Advertising is more robust in brand building than promotion

PRAKASH Wakankar, MD, Perfetti Van Melle India is a cricket buff and regularly doubles up as a commentator on All India Radio. Having had a motley career that spans pharma marketing, a stint in a packaging company, soft drinks and hospitality industry, Mr Wakankar is now grappling with the colourful and challenging task of confectionery marketing. He spoke with ET on a host of marketing issues facing the confectionery industry. Excerpts:

How has changing profiles of kids and shorter attention span affected the shelf life of confec tionery products?
Sugar confectionery in India has always been impulse-driven. The terms “loyal consumer” and “most often consumed brand”, have little meaning in a category where the average consumer has a set of 11 loyal brands. With kids getting increasingly exposed to new ideas, their gratification benchmarks have definitely undergone a sea change. Things which used to appeal to a 10-year-old five years back, are now passe’ for him. These are the realities of marketing in this category and our attempt is to influence decision at the point of purchase by being top of the mind to drive impulse to consumption.
Confectionery industry has been heavily promotions-driven. Doesn't that limit the role of strategic marketing and make the category heavily dependent on tactical initiatives?
Good consumer promotions, especially for brands which target kids, usually result in significant blips in sales. Having said that, more and more marketers are realising that exiting a consumer promotion is not easy. With kids becoming increasingly demanding, we are consciously reducing our dependence on promotion and investing more in advertising which is a more robust brand- building exercise. I do not think the strategic role of marketing gets diluted in any way in this kind of a situation--on the contrary, various (promotional) activities need to be in sync with the brand values and the brand promise.
With margins in confectionery products under pressure and high import levies, what is the way forward for marketers?
In a scenario where input costs have been increasing year-on-year, we are in an unenviable position of not being able to increase our prices in steps. The problem is compounded by coinage issue unheard of in most other industries. For instance, Alpenliebe at 60 paise would be a nightmare for both seller and buyer, given the currency and coin configuration that exists. We have tried to remain ahead by aggressively pushing top line growth by moving up the value chain. This will remain our thrust area in 2007 and we will continue to look at various methods to keep our margins at or above internal benchmarks. The other way to ease pressure on margins is to import high-end confectionery products and launch in the modern trade. There we have to confront a big grey market and we cannot be competitive on price when we import these legally. A combination of greater consumer awareness and governmental action will help level the playing field over a period of time.
How do you think has the emergence of modern trade and malls impacted confectionery retailing?
Despite the development, our dependence on small outlets and paan shops is unlikely to come down in the near future. Having said that, modern trade is a key growth driver for us and we are looking to customise our offerings for these outlets. I see this as segmenting the ‘outlet profile’ – the growing modern trade and related formats on the one hand and the rural opportunity on the other will straddle the `traditional’ outlet base. We want to do what we do even better and, of course, focus on improving our presence even further on both sides of the traditional base.
What are the regulatory issues that have or in some way stifled the expansion of organised confectionery industry?
Our industry is governed by PFA regulations, and some of those outdated laws need revalidation in today’s context. For instance, worldwide, sugar- free gums are gaining currency even among kids. However, in India, we still have to carry “not recommended for kids” notice on the pack. The other thing is, the reservation of “hard boiled sugar candy” for the small scale industry (SSI) as the result offerings in this segment are not keeping pace with the development in the other categories of sugar confectionery. It is clearly a big opportunity for player like us and we feel it will benefit the SSI in the long run. In today’s context, when manufacturing is being governed by HACCP guidelines, the SSI may not have the necessary wherewithal to comply. The bread and biscuit industries are a clear example of an industry which has thrived after deregularisation.

Courtesy: EconomicTimes
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