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Is Fair Lovely?

It is hard to argue that fairness creams do not perpetuate the stereotype of fairness = success in India. However, it is my belief that to remove this obsession with fair skin, the place to start is Indian society rather than FMCG commercials.

Ethical advertising: I do not believe that there is any way to promote fariness creams that does not simultaneously decrease the attrativeness of dark skin. Even a purely scientific advertisement talking about the (supposed) efficiacy of such a cream would push consumers to wonder why fairness was a desired goal.

Societal demands: While advertising does serve to create and induce demand, the FMCG industry primarily responds to existing societal demands for products. As we saw in the case, India's obsession with fairness has existed for centuries, far longer than Unilever and their ilk have been around. In the absence of (medically benign) creams like Fair and Lovely to satiate this demand, the consumer will inevitably turn to home remedies such as bleach etc. that might lead to more harm in the long run.

Government intervention: I would support a total ban on advertising on fairness creams, but not on the sale of the product. This was been successfully done in the case of alcohol and cigarettes in India, which are allowed to be sold but not advertised on print and electronic media in India. A similar ban would allow the products to satisfy the latent consumer demand, without increasing it further. We should also take care to eliminate the possibility of surrogate advertising coming up.

Cross-subsidization: Another way to help educate society about the ills of the obsession with fairness is to mandate some of the revenues from the sale of such creams to be used to consumer education, a sort of 'fairness tax'. This would help fund campaigns like Dark is Beautiful which would hopefully educate the consumer in the long run.

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Predicting diffusion of consumer products

To predict rapidity of market diffusion for consumer products, I have come up with a framework:

Absolute cost: The higher the price of the product, the less likely the customer is to buy the product 'on a whim'

Time return on investment: The sooner after buying the product the consumer gets a return, the more likely they are to become repeat buyers

Distribution networks: How quickly and broadly can the manufacturer distribute the product? 

Availability of complementary products: Is there an ecosystem of complementary products to hook into?

Virality: Is this the sort of thing that one tells their friends about?

Based on this framework, I have categorized the products into low, medium and high on each of these factors, and predicted their diffusion potential.

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[g-mainak-blog]

Oenophilia

Wine is an industry where perception almost always defi(n)es reality. This follows from the wide and growing body of scientific literature that even wine experts cannot tell the difference between cheap and expensive wines. However, due to the shroud of mystery surrounding wine, laypeople who might not be well-versed with the nuances of wine fallback to signals like the price of the wine, the country of origin etc. as shortcuts to judge the quality of wine. Of course, for old world wine makers, this suited them perfectly as they rode the quality perceptions of their highly priced wine from prestigious old-world wine-growing regions like Bordeaux, Rioja etc. to coast to high profits, while new-world producers were relegated to 'basic' segments of the markets where both prices and profits were lower. For Chilean producers like Concha Y Toro, the challenge is therefore twofold: How to counter domestic competition (i.e. competitions from other old-world producers) and how to counter lower perceptions of new-world wines. On the domestic side, it seems to me to be a purely financial and operational fight: conduct M&A transactions to acquire struggling Chilean and other South American vineyards. CyT currently owns about 6% of the total vineyards in Chile. Consolidation would reduce intra-national competition on foreign shelves. In addition, larger production would help is unlock economies of scale that would help improve its profit margins. These profits would be required to fight the perception battle against old-world wines. Among the 4+1 P's of marketing, it should tackle promotion, price and place. 1. Promotion: Advertising in premium magazines, sponsorships of high-fashion events, blind tastings with old-world wines all would help improve public perception 2. Price: As a premium product, increasing the price of sub-brands that have a more premium positioning would help Chilean wines establish a foothold as a premium product. 3. Place: Establishing distributorships that are able to push the product to high-end department stores and restaurants is key to improving perception. This may involve giving distributors artificially high margins to incentivize them to push the product until the demand is established. Through these techniques, Concha Y Toro can increase the size of the pie and also keep a larger share of the pie for itself.

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[g-mainak-blog]

When do nudges not work?

Nudging, choice architecture etc. are all terms that came into fashion in the early 2010s and really peaked after Richard Thaler won his Nobel in 2017. Every pop-psychologist worth their salt had their own take on nudge theory. Governments fell over themselves to open ‘nudge units’ in their policy thinktanks to incorporate choice architectures into their public policies. 

And yet, a decade on, what is the impact of nudge theory, really? The sheen has worn off and many of the nudge units have been quietly sunset. Attempts to use nudge theory to influence public behavior during Covid-19 came a cropper and were criticized as having taken away from the techniques backed by hard science. While there have been some well-publicized successes, the limitations of nudge theory have very quickly become apparent - the unpredictability of population response being the biggest one. Behavioural economics is a study of post-hoc rationalizations, but it much more instructive to examine the cases where nudges fail

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Heineken vs Corona

Heineken and Corona - both imported beers, but oh so different in the consumer's mind! Heineken brings to mind a cool, collected Northern European beer - you crack open a cold one after a hard day's work. Corona, fun, light, a party in every twist of the cap! A wedge of lime to transport you to a beaches of Cancun. The advertising also contributes to this image: Corona's ads are short and filmed on Mexican beaches; Heineken - “Just being the best is enough" - is cold, aloof, admired from a distance.

Heineken's vulnerabilities were its staid brand image and focus on quality and it's number one status. This might appeal to older beer drinkers who have been loyal to the brand for long, but alienates younger, more affluent drinkers who are looking for a fresher product. It also alienates the growing Hispanic demographic which might not resonate with this messaging. Heineken should capitalize on its strengths - it's association with sports, Europe and premium branding. Partnering with football clubs, tourism campaigns with European countries, high-end events etc. might be a way to go.

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