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Marketing And Strategy

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Advertising and Marketing Industry in India

June, 2014

Introduction

India’s purchasing power has improved significantly since the turn of the millennium. People are more aware of the products they buy, and marketers are constantly trying to provide the best deals to their current and potential clients.

According to McKinsey Global Institute (MGI), the country’s consumer markets are projected to increase exponentially during 2005–2025, and in this period the total consumption in India is expected to grow fourfold, making it the world’s fifth largest consumer market by 2025. MGI expects India’s real gross domestic product (GDP) to increase at 7.3 per cent per annum through to 2025.

The Indian government is also showing constant support to the advertising and marketing industry. Advertising expenditure is expected to grow in the financial sector, backed by: Reserve Bank of India (RBI) policies that are leading to a more congenial business environment; proposed licences for new banks; and better market sentiments which are helping the Initial Public Offering (IPO) markets.

Market Size

The biggest beneficiary of advertising spends in 2014 will be digital advertising which is expected to grow by 35 per cent over the Rs 3,042 crore (US$ 507.41 million) spent in 2013, as per a report named 'This Year, Next Year 2014' by Group M, WPP group's media planning and media buying division. The report states that TV advertising will also see a growth of 12.8 per cent in 2014, with print witnessing eight per cent growth as compared to four per cent in 2013.

Investments

Amazon.com, the world’s largest online retailer, has launched an advertising campaign in India. The company plans to spend about Rs 100–150 crore (US$ 16.68–25.02 million) on advertising in FY 2014–15.

Flipkart is planning a major push in its fashion lifestyle category that has brought with it a new demographic of online shoppers, including younger buyers in the age group of 20–27 years and those in tier II and III cities. The company is tying up with leading lifestyle brands to introduce dedicated online brand stores which will be subsets to its main store.

Dentsu Aegis Network has launched an experiential marketing agency psLive in the Asia–Pacific region. During 2014, the agency will be introduced to all key Asia–Pacific markets. “psLive will play an important role in the Asia Pacific, particularly in key markets like India, ANZ and South East. We see this as a fast growth area for our business in the years to come,” said Mr Nick Waters, CEO, Dentsu Aegis Network, Asia–Pacific.

Cadbury India has launched a television campaign to introduce Tang’s new one-litre pack. Specifically targetting mothers, the new campaign showcases the fun and convenience of the new pack, through moments between a mother and child. We hope to trigger a behaviour change of making Tang in a bottle, as it offers ease and simplicity without compromising on the taste,” as per Mr Amit Shah, Associate Vice-President, Powdered Beverages, Gum and Candy, Cadbury India.

Mobile retailer UniverCell Telecommunications India plans to come up with 100 more retail outlets across India by April-end 2015. While south Indian states will have the majority of the outlets, the company has expansion plans for markets in west and north India as well.

Hypermarket chain Big Bazaar has launched its biggest marketing campaign with the tagline ‘Making India Beautiful’. The retail chain has spent Rs 100 crore (US$ 16.68 million) in the campaign, which will have 52 short films based around 52 categories. The campaign which will be aired nationally for 52 straight weeks was first broadcast on March 24, 2014.

India’s Broadcast Audience Research Council (BARC) has signed an agreement with France’s Mediametrie for technology services and licensing for the audience measurement system. Mediametrie will offer technological knowledge and licenses to BARC. The French company has been in multi-media audience research for the past 25 years.

Government Initiatives

The Indian and Canadian governments have signed an audio–visual co-production deal which can benefit producers from both countries to harness their collective artistic, technical, financial and marketing resources, and lead to an exchange of culture and art. The agreement could also help promote Indian locales for shooting films. “The agreement will also lead to the transparent funding of film production and boost export of Indian films into the Canadian market,” stated the agreement. India and Poland will be increasing their co-operation in the digitisation and restoration of film archives. This was agreed in a meeting between Mr Bimal Julka, Secretary of Information and Broadcasting, India, and the Polish delegation led by Ms Malgorzata Omilanowska, Secretary of State. The two countries will also form a Joint Working Group that will help improve co-operation in fields such as student exchange programmes, animation, films, and digitisation, among others.

Road Ahead

The advertising and marketing sector in India is expected to enjoy a healthy 2014. The FMCG sector, with a good monsoon supplemented by rising rural incomes, is set to witness increased advertisement expenditure. With more players getting into the food and beverages segment, e-commerce gaining a foothold in the country and local players entering the market, a growth is also likely in retail advertisement expenditure. In the automobiles sector, two-wheelers’ sustained focus on rural areas could result in more launches by existing players and, consequently, greater advertising spends. The telecom sector will not lag behind, owing to increased smartphone penetration and service providers cutting down prices for 3G schemes, which could lead to greater competition and, consequently, higher advertisement spends.

Exchange Rate Used: INR 1 = 0.01668 as on May 9, 2014

References: Media Reports, Press Releases, McKinsey Report