It is amazing to see how some companies are consistently successful in creating reputation for themselves which pay them dividends year after year. Customers go on buying their products, investors buy their shares and the companies can easily introduce new products in the market which become successful. Some reputed FMCG companies in India are cases in point. Most of these companies’ products are trusted by their customers, and they go on adding value to their businesses. Investors buy their shares and rarely sell them.
Their partners and associates e. g. distributors and retailers, have long relationships with them, often decades long.
Trust is really the cornerstone of their businesses. This relationship creates a high entry barrier in their markets, and it is extremely difficult for a newcomer to attack them. What is the chemistry which binds thousands of stakeholders, year after year, in a relationship which continues to benefit them all?
Building Trust Takes Time
These companies understand that building trust takes time and it is the result of consistently doing certain things right. They have a propensity to take all the stakeholders, dealers, distributors, retailers, customers, and shareholders along and making sure that their business processes and practices are fair and just to each category of them. For example, they assess how much a retailer can sell in a week or a month and stock them accordingly so that the retailer does not suffer from any capital inadequacy. They generally reward their shareholders with good dividends and bonus shares, etc.
They Invest in Building Brands
FMCG companies invest consistently over a long period to build brands. They know that brands have huge long term value which will benefit them for a long time. They listen to their customers and try to figure out their needs with regular market research to understand their dissatisfaction and meet those needs with new products or upgrade existing products. In fact, they gather information about their products from their retailers who are the real customer interfaces. They approach their markets with appropriate product market fit for each market segment, right pricing and well considered value propositions.
Most of the startups fail to build brands and concentrate on sales rather than building brands. FMCG companies often exploit every channel possible to communicate with their brands. Coca Cola, for example, runs one the largest Facebook pages with over 100 million fans. Although nobody checks in Facebook or searches Google before he/she reaches out for a bottle of Coke, but this does not refrain the company from regularly engaging with its fans. They do not consider money spent on advertising as good money wasted. If you look at Facebook pages of Nike or MacDonald’s, you will get the point.
They Rectify Their Mistakes Pretty Quickly
These companies have always one ear to the ground and they keep a hawk-like eye on customers’ feedback, changing preferences and the areas of customers’ concern. In spite of detailed understanding and planning, things do go wrong. And when they do, they take quick steps to protect their reputation. If that step requires withdrawing a product from the market, they often do it and bear losses.
When ‘Maggi’ was launched in India, Nestlé promoted it as an easy to cook meal. But it soon realized that the Indian mothers were unwilling to accept a bowl of noodles as nourishing meals. For them, a wholesome meal must consist of rice or roti, dal and vegetables, and maybe sweets and a bowl of noodles just did not pass muster.
Nestlé saw to its dismay that the sales were sluggish because of this consumer perception and took steps to correct the situation. It launched an advertising campaign to reposition to products as a quick snack which could be had between meals.
Slowly and surely, the consumer perception changed and today ‘Maggi’ is consumed as a snack between meals.
Consumers Buy from the Companies They Trust and the Brands They Trust
Consumers buy products from the companies they trust. They buy the brands which denote that trust. Customer acquisition through price discounts, etc. is short term methods and not sustainable in the long run. In fact, these tactics actually devalues a brand as the customers start viewing the brand as just cheap and inherently compromising value. As this perception takes root, it is extremely difficult to change the deep rooted beliefs, often impossible.
A good many of Indian e-commerce startup founders will probably agree.
Author: Dipankar Dutta advises businesses on marketing strategy and implementation through digital channels and is Director of Excelligent Infotech Pvt. Ltd.