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3 Things Nestle should have done differently in India

Posted by Haja in Business, Leadership, Management, Retail

This is fast becoming a key case studies in Business Schools. Not for what they have done (they have done a tremendous amount of market innovation till date), but on what they have NOT done.

Nestle, almost single handedly created this market for Instant Noodles in India, and India today ranks 5th worldwide in this segment. That may all change since the Maggi fiasco has hit the industry as a whole. The sales have dropped by almost 80% for most of the leading brands, according to Economic Times.

But here are some interesting facts –
– Almost 39% of the Nestle Revenues in India comes from the sale of the Maggi 2 Minute Noodle.
– Nestle has a distribution network of around 2M Outlets/ distributors/ Sub distributors, where they sell their products. However, and according to Nielsen’s data, the Maggi Noodle reaches a whopping 47% of the country’s 8.8M Retail outlets – which means an additional 2M outlets sell these products.
– Out of the 450Cr Ad spend that Nestle has, almost 150Cr is spent on Maggi itself.

Without a doubt, this is one of the most critical products in their inventory- and they have achieved a significant reach of an extremely complex Indian market. Through sweat and blood.

And hence this question – Why is Nestle silent?

Here are 3 things, in my opinion, Nestle could have done differently to avoid reaching this rather desperate stage.

1. Reached out to their customers immediately– Possibly there really is an issue with the product. Possibly Nestle was worried about the fallout from this. Possibly they never thought it would snowball into such a big issue. But any way you look at it- Nestle should have reached out to the customers immediately and highlighted the issues that had been raised. They should have given a perspective of their own- and created a dialogue with customers. In a world driven by Social Media, Nestle was not visible. Period. And the customers had access to only one source- the Press.
2. Acted Immediately – Nestle should have taken immediate action and picked up products themselves and done the study immediately. They should have pulled out the products if they felt this was not appropriate. It should have given a refund to customers who had bought the products. It should have signed up all their resellers – and got them to be their agents in their messaging out to the customers. Ideally taken action when the first complaints were received. Nestle missed a great opportunity to do this.
3. Got their leadership team in front of the media – Nestle is a global giant. They know how to leverage the PR engines. They have great leaders. It was, and continues to be, quite surprising at the total lack of any visibility of their leaders at this time. The entire leadership team was missing – and possibly the biggest lesson. The Leadership team needed to take responsibility, and handle the entire fallout from this.

This offers some good lessons on leadership and strategic direction a company should take in times like this. Nestle failed. Now the wave has gone beyond their means -and even if the Government backs down, the loss of trust from the end users, will take a long time to overcome, if at all.

The above points are from my perspective and I would love to hear from you on more insights as to what you think Nestle should have done- differently and better.

Jun.08

Buying your PC in Retail?

Posted by Haja in Retail

In a recent article, I had spoken about the Retail experience and what I thought a Store Owner should do, to ensure that the customer walk in & buy the products the store is selling.

In parallel, I put up a quick query on LinkedIn to check on what some of my contacts (there are a few), thought about buying in Retail and what they looked for.

Here is a quick summary- and frankly, this feedback to me was slightly different from my perspective. But here it is anyways-

1. It appears that Feature & Configuration play a key part. My reading is that most customers who buy in a Retail Store- already do their ground work & plan on the feature sets & the configuration that they will go with.

2. The 2^nd important criteria is Price!

Other factors like Brand, Sales People knowledge, Store reputation were highlighted, but not the primary criteria.

In my personal opinion, the customers who buy in Retail, would look have decided on a configuration that they want to buy, and then scout around for the best offers that come closest to their requirement. If you have a good ecosystem, to get the customer in- and offer him the product he requires, he will buy. If you are a little more expensive than the shop next door- then you better have an option that helps to build that premium – great support, visibility in the market and great sales people who sell value.

Interesting learning this!

Feb.19

Retail 101

Posted by Haja in India, Retail

IT Retail is in its infancy in India. Though over the last few years, it has made rapid strides, it still offers an immense opportunity to the players (and potential ones too). In the same way, the IT industry sales to consumers is rapidly gaining ground, and with the potential that is India, it is a goldmine for those retailers who are able to provide the right building blocks for the customers.

The Million dollar question however- what does a customer really want? Many of our retailers believe in getting the customer through the door and hold on to them and make a sale – most often than not, using the price discussion. The Indian customer also seems to be price driven- but lately, branding, and some other elements are beginning to be reasons that are considered by them before making the all-important sale.

What are these other “elements”?

I am sure there are more, but these come to my mind now.

For an IT retailer to be successful (especially in India or emerging markets), it important to identify the areas they want to focus on.

1. Identify which primary factor you want to be known for: Price Leader, Best Support Centre, Most brand options, etc.

2. Who are your customers- be very clear of the target audience (at least the primary ones). If near a college or a mall, the trendy, young, college going or yuppies could be your target audience. It helps you to decide the kind of “look and feel” you want to provide to your primary target audience.

3. Create the “Right Awareness” – Think of marketing tools to drive the right audience to the shop- be it advertising, focused advertising through Colleges, schools or the papers – anything that works to help give a perspective of your offerings –will create awareness & over a period of time will improve the footfalls to your shop.

4. Set the right “Ambience” for the store- so that when a customer walks in- he sees the “overall message” you want to share than just brochures/posters & PC’s everywhere.

5. Understand their requirement- this can be done ONLY if you have great sales people in your store- who are willing to question the customer and then “LISTEN” to their wants.

6. Help the customer make the RIGHT choice – This is SUPER important. Don’t sell what you have- but sell what the customer needs. In the long run the customer will come back to you- and more importantly, the word of mouth it will generate will drive more customers to your shop.

7. Focus on “educating” the customer- be it hardware, software, etc. Educate the customer, and he will be thankful for the knowledge- and will buy something definitely.

8. Avoid “Hard Sales”- though it may be required at times. Drive “value” to your customers- let them walk around and make their choice. Be honest with your inputs- and they will come back to you. Don’t try to “hold” them to your shop- and desell other brands.

These are just some thoughts on building the right retail messaging- which though logical, is not exactly common in most malls.

The ones that get it, will be those who will survive and thrive in the next few years.

Feb.17