A UC-Berkeley Alumnus, Mr. Hitesh Malhotra (Chief marketing officer, Nykaa) visited IIM-Indore on 29-July-2017 for Colloquium, the Annual Business Conclave of IIM Indore. The theme of this year was “The Strategy Spectrum” and Mr. Hitesh spoke about India’s premier beauty and wellness portal – Nykaa.com and what differentiates it from other e-commerce players. We caught up with him after the talk, for a small interview. Here is what he had to say about e commerce, Nykaa and digital marketing:-
Nishant: How did you get into digital marketing and what interested you in digital marketing?
Hitesh: I was in brand marketing first and digital wasn’t big enough in 2005 when I finished my engineering, and I was focusing mainly on the retail marketing, but then something very weird happened. I was in a mobile company and then suddenly we realized that the return on ads that we are getting just out of one simple Google ad were 10 times cheaper and stronger than what we were getting in the retail. So we thought that if one small Google ad can make such a big difference in terms of return on ads spent then how big it will be if we scale all of this together, so then I got interested into the science and got deeper into it and realized that in next 10 years digital marketing will lead the race of marketing.
Nishant: According to you, what will be the impact of GST implementation on Nykaa’s Sales?
Hitesh: There could be a little period, till the time, people are used to pay certain taxes, on certain line of products, some products will be benefited, some will stay where they are in terms of pricing, some product pricing will increase, but eventually people will understand that they are getting benefited some way or the other. They might be paying more for a beauty product but they are also paying less for eating out in restaurants. Once they get their expenses balanced, it will be neutralized.
Nishant: Do you plan to acquire more number of male customers or go into the male segment too?
Hitesh: That’s not my business model. I am focusing on women customers at a larger scale and I want to stick to the core only.
Nishant: Are there any advantages of conventional marketing over digital marketing?
Hitesh: Both have their own strengths, conventional marketing has a very good ability, you can talk good stories about a brand, and you can build brands very strongly on offline marketing. The benefit of digital marketing is that the results are measurable whereas in conventional marketing, you have to work through different methods to arrive to a result and that too could have a high level of inaccuracy.
Nishant: What are your favorite tools related to digital marketing?
Hitesh: I think the best are analytics tools; either you work on Google analytics or Omniture Adobe. After that I would say, the typical marketing efficiency tools or the typical digital marketing outreach tools like Facebook marketing, Google AdWords are my favorites.
Nishant: How do you see the future of digital marketing? What trends do you foresee?
Hitesh: The trends are already here, every day the future is shaping for digital marketing. A lot of platforms are coming, and every platform has a new science around it. Earlier TV was the main media, then it moved to Youtube and now it has moved to OTT platforms like Amazon Prime, Netflix and Sony liv or Voot. I think new platforms will keep on emerging and with every new platform, there will be more consumption digitally.
About Hitesh Malhotra: He is a UC-Berkeley Alumnus, and has held roles in strategy formation and all level analytics at Levi Strauss, USA and best in class engagement practices with MakeMyTrip.com. He excels in performance marketing, integrated communication and engagement strategy for brands. As Chief Marketing Officer at Nykaa.com, he spearheads digital, main line and customer relationship marketing -controlling 20% P&L at organization level.
Mr. Rajeev Arora (Business Development Manager, Rural Marketing, Agri-Business Division, ITC Ltd.) recently visited IIM Indore as a speaker at the Colloquium organized by the Industry Interaction Cell of the institute. He spoke about ITC’s innovative e-choupal system, which is a unique combination of CSR and a rural penetration model. He sat down for a detailed interview with us, and here is what he had to say –
Darsheeka: Since the introduction of e-choupal 15 years ago, what do you think has been the shift in marketing approach when it comes to rural customers? Because, like you said, they are also shifting towards branded products.
Mr. Rajeev Arora: There are various kinds of shifts that have happened. Now, the consumer or maybe the end customer is more educated; they have various means of reaching out to their requirements; and people have started thinking about health, hygiene, education, and a better future for their kids. This has definitely led to a change, which is improving the quality of their life. They have also become technologically driven, as far as agriculture is concerned and ultimately, they are not the same kind of rural. The change has happened in every sphere of their life, and made them more educated and demanding.
D: As we know, the rural markets have not been doing well for FMCG companies due to drought situations and inflationary pressure. How has that affected the adoption of systems like e-choupal?
R: As far as adversity in any part of the country is concerned, the companies are not there to make profits, rather to support the system over there. There are a few product categories that are needed during emergency, and our approach has been to reach out to consumers so that scarcity is not there. As far as the ITC’s own Sanchalak infrastructure in the 4 states (UP, MP, Rajasthan, and Maharashtra) is concerned, it has always been a kind of support function. So, if anything positive happens over there, it is to be shared with the colleagues; and if something negative happens, there are ways to find out the solutions to overcome those issues.
D: Therefore, can we say that there is a predominant element of CSR in this initiative and it’s not just about rural penetration? If so, how does ITC balance between the two?
R: Yes, there is a heavy CSR element. The approach is not to go into a rural market and get business done; the approach has been empowering the rural people. This empowerment has come through various means – getting the right value for their agricultural produce, and providing them with facilities required for producing those commodities. So, whether it involves getting KCC (Kisan Credit Card) availed to them, securing them through life insurance policies, or educating them about how to avail weather-based crop insurance, these activities have always been done so that farmers are aware of what is good for their agricultural-related requirements. Beyond this, there are things not directly related to agriculture, but directly related to CSR. For e.g., health and hygiene of the females in the villages, employment generation, education of kids. Through these activities, ITC carries out a support function. Sanchalak is not working like a broker over there; he is a point of contact from the same geography as the people, present for support in agricultural as well as non-agricultural needs. This has definitely given us an advantage of deep rural penetration, and generating the confidence of the people in rural areas. So, this can be called a symbiotic approach.
D: Talking about the bottom line, do you think the investment in e-choupal is justified when we measure it against the increase in rural affordability?
R: Investment has been made over 15 years ago and it has given a different image to the company. Our Agri Business division has got strengthened in the rural areas. Perhaps, ITC is a company of its own size delivering results in India, and globally. Whenever our Food Business team comes across any new idea or are in the process of launching a new product category, they get back to us in terms of sourcing capabilities; this has only been possible because of e-choupal. Entering the rural market is not easy, and getting things done over there is also very challenging. The only advantage we have is our team member and channel partner, the Sanchalak; we support each other mutually in various day-to-day activities so that he can convince the villagers about what is good for them. The choice always lies in their hand.
D: If I am not wrong, ITC has partnered with a competitor like Coca-Cola for this initiative. How do the dynamics of this unusual collaboration work out?
R: While talking about the platform of rural marketing, Chaupal Haat originated 7 years ago and we had a pool of partners who joined us. These included TVS, Maruti Suzuki, State Bank of India, and the rural-centric brands from ITC (Superia, Sunfeast) as well. The agenda was to have a network to support the brands with good quality and social value that want to enter the rural market, and get connected with the consumer. In this case, the cost of reaching out to the consumer would be justified since it would be a mutual effort. Your point is very valid. We have never been into tie-ups with direct competitors like HUL or P&G. In fact, as far as Coca-Cola is concerned, we have been supporting them since the past 3-4 years in getting their rural distribution more aligned and intensive. As of now, both this companies do not have the product category where there is a mismatch, or a common functionality. So, this collaboration is able to work. The rest of our partners include TVS, Mahindra Finance, and others. For rest of the product categories, the product is one that is needed in the rural areas but it is not possible to make that available from the house of ITC. So, it is a demand in the rural market that is currently not possible to be met through us, so why not help out other companies if it addresses the need.
D: You mentioned the words ‘Rozgaar Duniya’ in your session. Can you tell us about that in a little more detail?
R: It was an initiative wherein the Agri Business Division (ABD) got into a partnership with Monster.com in order to support rural youngsters through availing various employment options to them, related to their educational qualifications. Through Sanchalak, we supported a set of youngsters in villages to obtain job profiles such as security guards, mechanics, masons, carpenters, and others based on vocational skills. It worked well. Normally, in any of our support functions, the Sanchalak is a catalyst and does not need to go beyond a certain threshold. This is because he is also, ultimately, a progressive farmer. He has his own liability, family, and various business responsibilities. So, he should be in a support function wherein things happen on their own and he does not need to worry much. There has to be some kind of passion, such that not much of a push is required. Support is definitely there, but it should not be from a 0 to 100 kind of a thing; it should be lining around 75-80% from his end and the rest of the support will come from our team members.
D: As one last question, the impending challenge of rural digitization and digital literacy in rural areas combined with issues of electricity can be a test to the effectiveness and efficiency of e-choupal. How does ITC tackle this?
R: When e-choupal originated, there were certain characteristics that were attached to it. The most important one was reaching out to farmers in the villages, and letting them know prices prevailing in various markets to enable them to make better and informed decisions. We were giving them an opportunity wherein, if they were interested, they could come to our buying locations where we provided certain set of product features above and beyond the traditional mandis. That was the basic agenda. But, there was also other content they needed in their daily lives like information related to better agricultural practices, and health. Therein, limited content is telecast at the kiosk fortnightly or monthly. The villagers can come and watch that content there. In order to address the power issue, we provided solar panels when this system originated. So, power is not that big an issue. Anyway, over the years, technology has changed – people are using smartphones with freely available content in villages as well. They have better connectivity with the nearby cities, or tehsil areas. It is no longer the case that they can only visit these areas only once a month, rather someone or the other from the villages visits these locations weekly to obtain information. So, access to information is not that tough now. Having said all this, there are various companies, organizations, and bodies that have a very fair way of trading. For example, the MP government is definitely doing a good job. So, there is a set of people trying to replicate our model after seeing our initial success, and doing a good job. In fact, more of such people are needed also. It is a win-win arrangement for everyone. We are not thinking just from our perspective and saying we have to be the only ones and the best ones. We are one of the good ones, but other players are also there. As a nation, we need more of such people.
This article is part of our Colloquium’16 series (Marketing – Strategy, Science or Sorcery)