Have you ever wondered why...

After four years in India, Kentucky Fried Chicken (KFC) is struggling with four outlets, while McDonald's already has 16 in just two-and-a-half years? 

Lee is lording it over the premium jeans market in India while Levi's, the Original American Jeans, is still trying to get its act together?

Sony TV, beaming just one channel, took merely two years to hit a turnover of Rs 220 crore while Rupert Murdoch's Star, with seven channels in its armoury, only expects to clock in Rs 300 crore this year, after being in the country for over seven years?

Hyundai has sold 20,000 Santro cars till April this year against the 5,000-odd that Matiz from Daewoo has against its name, though both hit the market almost together? And despite the fact that the Matiz outsells the Atoz (the Santro by another name) across the world, and the Matiz is the first Euro-II compliant car in its category?

WALK into a KFC outlet to understand why. As your order for the chicken arrives, it is obvious that it has been fried in a badly made besan (chickpea flour) batter. When you bite into one, the oil drips and the bland taste disappoints. Suddenly you long for your favourite, McAloo Tikka Burger (with an extra slice of cheese), at a McDonald's outlet accompanied by the noise of scores of children and their parents. For those of you who still haven't got the answer to why  -- it's because McDonald's made a burger, 'Indian,' and the experience of eating it 'Indian,' in tiny ways which you don't notice, but which influence your buying behaviour. 

While nibbling desultorily at the chicken, think of all these winners and laggards -- brands from the same country, in the same market, and which came at the same time. Speak to the companies which own them, walk into their outlets and see their advertising. What hits you again and again is that some element in their strategy -- product, pricing, advertising or distribution -- was not customised to suit the Indian reality. One of the biggest cliches in business is how MNCs should 'be global, act local' -- boring but true. But decades after the globalisation wave hit the world economy, the lesson doesn't seem to have sunk in -- whether it's the Indian market or any other. Incidentally localise doesn't mean throwing a wedding in your advertising -- but re-engineering your product offering to sell to the consumer in the same context in which he is buying.
 

The Local Aloo

A car maker can expect to spend Rs 300 crore and four years getting its supply chain right before launching its products. Would a fast food chain spend that kind of money and effort? 

But that's precisely what McDonald's did -- a fact that only underscores how seriously it was taking the Indian market. Between 1992 and 1996 -- when the first McDonald's outlet opened in the country -- it was working frenetically to put the perfect supply chain in place. That involved hand-holding farmers until they learnt to produce lettuce or potatoes to McDonald's specifications or working with a vendor to get the perfect cold chain in place. Or explaining to the suppliers precisely why only one particular size of peas was acceptable (too large and they would pop out of the patty and get burnt).

It meant figuring out the right menu -- substituting mutton for beef, something it has never done in any other market, choosing names like McAloo or Maharaja Mac, adding variations and dishes that don't appear in any other McDonald's chain anywhere in the world. Finally, it meant getting the pricing just right. The Maharaja Mac ensured that McDonald's main offering was competitively priced. No wonder "McDonald's has established itself as the family's favourite quick-service restaurant," beams Amit Jatia, managing director of Hardcastle Restaurants, the Mumbai arm of McDonald's.

The KFC experience couldn't have been more different. It paid enough attention to its main raw material supplies -- by working with Venkateshwara Hatcheries for the right chicken. It also got its cold chain in place. But then it slipped up by not paying enough attention to the cultural context in which Indians consume food. First, it offered too few choices -- with less than a dozen items on the menu to start with compared with 35 at McDonald's. A larger proportion of Indians are vegetarian, which meant a smaller market. A smaller menu  simply cut out a lot of potential consumers. Two, the Tandoori chicken is formidable competition for KFC's 'chicken pakora'. No jokes, that's how consumers think of it. 

Today, in a salvage bid, KFC has added a hefty Indian component to its menu. But even then, it is reconciled to the fact that it will never become a major player in the Indian fast food arena. Instead, Tricon Restaurants International, which owns KFC, is now banking on its other fast food arm, Pizza Hut, to make headway in the Indian market.

Hindi Soaps Please....

Star TV was the first to come in 1991, when the airwaves had just been freed. Unfortunately, it also came in with a one-size-fits-all mentality, beaming the same English programmes in India that it was showing to the 50-odd countries it was covering. Little wonder that Zee, which came in a year later, swept the market with its primarily Hindi movies-plus soaps content. Losing to Zee was bad enough. But by 1995, 30 other channels had started and Star was losing a slice of its audience to each new entrant. In 1996, Rupert Murdoch's Newscorp bought out the Hutchison Whampoa stake in Star and started corrective 
action. 

Star successfully added Indian masala to its music arm, Channel V. But just before it could get its Star Plus act together, newcomer Sony TV  burst into the market, targeting exactly the same audience Star Plus suited -- the young, upmarket adult Indian. (Zee caters to the slightly older middle-class audience.) While the quality of Star's programming is equally good, if not better in patches, the target audience for, say, Saans or some of its popular soaps is the more mature, middle-aged Indian. "The young adult, not the youth," says Rajesh Pant, executive vice-president at Sony, "is the market of tomorrow." And that's what Sony sells to advertisers through soaps like Just Mohabbat or Aahat. Star, on the other hand, is talking to the upper crust of middle-age India. Peter Mukerjea, the chief executive of News Television India, agrees that a younger feel to Star Plus' soaps will help. "The core audience will change in the next few months," he asserts.

He also points out that for over five years, the channel was beaming English programmes. "If we too had started on a clean late in 1996, there would have been no problem. The general perception is that Star Plus is still an international channel," says he. Changing it will take some heavy-duty local programming, something that Star cannot do because its shareholding agreement with Zee restricts local content to 50%. The result: Intam ratings show that two out of the top five shows in Mumbai and Delhi were Sony programmes. Not a single Star product features on this list. 

American, but at an Indian Price

A hunger to grab the top end of the market is why Levi's has to play catch-up now in the Indian jeans market. Strutting into India in June 1995, Levi Strauss had the advantage of being known as the company that invented jeans. But it didn't leverage that. "Our aim when we launched was to establish the brand's premium positioning," remembers C.S. Suryanarayanan, country manager of Levi Strauss India. Thus, it consciously pushed its top end and premium brands from a string of exclusive outlets. But by mid-1998, it was clear that Levi's was not going anywhere. It had 27 exclusive retail outlets, all of which scared teenagers away because they thought Levi's was simply too expensive, that it had jeans only for Rs 2,000 upwards. "We had to break this price perception and communicate that we had something at Rs 995 too," says Suryanarayanan. Remember that 80% of all jeans are bought by those in the 15-24 age group, who may aspire to an original Levi's 501 above Rs 2,000 but cannot afford it. 

Which is when Levi's decided to start using multi-brand outlets like Blues Bizaar or Shopper's Stop as well as increasing its reach to 70 outlets. "Also, three years back the number of retailing options weren't too many," points out Suryanarayanan. A new campaign with Indian elements thrown in -- like local trains and dhobis -- was also launched last year. The difference, says Suryanarayanan, who refuses to give figures, is beginning to tell. With 15 more exclusive outlets planned, its reach will increase to 85 by end-1999.

But it will still be a long while before Levi's can catch up with Lee's 35% share (or Rs 48 crore). Lee launched a range priced between Rs 995 and Rs 1,995 compared to Levi's Rs 995 to Rs 2,295 in the same year as Levi's. The target was the same -- the 1 million pair upper end of the 30 million pair Indian market. Why did it work? 

Lee, owned worldwide by the $6 billion VF Corp, is made in India by Arvind Fashions, part of the Arvind Group. Remember, Arvind is the third largest producer of denim in the world and sells brands like Newport, Ruf and Tuf and Flying Machine which straddle the economy and the mid-price segment. Lee is Arvind's first offering at the premium end. While the advertising is fairly American, aspirational and pesudo non-conformist,  it tom-toms the Rs 995 upfront. Arvind knew that Rs 995 is a teen psychological barrier. Despite his American aspirations, when it came to money his heart and pocket were truly Indian.

Apna Shahrukh

Within seven months of launch in India, Hyundai Motors India (HMI) has sold 20,000 Santros. Daewoo, launching its Matiz in the same slot and same time, has peddled all of 5,000. And yet, Matiz outsells the Atoz, the Santro's parent worldwide. So what did Daewoo do wrong in India? To start with, it learnt nothing from its Cielo pricing debacle. (The Cielo first tried to position itself in the Opel Astra/Ford Escort class with its price, before doing a volte-face and dropping price to Maruti Esteem levels.)

Despite the fact that the Matiz is an 800 cc car that could take on the Maruti 800, Daewoo deliberately tried to position it as a Zen killer at Rs 3.5 lakh. It ignored the fact that the Zen, with its 1,000 cc engine and more space, offered better value-for-money. Little wonder, after abysmal initial sales, Daewoo announced that it would be launching three stripped-down versions, at Rs 2.5 lakh, Rs 2.85 lakh and Rs 3.27 lakh. That has eroded  the trust of potential consumers. Managing director S.G. Awasthi doesn't think so. He expects sales to rise to 5,000 a month by August. He points out that the Matiz is Euro II compliant before any others in its category.

Now consider what Hyundai did right. First, it adapted the basic Atoz design to make the Santro specifically for the Indian market. (Among other things, the Santro has a higher torque at lower rpm, meaning less gear changes in slow traffic). Then, despite being a 1,000 cc car in the same class as the Zen, it priced itself at Rs 2.93 lakh for the basic model,  making it affordable to top-end Maruti 800 buyers.

But the master stroke was a bang-on-target advertising campaign. Saatchi & Saatchi had to communicate in an Indian context -- in 15 or 20-second commercials -- the idea that Hyundai was launching this technologically brilliant car. For short-term quick results a celebrity was the best bet. "Someone who could be himself," says V. Shantakumar, managing director of Saatchi & Saatchi. Hyperactive superstar Shahrukh Khan seemed just right. "The choice of Shahrukh was crucial," says B.V.R. Subbu, director (marketing & sales) at Hyundai. Shahrukh represented aspiration, ambition, decency (stable married chap) all in one. A series of five ads, showing the managing director of Hyundai India, Mr. Kim, introducing the company to Shahrukh and trying to get him to do the Santro ad worked with the mid-market customer Santro was targeting. By the time Shahrukh was convinced on film, in October 1998, the Santro was launched. Price: Rs 2.93 lakh. The launch ad positioned Santro as a "family car", something that Matiz also says, though  less convincingly, and with less recall value.

The whys are being answered -- slowly.