Inaugural PAN IIM Marketing Digest Article (Dec 2009)

Implicit positioning and surrogate advertising

Abstract: The ban on advertising of tobacco and liquor introduced by the Government of India during the early 2000s has spawned a generation of surrogate marketing initiatives as corporations leant to sell without communicating to the consumer. Many in the industry have since started to diversify into areas where they can leverage their brands’ aspirational value; such as aviation, clothing and apparel and sports. However the surrogacy in advertising continues in the absence of a strong code by the ASCI and the government flip flops on the issue. The need of the hour is to come clean on the subject and develop an unambiguous plan of action

Advertising is widely accepted to be the most potent tool in the hand of a marketer. Whether it is to launch a new product, entrench an existing one, educate on the new salient features or create a new market, most consumer products manufacturers orient a considerable amount of time, energy and money to reaching out to existing and potential consumers though various media such as television, radio etc as also new age media like the Internet and Out of Home (OOH) media.

Origins

In this context, one can imagine the predicament of a producer who is mandated to legally produce and stock and then has his hands tied by being denied the right to market the produce. This is ditch that many liquor and cigarette companies have found them in after the Government of India passed a blanket ban on all advertising of ‘intoxicants and harmful substances’ in mid 2002. Most of the large players adapted quickly to introducing what are termed as complimentary products which fell outside the ambit of the Government’s regulation. The significant ones include 8PM Whisky (apple juice), Aristocrat Whisky (apple juice), Bagpiper (club soda), Hayward’s 5000 Beer (kit of darts which was the centerpiece of the advertising campaign) and Gilbey's Green Label Whisky (mineral water); and in this process was born a new trend of surrogacy in advertising which is commonly defined as ‘advertising one product with the view of selling another’

Trends in surrogate advertising

After the ban imposed on the 12 advertisements identified as surrogates by the Government of India, and the show-cause notices issued to Star TV, Zee TV and Aaj Tak in 2002 under the provisions of the Cable Television Regulation Act of 2002, the whirlwind of surrogate ads hitting the telly calmed down to a large extent. Advertisers started diversifying and shifted their focus to other advertising avenues which often stretched the concept of brand extension to previously unheard-of levels. These include the mundane such as sponsoring events (without explicit advertising) and Internet advertising; the unconventional such as ITC’s diversification into clothing and apparel as well as the far-fetched such as the Red and White Bravery Awards and other lifetime achievement awards instituted mainly to perpetuate brand recall among the target audience. One interesting trend which was observed in the mid 2000s was the “socially responsible advertising” taken up by many liquor companies. Several advertisements exhorting viewers to be responsible citizens and refrain from driving after drinking were seen by media analysts as a form of surrogacy.

Media analysts have also often wondered aloud that the ambitious forays made by Dr Vijay Mallya in aviation, Formula 1 and related ‘glamorous’ industries have as much to do with his desire to perpetuate his strong brand portfolio as the prospect of de-risking his business by diversifying.

For the best part of this decade, the tobacco and liquor manufacturing lobby has been trying to persuade the government to relax the restrictions on advertising what are perceived as surrogate products. Finally, as late as March 2009, the Government of India decided to the hand a long rope under the stipulation that the surrogates have no product linkages to intoxicants. However on June 10^th this year, the government tabled a bill to amend the Cable Television Network Act of 1994, which is likely to tighten the screws on surrogate advertising even further.

Advertising Ethics

The Advertising Standards Council of India (ASCI) issued clarifications at various points of time that in accordance with the code laid for guiding ethical behaviour in advertising, the mere use of a brand name or company name which may be the same or related to a product put under advertising restriction may not be construed as reason enough to find the advertisement objectionable. An exception may however be made in case the product which is advertised is not freely available or is produced and distributed in minuscule quantities, which may not be sufficient to warrant advertising costs. Also advertisements must not contain direct or indirect cues for the product under advertising restriction.

However many advertisers must still grapple with ethical dilemmas as the existing code leaves a lot of scope for interpretation.

Voluntary abstinence

A notable exception to the clamoring by the tobacco and liquor lobby and circumventing of stipulations to maintain sales is the conduct of ITC Ltd after the ban announced by the government. In 2001, ITC voluntarily opted out of the sponsorship deal that it had signed with the BCCI to sponsor the Indian cricket team and has since been de-emphasizing its cigarette brands in favor of other lines of business which are considerably more sustainable. It has also taken up large scale Corporate Social Initiatives in rural India, the crown jewel being the e-Choupal initiative, to enable the agricultural community to adopt a direct selling approach.

Two sides of the same coin: Ambiguity of law

Many in the industry question the practice of banning advertisements which effectively erodes the ability to sell while at the same time allowing production to continue.

In an article published by The Hindu in March 2008 Ramesh Narayan, a communication consultant writes, “The advertiser’s perspective is fairly straightforward. If it is legal to manufacture, distribute and sell a product, why should it be illegal to promote the sale of that product? I don’t think anyone can answer that question convincingly. If it has been established conclusively that cigarette smoking kills, why is it that it is available to anyone, irrespective of his or her age, at every street corner?”

"It's difficult to digest that an industry which is allowed to sell its products, is banned from advertising the same products, despite the fact that the commercials carry health warning, advising the customers to use the product in temperance.", says Prof. Atul Tandan, Director, Mudra Institute of Communications in an article released in July 2002.

While such questions make intuitive sense, the practicality of banning production of tobacco and liquor is unpalatable for the simple reason that these are very heavy contributors to India’s tax kitty and the revenue loss due to a ban on production will most likely be catastrophic. Also the increasing pressure exerted by the WHO as well as NGOs and health activists have forced the government to be seen doing something. As a result of this duality of purpose, the tug-of-war continues without resolution

The need of the hour

The following measure will go a long way in easing the deadlock seen here:

1. The ASCI should have an unambiguous guideline for differentiating acceptable and unacceptable forms of advertising with respect to surrogate products. Also the ASCI should be empowered to implement the guidelines and issue penalties for non-conformance.
2. The government needs to take a stand on the issue. It must look beyond having the cake (the advertising ban) and eating (tax revenues)
3. Advertising companies must take pains to understand the nature of the products and market that they are dealing with and must refrain from designing and propagating surrogate brands.

References

Retrieved August 5^th from ICMRIndia.org: http://www.icmrindia.org/free%20resources/casestudies/Banning%20Liquor%20Surrogate%20Advertising1.htm

Retrieved August 5^th from The Hindu-Businessline website:

http://www.thehindubusinessline.com/catalyst/2008/03/27/stories/2008032750090200.htm

Retrieved August 5^th from The Hindu-Businessline website:

http://www.thehindubusinessline.com/catalyst/2002/01/10/stories/2002011000110300.htm

Retrieved August 5^th from The Hindu-Businessline website:

http://www.thehindubusinessline.com/catalyst/2008/03/27/stories/2008032750090200.htm

Retrieved August 5^th from legal-articles.deysot.com

http://legal-articles.deysot.com/pdf/article-180.pdf

Nikhil Joshi is a 1^st year PGDM student at IIM Calcutta. He holds a Bachelor’s degree in Electronics and Telecommunication Engineering from University of Mumbai and has worked as a Software Testing Consultant with L&T Infotech. He can be reached at joshin2011@email.iimcal.ac.in

Published in the Inaugural PAN IIM Marketing magazine (December 2009)

Hahahaha ... I'm Back Baby ......

Hi all of my currently minuscule viewership,

I am back .. after a long hiatus ..... and hope to be more regular in the near future at least .....

Will post more on my exploits at IIM Calcutta in the coming days ....for now ... just leaving you witha lil 'thought'-pourri

I tried so hard and got so far.....
In the end it doesn't even matter ....
So should I quit and hit the bar????...
Naah... that just makes me fatter ..... :)

Lesson:
Trying and failing in life
Is the trick to smooth sailing in life

ciao for now ..... and ..... I WILL BE BACK ......

It Ain't the Last Time

This is an as-of-yet incomplete poem which I have been writing..... incomplete because I am unable to think of an appropriate ending ..... if some inspiration strikes you, please help me finish it ...........

There lived a pretty, old lady at the end of the lane,

Jack used to think her a little too vain,

And she wished Jack could just act his age,

40 years were time enough to get on the same page.

Jack was a bonfide crazy ass,

Mary had always been a cheerful lass,

and she just wished Jack could see the light,

get out of his stupor and learn to do what's right.

Both were friends from their teens to their twilight,

And whenever they spoke, it always ended in a fight;

But each saw through the other's furious mime,

coz It ain't the first time, It ain't the last time.

You can't really say they were the best of friends,

But they were always there for each other in the end.

He was her crutch when she had broken a leg,

She had dropped him home after his thirteenth peg.

Fate took her to places far and beyond,

while he stayed feeding the birds at the small pond;

Yet often it happened, while petting a meadowlark,

He found her standing at the other end of the park

Both were friends from their teens to their twilight,

And whenever they spoke, it always ended in a fight;

But each saw through the other's furious mime,

coz It ain't the first time, It ain't the last time.

What is that feeling which don't have a name,

You can't call it love, no....it ain't the same;

But they always felt the tug of an unspoken bond,

which brought them together, time and again, at the pond.

Mental Accounting

I came across this statement while reading 'Fooled by Randomness':

"Statistics have proved that people prefer to earn $60,000 knowing that others earn $50,000 than earn $70,000 when others are earning $80,000"

Let me offer my un-expert analysis of this statement.

The Argument
At face value, it appear that it is a stupid mental accounting error made by most people because surely it would make more sense to have more savings in the bank with the $70K package than to have the satisfaction of earning more at $60k.

However, I would like to point out that it does not matter whether you earn $70k or $60K or $5. You can't eat the money, and wear it as protection from the elements nor can you live in it. What matters more is the value associated with the money e.g. how much food will $100 buy you in each of the two cases.

Let me illustrate further. We don't not have a single international currency (the dollar or Euro is a re-hashed arrangement). So we have to make all calculations by factoring the exchange rate in. As such it is much easier to be a rupee billionaire in India that to be a dollar billionaire (The rupee vs. dollar exchange rate has varied wildly in the 38-52 range in the past decade). So it is better to have $100 in your pocket than Rs 100 (at least while you are in India)

By analogy, the actual value of the money you have is the purchasing power that it generates. Hence, I can conclude that $60K when everybody else is earning $50K will give me an upper hand in terms of purchasing power (i.e. simple barter value) than $70K in a $80K neighborhood. So the mental accounting fallacy derived in this case is a fallacious argument in itself i.e. there is no mental accounting error. This was my first impression, which I was forced to alter when I realized there is more to this problem than appears at first dig.

The Googly
The twist in the tale is that purchasing power in terms of price of goods is not affected only by the earning power of a small part of the population. The people in the statistical study probably had a fixed set of people (e.g. family, friends and co-workers) and not the average of the entire population. For example, a construction laborer will arrive at a much lower 'desirable' remuneration that say a Wall Street high flyer simply because he has benchmarked himself with respect to those who keep him company. And the overall purchasing power is a function not only of the differing remuneration but also the number of people belonging to each category.

So, the real mental accounting error is committed by benchmarking to the observable rather than exhaustive sample set. And what is even more amusing is that this mental delusion of superiority (wealthier than thou) is even resistant to hard observations (e.g. having to cut down on luxuries) and is revised only in extreme situations (not being able to make ends meet) where survival rather than favorable comparison becomes paramount

Conclusion
So, a mental accounting fallacy does exist in this situation; albeit a different one from what I thought initially.

Corollarily, I realized that defining others as the observable sample would have avoided this hazard and hence wording your conclusion is pretty important.

Final Admission Status

Here is the final result of all the MBA entrance exams I have given for the 2008-09 season.

NMAT and FMS are speed based exams and I do horribly on such exams. Hence as such I expected nothing from these.... :) .... so sleep lost.

The big bonus was of course XAT, which I really did not expect to do well in, but eventually got and converted five calls.

If only there was one way of transferring good performance, I would have transferred all marks to CAT and got (and hopefully converted) an IIM Ahmedabad call... or at least got a scholarship in IIM Calcutta (even a teeny-tiny one would make me happy). But one can't edit life, can one ...... :)

Had gone to the welcome meet organized by IIM Calcutta PGP2s yesterday. Met a lot of the people who I am gonna be spending next two years with. ...and frankly overwhelmed by the overall quality of the batch. My resume looks like toilet paper when you see theirs.

Thankfully, all illusions of 'Swayam Mahant' (I am great) have been washed away and I will not struggle too hard once I get there as I will not have much to prove. I see that people like me are already stereotyped 'wildcard' entries and hence it is best to play the underdog and shoot as if u have nothing to lose.

Even if I graduate at the bottom of my class, it will still be IIM C, yaar!

Cheers! To the formidable trials and tribulations ahead............

Kasab vs Bhagat Singh

Yeah, I know, to 99.9999999999% Indians, this comparison in itself will sound revolting and people will start sharpening their pitch forks and their arsenal of choicest Hindi expletives. But this post is not to compare the activities or ideology of Kasab vis-à-vis Bhagat Singh, but to compare contemporary setup with its Raj-equivalent.

As one has been reminded by the very many variants of Bhagat Singh's story, which concurrently immortalized him on celluloid and have forgotten him since; Bhagat Singh's and his accomplices used harmless smoke bombs just to create a stir in the assembly and actually courted arrest by surrendering their weapons. Their modus operandi was that the ensuing trial would surely be covered by large dailies and that would be more publicity for their cause than a few million pamphlets could muster in a million years.

In contrast, Kasab and his coterie came with the sole intention of pulling off the most outrageous hit-and–run plan ever in the history of international terrorism. He was the only fateful gun-slinger to be caught alive, the rest having been granted a quick death, far superior than their nefarious deeds deserved.

People say that by trying Kasab, India is making a mistake. I think not. A widely-read Arab daily pointed out that the sign of a well formed judicial system is that it is able to keep beyond emotion and impulse and let justice take it’s slow, remorseless course. But is this compliment well directed? I differ here, again.

Justice must not only be done but also seen to be done. India could have used the Kasab trial to keep pricking the world with this thorn, reminding it of the atrocities it had been subject to, largely thanks to powers like the US and China donning kid gloves with Pakistan (in addition to India’s own magnificent ineptness). Pakistan’s degeneration, with the Swat and NWPF cave-ins, has created an image of victimhood, a curtain behind which the Pakistan establishment has only been too grateful to hide. India could have used the trial to rip this curtain apart and refocus attention on the root cause, Pakistan’s perpetual denial.

Instead, what has unfolded so far is a rather sad comedy of errors. The first defense lawyer who represented Kasab was also found to be standing for one of the terror attack victims and was summarily forced to leave. The second lawyer, a trustee of a number of Islamic institutions in Mumbai and one who has a track record of defending gangsters and bomb blast accused, tried to convince the court that Kasab was a suckling infant and should be given biscuits with milk rather than the death penalty. When the court saw through this, the Urdu charge sheet ploy was played. And the saga continue as we speak.

Another country would have stage-managed this trial and got the right leverage, but not India. India is called a successful experiment in democracy. It reminds me of a saying, “Success is about going from failure to failure without getting discouraged”. The Kasab trial is out to prove this.

SoftTimes and Tide waits for no man .....

In case you have noticed that I have not posted editorials and quiz snippets from SoftTimes in a long time and wonder if the global 'slowdown' (another post coming up on 'slowdown') has claimed another victim, lemme assure you that it is not the case..... :)

I have not been posting for these for sometime since I am mentally preparing myself for the fact that soon the day will come when I will no longer be the editor of SoftTimes. I have already spoken about drafting in a couple of new members in the team to take my place, and the editorial duty will be passed on to the group as a whole, with people taking turns to write the edit.

The team is yet to be apprised of the churn in the offing. I wait before divulging this information for two reasons. One, some from the team will panic as there were very few members who has the inclination to manage the editorial duty in the first place. Second, I don't want the change of guard to be a long drawn one, I don't want to see a SoftTimes in my mailbox which I have played no role in creating. On my last day, my mail account will be terminated and I will be 'Out of Circulation' for SoftTimes.

I am mentally preparing for the transition. Just that, I am going to miss ST a lot. it gave me a chance to boss people around, look condescendingly at a poorly drafted article and regularly dodge brickbats for the a variety of reasons .'Quiz was too difficult', '**** article had a spelling mistake', 'The Joke section wasn't funny', 'See ..... ST came to my inbox at 5:31 PM' (officially, we must release it by 5.30PM every Friday) ...... am going to miss these pick up lines.

Thank you SoftTimes ........ come June, I will no longer be a part of you..... but ST will be a part of me for a long time to come ........