Think of hair-oil and the first name that comes to your mind is Parachute. Think of edible oil and more often than not it is Saffola. Talk of advanced skin care and a name that shall easily pop up is that of Kaya Skin Clinic. It isn’t easy to create such a strong niche and brand recall value in today’s age when there are plethora of brands available and each spending considerable effort, time and money to advertise and make themselves seen and heard in the market place. Marico since inception remained committed to ‘innovation’ to ensure it not only had a considerable market share in whatever category it chose to be but also set a trend for rest to follow. We have an exclusive chat with Harsh Mariwala, chairman and managing director, Marico to decode the success behind their journey over the years.
RAI: How has Marico managed to win one out of every three customers in India?
HM: Over the past decade through flagship brands we have penetrated the daily consumption patterns of Indian consumers. Most of our brands are market leaders in the categories in which they operate and it is this growth mindset that has helped us build strong brand equities. Marico fosters a culture of Empowerment and Innovation. We believe that a continuous focus on innovation leads to achieve sustainable profitable growth. We ensure that innovation gets it due share of time and share of mind of the senior management. For example, the recent innovations have been in the areas of breakfast foods (savory oats-Saffola Masala Oats) and body lotions (Parachute Advansed Body Lotion) and the response and results so far have been very encouraging. Also, at Marico, Talent is Empowered. We have observed that when a member is made to feel that he/she is in charge or is a captain of his/her area the hunger for growth is higher which results in organizational growth. For the member this means that he/she gets the freedom to experiment and his/her learning is experiential, leading to professional and personal growth which automatically translates into business success.
RAI: We would be completing two decades of Organized Retail in India this year. What are the top three changes the country has seen with the evolution and revolution of organized retail in India in the last 20 years?
HM: When I look back, I think with the advent of newer food formats providing a plethora of choice to the consumers, the consumption patterns have changed drastically. Secondly, better infrastructure and organized retail cuts out the middle men resulting in a more efficient supply chain and better prices thus benefitting both the consumers and the farmer community. Lastly, organized retail has resulted in providing a huge thrust to employment opportunities which has reinvented the general trade making it more efficient and also extending a better shopper experience.
RAI: Your website states – From its foundation, Marico has worked outside the box, to bring innovation to its customers through the careful creation of continuous and sustainable change’… if you could please elaborate on this in terms of the innovations you have brought in?
HM: Innovation has been in Marico’s DNA ever since its inception. Our first tryst with innovation was early. We then had a small consumer products business. Parachute was packed mainly in 15-litre tins. When it came to small containers, coconut oil was only available in tin packs, in which Parachute had an insignificant share. An innovative perspective led us to think of changing the game – what if we offer consumers coconut oil in plastic containers? That will be attractive, convenient to use, and cost-effective! Eventually, the rest of the coconut oil market not only copied our shape but also converted from tin to plastic. We could share the cost savings with consumers.
Our understanding of consumption patterns, consumer insights and market trends has enabled us to enter newer categories. We realized that Indians are used to a very ‘masala’ sort of taste palette and came up with Saffola Masala Oats – a product that brought together the goodness of Oats along with a dash of masala and vegetables. The objective was to arrive at a product which could be cooked in no time and consumed as an entire meal by itself, satisfying all the needs of a consumer from breakfast – taste, health and convenience. Saffola was the first in the country to launch Savory Oats and is now available in 6 flavors customized to suit the taste palate of different regions in the country.
We also launched Parachute Advansed Body Lotion to enter the skincare segment. This product provides the goodness of coconut in a lotion form.
Another innovation was of course Kaya, this was originally conceived in our innovation cell and now provides skincare solutions with clinics in India and the Middle East. Kaya has now also launched Kaya Skin Bars; smaller format stores which are focused on offering Kaya products and limited Kaya services. Using the innovation platform within the company, we will also continue to prototype and launch new products to create future growth engines.
RAI: Our country has thousands and lakhs of corner and neighborhood stores. This is a nightmare for any FMCG company when it comes to Supply Chain Management. From the time you began your journey with various consumer products, what is the Supply Chain Management practice followed and corrections brought in with the changing market dynamics?
HM: Marico’s Financial, Material and Information transaction systems are based on ERP. The IT interface includes order booking at retail using PDAs, customer integration through propriety software which is connected directly to the ERP platform and IT integrated planning tools. This leads to high level of visibility across the chain and also promotes focused action.
The previously mentioned initiatives have resulted in significant cost reduction as well as improvement in service levels both for the internal as well as with the external customers.
RAI: The role of IT (internal and external) at Marico and various innovations brought in to enhance the business operations?
HM: IT if fully leveraged benefits in terms of operational efficiencies. We all know Indian market is heterogeneous and it is not easy to estimate the demand of different regions. IT helps to manage the complexity of the supply chain. Marico’s Information Technology function has always endeavored to be at the leading edge of advances in IT. We aim to build a strong IT capability which can track real time sales and can help drive efficiency, productivity and also help track distribution channel.
Arguably, Marico would have one of the finest IT enabled sales force in the FMCG industry. The culture of leveraging data for decisions has been internalized in sales. Coupled with technological advances such as mobile computing, this has given huge boost to our capability to look at and work upon large amounts of data around our consumer, intermediary trade, our sales force and so on.
RAI: The advantages of having a ‘flat organizational structure’ that you have seen within the organization?
HM: Marico is a flat organization with fewer decision-making layers. A flat organization structure has been an integral part of our culture. We believe it promotes faster decisions and enables us to support our value of bias for action. We have observed that when a member is made to feel that he/she is in charge or is a captain of his/her area the hunger for growth is higher which results in overall organizational growth.
At Marico, leaders are groomed to foster an empowering spirit, be forthcoming, transparent and accessible to discuss and resolve issues.
RAI: The single most biggest challenge that you face as a FMCG major today?
HM: The single biggest challenge as a FMCG major today is to differentiate and innovate so as to provide value to the consumer. It is also to drive growth so that not only do we benefit the shareholders but also all other stakeholders like employees, business associates, partners and the society at large.
RAI: The top three challenges that a retailer faces today?
HM: Operational Costs /Overheads: Rentals are very high as a proportion of overheads and procurement costs are high in rural areas due to poor infrastructure leading to high supply chain costs. Also cold chain infrastructure is virtually absent.
Driving differentiation and localization: India is a heterogeneous market with a variety of cultures and consumers changing across different locations which pose a challenge in driving differentiation with the value conscious Indian shopper and hence, increase the complexity of operations.
Development of E Retail: India is one of the highest mobile penetrated countries. With the online explosion especially in categories like electronics, entertainment, apparel and niche personal care; companies need to create a co-platform for online and the retails stores. The digital media has lead to a more informed consumer for whom we need to figure how we can provide a brick and mortar shopping experience.
RAI: The tug of war between the supporters and the opponents when it comes to FDI in retail seems to be never-ending in India? What are your personal views?
HM: The government’s announcement of allowing FDI in multi brand retail is a welcome step for the growth of this vital sector of the economy as it is likely to result in productive linkages with the agriculture sector. The economy of the country will also benefit from this reform.
One must also note that this policy was put on the back burner by successive governments as it feared the impact of international investment and competition on small retailers. Today the Government of India has allowed FDI in retail but with certain exceptions to protect the sector that generates a large employment at the local level.
Even with the exceptions, this policy reform adopted by the government will help open strategic investment opportunities for global players and provide the much required boost to the Indian economy. With the presence of foreign players consumers will experience more variety and quality at lower costs, FMCG companies will witness increase in volume of sales due to wide distribution channels and the sector will benefit with newer markets that will be developed for FMCG products. There will be new formats, products, categories, segments, channels, wider consumer base, better services and new geographies; and all this will enable the industry to be more competitive and develop at a faster pace.
RAI: You have a global presence with your products as well as with the operation of Kaya Skin clinic. If you had to draw a comparison of operating in India viz a viz other countries; what has been your experience in terms of – customer acceptance, retail industry feasibility, various Government policies etc.
HM: The biggest challenge of operating in India is the cost and the availability of real estate which is roughly double of international standards as a percentage cost on the P&L. The Indian customer is still value conscious. This reflects in their purchase behavior in luxury and discretionary segments.
RAI: How can one create a culture of innovation in an organization? What are the activities undertaken at Marico for this?
HM: The culture for innovation is one where people are encouraged to take risks, to go outside their routine mandate. A co-ordinate approach to innovation, covering products and processes is the mainstay..
An innovative organization is thus ‘at it’ all the time. How does an organization institutionalize innovation? Based on my learnings, I have identified a few critical ingredients:
Culture, Mindsets and Leadership
The culture in the organization plays a pivotal role in such sustenance of innovation. It can spur every person in the organization to think of innovation and be keen to make innovation happen.
Leaders have to take innovation beyond mere tools and processes. Leaders need to have an ‘innovation mindset’ – they need to keep reinforcing innovation on a perpetual basis.
Leaders should bring the ‘outside-in’ perspective into the organization. For that, they must enhance their team’s exposure to learning by travelling internationally, researching through literature or Internet or through a perspective from thought leaders in the industry.
It is also important to highlight the role of consumer-insighting across the organization, and not only in marketing. At Marico, we regularly train our marketing, sales and R&D teams in consumer insighting. The training enables them to delve deep into consumers’ minds and spot latent needs which the consumer herself often does not know.
Persistent and All-Round Focus
Leadership and the organizational environment have to keep demanding and celebrating innovation at every opportunity. We have institutionalized innovation awards where we receive 30- 40 entries every year for innovations across the spectrum, including factories, brand, sales and HR, virtually covering the whole organization. We also reckon that there will be failures. Unless one is ready to fail, one will never succeed.
Innovation needs to be both wide and deep. It is not a one-time event. It is the oxygen for the organization – its future depends on innovation. Innovation is also not a functional activity, it is a business activity. One needs every component of business – sales, marketing, manufacturing, finance – as a participant.
Innovation is tough to manage, especially for the conventional management mindset that demands consensus, control, certainty and status quo. Innovation thrives on the opposites — instinct, uncertainty, freedom and iconoclasm.
Innovation does not happen only in labs but also through dialogues occurring in different parts of the organization and through interactions with the consumers and thought leaders. Such dialogues and interactions are feasible only if the organization has a culture of openness, a high degree of candor and boundarylessness. Innovation spawns in an ecosystem that encourages people to imagine and think broadly, collaborate, capture serendipity, and have the freedom to create.
It is a myth that innovation is all about creativity. In fact, innovation is far beyond just great creative ideas. It is about due rigour in implementation, persistence and detailed execution.
Any innovational journey is going to be exciting, but it will be tough. One needs all the ingredients I have listed above, but if I have to pick just one, that would be “an open mind”.
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