iMARKETING: WHY IS THE MAGIC MISSING?

CERTAINLY STEVE JOBS’ CREATIVE GENIUS HAS PROTECTED THE COMPANY ALL THESE YEARS. BUT WHAT ABOUT APPLE OF THE POST STEVE GENERATION? WILL HIS LEGACY LIVE ON?

On August 10, 2011 Apple became the most valuable company in the world with stock price at $364. If you had invested in Apple IPO in 1980, this would have fetched you a return of 13,300%. In fact, by this date more than 314 million iPods, 129 million iPhones, and 29 million iPads had been sold. The latest version iPhone 4S had 4 million confirmed buyers during the weekend of October 16, 2011; the number is rising every hour. All this because of the efforts (atleast visibly) of one man army – late Steve Jobs. Uber-secretive he built his devices without screws so that what was inside would remain unknown. He had the uncanny ability to ‘blend foresight, fashion, form, and function’ which he used to revolutionise music, mobile, communication, telephony, retailing, and of course computing. But more than that he transformed the way people used technology.

He, of course, had his share of ‘lemons’ in Apple III (1981, unreliable hardware), Lisa (1983, at $9995 too expensive), NeXT (1989, ahead of its time and prohibitively unaffordable), Puck Mouse (1998, would disappear in the palm), The Cube (2000, designer PC which flopped again due to price factor), iTunes Phone (2005, which could hold only 100 songs), and Apple TV (2007, half hearted effort born out of ‘hobby’). But against these duds there were revolutionary products that deified Jobs: Macintosh (1984, GUI and cheaper yet faster than LISA), NeXT (1989, even after failure its software provided the basis for today’s Macintosh and iPhone OS), iMac (1998, strikingly designed, easy to operate home computer), iPod (2001, first successful digital music player with a hard drive), iTunes Stores (2003, made buying digital music easy and cheap to access), iPhone (2007, foolproof mobile), and iPad (2010, most advanced tablet).

But, wait a minute! This piece is not about his regular creation of products that would disrupt many markets and marketers. For, every one knows how the Apple I and II forced IBM to enter the PC market,how iPod has almost killed the MP3 players and the personal stereo system, or how the iPhone has disrupted the smartphone market. It also does not wish to tell you that Jobs had a great propensity to take other people’s concepts, improve upon them, and spin them into wildly successful products. Remember Apple never invented computers, digital music players, or smartphones. It reinvented them for people who did not want to learn computer programming or negotiate the technical hassles of keeping their gadgets working. Reams have been written about Jobs’ incessant effort to delight customers by bringing to them the products that ‘they did not know they needed’. However, we have a different agenda, that of pointing at the Achilles Heel in the armoury of Apple Inc.

Apple, after all is not a particularly good innovator. Instead, it relies on design, functionality, and branding to charge huge markups for its products. It was the passion and patience, until he would get it right, of Steve Jobs that would motivate him to pursue an idea and commercialise it through a wildly successful product. But what about Apple of the post Steve generation? Even if millions have booked iPhone 4S over the weekend, by their own admission these people are buying the Jesus Phone because it is the last thing designed by the late ‘Michelangelo of the digital era’. Earlier Apple was known for maverick engineering. But the latest launch has invited mixed review. According to the detractor tech geeks it was a disappointment; it has blown open the doors for the competitors to come charging in. Besides, the launch presentation itself lacked all the aura, drama, and hype that one used to witness when Steve Jobs would orchestrate the launch. People now have many other options to park their money, to get more bang for the buck. Sea Ray from Nokia, Xperia Arc S from Sony Ericsson, Wave 3 and Nexus Prime from Samsung, Titan from HTC and many others from Motorola, Blackberry, LG etc. are likely to offer formidable rivalry to the incremental upgrade from Apple. At least until the release of iPhone 5.

Apple is what it is today because it marries cutting edge hardware and software to provide the user an experience he has not had before. However, this walled garden approach might prove to be its nemesis. Apple is applying its might to make the company experience of its users less free, more locked down, and more tightly regulated than ever before. All of Apple’s iDevices use operating systems that deny the user access to their workings. In an industry where innovation is commoditised, locking consumers into proprietary platform is not a good idea. Open source yields technological improvements on a scale no individual company can hope to match. Computer and cellphone makers have mostly burnt their fingers with home grown  software. Costs of keeping up with Android for mobiles and tablets can be prohibitive. No matter how brilliant marketing is, the iPhones & iPads will always be under intense pressure from the likes of Micromax (makers of iPhone lookalike) and Akaash (tablet at Rs.3,000).

Then, by Apple’s own admission, it has never proactively chased customers worldwide. It is only committed to employees, partners, and customers who spread the gospel about its products. But that still does not explain the almost malignant apathy of the company towards the Indian market, the world’s second largest for mobiles, having 600 million plus active subscribers. Apple, the world’s largest smartphone maker, has failed to capture a significant share out of this booty. The market for smartphones in India is forecast to grow at 68% per year, reaching 81.5 million units, by 2015. Nokia and RIM far outnumber Apple here. Apple shipped only 21,150 iPads to India during April-June 2011 (0.2% of its global shipments). iPhone accounted for barely 2.6% of India’s smartphone shipments in the same quarter. So, whereas Apple App Store has 5 lakh plus applications available for downloading, and Blackberry barely 36,781 (as on June 30, 2011), still RIM has won hands down because it got the right product, the right app for its target customer, and the right timing. Nokia commands 46% marketshare, Samsung 21% and RIM 15%. RIM’s BBM (instant messaging service) is popular because it was one of the first, and it functions well on networks a generation behind the speeds offered in the US and Europe. Apple has lost out partly because it thrives on 3G network which has very limited footprint in India. But there are other reasons aplenty.

In a highly price sensitive Indian market an iPhone 4 costs $705; the same handset is priced at a mere $199 in the US. Any amount of marketing chutzpah can’t face the onslaught of price warriors, especially in India, a market which incidentally also represents the new frontier of digital world. RIM entered India in 2004 and now wishes to expand its distribution to 80 cities from 15 in 2010. Nokia already has more than 200,000 outlets in India and offers 13 smartphones models. But consumers cannot buy Apple products from company stores (in fact, there are no Apple stores in India, only licensed resellers) or even its website.

Finally, Apple is known more as a retailer than an institutional seller. In the US between October 2009 and September 2010 it sold only $50.8 million worth of products to the US Federal Government out of a total reported sale of $65.2 billion. This partly stems from a fundamental mismatch in orientation. Apple revolutionised the markets it operates in by designing products people ‘did not know they need’. But government purchasing always starts with issuing detailed description of products it wishes to buy. Whatever, the fact remains that in India the government is a major buyer of all the technological products. No company can ignore it if it wants to do big numbers.

While Jobs’ creative genius has protected the company all these years, now when his legacy has began to wane, Apple will have to contend with sobering realities of a new marketplace which is swarming with hungry wolves and sharks out to attack a vulnerable soul.

Apple has learnt no lessons from the failure of iPhone 3 in India. It is high time it reviews its marketing strategy for the world’s second largest market.

iMARKETING: WHY IS THE MAGIC MISSING?

FIELDWORK OR FEELWORK?

STRATEGY FORMULATION AND EXECUTION WITHOUT THE BENEFIT OF CONSUMER INSIGHTS IS AS SENSIBLE AS RUNNING ON A MINEFIELD BLINDFOLDED

Despite being known as a highly professional company offering very challenging work environment, an MNC (name being withheld) failed to attract top notch talent from B-schools. Research told the company that it was telling its prospective recruits what they already knew, thereby adding no value through communication. Besides, these freshly minted MBAs wanted moderate challenge, not the ‘fear factor kind’ of environment at the workplace. Tang kept on insisting in India that it was orange juice to be had on breakfast table, as in US. Instead it should have perhaps tested the hypothesis whether the brand would find acceptance on any other occasion, given that Indians don’t drink juice at breakfast table. A third company wanted to find out which flavour should it choose to lace its new introduction of glucose powder with – grape, pineapple, orange, or mango. This despite the common knowledge that in India the most acceptable flavours are mango and orange. Real was also introduced the western way – unsweetened. But research made Dabur realise that market preferred it sweet. Yet when Tropicana arrived in India it came in with sugarless juices.

Strategy formulation and execution without the benefit of consumer insights is as sensible as running on a minefield blindfolded. At times these might be intuitively obvious to the marketer. A tremendously successful cigarette brand – Charms – was introduced without any research input. Or, at other times while research may provide counter indications, a marketer, through sheer perseverance, may still make a success of a brand. Pre-launch survey for Sintex water tanks had warned against such a launch. So a manager should avoid making the business problem a slave of the research. But, equally he should avoid working on the strength of a mere hunch.

RESEARCH PROVIDES A DECISION SUPPORT SYSTEM

When R. Mohan thought of introducing Good Knight repellant mats (in 1984) the market was using coils followed by creams and sprays, with coils commanding 70% market share. Mohan wanted to introduce an electronic mosquito repellant,including the electrical mosquito destroyer (EMD) and the chemically impregnated mats. Focus groups were conducted among both non-users and users of repellents. The aim was to know about principal and peripheral motives behind the use, knowledge about the product, and the level of satisfaction enjoyed.

It was discovered that the basic reason to use the repellant was to enjoy peaceful sleep. Knowledge about electronic repellents was virtually missing, and those who knew disapproved of their high price and fluctuating quality. Families with children were frequent users of coils and creams, and they were reasonably satisfied. While users of mats disliked cream due to its perceived harmful effect on skin, cream users avoided mats since they emitted harmful gases. Pricewise, at Rs.5-10 both were affordable, easily available too. Briefly put no major dissatisfaction. Undeterred, Mohan decided to launch his high priced contraption through premium positioning. The product was targeted at dissatisfied cream and coil using parents with young kids. Communication aimed at selling generic product concept & induce trial by projecting a modern image, and ease of use. The rest, as they say, is history.

Learning: At times research about not whether but how the concept will work. Not decision making about strategy, but decision support system is provided by marketing research.

CONCLUSION BEFORE THE HYPOTHESIS?

One of the top three multinational nonformal shoe marketer came to India, salivating over teeming millions as potential buyers. Logic deployed was simplistic, albeit daft: Everyone who could buy a Maruti was capable of buying the shoe brand. Logic so far was uncontestable. But how can you forget the simple lesson of Economics 101: What ‘could’ be purchased is not necessarily what ‘would’ be purchased. Need plus ability plus motivation plus opportunity combined together generate demand for a product. Another MNC, this time a contact lens maker, had gathered some data from published reports and estimated that the market had a size of 2,00,000. Indian middle class was spending huge amounts on branded clothing, fashion accessories, grooming products and so on. Besides, every unmarried, spectacled woman between age 18-26 was looking for alternative to spectacles (not true) since Indian men did not want girls with glasses (even if true). It refused to accept the researched size of the market, between 75,000-78,000. A third marketer, in face of declining sales for his product, had concluded that flat sales were due to the tactical price cut by the competitor. The brand manager wanted the research to answer: One, should he cut prices; two, should the cut be even lower than that of the competitor? The agency being wiser than the client found out that consumers were not price sensitive anyway, and only one third market had even noticed the Rs.2 price differential between the client and the competitors’ brands. So it tested other hypothesis. It found that penetration of the competitor was now deeper by 500 more outlets and it was paying better margins to the retailers. Hence, bigger sales.

Learning: Preconceived notions yield wrong hypotheses and faulty hypotheses do not deliver correct findings.

RESEARCH HELPS FINE-TUNE POST LAUNCH STRATEGY

When Gillette introduced shaving gel in aerosol cans, where it could be sprayed directly on the face, it failed to find many Indian users. Research revealed that in India users associate shaving very strongly with brush and foam; they were uneasy about using gel directly. The company introduced a gel tube whereby the shaver puts gel drop on a brush and works up the lather. Cadbury found that with a positioning of Cadbury as a gift to a child on special occasions, and with 70% marketshare, the sales were stagnant. The parent would be the buyer but never consumer. The company repositioned the bar: eating chocolate is an everyday affair, and for adults; the sales shot up. Research surveys and retail feedback repeatedly pointed out that Barbie appealed to only those inclined westward. The company decided to launch ‘Barbie in India,’ a dark haired variant drapped in a saree, sporting a bindi. It worked.

Learning: To the extent possible, listen to the consumer & fine-tune your Ps of marketing. Give Real to those with a sweat palate and Activ, Zero sugar range, to diabetics. Both should work.

RESEARCH, HOWEVER, CAN’T SUBSTITUTE FOR INTUITION

All over the world, Lifebuoy was sold on the body odour platform. Unilever (now HUL) wanted to deploy the same positioning here too. Lintas, their agency, did a dipstick and found that in India body odour was not perceived to be a problem. Lever pointed out that it was not perceived to be a problem in West either – until Lifebuoy campaign made people conscious about it. Lintas, unconvinced, pointed out that in West people lived in close spaces, not necessarily bathing everyday. In India people use open spaces and bathing is a daily ritual. So ultimately the platform chosen was Lifebuoy hai jahan, tandaroosti hai wahan (where there is Lifebuoy, health is assured). Today, while in West Lifebuoy sells no more, in India, volumewise, it is the largest selling soap brand. Hindustan Lever had initially rejected the Lalitaji Campaign for Surf. It was the agency again which wagered a bet and sought permission to go ahead with the campaign to counter the declining sales. Sony Corporation is on record saying that it does not make sense to talk to consumers anyway, because they don’t know. No pre-launch research was ever done before the introduction of ipod, iPad, or iPhone. But before you jump to the conclusion as to why then spend money on research, remember that the list of failed products from Steve Jobs is longer than the ones that worked. And Sony is losing its status of being an innovative company to Samsung which retains its faith in research.

Thus, intuition cannot replace research either.

FIELDWORK OR FEELWORK?

AS INDIANS, DO SAVOUR SWADESHI!

A while ago as I ventured to select junior managers for a North India based conglomerate, I decided to put the hopefuls through a different grind: I quizzed them about successful brands in various product categories like bathing soaps, detergents, candies, soft drinks, etc. Sure enough this proved to be an easy one for them. They named the brands pronto, most of them being from the stables of an MNC. I followed it up by asking them about cash cows in the same category, but this time from an Indian company. To my consternation, though admittedly not surprise, many demurred this time. Ghadi detergent, Hajmola candy, Godrej No.1 were entities they were acquainted with but were clueless about how these brands were proving to be formidable foes to their MNC rivals.

Most B-School graduates have to work in Indian markets which have their unique DNA, team up with Indian counterparts who have a typical work culture, raise money from the Indian financial system which is highly unorganised, and practice production and logistics management even when supply chain management is an alien concept. The importance of the kirana store in the retailing business, existence of caste-based groups in factories, highly fragmented financial and capital market, impossibility of adopting JIT practices for inventory keeping, etc. are some facts that an Indian manager has to grapple with. Herein lies the significance of case studies steeped in knowledge about business as conducted in India.

How can pickles be marketed; what is work-life balance in the Indian context; why do incidents like Bhatta-Parsaul, Nandigram and Singur happen; why is Anna a brand in his own right? The answer to these and other similar questions are not available in cases drawn from Harvard, Wharton, or other Ivy League B-Schools across the globe.

While it may be interesting to learn how Hollywood studios are marketing a Spiderman or an Avatar, it will be more instructive and gainful to analyse how a certain Vishesh Films has been able to crack the consumer code and deliver 18 hits out of the 25 movies that it has released. Or, despite having small-sized farms, why peasants in India generally favour to purchase a 50 HP tractor, making mincemeat of the mythical ‘rational buyer’!

It is certainly not our case to claim that by arriving at classroom solutions to a myriad number of cases a management wannabe can hit the ground running, or he/she can replicate the real-life working on, say, Project Shakti. But learning about the success of the Scorpio and the failure of the Nano enables him/her to grasp the context better than if he/she solves a case on the Prius or the Mustang. The purpose of coming out with this publication, therefore, is twofold. Knowledge being a ‘merit good’ (invoking Economics 101, if you allow us!) we, the editorial team, have decided to put case studies developed by IIPM faculty members into the public domain so as to make them accessible to all managers, practicing and aspiring. All these cases will be the narration of stories as they unfolded in real Indian companies and institutions. A subsidiary aim, of course, is that we would like IIPM to be known as a knowledge creator and not merely a knowledge disseminator, especially when it can claim the unique distinction of being hyperactive in teaching, research, consultancy, training, and publishing.

Ciao for now.

AS INDIANS, DO SAVOUR SWADESHI!

FREEDOM FABRIC OR FASHIONERS?

KHADI HOLDS TREMENDOUS POTENTIAL TO BE PROMOTED AS A FABRIC FOR DRESSING THE UPPER CRUST. THE NEED IS TO REORIENT, REPOSITION, AND RELAUNCH OUR CULTURAL HERITAGE

“I present the spinning wheel on which depends India’s economic salvation,” wrote Mahatma Gandhi in Young India in 1920. More than three quarter of a century later, in 2001, Vasundhara Raje, the then Minister for Micro, Small and Medium Enterprises (MSME) submitted, “Khadi has fallen to disrepair. It has to be repackaged, upgraded, and cleaned up.” Khadi, which symbolised self-reliance and emancipation during the freedom struggle, has indeed lost its sheen over the years.

Khadi – the essentially handspun and handwoven fabric – first caught the imagination of the nation during the struggle for Independence when Mahatma propagated it as just not a fabric but a way of life, the self reliant way. Gandhiji talked of the khadi spirit encompassing simplicity, fellow feeling, and promotion of all things Indian so as to unshackle the country from British domination. Spinning yarn on the charkha (loom), Mahatma believed, inculcated discipline and dedication. And while khadi was meant to be fabric for masses by masses, according to him, it was also meant to be a great social equalizer, since it could sit well on the shoulders of the poor as, equally adroitly, it can drape the bodies of the richest and the most sophisticated men and women. However, over time, partly under the onslaught of mill made fabric and partly due to unglamorous image coupled with poor marketing, the freedom fabric has lost its mojo. In popular culture, khadi has come to be synonymous with politicians; and to a lesser extent, with journalists.

RECLAIMING THE SPACE AND CONQUERING NEW TERRITORIES

Khadi forms 1.5% of national textile production of around 15,000 million square metres. According to fashion designer Sabyasachi Mukherjee, use of khadi could be one of the ways for Indian designers to distinguish themselves and thwart the invasion of global brands. He has dressed up Aishwarya Rai (in Ravana and Gujaarish) and Vidya Balan (Paa) in the luxurious fabric that needs to be restored and preserved. For him, khadi is refined, sophisticated, individualistic, eco friendly & sustainable. But, the Indian buyer suffers from the gloss syndrome. Anything that is dull or matte is not easily appreciated. When Sabyasachi introduced bridal wear in khadi, it failed to take off. He tried to convince the upper crust that khadi is a sophisticated fabric with a quiet dignity attached to it, which is absent in mill-made products, the glitterati still declined to pay heed. Yet, a change of mindset should always be possible through an appropriate marketing programme.

Presently khadi lacks aspirational value. It is still regarded as a poor man’s fabric. Fashion diffusion generally takes place either through trickle down or trickle up. Trickle up for khadi is difficult, given its existing image. The best way then would be to follow the alternative approach.

The classically rich aspire to be like royalty. Royalty means culture. Those who have new money drip diamonds and buy big international/local brands; but they also aspire for culture. Khadi is in a unique position to be able to lend culture to both these classes. The rich woman may already own everything. By offering her ensemble in khadi she is provided a point of view. The contemporary woman in khadi is self assured, educated, and cultured in need for self expression, and not to prove a point. She is the one to be targeted. Khadi and Village Industries Commission (KVIC) can hardly be expected to rise to the task, though.

MARKETING THE SWADESHI

Bollywood in India has the maximum influence on fashion trends. But Bollywood actors are pinups for the glossy and the crass. They are besotted with big brands and money spinning styles. Instead of appreciating individuality, Bollywood encourages cloning. It is like juvenile American pop culture, an obsession with bling. If Bollywood could be made to get out of its polyster and chiffon, and drape into khadi, the followers will aspire to adopt too.

In 1985, Devika Bhojwani introduced the Swadeshi label of khadi ensembles. It was retailed through nearly 5,000 khadi emporia. In 1989, KVIC organised a fashion show in Mumbai in which 85 dresses of Bhojwani were paraded on the ramp. Yet, due to red tape and bureaucracy, the exercise proved to be still born. In 1990, Ritu Kumar presented her first khadi collection – Tree of Life – so as to help khadi arrive on the fashion circuit. In July 2002, a Bangalore based designer, Deepika Govind, displayed a collection of ensembles in ‘Tencel khadi’. And Sabyasachi Mukerjee has been successfully working with, khadi. He once introduced 90 odd lehngas in bridal khadi collection; all were taken up.

But while appeals to the heart can be successfully made through communications, problems exist aplenty elsewhere too. The designers legitimately complain that production of khadi is inconsistent while the cloth is prone to shrinkage and fabric stretch. Fabric colours are also limited. Khadi has very little to offer in terms of fabric performance. It looks attractive when starched and kept in showrooms, but it does not present the same look after one wash. Even finer counts and blends of khadi cannot withstand many washes and, therefore, cannot be adopted for daily wear. The fabric, thus, finds itself vulnerable against the high-tech, colourfast, wrinkle free mill made cottons and blends available today.

TURN THE PROPOSITION 180 DEGREE

However, having said that, khadi is a versatile fabric with a unique property of keeping the wearer warm in winter and cool in summer. Unlike mill made synthetics no one can be allergic to the fabric. khadi silk provides a very royal look with a rich tapestry. Now designers are dyeing khadi with striking colours. Stylish garments like miniskirts, halter neck tops, etc. are made from khadi. Recently Arvind Ltd. has planned to market khadi denim (at nearly Rs.800-1,000 per metre) in Japan and Europe to high-end consumers.

In other words for the niche market the so called limitations of khadi can always be converted into its virtues which are unparalleled. As Ritu Kumar says, “The rustic, no machine look of the fabric is both sophisticated and bohemian.” Mukerjee, the die hard loyalist to khadi, thinks khadi is too intelligent to be treated. According to him, limited availability of khadi with its inconsistent quality makes it even more of a luxury product. Tradition, symbolism and a new found versatility can be glued together to promote the organic fabric in contemporary cuts and designs. On the other hand the traditional fabric can be chemically treated to make it softer and more pliable so that it can be adapted to more outfits.

This coupled with a judicious blend of other Ps (pricing, placement) should sure do the trick.

Khadi holds tremendous potential to be promoted as a fabric for dressing the upper crust. The need is to reorient, reposition, and relaunch our cultural heritage. Khadi is calling out for a second freedom struggle, freedom from the clutches of government’s pincer like grip. Allow it independence and see it blossoming.

FREEDOM FABRIC OR FASHIONERS?

SHOULD MEMBERS OF PROFESSIONAL BODIES BE ALLOWED TO ADVERTISE?

IN INDIA, MOST PROFESSIONAL BODIES DON’T ALLOW THEIR MEMBERS TO ADVERTISE. REASON: ADVERTISING UNDERMINES THE RELATIONSHIP OF TRUST BETWEEN A PROFESSIONAL AND HIS CLIENT. BUT, IS IT TRUE?

In US, as early as in 1977 the Supreme Court had upheld the right of professionals to publicise and advertise their services. Although in India most professional bodies don’t allow their members to advertise, occasionally there is a clamour for such permission. The code of conduct for practising members of ICAI says that a Chartered Accountant (CA) in practice will be deemed to be guilty of professional misconduct, “if he solicits clients or professional work either directly or indirectly by circular, advertising, personal communication, interview, or by any other means.”

The issue of self promotional advertising rears its head from time to time. The rising tide of consumerism and the state commitment to the philosophy of laissez-faire have together fuelled this move. Those who support advertising by professionals proffer a number of arguments. Thus, the case for self promotion rests on points like; one, advertising will increase demand, innovation, and competition, particularly in the area of routine practice of the profession; two, advertising will make it easier for new entrants to a profession to establish a viable practice; three, advertising will increase the availability and quality of information to consumers; four, advertising will potentially lower the prices of professional services to consumers as a result of increased competition; and, five, inter-professional competition necessitates advertising. Practising CAs supporting the freedom to advertise, for example, say that nowadays the practising members undertake multi-varied jobs from project fi nancing to certifi cation of financial statements. And since this has led to specialisation on the part of the individual CA firms, at least informative advertising should be allowed.

In US when optometrists were allowed to advertise prices fell by about 32% for eyecare products. And no evidence of deterioration in quality of services was found. For routine legal and medical services also, prices in US have fallen since the date permission to advertise was granted. Recently the Parliamentary Committee on Subordinate Legislation in India has taken a serious note of exorbitant fees charged by lawyers, physicians, et al, and proposed to the government to introduce a system of transparency about the remuneration charged by them.

On the other hand, there is a growing feeling in the US that too many legal ads mislead clients by failing to provide correct information on how to hire a lawyer. Many ads, in fact, contribute to distrust on the justice system.

DRAW UP A BALANCE SCORE CARD
Let’s critically examine the arguments against advertising by professionals:  Mass advertising undermines the relationship of trust between a professional and his client: A related corollary thus is that such relationship should not be a result of high pressure advertising. Professional skills can seldom be evaluated by the client. Thus, he cannot ‘shop around’ like in case of  a commercially marketed product to get ‘best bargain’. And since advertising can simultaneously lead to increased supply (in terms of either increased number of professional or they serving more clients by increasing the speed) these professionals will indeed pass on the cost of promotion to the customer.

Second, practice of advertising may mean less incentive to introduce more efficient practices. On the other hand, restriction on advertising will promote non-price competition which in turn should promote innovation and efficiency. Third, a professional service is non-standardised, and so personal that there is nothing to inform except the existence of the professional.

The above arguments can be easily countered. There are two suppositions, both wrong, involved here: One, that there is no advertising information that can reduce a client’s search time, and, two, restriction of competition springs from a concern for the consumers rather than for earning higher profi ts.

In actual fact there are at least some services which are relatively standardised (filing of tax returns, getting uncontested divorces, termination of pregnancies within medically permissible time limits, et al). Besides, without intraprofessional competition innovation is likely to take a back-seat. And even if the services are somewhat non-standardised, while some clients may make a wrong choice, there cannot be an ex-hypothesis case to suggest that the number of clients deciding wrong will exceed these deciding right.

Professional advertising is inherently misleading: It is said that the professional services are so individual in content and quality that meaningful comparison is futile. Second, advertising by a professional does nothing to help the customer make an informed choice because it highlights irrelevant factors; advertising can’t really highlight the competence and quality of a professional service. Well, regarding the first argument, as said above, for routine services fee can be indicated in the ad. And as regards the difficulty of making an intelligent comparison, while the argument can’t be dismissed entirely, it would be really ironic if consumer is denied at least some of the relevant information – even if not complete information – needed to make more informed choice.

Some members of profession will abuse the privilege: They may come out with outrageous ads bringing the whole profession into disrepute. Again, this indeed is a real possibility. But the correct option would be to regulate, and not put a blanket ban on advertising. The regulating bodies already exist so policing such advertising should be quite easy and effective.

Advertising will be done by large players, leaving small firms somewhat maimed: While this charge has lot of a priori merit, evidence from the US (where such advertising is permitted) establishes its falsehood. It has been observed there that larger the firm, less is its reliance on advertising.

But when small firms will advertise, all others will feel compelled to follow suit: Well, if everyone advertises then is such a development necessarily bad or should it be encouraged since it is likely to increase the comparative information available to public? Besides, again taking a cue from US, more than three quarter lawyers don’t advertise despite the option being available.

Professional advertising will have a deleterious effect since it will encourage trivial or frivolous redressals: Empirical enquiries have not found any abnormal increase in unwarranted cases. Besides, in some cases at least, will it not be better for a person to obtain a solution rather than suffering silently.

Advertising costs will be passed on to the clients: As said earlier even if advertising is permitted, not all professionals advertise. So those who advertise can’t possibly afford to raise their prices to recover the advertising costs, more particularly for standardised services like preparation of a will, statutory audit, et al.

Advertising (particularly fee advertising) will lead to lower quality services: The premise here is that advertising will lead to fierce competition and encourage some professionals to cut corners. However, every buyer does not necessarily go for the most inexpensive offer. Of course, advertised product generally has a better image though not necessarily better competence than the unadvertised one. But this difference in competence will have to be marginal; else truth will come out in no time.

Advertising is beneath professional dignity: This, however, is a tenet of faith, and not really an assertion of fact. There are likes of K.Venkataratnam from the Bar who believe “a lawyer is a repository of his client’s trust. And you can’t advertise trustworthiness”. But you have also R. K. Anands from the same Bar who think nothing of this privilege of promotion and opine that regulated promotion will be in the interest of the clients.

TO SELL, YOU NEED TO TELL
Without advertising every profession is covered with a veil of secrecy. Sans informative advertising it becomes expensive for the buyer to sample the varied offers available in the market. Since cost may be high, less searches are undertaken, uninformed choices are made. Being unaware about competitive offers, a consumer will be made to pay up a high price. Besides limited demand in absence of self promotion would mean less probability of enjoying the economies of scale thereby further limiting the possibility to cut costs and reduce prices. Advertising will in fact segment the service providers into low price-low quality group and high price high quality one. The consumer can now exercise his own discretion. Finally, in the absence of advertising the early movers (into the profession) enjoy monopoly rent due to established brand. It is only through advertising that newer entrants can build up their practice and offer the oldies competition.

So, while a complete ban is not justified, some professional control over the content of advertising will protect buyer’s interests. Tightly organised professions have been able to appropriate consumer surplus derived from quality assurance (emanating from certification); this has raised practitioners’ income to inclusion of monopoly rent. Blanket advertising bans arise because of buyer’s weak bargaining power; the ban should be lifted. And big deities’ riches be moderated.

SHOULD MEMBERS OF PROFESSIONAL BODIES BE ALLOWED TO ADVERTISE?