When Parachute Took Flight

The man Vijay Subramaniam
Designation CEO of Marico’s International Business Group, which accounts for 19 percent of group turnover and is growing by 40 percent per year
His Latest Moves Marico Bangladesh Ltd listed on the Dhaka Stock Exchange in September after a Rs 9.5 crore public listing in Bangladesh

This may sound clichéd. But think local. For instance, we realised that hair gels in the Middle East were targeted mostly as a styling product for men. So, we looked at positioning hair oil as a nourishment product for women. When the market caught up, we went back and did our research. We found that water in the Middle East has very high chlorine content. So we worked on something that provided the consumer a promise of nourishment plus protection from harsh water, until then, an untapped need.

Going international is part of a focussed strategy to fulfil our aspirations for growth. We had been in some countries including Bangladesh and the Middle East since the mid-Nineties. It was a typical export model and we were sizing up the market. Around four years ago we changed our mindset and decided to go “glocal” and play by the rules of the market we operate in.

We have a fairly deep consumer insight process. We look for common usage categories, attitudes to certain categories, and then try to find needs that are not met and where we can fit in. This process starts with doing focus groups, spending time with consumers etc. Then we come up with concepts for a product, then samples and then concepts to use.

We started out looking for emerging segments in emerging markets. We were looking for segments growing quickly and where penetration is low. This way we could get leadership positions in niches. In the early days, the question was not whether we ought to be in India or abroad. But how can we be both in India and abroad? We scanned various geographies and identified emerging markets in Asia and Africa as possible growth avenues. We also looked at the quality of talent, ease in getting permissions and other cultural and administrative parameters. Today, the international business contributes to roughly 20 percent of the group revenues.

In some markets, it is not possible to interact with women. In Saudi Arabia, for instance, the laws of the land don’t allow us to do that. So we work with a dedicated network of partners who help us work around these challenges. Local ad agencies, market research companies etc., can help us understand cultural sensibilities in these places. All our communication is in the local language. In fact, some of our products are endorsed by popular celebrities from that market. Along with this we work on distribution expansion and visibility in modern trade.  

Brand building is a slow process. In Bangladesh, we are listing the company, essentially to signal our commitment to the market. Not to raise money. We have been there for more than a decade and are now the third largest consumer products company behind Unilever and Nestle. We do use learnings from our domestic business in the international operations and vice versa. For instance, after the success of Parachute cream in the Middle East, we launched it in India and it is doing well here also.

In markets in UAE and South Africa, more than 50 percent of the sales are through organised retail. It gave us learnings in terms of merchandising and category management. So, in South Africa, we don’t use our current products at all because the quality of hair is so different. Acquisitions in such markets give us the local products we need. Sometimes it is not just about market entry but product research and development too.

We want to use our businesses in South Africa and Egypt to expand in contiguous regions. Through Egypt we want to enter the North African market, including Libya and Morocco. Through South Africa we want to enter Botswana, Angola and other such countries. It will take some time for our acquisitions in these countries to stabilise. But we are looking for more acquisitions in the emerging markets of Asia and the Middle East.

Today, we have fairly multicultural workforce. If you look at the international business group member profile only 18 percent will be from India. We have also grown through acquisitions hence it is very important that we create a common culture across the organisation.

We have identified certain core values that enable driving this culture and we keep reinforcing these values. However, it must be said that is a journey where we will have to continuously improvise.
We also have to keep in mind that we need to appreciate local nuances of that culture. While constructing our office in Egypt, we realised the visitor never faces the host but always sits sideways as a mark of respect. So we had to redesign our cubicles accordingly.

Speaking to other non competing companies from India who already have operations there helps fasten our cultural learning curve. When we started in Egypt, I spent time with the people at Asian Paints, who have been there longer than us. We may have spoken to some foreign firms as well, but being an Indian company, it is always nice to speak to an Indian company because they are in a similar position as us.

(As told to Saumya Roy)