Monday, January 5, 2009

Why the Consumer should not be the King in India?

Jitender Dabas, VP & Strategic Planning Director, JWT India

The sudden rise of ‘bully consumers’ in India

When was the last time you heard someone warning his mobile service provider and threatening him about switching to another brand? Or when was the last time you snubbed a representative from a reputed bank/ insurance company who tried selling you one of his loans/investment products? Else, try recalling the last time you heard someone proudly brag about the dressing down he gave to his MNC bank/credit card company about the poor quality of their customer response time?

The chances are that if you are in India you would be experiencing one or more of these things around you very frequently. And if you were an outsider you are most definitely likely to reach a conclusion that you’re perhaps seeing the reactions of consumers in market where they don’t have good service providers and/or the quality of service is fast deteriorating.

Now consider the reality.

About 10 years back it used to take 15 days to 3 months to get a telephone installed at your residence. Today it takes less than 24 hours for an active landline connection and you can have an active mobile phone connection almost instantly. The approval time for a home loan has come down from months and weeks to 5-7 days. You can apply and get a credit card almost instantly. The time required to get cash from bank has almost come to nil thanks to the technologies like ATMs compared to half day that it took a while back.

Now consider the brand choice equation. About 10 years back there was one telecom service provider, one life insurance company and not more than 4-5 big banks to choose from. Today there are more than 5 telecom service brands ranging from the international giants like Vodafone to homegrown biggy Airtel, Tata and Reliance to choose from. There are more than 10-12 insurance brands almost all of them partnered by the world leaders. There are more 20 banks to choose from – all of them armed with latest technologies to make your life easy. From Citibank to HSBC to Barclays to Deutsche to Stanchart to ICICI to HDFC etc. etc. More than half a dozen airlines are ready to fly you through the day between different towns.

In light of this truth the above described aggressive behaviour by consumers clearly defies any logical deduction from reality. An even more intriguing aspect is the consumer behaviour before all this. 10 years back the linesman from the stateowned BSNL installed came and installed the telephone after month and a half most consumers very happily offered him sweets. But now the same time has been cut down to 12-24 hours but agitated consumers are chiding the hapless new service providers for taking so long. Today our Pizzas are getting delivered in 30 minutes, our bills are being collected from our doorsteps and the service brands are treating the consumer as the King. Yet we’re becoming more and more foul.

Clearly, we are seeing the emergence of an extremely intolerant breed of consumers who are forever threatening and bullying the service brands. While the choices available to the consumers and the service standards have improved in absolute terms the consumer’s behaviour towards the service brands has progressively deteriorated. While due to the high degree of competition in all the service sectors the brands are stretching themselves to ‘delight the middle class consumers’ the consumers are treating them with increased disdain.

There seems to developing almost an inverse relation between the efforts that the service brands are putting to delight the consumer and the consumer respect towards the brands. As an outcome today even some of the international brands in areas like financial services have started losing the global ‘halo’ that used to fetch them a premium. Therefore the brands need to worry. Not just because the consumer is getting irritated or behaving badly but their brand premium has started to get eroded.

What explains the sudden emergence of this rude consumer behavior towards service brands?


After years of being treated shabbily he’s got the choice finally and therefore he is venting out his built up frustrations. But logic says why should he be unhappy about getting what he wanted and more.

The second hypothesis is about the intensity of competition in the market raising the consumer expectations every day to a level where he’s become insatiable and unhappy.

Some may also suggest that the increased brand choice across all categories has made him a ‘spoilt child’ and hence his bully behaviour. But strangely in categories like DTH where the choice isn’t much the consumer bad behaviour is already prevalent.

And even if one was to believe the increased choice leading to unhappiness theory, what one can’t explain is the increasing bad behaviour or intolerance from the consumers in a culture which is seen as more tolerant and polite. This behaviour goes against the cultural grain of the generally polite and tolerant Indian Middle class.

What has changed? The new power equation

What has changed in the last few years is that the consumer has become more powerful because of the choices that he has today as a result of opening up of the service sectors to the private players. But why has this led to the change in the value system of the consumers?

The answer lies in the understanding of Indian social structure and the abilities of its sub-parts to handle power.

A look at the social structure in the Indian society would reveal a pyramidal construction with the power gradient being steep between levels/classes. A structure that has existed since ages and we find that Indians are very comfortable in this structure. And the truth about a Pyramidal structure is that in such a structure you either look up or look down at other people. There cannot be a third way. There cannot be a relationship of equality. In such a structure either you rule or you are being ruled. Therefore the only relationships that the Indians have existed comfortably in are of either superior or subordinate.

Added to it is the historical experience of the mainstream of the society of handling power. There haven’t been too many instances in the history that the middle class has had the power in India. Whenever a part of the middle class has acquired power, suddenly those parts have generally displayed a change in behaviour which has been towards becoming rude. (The Neo-rich class has at times tried to aggressively assert its dominance in an ugly way).

This comes from the fact that by and large the mainstream Indians (or the middle class) are bad masters – they don’t know how to handle authority. We’ve never been good to people below us. The ‘casteist nature of the Indian society reveals this fact.

We’ve never been too courteous to lower castes (who perform the menial tasks) and in this regard most we find that people in some of the western societies are far more courteous to the bar tender or the guy at the gate or the valet at the car park. We on an average perform much worse.

The Power distance theory: Understanding the Indian culture through Hofstede’s cultural dimensions

A more scientific understanding of this behaviour comes from the study of different cultures by Geert Hofstede on various dimensions. The Hofstede model of five dimensions of national cultures has analyzed and differentiated societies from 50 countries on the basis of five dimensions, namely, Power Distance, Uncertainty Avoidance, Individualism, Masculinity and Long Term Orientation. One of the dimensions on which the 50 countries were plotted and differentiated was the Power Distance Index.

Power Distance was defined as the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. This represents inequality (more versus less), but defined from below, not from above. The most important bit is that it suggests that in a lot of societies the level of inequality is endorsed by the followers as much as by the leaders. All societies are unequal, but some are more unequal than other. On the basis of how people in different cultures willingly accept or reject these inequalities the societies in 50 different countries have been classified as small and large power distance societies.

Some of the characteristics of a large power distance society are:
• Power is a basic fact of society antedating good or evil: its legitimacy is irrelevant
• Parents teach children obedience
• Older people are both respected and feared
• Teacher-centred education
• Hierarchy means existential inequality
• Subordinates expect to be told what to do
• Corruption frequent; scandals are covered up
• Income distribution in society very uneven
• Religions with a hierarchy of priests

India has Power Distance (PDI) as the highest Hofstede Dimension (among the five dimensions) for the culture, with a ranking of 77 compared to the world average of 56.5. This Power Distance score for India indicates a high level of inequality of power and wealth within the society. But what is important to understand that this condition is not subverted upon the population, but rather accepted by the population as a cultural norm. This somewhere explains the legitimized and comfortable existence of the caste system and other hierarchical behaviour in society. The fact that this inequality is endorsed as much by the followers as by the rulers explains why in spite of being a democracy the we are obsessed with one family rule/ why we treat our cricketers as demi-gods/why we worship our movie stars as gods. It is almost desired by the population to have heroes whom we can put up on the pedestals and then follow them.

This is where India completely differs from some of the western cultures like Sweden, Austria, UK, US and Australia who have very low PDI scores less than 40 and hence are classified as low power distance societies. Hence the relationships between entities there are more equal and less hierarchical.

Power distance between the brands and consumers and therefore the choice before brands

What this means is that in the low power distance societies it is possible for brands to have the relationship of equality with the consumer. The brands can ascribe the status of ‘King’ to the consumer and yet retain the status of equal in the hierarchy. But not in a High Power Distance society like India and the others.

And therein perhaps lies the reason for the problems the service brands are facing in controlling their relationship with the consumers. As the development of the service sectors of the economy happened first in the industrialized west, therefore the theories of service marketing and models of service brands have taken shape in the West in societies with lower power distance. In those markets the consumer-centricity of the brand management slowly evolved to putting the Consumer at the centre of everything and started treating them as the ‘king’. But since these were all small power distance societies therefore even while treating the consumer as the ‘king’ the brands themselves didn’t have to compromise their own position since the inequality between different social levels was never too high.

Therefore, in the low power distance societies the service brands could retain the equality in the relationship even when they treated the consumer as King. But not in a High PDI (Power distance Index). In such cultures there can only be a hierarchical relationship between the consumer and the brand. By the servile nature of the business itself the service brands get disadvantaged in the relationship with consumers in such cultures and over and above this when they follow ‘let the consumer be the king’ model in their demeanour they completely become subservient to the consumer in the equation and consumer starts treating them with the same disdain it treats any subservient entity in their culture.

This explains why as the service brands are falling over each other to please the consumer; he is treating them with more and more contempt. Not that he dislikes being given importance but because that’s the only way he knows to treat his subject. Hence the increasing disdain towards brand which want to make him the ‘king’.

This also explains why the consumer was more respectful 10 years back when he wasn’t treated too well by the state owned brands. It is very simple. Then intentionally or otherwise the service providers kept the power with themselves and the consumer who was comfortable with being at lower rung of power equation gave the brands the status of the ruler and was happy to be ruled.

But as the service brands these days have ended giving all the power to the consumers, the consumers have become rulers and have started behaving like tyrants. In such a scenario the brands have serious challenge in front of them to retain their premium-ness going forward.

To be respected in such a culture, the brands will need to increase their distance and will have to assume power. If brands try to play a ‘subservient’ role in such cultures, they will not be treated well. Hence, the conclusion that in India (and in similar cultures with high PDI), THE CONSUMER CANNOT BE THE KING. The brands should not operate from “You are the king” mindset with the consumer.

The Consumer Cannot Be the King: What does it mean?

It simply means the brands need to be always at a higher level of hierarchy than consumer if they need to protect the premium-ness. If the choice has to be made then the brand should be the king. In a competitive market the brands that display a servile demeanor in order to win consumer preference will eventually end up being exploited and bullied by the consumer.

So are there examples of brands that seem to be doing it right? Are there service brands that behave like kings and have people following them? Well there are many like Gymkhana club and India Habitat center which enjoy high premium simply because of their excursionist positioning. The most interesting case in point is Kingfisher Airlines which seems to climbing fast on brand preference among fliers in India. The whole experience is built almost as an invite from king to his private kingdom to enjoy the luxury. It offers you great service but keeps itself at a higher pedestal and doesn’t compromise its position in the whole equation. Therefore, it is very much possible to keep the consumer at the center without having to make him a ‘King’.

What it does not mean? What the brands should do and not do?
What needs to be understood that this is not about treating the consumer disdainfully. It is about the equation that the brands will choose to have with the consumers. It is about the demeanor the brand will have when it deals with the consumer. The brands will need to provide the best of service but what they need to avoid is becoming too eager to please the customer. Across all consumer touch points we need to be careful about our status in the relationship. The more number of humble telephone calls I receive from the customer service asking if I’m happy, the more I will start asserting my ruler status on the brand.

The service brands needs to be careful when they’re training their staffs in the softer skills. They need to be told the difference between being polite and being servile. The CEOs of top companies should not appear in a servile avataar in TVCs even if they’re handling some delicate PR issue. I would always recommend the way Vijay Mallya invites you aboard his flight. That looks like a ‘King’ inviting to his kingdom. The equation with the consumer is therefore stated clearly in the very beginning.

It is also not about being niche and mass. The argument that by increasing the power distance from your consumers you will become niche is also not correct. In fact, the brands with high power distance from their consumers will always be the bigger and more desired brands than others. Sonia Gandhi and Shah Rukh Khan are examples of two celebrities in India whose popularity has increased in direct proportions to their power distance from their consumers. And in market share terms they are bigger brands than any other in India.

After the telecom and financial services the next wave of service brands to hit the Indian consumers are going to be in the area of retail, entertainment and food services. As the brands like Wal-Mart, Carrefour and Indian giants like Reliance go about creating the next set of service brands they need to decide the nature of their relationship with the Indian consumers. Before the make plans to rule the market they need to decide who will rule the relationship?

Not just India but other markets as well

Indian has a PDI of 77. But then there are countries like Russia, Romania, Mexico, Bangladesh and countries from the Arab world with PDI scores higher than 80. The service brands will have to make similar choices in those cultures as well. There might be impact of other cultural dimensions affecting the overall consumer behaviour in each country but I believe that brands will have to decide which side of the power equation they want to be.

Therefore, let the brand be always the KING. Or at least the consumer should never be...


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