Brands & festive season Part 1: The headwinds fuelling bumper spends this year

This festival season is important on so many counts. Brands and advertisers are enthusiastic and hopeful as they are eager to make the best out of the season, which is coming after two years of pandemic-induced lockdown and the resultant economic slowdown. Now that the effects of the pandemic have ebbed, there is sufficient ground to rejoice. In fact, brands and analysts are expecting increased consumer spending during this festive season. Many believe that consumer sentiments have returned to pre-COVID levels.

Mayank Shah, Senior Category Head, Parle Products, is optimistic about consumer demands going up this festive season. He says: “We definitely expect the consumer demand to be robust this festive season for multiple reasons. First, the severity of COVID cases throughout the country has gone down. The quantum of vaccination has been a key contributor to stabilising the Covid situation and people are far more confident now. In addition, owing to two years of muted celebrations people are looking forward to going all out this festive season. The season has already commenced with Raksha Bandhan, and we have witnessed a strong demand coming in on both Raksha Bandhan and Independence Day. The phenomenon of revenge shopping is also taking place simultaneously.”

The upbeat mood is visible across categories, such as electrical goods, automobile, etc. The festivities are expected to bring in cheer and fresh enthusiasm to the automobile industry, remarks Abbey Thomas, Head of Marketing & PR, Volkswagen Passenger Cars India. “With the continued demand for aspirational and safe personal mobility options, we are optimistic that the sales momentum will be positive in the festive season this year. The festivities are expected to bring in cheer and fresh enthusiasm to the automobile industry, having missed out on festival indulgence in the last two years owing to COVID limitations. This year, customer sentiment is upbeat with regard to celebrations,” he adds.

Continuing further, he says, “In today’s dynamically changing marketplace, we believe in optimising our marketing spend with targeted messaging across channels for better consumer engagement and generating higher ROI. Our marketing spend is aligned to our business plans and priorities. With the wave of hope of a good festive season ahead of us and improved demand in the upcoming quarter, we have aligned our marketing spends and campaigns enabling our brand to be present and visible across mediums.”

The ad spends have returned to the pre-COVID levels, says Simran Hoon, CEO, QYOU Media India.  “This is welcome news for the TV industry that advertising spends in 2022 will exceed pre-pandemic times. more so in certain genres that are immune to vagaries like the General Entertainment Category, be it Hindi or regionals. This is so heartening and also well in line with expectations.

“With the festive season approaching, we anticipate a higher double-digit growth in the fast-moving electrical goods (FMEG) sector. The global market for electrical equipment is expected to grow in 2022, with a compound annual growth rate (CAGR) of 10% over 2021.  The growth is mainly due to companies rearranging their operations to meet the post COVID demand. Electric switches, lighting, switchgear, as well as wires and cables, are the main categories of electrical equipment.  Consumers in India are optimistic about the country's economic recovery,” says Pradeep Dutta, Head of Branding, Advertising and Alternate Channel, Panasonic Life Solutions India. 

According to him, the net intention to spend across many categories is positively increasing. Most categories, he adds, continue to use omnichannel communication, and social media has a significant impact, particularly on GenZ and millennials. “New technologies like Virtual Reality (VR) and Augmented Reality (AR) are becoming more prevalent. With 68% of the population being vaccinated, consumers are participating significantly in the offline activities. A trend has emerged in which most shoppers have experimented with new shopping habits, such as visiting new stores and trying new brands. Home improvement purchases are still made by 80 to 90% of consumers.”

Pradeep Dutta says Panasonic will be focusing on launching 360-degree marketing campaigns, which will include ATL, BTL and Digital activations. “We have re-launched our campaign 'Naye India ke badte load ke liye’ which designed just before the pandemic.  The campaign covers a central thought about new and aspirational Indians who are now looking beyond basics. The campaign aims to amplify the visibility for the brand, considering the change we have witnessed during and post the pandemic.”

Shift in brands’ behaviour

Marketers and brands are witnessing a shift in brands’ behaviour, especially now that the effects of the pandemic have ebbed. Invariably, they are expecting a concomitant improvement in ad spends in certain categories.

After two years of lull during the pandemic, the sense of normalcy is back with a considerable improvement in consumer sentiments across industries, says Abbey Thomas.

Thomas feels that the steady monsoon and festive enthusiasm are expected to positively steer the customer demand.

“The industry would likely witness a 10-15% growth in ad spends from the consumer goods category. Marketers are leveraging the positive sentiments to amplify their marketing initiatives to boost brand awareness, and, therefore, we are likely to see an ‘omni-channel media’ spends approach across the industry. The skew towards digital during the pandemic is now returning to balanced levels with a focus across platforms. At Volkswagen as well, our marketing campaigns are aligned to an omni-channel approach where we will be present across broadcast, print, OOH, digital, and more,” he says.

Simran Hoon notes that there has been a prioritisation and re-jig in certain categories post-pandemic. “Categories like education, telecom products, new-age digital companies, corporate/ brand image were bigger during the pandemic. The sectors that I foresee picking up this festive season are household and personal products, BFSI, jewellery, F&B and auto.”

Diving deep into the factors driving the demand, Mayank Shah says, “Another factor is the resurgence of rural demand. Rural demand was low in the first quarter of last year, but the current situation is much better. The present and previous quarters have seen an uptake. Owing to the geopolitical circumstances in Europe, farmers were able to get good realisation for their produce. Prices were soaring high and farmers were benefited as a result of that. Second, of course, is the current monsoon season. It has progressed well in most parts of India except two states, Uttar Pradesh and Bihar, which receive rainfall towards the latter part of monsoon. But overall, the monsoon has been normal to excessive and that is heartening. Farmers are also optimistic of bumper crops this year. For these reasons, demand during this festive season looks very lucrative for most marketers.”

Regarding changes and shifts in consumer behavior patterns, Pradeep Dutta says in retail, the convenience of online shopping remains a priority for shoppers who have embraced digital-first lifestyles. “Alongside continued growth in search interest in “same day delivery” and “free delivery,” which have risen by more than 35% and 15%, respectively, over the last two years, there has been a surge in search interest in “instant delivery,” which has grown over 215% from 2021 to 2022. Consumers are no longer just looking for convenience now; they want to have products on hand immediately, especially during peak shopping moments such as the festive season.”

In technology, Dutta adds, consumers are conscious about sustainability. “They are moving from awareness to action, following India’s net zero carbon emissions pledge in 2021. For example, there has been a shift in search interest in “what is e-waste” to “e-waste disposal methods” quarter over quarter, with search interest in the latter growing over 110%. At Panasonic Life Solutions India, we always strive to meet consumers’ expectations and demand real-time, and thus automation in a lot of marketing solutions can help us stand out of competition. For example, we have tried and tested various new and evolving digital advertising platforms and formats to deliver engaging content to our consumer segment, with precise targeting. Our digital solutions enable a decent percentage of business volumes generated for new business segments like solar and housing solutions. Apart from conventional channels, we have been advertising heavily on e-commerce players such as Amazon, Flipkart, BigBasket and Blinkit,” he explains.  

Keeping your finger on the pulse of consumer interests in products and services related to your business can also help you respond quickly to changing consumer behaviour trends and capture new demand. 

Dutta says Panasonic currently spends more than 50% of its available marketing budget in BTL – reaching to around 1 lakh+ retailers, dealers and distributors across the country. From the remaining marketing budgets the company spends close to 70% on television, 20% on outdoor advertising, and 10% on digital.

Growth projections

Now that the effects of the pandemic have ebbed, brands and marketers are all hoping for a revival in market sentiments.

The Electrical Construction Material (ECM) segment has been seeing continuous growth, even during the pandemic period, says Pradeep Dutta. “This year we are expecting 18 ~ 20% growth in the power category (wiring devices, switchgear and wires & cables), and around ~19% in trade lighting and 32% in solar. We look forward to an increased spending by the consumers in the approaching festive season – as many of them would look to complete their home enhancements driven by Tier-2 and below markets. Further, the gig economy, remote and hybrid working has given rise to new needs and desires, which will further add to the growth in most of our categories,” he says.  

Mayank Shah is expecting at least about 10-15% growth compared to last year, as far as the demand is concerned. “It can be more, but that’s the minimum that we are expecting this particular year. As I have shared above, the early indications from consumers on occasions like Raksha Bandhan and Independence Day have also been good, so the growth outlook for the festive quarter looks very promising.”

As far as consumer behaviour is concerned, Shah sees it evolving with the proliferation and influence of online marketplaces. According to him, research in 2019 projected that e-commerce online marketplaces will contribute about 10% to the total FMCG revenue by 2030.

“COVID changed that completely, from less than 1% contribution back then, we have almost 3% contribution to FMCG revenue from online marketplaces. We have come a long way. In fact, we are expecting online marketplaces and e-commerce sites contributing to 10% of the FMCG revenue by as early as 2027. COVID has catalysed the behaviour of buying online. Secondly, it’s also the convenience that it offers. It helps in saving time and spending it on better experiences. The pandemic brought people closer, and so during the festive season, when gifting becomes really huge, people try to reach out to their old friends, classmates, relatives, etc., using the online mediums. It would be difficult to reach out to them in regular day-to-day life, so people use gifting via online mediums to get relationships rejuvenated. Also with the recent penetration and proliferation of online and e-commerce platforms, it has become easier to send anytime from any part of the country to even remote locations. One can be assured that their ordered product will reach the designated recipient in the said time. Even with the Geniously Sweet Collection, we observe that it has been purchased for online gifting quite frequently. Hence, this area holds a lot of opportunities,” Shah explains.

Abbey Thomas is optimistic about the demand going up this festive season. He remarks, “With the continued demand for aspirational and safe personal mobility options, we are optimistic that the sales momentum will be positive in the festive season this year. The festivities are expected to bring in cheer and fresh enthusiasm to the automobile industry, having missed out on festival indulgence in the last two years owing to COVID limitations. This year, customer sentiment is upbeat with regard to celebrations. In today’s dynamically changing marketplace, we believe in optimising our marketing spend with targeted messaging across channels for better consumer engagement and generating higher ROI. Our marketing spend is aligned to our business plans and priorities. With the wave of hope of a good festive season ahead of us and improved demand in the upcoming quarter, we have aligned our marketing spends and campaigns enabling our brand to be present and visible across mediums.”

Simran Hoon is hoping for a 20% growth in ad spends. She attributes multiple factors for this expectation, such as the positive consumer sentiments despite inflation, brands’ increasing willingness to spend more on advertising, coupled with big ticket events and shows in the quarter.

The same trend can be seen in other segments as well, such as gold. Gold demand in India in the quarter ending June 2022 was up 43% to 171 tonne on the back of buying for wedding and festival season, and “it is business as usual for brands across segments”, maintains Amul Kumar Saha, Chief Digital Officer, MMTC-PAMP.

“Gold remains a key component for saving in traditional Indian households, be it for a rainy day or milestone expenses like child’s higher education, marriage, and house purchase, among others. During the festive season, we expect our product portfolio featuring deities like Lakshmi, Ganesh in unique designs such as the Shankh, and other products to move in large quantities across India. Apart from our devotional series of products, our classic range of products featuring the iconic Lotus, Bodhi Tree/ Banyan Tree, Peacock and other motifs continue to be favoured by gold buyers. Additionally, we may soon be launching another exceptionally crafted product range to our classic series,” informs Saha.

Along similar lines, Parag Shah, Director, HK Jewels, says that the consumer story has picked up in big way. “Big public celebrations are back, the mood has picked up and we are already seeing signs of increased consumer spends. Advertisers will be spending both nationally and locally. Besides big spends on traditional media, expect a lot of hyperlocal marketing as jewellery is culturally nuanced.” He says he is looking at one of the highest sales in the coming months.

With the rapid spread of digitalisation, consumers are increasingly opting for the phygital mode to conduct purchases, says Abbey Thomas. In the auto industry, he adds, the first point of familiarisation happens through the Internet using various tools and platforms, including the company’s website, test-drive videos and reviews. This is where the consumer shortlists a certain set of cars and models based on individual interest and purchasing power. This is followed by physical visits to the showrooms and getting a first-hand experience of the shortlisted vehicles, ultimately making the final decision.

“Going further, we will see the gap between digital and physical modes of purchase narrowing further. Bound by the growing trust of customers in the digital marketplace, we foresee tremendous developments including an AR experience of the car’s interior, a simulator to give a driving experience and more.”

(Tomorrow: Part 2 of the report will cover shifts in both consumer * brand behaviour, impact of the overall economic growth, marketing campaigns, brands’ strategies to woo consumers, and much more.)