Gold loan firms spread out to all-India market
Use marketing and advertising to reach out to masses beyond their Kerala base
Big gold loan companies are using marketing and advertising effectively to register an all-India presence, growing beyond their Kerala origin to go local in northern, western and eastern states.
Gold loan company, Muthoot Fincorp, apart from having southern region brand ambassadors like actor Mohanlal for Kerala, Vikram for Tamil Nadu, Venkatesh for Andhra Pradesh and Puneeth Raj Kumar for Karnataka, now also has appointed actor Mithun Chakraborty for West Bengal, Marathi film actor Sachin Khedekar for Maharashtra and Odiya film star Uttam Mohanty for Odisha to reach to the masses in their respective regions.
The craze for gold, as it is for movies and cricket, is, of course, a passion for most Indians, cutting across regions. But gold loan companies are asking people to part with gold for cash they may be in need of. That is a concept, not acceptable uniformly in all regions of the country. The brand ambassadors are a way of reaching out to the regional hinterlands and sell the idea.
The big gold loan companies are Kerala-based, bearing Malayalam family names like Muthoot or regional terms like Manappuram. The challenge for them was to shed the image of a regional player and communicate and reach out to Punjabi, Gujarati and Bengali customers.
Going to a finance company for loans, to pledge jewellery and land, or simply to deposit money is a local habit. It is all about distance and proximity, like a local moneylender. To that extent, there is a certain degree of comfort in the local rather than the national.
Which is why the advertisements of companies like Muthoot Fincorp appeal to regional sensibilities, like a group of Sardars setting up a lassi shop by pledging gold or a Gujarati hotelier expanding his business through a gold loan.
When asked why these companies only choose male actors as their brand ambassadors for a business that involves jewellery, Bijoor said it is primarily because it is a male-dominated society. In gold finance busiesses it is assumed (and it is also a fact) that the man pledges the jewellery and takes the loan. “There may also be another reason — women are attracted towards the male stars,” he added.
Hence advertising and promotion becomes the single biggest expense of these companies where the overhead costs are otherwise low. Muthoot Finance, the largest gold loan company in India, will spend Rs 200 crore on advertising and promotion this year against Rs 130 crore spent last year. Manappuram spent Rs 103 crore last year and is looking at a similar spend this year.
In south India, the company’s brand strategy would be to position itself as a better alternative to pledge gold with than with a local pawnbroker. In newer markets, the campaign will be aimed at educating the consumer and breaking the taboos associated with raising loans against gold, company officials said.
When Muthoot set out to expand its national presence, one of the first things the company did was to set up its chairman’s office in New Delhi. The company also became the principal sponsor of the IPL cricket team, Delhi Daredevils, to be seen more as a national player.
Gold loans were always seen as a distress product, used as a last resort if all other ways to raise money fails. Our next big challenge was to reposition it as a way of unlocking the value of gold sitting idle at home and use it for better purposes like expanding business or education or agricultural purposes.