Surrogate Advertising-Enforced Innovation: an Inside-Out Overview of Indian Liquor and Tobacco Industry Presented By: SUBHABRATA

Surrogate Advertising-Enforced Innovation: An inside-out overview of Indian Liquor and Tobacco industry Presented by: SUBHABRATA BANERJEE MBA Ȃ DAY INDIAN INSTITUE OF SOCIAL WELFARE AND BUSINESS MANAGEMNT ROLL NO: 107/MBA/080004 REGN NO: 19779 of 2001-2002 Acknowledgement I deem it a privilege and pleasure in submitting the dissertation paper ǲSurrogate Advertising-Enforced Innovation : An inside-out overview of Indian Liquor and Tobacco industryǳ which is in partial fulfillment of the requirements of MBA program of Indian Institute of Social Welfare and Business Management, Kolkata. I would like to extend my sincere gratitude and profound thanks to Dr. S.N Roy (Head of the Department, MBA (Day), Dr. Tanima Roy (Faculty, MBA (Day)) and Dr. Archana Sharma (Faculty,MBA(Day)) for their guidance, co-operation and valuable feedback extended to me to complete the dissertation paper. I also would extend my gratitude towards Mr Shubhadeep Nag(Brand partner, rediffusion D Y & R), Mr Kaustuv Bhadra (Vice-president and Branch-head, Mudra communications,kolkata) and Mr Sudarshan Banerjee (Vice-president and branch-head, Genesis Advertising, Mumbai) for their valuable suggestions which enriched this study. Besides this, I would also like to place on record my thanks towards the number of people that I met during the course of research study. Due to constraints of space, it would not be possible to name all of them. Date SUBHABRATA BANERJEE ABSTRACT We live in a complex world where we respond in extreme ways to what we view as extreme pressures. The ethical debate rages around surrogate mothers. Yet it is difficult to deny they perform a great service for those who use them. Closer home, surrogate advertising has been around ever since someone decided that certain things were probably not good in the interests of the community at large. It is really difficult to express an opinion, leave alone pass judgment on matters that are personal. There is also the question of personal rights and many of them are happily enshrined in Constitutions of progressive nations the world over. Who is anyone to decide whether I can sip my daily quota of what started off as eau de vie, or the water of life and then rapidly transformed itself into its present day avatar, Scotch? People have spent years perfecting a heavenly blend of spirits, and imparted to it the smoky flavour that could come only from the peat of Scotland and the pristine Highland water. Several others have made methode champenoise into a fine art and have succeeded in bottling the very soul of France in green bottles that, when uncorked, seem to scream celebration. Who has the right to decide if I can deeply inhale the rich aroma and full-bodied flavour of carefully rolled Virginia tobacco? Every time I nonchalantly put one of those sticks to my lips I feel I have mounted a wild mustang and I am riding down the lonely mountain trails of Colorado. Forget the hype. Forget the imagery we have all grown up with. The Government has the right, invested in it by you, to decide whether you will get transported to the chalky fields of Champagne or the misty heights of Scotland, or for that matter the Wild West. And the Government in its wisdom has decided that advertising for tobacco and liquor is a big no-no. So does that mean you lose the right to tipple or smoke? Certainly not. The wisdom of the Government extends only to banning the advertising of tobacco or liquor. Not to the manufacture or marketing of these supposedly deadly substances. It is legal to manufacture liquor and cigarettes or bidis. It is legal to sell cigarettes at every roadside stall, even to unsuspecting children. It is illegal to advertise it. And that is precisely why you have to live with surrogate advertising. The literal meaning of ǮSurrogate advertising' is copying the brand image of one product to promote another product of the same brand. It can be defined as the strategy used by manufacturers and advertisers to promote a product surreptitiously, the advertisement of which is banned by the law of the land. In this study, I have tried to found out the impact of Surrogate Advertising not only on the brand- recall but also on the consumer psychological traits which affect our daily lives. OBJECTIVE OF THE STUDY The basic objective of this study is not only to understand the loopholes of the acts or measure the effect of surrogate advertising on brand recall, but to gain an inside-out overview of how effective surrogate advertisings are in Indian scenario as far as tobacco and liquor industry in concerned. METHODOLOGY The understanding of the subject took not only secondary research or help of books, white papers and journals, but also for the better understanding, primary research had been conducted to get the first-hand understanding of the consumers. Questionnaires were made as qualitative as possible so that every respondent enjoys the space of expressing his or her own opinion. Those opinions were then mapped on a Brand-performance matrix, being precise, a brand-scorecard which allowed the comparison between the original brand and the surrogate brand. To conclude, expert opinion is also taken from nearly 10 senior people in advertising and media, as they have seen the makeover and had been a part of it Surrogate Advertising: Enforced Innovation Recent series of hoardings led me to delve into a very unique trend specific to Indian advertising Ȃ Surrogate advertisingǥ a trend which is fast catching up and has suddenly attracted a lot of innovative and creative brains around the country. Reason? On one hand, the government cannot allow public advertising of liquor companies. But ironically, liquor and cigarette sales are the biggest revenue generators in terms of taxes and duties on these items. Thatǯs why an overt acceptance of the marketing in these sectors is not legally acceptable. This has led to one of the biggest ironies of the country Ȃ Sales of these items are not banned, yet advertising on the same has strictly been prohibited! Talking about the market size and the different segments would not be pertinent to the discussion (for the records, it is more than 100 million cases in India!). But what is the significance of this trend vis-à-vis the entry points for new players and sustainability of existing ones? Multinationals which would like to explore the Indian markets find the double- faced attitude of the government as an impediment to their ventures. Since no policy has been formalized in this regard, foreign companies continue to be sceptical about their entry. Domestically, it has led to innovative ways and methods of spending on different media for Advertising from the companies, where companies do more of a brand building exercise than direct advertising. Be it promotions for brand building, or sponsoring events that can be mapped with the ǲshowbizǳ and ǲglamourǳ of the brand, advertisers donǯt leave many avenues to enhance their visibility. The rule says, ǲAdvertisements which lead to sale, consumption and promotion of liquor should not be allowed.ǳ So, in Surrogate Marketing, a product which is different from the main product is advertised, and has the same brand name as the main product. The product is called as ǲsurrogateǳ and advertising through this channel is called ǲSurrogate Advertisingǳ! It may include CDs, water, clothing, Apple juice, fashion accessories, sports goods or even events sponsoring! These gimmicks, in turn, help the consumers build a strong equity of the parent brand, and with the enhanced visibility, the equity of the brand would definitely become higher! Liquor companies were forced to look at innovative ways of building their brands. With an objective of enhancing brand recall, companies either engage into ǲsurrogate advertisingǳ or displaying ǲsocially responsible messagesǳ. Again, out of the two viable options for Advertising, Surrogate Advertising has been surrounded by controversies and legalities for a long time. There is no clear policy from the government for obvious reasons and companies do not want to risk their investments on Ads, which might not be screened after a while. So, a safer choice available where companies can exercise their grey cells is advertising ǲsocially responsibleǳ messages. Origin of Surrogate Advertising As a reaction to the directive of Government, the liquor & tobacco majors sought other ways of endorsing their products. They have found an alternative path of advertising through which they can keep on reminding their liquor brands to their customers. They have introduced various other products with the same brand name. Launching new products with common brand name is known as brand extension, which can be carried out for related products (e.g.: Tata Salt and Tata Tea) or unrelated products (e.g.: Tata Tea and Tata Indica). Prima facie, there is nothing wrong with brand extension. The problem occurs when brand extension is carried out in response to the ban on advertisement of one product category. In this case, the companies launch other products with the same brand name for the purpose of reminding their old customers. Heavy advertising is done so that the customers do not forget their liquor & tobacco brands, for which advertisements are banned. The advertisements for such new products are placed under the category of "Surrogate Advertisements". Their only objective is to compensate the losses arising out of the ban on advertisements of one particular product (i.e. liquor). According to dictionary - surrogate means substitute. Many of us have come across this word in connection with surrogate motherhood. This time it has come in a new avatar - "Surrogate Advertisement". This is a loophole challenging the Government's action.

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