Indian Merchandising - Those Apes!

There was no need for me to reproduce this dialogue from one of the best movies you can ever watch, A Few Good Men, except that I love the movie no ends (can watch it a zillion times - have watched it a million times in the last 2 months alone), and also that I, too, am appalled at the sorry state of merchandising in India. Especially in sports.

My observations date back to around 3-4 years back when I was very much a part of the sport industry (private), and had professional reasons to keep a critical vigil on what's happenning in the messy world of Indian sports. However, we are such slow movers that I suspect these observations won't be contemporary. 

So this is what happens in the Western sports' world ... 33% of a club's entire revenues come solely from merchandising ... which could be selling anything from beer to puke to diaper to hat ... anything with the club's logo pasted on it. It helps that those developed countries have people with money to spare, with tempting disposable incomes ... so they don't mind spending 40 dollars or so for a season jersey ... every year. 

However, it's not just that. It's not just the superior disposable incomes that spurs them to part with their money. Afterall, most often, it's still hard-earned money! 

The great thing about the sports merchandising industry is it gets all the benefits of a volume-based industry, as well as a margins-based industry. In other words, hundreds of thousands of fans want to buy merchandise, and they do not mind paying really unreasonable prices too ... throwing the logic of the typical demand-and-supply curve out of the window!

However, all of this requires years of patience, and common sense management. For any brand to be able to sell it's own merchandise without a great deal of utility value, the marketeer needs to spend time playing with these two emotions of the target customer: price insenstivity, and social proof.

I'll repeat it: price insensitivity, and social proof. 

The two may or may not work individually, but if the marketer gets the combo right, she might fall into 'demand exceeds supply' zone of the PQ chart ... taking her pricing capacity to higher and higher levels! That, for the brand, is the Holy Grail ... that's what the brands wants to do really: sell tangible branding paraphernelia procured at low costs (probably from the AsiaPac region) at supreme, premium prices!

So let's see what their Indian counterparts do. I will keep this simple, and leave it up to you to get amused by the lack of either patience, or thoughts, or both ... on part of our marketing imposters.

Let's take the case of Royal Challengers, Bangalore. Reebok have always been their kit producers, and these rabbits at Reebok tried to do what their counterparts in the US or the EURO have always tried and succeeded at: make imitation jerseys of the team, and sell them at a mind-boggling premium! So, it was easy to walk into a Reebok store and find a jersey priced at Rs. 1299/-. 

For the marketer, that's job done. Who cares about the customer ... his spending powers ... his temptation to buy the jersey in the first place ... or the short-term vs. long-term conflict. Who cares about, "Thinking!" That's how stupid our sports industry has always been ... and I would extend that to the entire merchandising industry too.

The point is .. why the hell would a RCB fan, despite screaming and yelling in support of the team all night, spend Rs. 1299/- for their jersey? The team has no history, the team is yet to win over it's fans with consistent performances, there's no tradition that the RCB fans could be proud about, and the IPL lives for just span of 30 days in an entire year anyway. I mean, where's the price insensitivity coming from? And ... when there's no price insensitivity, when there's nothing irrational, the customers starts thinking in rational terms ... and easily rejects the jersey for that heavy price tag.

And what about the social proof? If an average RCB fan won't see other fans wearing the jersey, chances are he won't be tempted to buy one for himself too. Probably I should put it the other way ... if an average RCB fan is off to the stadium or the pub to watch his fav. team play, and he notices almost everyone wearing an RCB jersey, there's no way he won't give in ... he will end up buying one for himself (it's upto the marketer to ensure that those jerseys are available for purchase at such locations, at least). 

However, with such a hefty price tag, not many people will buy the merchandise in the first place and, hence, the social proof funda won't get a chance to weild its magic wand.

The sorry thing is ... our marketers see this high-pricing working very well in the Western world. My suggestion to them: what they see is contemporary. What they should dwell into is the history books. Did Manchester United or the New York Yankees have it easy with their merchandising sales? How did their merchandising start, in the first place? At what price did the first duplicate jersey sell, and where?

But who's got the time. But then, how about common customer sense?! We've surely got that, haven't we?

Anyway, I will stop being snobby now. In my humblest opinion, what these fellows should have done, and should continue doing in the first five years of the IPL is this: make decent jerseys to last for a couple of years (takes somewhere around Rs. 200/- to make one considering that the teams will be producing them in volumes), price them at somewhere around Rs. 400/- (thereby making it affordable for the average college kid too ... may be the rickshaw waala as well), and make them available at every place as the team can. 

Plus, give a great discount for kids sizes ... these are not customers yet, but 5 years hence, these are the people who will be the most loyal fans of the team.

The idea is to please the customer ... and in the business of sports, a pleased customer often becomes a lifelong fan. The idea is also to please as many customers as possible ... with the message that says, "We don't care what the other clubs are doing, but we will make our merchandise available to everyone who cares for us. Afterall, it's your team, not ours!" 

Considering the kind of fanfare that IPL generates annually, and also considering the number of people who save money to be able to buy a Rs. 1299/- jersey, I am more than certain that more than 50% of the geographical natives would end up buying a jersey as the month comes to an end. Purely on the social-proof temptation.

The best part is ... the marketer need not worry about the on-field performances of the team. That's something a marketer cannot control, and should not worry about anyway (Rule #1 for sports marketers, btw)!

As years fly by, the marketer needs to work on the 'price insensitivity' aspect ... which, dependent on things like loyalty/tradition/history/consistency etc. will take its own time anyway. However, unless the marketer is sure that this emotion of price-insensitivity has creeped in, the prices cannot be hiked beyond unreasonable proportions. I will give it 5-6 years before a club can price it's jersey at Rs. 1500/- or so ... with whatever peripheral knowledge I have. Once this PI creeps in, though, it's a gold mine ... put everything you can on the shelf, and that hard-core, loyal fan will buy it .. for whatever prices you want him to. It really *is* that simple!

However, all this is blah blah. The IPL teams, by their unprofessional and disorganised characterisitc, have many more messier things to worry about. Plus, they are here to make their moneys and go away ... not to build a sporting culture! Only if sports was their priority ... or only if fans were important to them ... or only if they had a long-term sports related vision for their communities ... ! 

Sometimes I wonder why didn't all the apes evolve to become humans? Why do we still see orangutans around? Probably it's in the will. Some apes don't evolve because they never wanted to ... and the same goes for our Indian sports marketers/adminstrators.