How the marketing scorecard has worked in India: a case-study
A conceptual framework like a Marketing Scorecard can help us understand how the real world makes it happen. In this article, the Marketing Scorecard is taken and explained in the book "Marketing Genius" by Peter Fisk and then anchored in the context of an Indian case-study, namely that of Jain irrigation.
IntroductionThe concept of Marketing Scorecard, as explained in the book "Marketing Genius" by Peter Fisk, has four dimensions - Customer Engagement, Market Impact, Financial Performance, and Marketing Improvement. It should be noted that the activities pertaining to one dimension, when carried out successfully, would impact the other dimensions as well. This is the one significant aspect of a Marketing Scorecard. That is, the overall score in terms of the impact of a particular brand can be analyzed with specific reference to four dimensions, each of which is related to the other three dimensions.
Let us take the recent example of Colgate Vedsakthi, a product from Colgate Palmolive. The product has a distinct herbal flavor. It was advertised as the combination of modern science with the ancient principles of Ayurveda and is a direct competitor to Ayush from Hindustan Unilever. This is the Customer Engagement dimension and customer awareness is followed by customer preference for the brand and customer affinity is also achieved to some extent. This commercial breakthrough in the form of brand success does impact the market. This is called the Market Impact. Colgate Vedshakthi has made an impact in terms of a small market share and is growing. The continuous advertisements would seek to retain customers who would prefer to use the brand. This, in turn, impacts the Financial Performance of the company and the product. This will impact the sales revenue, profitability, and growth of the brand and the company that manufactures it. It is obvious that the brand is here to stay. It has got a niche and will continue to grow this niche.
Finally, the Financial performance will also impact the Marketing Improvement activities of the company in terms of brand building. There are new advertisements for Colgate Vedshakthi, but the effort is to supplement and support the core value proposition of its herbal base. The brand will continue to build on this core value proposition for all time to come.
Now, the aforesaid example of Colgate Vedshakthi will become very clear from the following diagram of the Marketing Scorecard, given below from the book, "Marketing Genius" ( page 343)
Now let us proceed to anchor Marketing Scorecard in the context of an Indian case-study of Jain Irrigation, a company that specializes in drip irrigation and is also present in various activities that connect to the farmer in the backward area of Jalgoan, Maharashtra State. The details mentioned here is based on a cover story of the company, published in Business India, dated June 8-21, 2015, "Jain Irrigation: A Model for rural success" pages 32-41.
Customer Engagement A company is known by the Vision of its founder. Here is a significant quote from the founder of Jain Irrigation, Mr.Bhavarlal Jain: "I have cherished the thought that that one day I would achieve something -something people would remember me by. I never believed in accumulating wealth". ( page 34). The article "Son of the soil" on the same page mentions that he is educating the local people through numerous schools and colleges, built through the generous donations, personally and from his company. Hence, the company has successfully engaged with its customers, the farmers in this case, and has also gone beyond merely serving them with its products, but also providing for the education of their children.
Jain irrigation has demonstration farms that have enabled the improvement in productivity and prosperity in agriculture. There is a contract farming division of the company, and it had 10,000 farmers involved in contract farming in 2015. (page 37). It not only buys back the products at reasonable rates, but the farmers are also provided support in the form of high-quality seeds, saplings, and other inputs. It has 70 associates that provide expertise related to good farm practices. (page 37).
It can easily be observed that Jain irrigation has been able to successfully tick all three boxes of customer awareness, customer preferences, and customer affinity.
Market Impact This has three components of the Market share, customer retention, and channel penetration. The vital information provided in the article captures the reach of this company. For example, it is the second-largest micro-irrigation company in the world. It has a high-tech agriculture institute, spread over 2500 acres at Jalgoan. This institute has about one thousand agriculture scientists, technologists, and technicians who provide professional advice to farmers, the main customers of Jain Irrigation.
The aforesaid inclusive model of business development does not go unrecognized. The agri-processing division of the company exports its food products to 50 countries. The then CEO of Hindustan Coca- Cola Beverages Limited, Mr. Krishnakumar, had certified that the company was successful in optimizing the mango supply chain for his organization, resulting in benefits to both companies. It has had recognition coming in the form of Government contracts as well. For example, the Rs.385 crore contract to the company was to implement a micro-irrigation project 7,000 farmers would be involved in 35 villages of Bagalkot district, covering an area of 30,381 acres under micro-irrigation. (page 38). It is obvious that the company, Jain Irrigation has a good inclusive approach to business and it satisfies all the stakeholders.
Financial performance There are three dimensions mentioned in the diagram. They are Sales revenue, Profitability, and growth. The company has had a rising turnover. It has also had rising debts and this has been a big worry for the investors. However, it has been able to service its debt and its growth ambitions are based on the basic premise that just around 15% of the total agricultural area in our country is serviced by drip irrigation and the company has enough competencies to grow in this space, as it is its core competencies. However, the debt of the company has increased and this has decreased the interest in the stock.
The report dated Jue 30,2019, in the Economic Times ( available on Google) has mentioned that the debt of Jain irrigation had a debt of Rs.3,767 crores in March 2017, which rose to 3,891 crores in March 2018. However, it increased to a worrisome Rs.4,594 crores as on March 2019.
In Feb 2018, it acquired the Belgium-baed Innovafood which is an importer and distributor of food ingredients and in Sep 2018, it acquired the US-based ET Water Systems, a smart irrigation tech company, for sums that have not been disclosed. Yet, the company has maintained that its rising turnover and its financial strategy of collecting money from farmers upfront, to a large extent, will enable it to reduce its debt burden. Clearly, given the competencies that it abundantly possesses, Jain Irrigation is a company for the future, as it has several boxes successfully ticked in its favor. It is reportedly considering selling part of its stake in some group companies to raise money and use this money to retire its costly debts.
Marketing improvement The text in the diagram talks about three variables. These are product innovation, brand building, and market development. It is obvious that with the kind of core competencies that it has in addressing all the concerns of the farmers, and its big focus on serving the rural community, Jain Irrigation is far ahead of any other competitor in this space. For example, the two acquisitions mentioned above might have increased its debt in the short run. But one also needs the most advanced information technologies to stay relevant in this business and grow. Jain irrigation is an Indian multinational. Its product range is quite impressive. It also manufactures a wide range of pipes and is a big player in the agri-processing industry. It will seek to identify new products for growth in the years to come.
There is no doubt that a company like Jain irrigation, that has a big social relevance in the Indian context, will continue to grow to become a profitable multi-unit, multi-product company, with a big focus on agriculture and agri-products. And agri-processing. While the short-term view about the market and the profitability of Jain Irrigation may be under some threat, in the wake of the COVID-19 scare, the farm activities can never be kept idle for a long duration of time, as that will endanger food security.
Hence, even when the heavy industries and the engineering industries face the music and will only be gradually opened up under severe restrictions, the companies like Jain Irrigation will obviously stand to gain, as it has several core competencies that will be sought by several State Governments to uplift agricultural productivity, right after June 2020, when the COVID scare will subside and enable normal operations to continue in agriculture, even under restrictions.
ConclusionGiven the complexities of the rural market, and the scope for a business such as a drip irrigation, Jain irrigation has done a fairly good job. Though its debt is a concern, there are several good core competencies that will enable it to back to profits over a two year period. It is one ideal company to study and understand the Marketing Scorecard, some salient features of which have been discussed above in some detail.