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Tuesday, November 10, 2015

MANAGEMENT LESSONS FROM BIHAR ELECTION

Followers of VOXINDICA are aware that the blog analysed various elections in the past. They include Delhi, Gujarat, Jammu & Kashmir and Karnataka (in alphabetical, not chronological order), and the national election of 2014.  Each of these elections had a different context which was the reason why they were chosen for analyses. One or two articles broached the application of management and marketing principles and social psychology to electoral politics.

The following marketing management principles (listed after the introductory part) are well-known, at least for students and practitioners of marketing management. However they can be applied to politics as well, for after all, politics is very similar to branding. American politicians have long recognised it; therefore they rely on branding agencies, well, to build political brands. There is a saying that the American presidential election strategies are designed not in the political party offices but in Madison Avenue where America’s largest advertising agencies are located. Indian political parties too have caught up with the trend and we have seen the application of branding and marketing principles to electoral battles in the last decade or so. Every political party or candidate is akin to a brand. The broad principles are expanded here to draw lessons from the Delhi and Bihar elections.

In his seminal work Competitive Strategy (1980) Michael Porter identified five forces, - popularly known as the ‘five forces theory- which impact businesses. The five forces Porter identified are the bargaining power of suppliers, the bargaining power of buyers, the threat of substitutes, the threat of new entrants and competitive rivalry among existing players. Porter theorised three generic strategies to counter them. They are cost leadership, differentiation and niche strategies. To a large extent the five forces and the generic strategies are relevant and applicable to the world of politics too.

Applied to electoral politics some of the five forces are easily recognised: the bargaining power of the buyers is the voter power. One political party can always substitute the other if they have similar political ideologies. Tamil Nadu is a case in point. Both the DMK and its offshoot AIADMK have similar political ideologies. There is nothing much to choose between the two.

Quite often, new political entities have emerged out of realignment or fragmentation of the earlier national players, the Congress and the BJP. The examples are the many regional political parties which identify themselves based on regional aspirations. They are in addition to the two already mentioned, the more recent Aam Admi Party (AAP); the Biju Janata Dal (BJD); the Janata Dal United (JDU), the Nationalist Congress Party NCP); the Rashtriya Janata Dal (RJD); the Shiv Sena (SS); the Telangana Rashtra Samithi (TRS); the Telugu Desam (TDP) and the Trinamul Congress (TC).

The bargaining power of suppliers comes into play when political parties have to form alliances. We have seen in the past how political parties demanded money-spinning infra-structure portfolios or immunity from corruption cases to join a coalition. The rivalry among the existing players needs no elaboration.

As for the generic strategies the Congress party has always adopted the cost leadership principle. In marketing it means offering a product at the cheapest possible price. In politics it translates as offering everything to everybody. The philosophy is summed up in Indira Gandhi’s ‘garibi hatao’ slogan. In Max Weber’s terminology this is also known as transactional leadership. The late Y. S. Rajasekhara Reddy successfully employed the transactional leadership principle to capture power by offering something to every section of society.

In contrast, the BJP adopted the differentiation strategy to begin with. Remember the ‘the party with a difference’ slogan. It offered corruption-free, development-oriented governance. Again to borrow from Weber what Narendra Modi offered was transformational leadership. In his earlier stint as chief minister, Chandrababu Naidu adopted the transformational leadership principle. Though successive defeats at the hands of YSR seemed to have mellowed him a bit he has a godsend opportunity after the bifurcation of Andhra Pradesh. In building the nascent state, he came back into his element of transformational leadership.

Transactional leadership obtains immediate dividends but is difficult to sustain in the long run. What will Jayalalitha offer in the next election after all the sewing machines, pressure cookers, grinders, laptops and all the other freebies she and her rival DMK gave away already? How will K. Chandrasekhara Rao fulfil his promise of two bedroom flats for all poor people and three acres of land for the landless farm labour? There is a limit to the state’s ability to offer freebies. ‘Robbing Peter to pay Paul’ can work only so far! Foreign-funded NGOs and sundry social activist groups try their best to thwart generation of wealth from the nation’s natural resources. Arundhati Roy would rather the Comrades of Dantewada sleep under the stars and shit under the trees rather than allowing governments to exploit the mineral wealth that lies buried under the earth in the forests.

On the other hand, transformational leadership is slow to yield dividends but is good for the nation in the long run. A transformational leader enunciates an ideal vision which his followers identify with and work for its achievement. As long as Narendra Modi governed Gujarat he adopted the transformational leadership principle. After becoming the prime minister, though he has been projecting a transformational vision (development-based economy, skill development, India as world guru, make in India, swatch Bharat, give up LPG subsidy et al) he somewhat diluted it by offering special packages for various states.

The Siromani Akali Dal (SAD), the AIMIM and the IUML are political parties formed based on religious ideologies. The may be described as niche players. The AAP debuted as a niche player claiming to champion the anti-corruption cause but seems to have somewhat lost the plot subsequently. There are quite a few other regional parties which have their influence limited to small niches.

And now we come to the crucial question of ‘what went wrong with the Delhi and Bihar elections?’ when viewed in terms of the application of marketing principles.

DON’T OVERSTRETCH A BRAND

In both Delhi and Bihar the party overstretched brand Modi. The voter recognised brand Modi but was unable to understand how it satisfies his/her needs.

Remember the first principle of branding is identifying and satisfying apparent or latent consumer needs. In 1983 when N. T. Rama Rao formed the Telugu Desam party, the electorate was vexed with the centralised Congress governance (no Congress CM was allowed to finish his full term till then) and corruption. There was a political vacuum, which meant there was an unsatisfied consumer need. Chiranjivi could not replicate 1983 when he formed his Praja Rajyam in 2008, as there was no unsatisfied need when he launched his party. The electorate was satisfied with YSR. In the 2009 elections, Chiranjivi had to satisfy himself with just 18 seats in the 294-seat assembly, and in fact lost one of the two seats he contested!

In Delhi and in Bihar the electorate was unable to see a local structure which would translate Narendra Modi’s transformational vision  - even if they understood it - into action.

REMEMBER A BRAND IS A ‘PROMISE’

The second but most important principle of branding is it offers, nay it is, a promise. Beyond satisfying consumer needs, a brand promises to deliver value. If a brand does not deliver on a promise, no amount of packaging or marketing will help sell it. It has been sixteen months since the national electorate voted brand Modi to power. Brand Modi has many achievements: improving India’s image internationally; attracting foreign investments; foreign policy; revamping railways et al but they are all intangibles. Any achievement in bringing down corruption is also an intangible - at least in the short run - for the ordinary voter. It takes time for the effect to seep in.

What the voter hasn’t seen is the reversing of inflation, creation of jobs and the lofty promise of bringing back black money. The ordinary voter can neither understand nor care why the government is unable to deliver on the promises. He/she wants delivery. A voter who has to shell out Rs 180 – 200 for a kilo of tur dal does not understand highfalutin economic principles. World Bank classifications or elevation in IIP and GDP metrics do not fill the belly!

The BJP government also seems to be helpless in pursuing corruption cases against the previous government. Why could it not form special courts and transfer all corruption cases to it. The government, it appears, is handicapped by the ‘insidious networks’ of bureaucracy, judiciary and the media which the previous Congress government formed, cultivated, nurtured and left in place. The new government should have used its think tanks to find ways and means to dismantle the ‘insidious networks’. Alas, it does not seem to have a clue as to how to go about it. The ordinary voter neither understands nor cares why the government is handicapped but expects delivery on the promises of corruption and black money.

A prominent media company has been accused of indulging in money-laundering in collusion with some Congress politicians. Another media company which finished the career of a BJP president and all but finished a popular leader of an alliance partner has been accused of making tons of money out of activities not usually associated with media companies. The BJP government should have speed-tracked cases against these companies and made an example out of them. Both Indira Gandhi and her daughter-in-law Sonia Gandhi have effectively used the carrot and stick policy to make the media fall in line. Despite public posturing about freedom of expression the media both fears and respects them.

FOCUS MORE ON BRAND QUALITIES LESS ON COMPETITION

Every brand feature should relate to a benefit. The benefit defers from consumer to consumer. For a consumer who buys a Audi or a Bentley the benefit he seeks is not fuel economy. The benefit he seeks is the recognition that he made it big in life. For him owning a Audi or a Bentley is a status symbol. On the other hand for a consumer who buys a Hyundai i10, the benefits he seeks are comfort (seating, air-conditioning), speed manoeuvrability and economy. A consumer who buys an entry level car like Maruti Alto seeks only economy. Of course he aspires to ascend the ladder and be able to buy higher level cars.

A consumer would be more interested in knowing the better qualities of a brand he is buying rather than the poor qualities of a competing brand. Comparison with other brands may be necessary but beyond a point it would be counterproductive. Why do people watch television advertisements of brands they already own? The reason is they want to reassure themselves that their buying decision was right.

Instead of running down the JD (U) and the RJD, the BJP could have paraded the achievements of its own governments in Chhattisgarh, Gujarat, Madhya Pradesh, and Rajasthan. Chief Ministers of these states could have addressed public meetings and enumerated their success stories. It would have reassured the Delhi or Bihar voters what the party could deliver. Why the BJP did not think of this is quite frankly inexplicable.

‘POSITIONING’ IS THE KEY

‘Positioning’ is a key concept in marketing. It does not exist in the market place; it does not exist even in the brand. It exists in the consumer’s mind. It is a slot in the consumer’s mind that the marketer seeks to own. In the process a marketer may have to sacrifice a part of the market to obtain a larger share of the targeted consumer’s mindshare. As an example take the case of the beauty soap, Lux. For several decades (the soap is actually 90 years old), it has been marketed as a soap that would make women look beautiful by featuring popular female film stars in its advertisement campaigns. This means the company was ready to sacrifice the market segments of men, old women and children to capture as much of the ‘young women market’ as possible. A successful marketer knows that his brand cannot be everything to everybody.

Indira Gandhi was once reported to have said she did not have to bother about the middle class voters as they do not go and vote in numbers. Her market was the poor voter; therefore she positioned her party as a party for the poor. Hence the ‘garibi hatao’ slogan! But the market is dynamic. There has been an increasing upward mobility in the society since Indira’s time. The middle class voter today is not as apathetic as in the 60s and 70s. He wants a say in governance. It was into this aspirational class that Narendra Modi was able to successfully tap in Gujarat since 2002 and nationally in 2014.

However, ‘positioning’ can’t be frequently changed. It is for the long haul. It has to be constantly claimed and the claim reinforced. BJP has a core constituency. The party should not let it go. It should retain it while trying to gain a share of the rest of the market.  

COMMUNICATION KEY TO EFFECTIVE BRAND BUILDING

In a successful company everyone from the managing director down to the girl sitting at the telephone switchboard should be committed to brand building. There is a simple reason for this. The day to day consumer comes into contact with the telephone operator, the service mechanic and other low level employees but rarely with the managing director. It is they, who should impress, win over and reassure the consumer. They all should speak in the same language to convey the company’s commitment to delivering brand value. It can’t be achieved by speaking in multiple voices.

It was probably the low level BJP politicians who did the party in. Congress and other secular-labelled parties do pretty much what they want while mouthing platitudes about the idea of India. By talking in multiple voices the low level BJP politicians have created a negative buzz which the competition has successfully exploited to its advantage. The low level BJP politicians should take a leaf out of Congress book. They could pursue their Hindutwa agenda without making a song and dance about it.

DEVELOP & FOCUS ON LOCAL LEADERSHIP

As has been mentioned earlier the voter in Delhi and Bihar did not understand who would deliver the brand promise if they voted the BJP to power. The BJP did the mistake of parachuting Kiran Bedi as the chief ministerial candidate in the eleventh hour, ignoring workers who had toiled for the party for decades. It antagonised its cadres while not impressing the voter.

Could the BJP not have projected Sushil Modi as the chief ministerial candidate in Bihar? He matches Nitish Kumar’s image in being soft-spoken, in being low profile and has an impeccable record of delivering as finance minister. Britain has the tradition of the principal opposition putting in place shadow cabinets. It is like target-marking in rugby football games. There may be a worthwhile lesson for Indian political parties in it.