Here is the full transcript of VP of Xiaomi Manu Kumar Jain’s TEDx Talk: Marketing Without Advertising at TEDxIIFTDelhi conference.
I’m going to talk about something that has really fascinated me over the past three years, which is, how you can build a brand without really advertising. Historically, people are taught that marketing is equal to advertising. The most convenient way of building a brand or selling our business is to basically launch a product, do a lot of traditional ads — TV ads, and then assume that people will come and buy it. “But is that the only way to build a brand?” is what I’m trying to caution today.
Let’s start from the beginning. In the 1980s, when I was a kid, probably many of you were not even born, this was the only way for us to come to media. This was Doordarshan. Then around the late 1980s or early 1990s, all of a sudden my role changed because I had a choice. I had two channels: Delhi and Delhi Metro. So I could switch.
And with this Delhi Metro coming in a lot of new soaps came on, like Zabaan Sambhalke, Dekh Bhai Dekh, etc. And a lot of new brands started showing their TV ads. In fact, all the brands that I consumed during the 1990s when I was growing up were the brands that were introduced to me by these TV ads.
Then I went to I.O.T. the big revolution for me in I.O.T. was a new medium, called Internet. All of a sudden, I could go, and access Internet on something called “desktop.” I used to go to my conference lab, I used to go to Yahoo. I had an image of Yahoo! there. All of a sudden you could type something and results would come up. It was so fascinating! A new way of communication. About six or seven years back I thought that was the only way for me to access Internet.
Today, I’m responsible for Xiaomi’s business in India, and we call ourselves a mobile internet company but can you imagine that in 2010 I didn’t know you could access Internet on a mobile phone? In 2010, my wife gave me this phone, an N72, and that’s when she taught me, my wife, that you could access Internet on a smartphone. I said, “Wow!” This is phenomenal!” Who ever thought of something like this?
Anywhere you’re travelling, you no longer have to hold onto a laptop, or your desktop. And you can access Internet on the go. And that was one moment which basically defined my life. At that time of my life, I was working for McKinsey and I started thinking, “What am I doing?” The world is changing, and I need to do something much more exciting with my life. And that’s when we started Jabong.
Jabong was basically a new way of selling products. As many of you would know, he was selling shoes, clothes and other fashion products online. So we were trying to redefine the distribution network.
[1. Distribution. 2. Product]
We were saying, “We will sell these products, available offline, now online. We actually thought we would fail. Who would ever buy shoes online, or clothes online? But eventually we were wrong; a lot of people were coming and buying. We came up with a new type of distribution but our marketing was still very traditional.
At Jabong, we started with a lot of TV ads, print ads, outdoor hoardings, and he was spending just like any other traditional companies in the 1990s were spending. That’s how we were building brand. And I used to think, “Something is wrong.” Because when I used to compare Jabong to other Internet companies from the west, that I knew about and was proud of, like Google, Facebook, etc., I thought that these are companies that have built Internet businesses without any kind of TV ads. So what were we doing wrong?
At that point, I didn’t have an answer. About two and a half, three years back, I left Jabong and I started Xiaomi‘s business in India. When I started Xiaomi’s business most of the people said, “You’re going to fail.” “You’re going to be a disaster.” “You’ll die in three months.” The reason was that we were selling phones online. And only online. And we were not doing any TV ads. In fact, if you look at all the smartphone brands before that they had built their business on only the usual things building a huge distribution network across 100,000 shops, doing a lot of traditional TV ads or print ads. People said we weren’t doing any of the usual things so we would will definitely die.
Today we have become the number one brand in the online segment. We have become the number three brand online plus offline in all of India. And we have had a great success over the last two years. A lot of people don’t know us because we don’t do any TV ads but we have basically built a pretty solid business foundation over here. And that started me thinking, “What have we done differently? And can you basically share it with others? And what have other similar companies across the world have done, which is how to build brands without any advertising?
I looked at the top 50 smartest companies in 2015 in the world. This is MIT’s list of last year. We are one of them, by the way. I short-listed some of these companies, which I thought would be some of the companies we could relate to, companies that we use or we have heard of. Companies like Facebook, Snapchat, Uber, Apple, Google, Amazon, Tesla Motors. I said,”What are these companies doing? Aren’t they really spending money on advertising?” And the answer was, “No.” None of them.
Take the example of Facebook. Facebook has 1.7 billion people coming on Facebook monthly. One fourth of the people in the world come and use Facebook every single month. Has Facebook ever done any kind of TV ads? No. Take another example from the East: Alibaba, which is the biggest e-commerce company in China, and the biggest e-commerce company in the world. They have a “Singles day”, every 11th day of the month they celebrate a Singles day. Last Singles day they did a revenue of ten billion dollars in less than a day. Ten billion dollars! And without any TV ads.
So what are these companies doing differently? What are all these great companies across the world doing differently? And that’s what I’m trying to answer. If you were to ask me, the number one thing that they are doing differently, is that they have a fundamentally great product. [Product] A great, great, great product. In fact, if you look at most of the founders, they’re paranoid about one thing, which is product. They’re bothered by one thing, which is product. Most of the CEOs or founders of these companies are the biggest product managers who are very consciously, every single day, just working on product.
If I divide these companies on two different axes, with marketing spend on one end, and product innovation on the other. So companies like Google, Facebook, Wechat, Tesla, etc. are companies who rank very high on product innovation and spend zero money on marketing, They’re companies like Apple, who are great on innovation, who also spend money on marketing. They’re companies like our biggest Indian success, Flipkart, which has done innovation, also spends a lot more money on marketing And a bunch of traditional companies which spend a lot of money on marketing, and may or may not be doing a lot of product innovation. These are the companies that I’ve shown in blue.
Now, the point that I was making that most of these CEOs and founders are so paranoid. Take the example of Facebook. Mark Zuckerberg is only involved in product. That’s what he does every single day. But he’s hired a separate person to take care of the company who shadows in the back. And he says, “Let me focus on product. All the other stuff, like revenue, marketing, profitability, etc is something that you should focus on. So that I can focus on one single thing which matters, which is product.”
Take an example of Tesla. [Model 3] Not many of know about Tesla here because it hasn’t been launched but Tesla is basically redefining the way the world will travel. They’ve launched not only electric cars, but they’ve launched cars which have an auto-drive capability, which means you can sit in the car, tell it the address, and it will drive on its own. You don’t even need to park the car. It will go and park on its own. This is something only thought possible in sci-fi movies, which we thought would be 100 years from now, but it’s beginning to happen now. And the person who is driving this, who is in war on this on a daily basis is the CEO and founder of the company, Elon Musk, himself. He just worries about one thing, which is product.
At the beginning of 2016 they announced that this Model 3 would be sold and made available in 2017. [Pre orders worth US$ 10 billion in 2 days] And still, within two days, they did a sale of ten billion dollars. And with zero advertising.
[Innovation] How do these companies build product? Obviously, most of these are innovators. They try to do something different. Take an example of Flipkart, the biggest startup in India. It came up with a very innovative product, which was cash on delivery. I would give a huge amount of credit to Flipkart, for starting the e-commerce revolution in India. They were not the first e-commerce company. There were companies like Indiatimes Shopping, Rediff, and others, like Indiaplaza, which existed five years before Flipkart started. But none of these companies was a success story.
When Flipkart started, they basically realized that most of the consumers in India don’t have credit cards or internet banking. India is a cash economy. Most of the people still do their business on a daily basis in cash. So why force consumers to come online and basically shop using a credit card or Internet banking, when they don’t even have this facility? So they came up with the concept of cash on delivery. And today, about two thirds, depending upon the number you look at, but approximately two thirds of Indian e-commerce is driven by one single concept, cash on delivery. The e-commerce market exploded when Flipkart started with this one single concept, cash on delivery.
Look at Snapchat from the west. Snapchat was not the first social media platform, nor the first image-sharing platform. Before Snapchat there were a lot of other social media platforms or image sharing platforms. But there was an inherent need. If I were to send a picture to you, it would be stored on your phone, or on your desktop, or your laptop, and you could have a permanent access to that image. What if I wanted to send you a picture but I just wanted you to see it but it should not be stored on your phone or any device. It could be some naughty picture that I’m sharing with my friends or it could be something else, right? They realized there was a need for this and they innovated on this, saying, “We will come up with a product which allows you to share pictures without anyone else sharing this picture.”
And then four to five years — Snapchat was pretty early, I think 2011 or something when they started. In four to five years, they have become bigger than Twitter, and the amazing statistic is that 60% of young users in the US in the age group of 15 to 35 actually use Snapchat very actively.
So the point I’m trying to make is that all these companies had great products, great innovation, they understood what consumers wanted, and they accordingly came up with something to satisfy the needs of the consumers.
[Product, Price, Promotion, Place]
A lot of you who are studying here will know the four “Ps”. The reason I brought it up was that I don’t think they are all relevant. And even if they are, if you were to ask me, there is one “P” which stands out, which is probably five times, ten times, 100 times bigger than the other three, and that is “Product.” If your product is fundamentally great, even if you don’t do the other three Ps, you can live with it. But if your product is shitty, even if you do great things with the other three Ps, you cannot succeed. So product is important.
What do many of these companies, also do apart from product to successfully build brands without advertising? They build BG. [Network] They build a small group of users who are social influences. A traditional way of working was that a company would have a brand campaign, they would have TV ads, and they’d hire a brand ambassador, say Shah Rukh Khan, or Salman Khan or any big star, and they would do a TV ad which will reach out to millions of people. But in some of these new-age companies, the way that they work is, they don’t have any TV campaign, they don’t have a brand ambassador, but they have something called “brand influencers.” They will go and work with a small number of people, who genuinely believe in their product, who love these products, and become brand evangelists. These are the guys who will go to their social circle, friends, family, or colleagues, and will talk about this brand.
Think about this: Today, most of the shopping, or any other thing, is a social need. If you decide to buy a phone, you will typically go to a friend or family member, and ask, “Hey, which phone should I buy? My budget is 10,000 bucks.” “I want to buy a car. My budget is ten lac rupees. Which car do you suggest?” “I want to buy a watch. My budget is 10,000 bucks. Which one should I buy?” And these friends, colleagues and family will recommend brands. And this is much truer in smaller towns.
A 50-year-old man living in a small town would call up a son or daughter or a nephew or a niece living in Delhi or Bangor, and ask, “Hey, which one should I buy?” And these are the brand influencers who can recommend the phone or the car or whatever the product is, and say “This is what I use. I believe this is a great product, and you should buy this.” When a brand influencer recommends something, it is far more trustworthy than a big film star saying this. Because more often or not you know that when a film star is saying that he uses this phone or drinks this cola, he is not even using it. When your social circle says this, the amount of trust is much higher.
[My Fan Club]
We do this a lot. We have fan clubs in every single city. And these fans — like when people ask me how we have built a great brand– a huge amount of credit goes to our fans, who are living in every single city and who help us spread this message without any kind of TV ad, without any type of print ad. Great product, great network.
Again I want to repeat: [Advertising = Success X] Advertising does not lead to success. I just want to give two last examples from Indian companies, which I hope will help establish this point, that if your product is “shitty” you cannot build a brand only on the basis of advertising. Look at this e-commerce company. [askmebazaar.com] It was in use about a few weeks back, Askmebazaar. They had a website; there was nothing special about the website, nothing special about the assortment, nothing special about the price, or about their service, but they spent hundreds of crores– or whatever the amount was, I don’t know, on TV ads. With some of the biggest brand ambassadors, Kangana Ranaut, Ranbir Kapoor, and a few other big stars doing TV ads every single day for AskMeBazaar. And yet, this company was shut down. No great product, amazing advertising; it doesn’t work.
Another very radical example from our Brake and Motor industry, and I’m sure many of you will notice, is Patanjali. Look at Patanjali versus Dabur. Dabur was started almost 150 years back, Patanjali was started ten years back. Today their revenue is similar, and Dabur spends 25% of their revenue in marketing. 25%. Patanjali also does a little bit, but nowhere close, almost negligible. And in ten years, they have done what Dabur did in 150 years with zero advertising.
So coming back, if I were to summarize, I would say, ” Yes, the traditional form of marketing has some merits.” But that’s what I call lazy marketing.
[Traditional advertising = Lazy]
Lazy: we build a brand, just do TV ads, and then hope the consumers will come and buy. The smarter and harder we’re working means that we’re building great products. Brands and companies will eventually realize that consumers will understand that when I’m watching a TV ad and I’m buying a product, I’m not only paying for my TV ad, the TV ad that I’m watching. I’m also paying for thousands of others who are watching this TV ad, but are not buying. It is not a good proposition for a brand; it is not a good proposition for the user. It’s a lazy way of working. And I hope in the future a lot more new B to C tech companies will not use this. Thank you.