New business models evolve in India

2 September 2014

MUMBAI: The growth of ecommerce in India will lead to the evolution of new business models as the physical and digital worlds find ways to operate together in FMCG, according to the head of PepsiCo India.

"There is a physical model of distribution and there will be a digital model and the combination is what I call a 'digi-cal' model," D Shivakumar, chairman and CEO, told FirstPost.

And he expected that very different business models would emerge in 'digi-cal' in India. "People will take a few bets," he said "and there will be some ecosystem partnerships between a few select people and brandowners."

He saw a three-way play evolving whose final direction was as yet unclear. "Modern trade is playing digital, digital is playing digital and brand owners are playing digital, so that confluence … let's figure out how it goes."

Another disruptive digital development with great potential was the increasing use of wearables, which Shivakumar suggested could have a similar impact to the advent of the bar code.

"Once you have something on your arm, then your location, what you do, how you do it, every single thing can be tracked almost on a minute-by-minute basis … it can fundamentally change how marketing is done," he said, while acknowledging there were privacy issues still to be overcome.

Pepsi's own marketing has invested heavily to achieve a high profile in India through its sponsorship of India Premier League cricket, a tournament which has been the focus of several betting scandals in recent years. Was the association worth it?

Shivakumar said the 2014 tournament had been completely free from controversy and outlined how part of the brand's marketing with the Board of Control for Cricket in India had involved communicating to the audience, via cricket ambassador videos, that "people play for the pride of cricket as opposed to the money in cricket".

IPL is a huge property, he said, and he stated that Pepsi had got the "talk value" it sought from its sponsorship.

Data sourced from FirstPost; additional content by Warc staff