100 year old story holds the secret for our industry's growth

Wrigley's chewing gum - world leader with a commanding 50% global market share, sold in over 180 countries across the globe. A 125 year old business that continues to dominate the global chewing gum market. A marketing genius that created advertising axioms that the world continues to follow, for over 100 years. But the most fascinating aspect of the Wrigley's story is that the founder William Wrigley Jr never set out to make chewing gums! His keen sense of observation enabled him to stumble upon the business potential of chewing gums and his innovative mind then went to work, creating a huge market which his firm continues to dominate.

Why is the Wrigley's story relevant to us in the fund business? There are interesting parallels between what happened with Wrigley's a hundred years ago and what's been happening with our fund industry over the last 5 years. And, for those who have a keen eye to spot an opportunity, there's another one waiting to be tapped by innovative minds in our industry over the next 5 years.

imgbd William Wrigley started out as an entrepreneur way back in 1891, selling soaps and later baking powder. He had a smart marketing mind and understood consumers better than most. He figured out that offering freebies - "something for nothing" - is a great way to interest your customers in your products. To push sales of baking powder, he started offering two sticks of chewing gum free with every packet of baking powder. He started noticing an interesting trend - customers were actually interested more in the chewing gum rather than the baking powder! An add-on / freebie was actually proving more popular than the base offering. He decided to plunge headlong into where his customers were pointing him to - which was chewing gums. From being a wholesaler of baking soda, he plunged headlong into the world of manufacturing chewing gum. Within a couple of years of launch, he introduced two flavours which went on to become - and still are - the world's most popular chewing gums - Wrigley's Spearmint and Wrigley's Juicy Fruit.

Tell 'em quick, tell 'em often

Latching onto a promising idea was one thing - popularizing it across the US was quite another. Wrigley's redefined the world of advertising with their ground breaking axiom, which continues to be the guru mantra for advertisers today - "Tell 'em quick, tell 'em often". Make your message small and simple, and make sure you repeat the message as often as you can to build lasting recall. Sounds obvious today - but Wrigley's actually broke new ground a 100 years ago with this wise advertising strategy. Despite being a single product company, Wrigley's became one of the largest advertising spenders in the US with their concerted awareness building efforts. During World War I and its aftermath, when business sentiment was lousy and everybody was cutting back on all spending, advertising rates hit rock bottom. Sensing an opportunity, Wrigley mortgaged everything he had to raise cash for a high decibel $ 250,000 advertising campaign that would otherwise have cost him $ 1.5 million and launched a campaign that catapulted his brand into public consciousness literally across the US. In addition to his high decibel advertising, he came up with what was then seen as a stunt - but which later came to be known as direct marketing. He got hold of phone directories of all cities across the US, and mailed to every house listed in every directory, a complimentary 4 stick packet of Wrigley's chewing gums. The combined impact of high decibel advertising and an audacious direct marketing campaign raised awareness of chewing gums and Wrigley's incredibly across the US and enabled the company to create a stranglehold on the market - which it continues to hold onto.Wrigley's seized the moment a hundred years ago to set the foundation for what went on to become a global brand and a household name across 180 countries.

Many parallels with last 5 years in our fund industry

That was a hundred years ago. But, what we are seeing in the fund industry over the last 5 years has some interesting parallels. And, if we take a leaf out of what's happened over the last 5 years, we can create another big wave over the next 5 that can take the industry to a whole new level. Consider what's happened with SIPs in the last 5 years. SIPs are at the end of the day an additional feature offered in mutual fund products. But in the last 5 years, SIPs in terms of consumer awareness, have become larger than mutual funds. SIPs are what are being bought now - not mutual funds. Market researchers often observe that consumers say that they don't invest in mutual funds, but they invest in SIPs! It's a bit like the chewing gum becoming more popular than the baking soda it was offered as an add-on to by Wrigley's.


SIPs have always been a standard feature of mutual funds. But something changed from 2013 - the advent of the 2 bps investor education pool created by SEBI. Over the last 5 years, we have seen the biggest awareness building initiative this industry has ever undertaken - and everybody in the industry spoke the same language - that of SIPs. Sure enough, awareness shot through the roof and with supportive tailwinds from markets, SIP volumes have now reached levels we only dreamt of 5 years ago. Today, many fintech start-ups promote only SIPs - they rarely talk about mutual funds. Many distributors position themselves as SIP experts rather than mutual fund distributors. SIPs have indeed become a bigger retail draw than the original product - mutual funds. Latching onto the feature that appeals most to consumers and building huge awareness around that one feature has resulted in huge growth of the underlying product. What we've done in the last 5 years has quite a few parallels with what William Wrigley did over a century ago.

There's another one waiting in the wings: SWP

The SIP story now has a momentum of its own and will hopefully establish itself in the household savings wallet as a permanent, must-have product. What's interesting is that the industry is at the threshold of creating another such killer proposition - if it gets its act together quickly. Systematic Withdrawal Plans (SWPs) have - like SIPs - been around as standard features of mutual funds for as long as we can remember. Just as SIPs caught the imagination of a savings hungry young and middle aged population, SWPs have the ability to catch the imagination of the huge base of senior citizens who are currently struggling with dwindling returns from their traditional fixed income instruments. Can our industry get together and speak with one voice about the benefits of tax efficient, inflation-protecting, regular cash flow solutions for retirees using SWPs? Imagine the impact we can make if AMFI were to launch for a full year a focused campaign only on the benefits of SWPs for senior citizens. Imagine if we take a leaf out of what Wrigley's did a hundred years ago, and have AMFI launch a huge direct mailing campaign targeting every tax paying senior citizen in the country, with active ground support from the IFA fraternity to follow through and convert leads generated by this direct mailing campaign? Wrigley pulled out all stops when competition hesitated to do so - and won the battle decisively. In the retiral income space, competition in the form of deposits and annuity products are currently weak as they offer unattractive returns. Isn't this the time for the fund industry to think innovatively and come up with bold ideas to take competition head on and establish itself as the premier retirement income solution provider for every tax paying Indian?

Are you a SIP investor, a SWP investor or a MF investor?

Think of what a combination of SIPs and SWPs - two humble add-on features - can do for the underlying product - mutual funds. In times to come, consumers are likely to identify themselves either as SIP investors or SWP investors - perhaps not as mutual fund investors. What we need is an imaginative, bold and innovative mind like what William Wrigley showed over a hundred years ago, to understand what his consumers really wanted and then to make sure that you give them what they want, how they want it and leave no stone unturned to build mass awareness of your consumer-friendly offering.


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