With the festival season round the corner, the rate cut in corporate tax is likely to spur growth in advertising and marketing spends as companies see an immediate increase in their margins. While experts are still estimating the growth, a few brands have begun rewriting their marketing strategies.
Vikas Iyer, Business Head for premium motorcycle brand KTM, which is 48% owned by Bajaj Auto in India, told BestMediaInfo.com that the move would allow companies to spend more on advertising.
Companies such as Hero MotoCorp and Bajaj Auto pay around 32% and 28% in tax. The auto industry, which is among the leading advertisers, is going through a tough time as automobile sales have been falling, leading to decreased ad spends.
After the tax rate cut, a lot of these brands might now pump more monies into digital but KTM will spend more at the bottom level of customer engagement. Present at the launch of its superbike 790 Duke, Iyer told BestMediaInfo.com that the brand will scale up its engagement with its owners via on-ground promotional activities.
“We never spend on ATL. We are completely focused on customer engagement at the bottom level with the biking community where we directly engage with our owners and intenders with the range of on-ground activities, which we will scale up further,” he said.
The brand has a customer base of over two lakh biking enthusiasts. And to engage better with bike owners, giving them first-hand experiences, it invests 50% of its spends on customer engagement properties such as Orange Cup and Orange Day. Apart from that, KTM invests in digital for interaction with people through its various campaigns on social media. Iyer said these marketing activities are of utmost importance and that is the reason why the brand didn’t cut short its spends even amid the economic slowdown.
Iyer said, “To a large extent, we have continued to maintain the spends for customer engagements. Those are non-negotiable. We have kept going with the same spends in the slowdown as well.”
In general, the slowdown has affected the spends and sales of the auto category. Apart from the bulk of the inventory that brands are trying to get rid of, they also are launching new products.
However, Iyer said KTM was sitting on a very low inventory compared to other brands. “We are still sitting on very low inventory levels as compared to the rest of the brands. The growth of the existing portfolio is further being fuelled by the new entrants. By the end of the 12 months, we will launch a new product,” he said.
KTM made an entry into the superbike segment with the recent launch of the 790 Duke. It is being launched in nine cities in its first phase — Mumbai, Delhi Bengaluru, Pune, Kolkata, Hyderabad, Surat, Guwahati and Chennai. The brand plans to launch the new model in 30+ cities by April 2020 in its second phase.
To promote the new superbike, the brand is focusing on engaging with the biking community with a lot of on-ground activities, including the track and test, giving them the first-hand experiences.
The brand entered the Indian market in 2012 and since then has grown its presence across 365 cities and 460 stores. Having grown at 44% since its inception, it was the fastest growing two-wheeler brand in India this financial year.