K Madhavan, Managing Director of Peps Industries took over a sick manufacturing plant in 2006 and turned it around. “The Mattress Man of India”, as he is called, is confident of more than doubling his revenues and crossing the Rs 1,000 crore mark in two years At the age of 55, most professionals, start planning on life post retirement. However, going against the tide, K Madhavan started his entrepreneurial journey at 55 when he took over Peps in 2006, after spending over 30 years “living, breathing, thinking mattresses.” Madhavan says that the industry was dominated by a tiny group of highly consolidated wholesalers with one or two major players around. “From the consumer’s end, I realized that good sleep is important to fuel and replenish and that is possible only if you have quality products available as an end consumer. To make that happen at a scale that I envisioned, I needed to take the Entrepreneurial path,” he says. Today, a little over a decade later, the Managing Director of Peps Industries, Madhavan says, “Over a period of 12 years we have established ourselves as the India’s top-selling spring mattress brand with a CAGR growth rate of around 33%. In the year we started our operations, the company turnover was Rs 4 crore and today in 2018, Peps has a turnover of over Rs 300 crores.” A Disruptive Start Remembering how the journey started Madhavan says, “We cashed in on a golden opportunity and took over a sick manufacturing unit that was for sale and converted it into a profitable unit.” In a disruptive move, Peps then associated with Restonic USA - the fourth largest spring mattress brand in the world – and brought in spring mattress as a product category to the end consumer. This at a time when the Indian market was dominated by Coir & Foam mattresses and spring mattresses had a market share of less than 2% of the total mattress market. In fact, in 2012, Peps signed a 25-year licensing agreement with Restonic. Building Brand Peps When Peps started, the industry norm then was to talk about the product and its benefit. However, the challenge for the new entrant to the industry was that it had a product – spring mattress, that customers were unaware of. A major challenge was educating the customer about spring mattresses when the traditional mindset for Indians was that only a firm mattress is good for sleep and Madhavan says he had to use a similar language as other brands, with the focus being on good sleep. However, soon other brands started emulating the messaging. Madhavan says, “It wasn’t long before the market caught up with us. And every player started talking about the need for great sleep. We lost the plot with our customer then. For the customer didn’t know who started talking about great sleep first. Was it Peps or some other brand? We weren’t making a difference to him; were fast losing out on our emotional connection and our product laden communication for great sleep was mirrored across several brand communications.” This had the company going back to the drawing board and reflecting on how to connect with the consumer. “We ideated on what happens when you get a good night’s sleep? You wake up refreshed. That insight became our focus of key communication. We utilized marketing tools to communicate and connect with this emotion. Of waking up refreshed. We found that given today’s lifestyle, an average adult sleeps less than seven hours a night. We felt the need to create awareness about sleep hygiene that led to the creation of the Peps campaign: ‘live the #pepslife”. Peps positioning now was focusing on the aftereffects of a good night’s sleep, i.e. waking up energized. He says, “At a time when other brand campaigns spoke about sleeping well, our focus was to highlight the importance of waking up fresh. ‘Disruptive innovation’ has been at the core of the brand and the organizational DNA.” Madhavan also notes that the consumer has changed in the last three decades, from a disinterested to mildly interested, today’s consumer has evolved to be an informed buyer. What must also be kept in mind is the shelf life of the product - with some people changing their mattress once in 10 years, and the low priority given to the mattress, by consumers, when compared to other consumer durables and household products. He also points out that consumers are willing to compromise easily on the mattress quality if it doesn’t fit into their budget. At Peps, the focus is on creating meaningful relationships and connecting on an emotional level with the consumers, employees and distributor networks. Madhavan says, “The sense of belonging and connect has to be inclusive. This has to reflect in the core identity and values of the brand. You have to continuously be on top of every strategy and tactic that resonates these values.” He also candidly shares an example of how the brand recently dropped the ball in staying connected with the customer. “Our radio advertisement ran past the Diwali period with the tagline of ‘This Diwali Season’. We should know as a brand that while we timed our ATL in line with the festive season and connected with the joyful emotion of the customer, by continuing to play the advert post-Diwali, we didn’t keep pace with the changing emotions of the consumer. The consumer has moved on from the joyful emotion to that of other. While our communication stood still at the previous emotional pit-stop defying the brand focus when talking to the user base,” he says. Though mattresses as a product is a low involvement category, Peps’ vision is to move out of the bedroom as a mattress brand and move into homes and living spaces. To build a brand connect, Peps aims to reach its audience across all platforms, as and when they are ready to listen, be it during their daily commute to work or in between commercials when watching a movie, Social Media platform such as Facebook, Instagram and also hoardings, articles, write-ups etc. Speaking of Digital, Peps and Flipkart recently entered into a partnership which gave the e-commerce company exclusive rights to sell Peps Industries’ products and its two allied brands Hypnos and Cirrus. With this, the company looks to conquer the online segment as well. The Dreammakers Peps Industries recently announced its new brand positioning - ‘DreamMakers’ and in line with its core brand philosophy to help Indians sleep better and as a part of a strategic brand repositioning exercise, the company released its latest #DreamMakers series. The campaign highlights Peps’ proposition of a good night’s sleep as vital to chasing dreams. K. Madhavan, Managing Director, Peps Industries says, “Peps has led by example concerning disruptive innovation in the mattress category. With the new brand narrative, we seek to bring a fresh perspective in the spring mattress category via product innovations that will shift focus from great sleep to waking up refreshed with a purpose. Thereby, harnessing one’s ability to perform at their peak to chase and achieve their goals.” Speaking on the insight behind the campaign he says, “The millennials have goals and ambition that drive them to dream of bigger things and with no fear whatsoever to chase their dreams. This resulted in our current brand positioning of being a #Dream Maker. We aspire to be that brand which gives wings to a consumer’s dreams as he wakes up from a refreshed sleep. Via our incremental product innovation and a 360-degree communication approach, we intend to take on the mandate of being DreamMakers as a brand platform. And connect in a way that allows the brand to go beyond the product and connect with the consumer’s emotions by speaking to his hopes, dreams, aspirations and anxieties." Seamless Communication Peps is also in the process of streamlining its communication, and making it seamless, across platforms to ensure that the user engagement is simple and clutter free. The coming year at Peps will see the firm integrate seamless messaging across all platforms of communication – right from the voice IVR to design, style, packaging, point of sale-online and offline-will all have same consistent messaging. On a final note, Madhavan says that today Peps is present not just in India but also in Sri Lanka, Bangladesh and Nepal as well. He adds, “We have grown in size today with our current channel strength of 4000-member dealer network spread across India, with 140 company-owned and franchise based “Great Sleep Stores” - a concept of creating a bedroom ambience to focus on the personalized buying of a mattress after experiencing its feel. Our distributor network is around 187, poised to increase the channel width dramatically in the coming fiscal. We diversified our product portfolio to Affordable Luxury, International Luxury and Ultra Luxury. This ensures that all the consumers have access to a quality sleep and wake up refreshed.” I AM CONFIDENT THAT WE WILL CROSS RS 1,000 CRORE IN THE TWO YEARS “Someone once asked me, ‘Who do you respect the most in the world?’, I replied that I respect myself as what I am today or will be tomorrow is because of me. This is the belief I have in myself, and I was always confident in achieving what I set out to do. This is the reason I have reached where I am today.” This statement in a way encapsulates the persona of K. Madhavan, Managing Director, Peps Industries. His frequent use of metaphors as he recounts his life and decisions he made, makes one think that he could have also been a storyteller and a very good one at that. For example, when speaking of his years working as a professional, he says that he felt as a bonsai or a banyan tree planted in an earthen pot, today he sees himself as a tree growing in the forest, providing shade to many and doing good to the society. In a conversation with Pitch, Madhavan recounts the challenges. Excerpts What were some of the challenges you faced during the initial days? First and foremost, consumers weren’t aware of the product. Also, there was a belief that international products are too expensive and being a new brand, customers also wondered who the promoters behind the brand were? We also faced a challenge with the distribution channel, as many did not accept my product. Simple reason being that if they accepted my brand and started promoting it, they felt that the leading brands may not support them. Considering ours was a new product, there was a dilemma how much they could support us. And to compound, the problem, the product category we represent does not have great user engagement at a social level. It is not like a mobile phone or a car that people can flaunt. A mattress gets hidden in the bedroom under the bedsheet and is the last thing that people would show off in their bedroom. Customer interaction with the direct product is limited on an ongoing basis. Also, when you are tired all you want to do is sleep and many do not bother with the quality of the mattress. How do you then overcome this challenge with the consumer? We are now working towards enhancing the aesthetic value and the emotional value for our product now. We have now started telling customers that a mattress is as important as the clothes you wear. Why, because a mattress is more personalised. What mattress suits me may not be good for you as my body structure and weight is different from you and you should select a mattress suited to your needs. What happens now is that when you enter a multi-branded retail shop, you select a mattress based on the recommendation of the salesman, who in all likelihood will talk about a mattress that benefits him than the mattress that is best for your health. So, we have launched our ‘Great Sleep Stores where we showcase our entire range of products. We want a customer to come in, roll on the mattresses, feel them and then decide what mattress they want. What is the media mix for your latest campaign, DreamMakers? For the DreamMakers’ campaign, we are heavily using Television and Radio. We are using Radio mostly in the metros where the commute time is long and there is heavy traffic on the roads. On Television, we are mainly using General Entertainment Channels (GECs) which is seen by the entire family. This is because the decision to buy a mattress is made jointly by the husband and the wife. We do look at other media and Print, but to be very frank newspapers are very expensive and an ad in the newspaper is only seen once. You are very strong in the south… Yes, 80% of our total revenue comes from the south. We are looking at expanding in the western markets. The fact is that the psyche of the customers in the western markets is very similar to those in the south. We feel that influencing customers here is easier than those in the east and north. We are present in these markets but are more focused on the west. This year, we will cross Rs 475 crores and I am sure that two years from then, I will double my revenue and cross Rs 1,000 crores. We are growing at over 30% CAGR and my profitability (EBIDTA) is 12-13%. When the industry is growing at 10%, I am growing at 30% and I am confident that we will cross Rs 1,000 crore in two years. Published in the January 2019 Issue of Pitch Magazine