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Creating
and Preserving
Brand Value
Arvind Singhal
Chairman, KSA Technopak India
The most important change in India has been the
demographic one. By this time, almost all know that
we are a nation with a very young populationBrand
owners or creators have to invest more time, effort
and money in trying to forecast impending changes
in consumer behavior and expectation
It may be an understatement to say
that we are seeing challenging times when it comes
to creating and preserving value for a wide range
of consumer products’ and services’ businesses
through the process of developing and nurturing
Brands. Companies having some of the most successful
brands - both in the Indian as well as global context
- are unable to deliver expected value to their
shareholders. The list of companies facing such
a challenge, at least in the Indian market place,
goes well beyond Hindustan Lever which unfortunately
is increasingly getting pilloried (perhaps unfairly)
by all and sundry. Illustrious names such as Coke
and Pepsi, despite trying almost every trick up
their sleeves, have yet to delight their parent
companies. Macdonald’s, despite making a multi-hundred
Crore investment in India so far, probably has just
about breached the Rs 100 Crore annual sales level
and profits may yet not be in sight. Whirlpool and
Electrolux, exceptionally successful global businesses,
have been frequently re-jigging their business strategies
but have yet to zero down on the winning one. Sony,
alas, seems to have already given up on India (at
least as far as audio systems are concerned) and
has been reportedly looking to increase its attention
on China now. Ford and General Motors are just about
beginning to pick up some traction in the Indian
market. Levi Strauss and Benetton still enjoy leadership
in their global markets despite some hiccups now
and then. However, success as measured by a leadership
share of market continues to be elusive in India.
| Brand
owners or creators have to invest more time,
effort and money in trying to forecast impending
changes in consumer behavior and expectation |
At the same time, LG is well on the
way to build an Rs 7000 Crore (and profitable) business
in India this year. Samsung may cross the Rs 3000
Crore revenues mark early next year. Hyundai is
a close number three in the Indian market despite
the current leader - Maruti - having a head start
of over 15 years. It is old news to talk about the
success of Ghari, Cavincare, Anchor, and Bagh Bakri
(in detergents, personal care, toothpaste, and tea
business respectively). Himalaya seems to be doing
financially better in the packaged water segment
though Kinley, Acquafina and Bisleri may be having
a bigger market share. In just about no time, Pantaloon
Retail has raced to be amongst the front runners
in the Indian retail sector and could well be the
very clear number one by end of 2005, besting its
other illustrious competitors in the process. Haldiram,
Café Coffee Day, and Barista (despite some
recent hiccups) continue to the packaged snack food
/ food services brands Indian palates seems to be
voting for.
Is there any rational explanation
for this seemingly peculiar phenomenon that while
some of the best international brands have somehow
under-performed in India, relative to their potential,
others have sprung from almost no where and now
occupy pole positions in their specific product/
market segments?
In my view, some facts stand out
that can give some insight on what is happening
in the Indian market today, and some learning emerges
from the same. At the risk of stating the obvious,
India in 2004 is a very different country from what
it was in 1994. Further, it is certain that the
India of 2014 will again be very different from
what it is today. There are several changes that
have been taking place in the last two decades,
the impact of which is being partially felt today.
The full impact of these subterranean changes will
unfold in the coming years, and at that time, many
marketing and branding paradigms would have had
to be rewritten.
The most important change in India
has been the demographic one. By this time, almost
all know that we are a nation with a very young
population. Almost half of India was born after
1982 - an incredible statistic when we compare the
500+ million Indians who are below 22 years of age
with more mature markets like the USA (entire population
of about 300 million) or extended EU (about 350
million inhabitants). And we are still adding about
25 million newly born each year, ensuring that the
median age in India remains in mid-twenties for
the next 15-20 years! Most of our “new”
consumers have no recall or affinity to brands or
companies that have existed for many decades or
even centuries like in the case of Levi Strauss.
These young consumers’ mindspace is currently
a blank canvas, and almost every company has a chance
to make an impression on this canvas. Brands/Companies
that have relied on the continuity factor (some
of HLL brands and strategies will certainly fall
in that genre) have found, to their dismay, a surprising
disconnect between the buying behavior of their
older customers and the potential new consumers.
These young consumers have been born
in times of increasing consumerism, in an environment
where each day, they are offered more choice of
product and service categories on which they can
spend money, and newer options within each product
and service category. Whichever company/brand offers
a better (perceived or real) price-benefit value
proposition gets the share of customers’ mind
and wallet.
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