Branding In Indian Landscape

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Information about Branding In Indian Landscape

Published on June 17, 2008

Author: inside_out


Building Indian Brands

Levitt’s globalised market Theodore Levitt’s classic globalisation of markets theory predicted a worldwide consumer convergence of tastes Consumers throughout the world are increasingly motivated by the same desires to modernity, quality, and value: they all want a quality product at a low price “Only global companies will achieve long-term success by concentrating on what everyone wants rather than worrying about the details of what everyone thinks they might like.” Going by Levitt, companies must learn to operate as if the world were one large market ignore superficial regional and national differences and selling the same products in the same way throughout the world

Many takers of Levitt’s Procter & entered India in 1984 through its subsidiary Richardson Vicks Following Levitt’s theory, P&G expected Indian consumer to upgrade to premium Western products P&G believes that learning from one market can be transferred to another and constantly uses its ‘search and re-aply’ techniques However has faced many problems trying to sell products like Camy, Tampax, Ariel that were successful elsewhere Vicks brand still accounts for 40 % of P&G’s turnover in India P&G now focuses on upper-middle class urban consumers, who are more likely to buy their premium-priced products like Whisper or Ariel

Many takers of Levitt’s When entered India in 1990, they expected that that middle-class Indians would switch to convinience cereal products and pay the premium They didn’t understand that time was not viewed as a commodity Labour is cheap in India Targatted upper middle class are very likely to have a maid at home So convinience is not an offering as attracting as it is in the West. They did not notice the differences of Indian breakfast behaviour from the Western consumers 3 years after entering Indian market, Kellogg's revenues were just $ 20 million Since then, however, Kellogg has made a radical departure and launched a line of biscuits, one of the largest convenience food categories in India

Many takers of Levitt’s When entered India in 1990, they expected that that middle-class Indians would switch to convinience cereal products and pay the premium They didn’t understand that time was not viewed as a commodity Labour is cheap in India Targatted upper middle class are very likely to have a maid at home So convinience is not an offering as attracting as it is in the West. They did not notice the differences of Indian breakfast behaviour from the Western consumers 3 years after entering Indian market, Kellogg's revenues were just $ 20 million Since then, however, Kellogg has made a radical departure and launched a line of biscuits, one of the largest convenience food categories in India

Many takers of Levitt’s Fiat cars imported to India by Premier Automobile before the launch of Fiat Uno were mostly used as taxi When launched in 1997, Fiat Uno had to struggle for market Car at that point was an object of luxury Because of the image of the Fiat taxi as a cheap car and owning Fiat car did not add to the status of the owner


Branding & Packaging Brand is a product, service, or concept that is publicly distinguished from other products, services, or concepts so that it can be easily communicated and usually marketed… A brand name is the name of a distinctive product, service, or concept. Branding is the process of creating and disseminating the brand name Branding can be rational or irrational. Branding is a promise made to the customer that will deliver values beyond expectation Branding strategy hence should also involve continuously communicating to the customer of the novel experiences that he/she has had with the brand.

Branding in India- Four Dimensions To succeed in India, one needs to use the four pillars: functionality, value for money, goodness and communication Functionality Functionality Effective branding Value for Money Communication Effective branding Value for Money Communication Goodness Goodness

Functionality… “A brand is built by performance, not advertising. Advertising can only make you aware and possibly interested but it’s the trial and fulfillment of created expectations that count most.” - Phillip Kotler Functionality is a significant determinant of successful brand building in India Despite being criticised for bringing in a dated product to India, Toyota’s Qualis received overwhelming reception because of its functional performance

Functionality… Mere emotional or aspirational value will not work in the Indian market. Successful and everlasting brands have proven their mettle in their utility Kellogg’s has failed to convince its functionality against the traditional Indian breakfast options However, Maggi (instant noodles) has created a huge market by communicating the functional value of the product and by adapting itself to Indian consumer culture Cease Fire (home fire extinguisher) is a success despite being an unsought product, as consumers saw a functional value in it. The same company failed with its Vacumizer brand because customers did not see any functionality.

Value The Indian consumer’s obsession with value is famous In the psyche of Indian consumer, there is an intricate link between functional performance and the value proposition The lukewarm response to several iconic international brands when they launched in India is a result of this The iPod or an Apple computer could not replicate their global success in India because of this mismatch. Although iPod still ranks supreme in aspirational value, it is not translating into sales

Value The value proposition delivery has forced many brands to reorient their strategy in India Levi’s launched a much affordable Signature range to cater to value conscious buyers. Shampoos sachets were successful as customers saw more value in sachets than in bottles. The boom in mobile telephony is because of low tariffs as well as the low handset rates. But often low price is confused with value When personal computer marketers launched the sub-Rs 10,000 computer, analysts were bullish. But the functional performance of the low-priced variants put off potential consumers.

Communication “To persuade someone to do something, or buy something, it seems to me that you should use their language, the language in which they think,” David Ogilvy. Interestingly, brands that have been successful in India were able to connect with consumers in a language they relate to Globally Horlicks is positioned as a drink targeting adults, but in India it’s a health drink for kids. McDonald’s Indianised itself through a series of campaigns which are truly Indian Indian consumers like products to have a global outlook with Indian heart. Initially, suitings brand Reid & Taylor built its brand image using the character of “James Bond” and then Indianised the brand with Amitabh Bachchan.

Goodness It’s not that the brand should take up social responsibility activities, but it should be able to convey its goodness to the consumer Saffola (cooking oil) health care initiative by Marico was one such experience delivered to the customers The customers were allowed to come together and discuss the major issues while Marico hired cardiologists and other experts to brainstorm on the quality improvements in Saffola The results were increase in sales substantially and definitely a better customer loyalty. The Saffola brand enjoys a price premium of 10% over other brands and large market share in the market today Goodness helps brands to bridge the perception of ‘exploitation’, build brand equity and helps in connecting with customers better.

Packaging Innovations There are two aspects of packaging innovations adds to the basic functionality of the product through providing additional benefit to the consumers it enables trials and increased usage by virtue of pack size (small) Small pack sizes have enabled marketers to reach consumer groups who were earlier not considered to be their target customers. The sucess of small shampoo sachets in rural markets have become marketing folklore The basic logic behind the small pack introduction is the understanding that the consumer though might not be able to afford to buy the full bottle of shampoo but wanted to use shampoo. And the fact that he would be able to afford buying it in smaller quantities, moving from cost of a monthy hair cleaing to cost per use to the consumer.


Learnt the hard way… Hardships have taught many MNC’s that India has a radically different market Referring to the experiences, learnings and business models of other markets do no good here Unlike western countries, India has a large income variability, large number of segments and product offerings Indian oral care market is probably the only market where you have the whole range of solutions, from tooth powder (specially launched for rural markets) to branded toothpastes Colgate and Unilever are have been successful at matching product segment variety Thinking about what segment you can target, given your core competencies and what revenues you can expect from that segment, is critical in emerging markets.

Learnt the hard way… Unlike the west, most consumption decisions and attitudes towards products and brands are made with other people and important relationships in mind Indian consumers have not been exposed to global brands for a long time and are not sure about how to interpret then or what these brands mean in their lives Thus there is a lot of variance in brand perception among the mass No matter how much you globalise your brand or product, consumers will interpret it at a local level

Learnt the hard way… Indian company Pizza Point estimated 23rd of Indian markets could not afford global brands It executed a plan to develop a local brand to capitalise on the desire and awareness of Pizza Pizza point failed in branding exercise The perception about pizza among the Indian consumers are through global brands like Pizza Hut, Domino’s Despite lowered price and localisation, Pizza point had difficult time in communicating the differentiation between the local and global product The target consumers would not go to Pizza Point because they perceived the price to be way too expensive After all the food was international, not Indian


Rural Indian Markets 70 % of India lives in villages The biggest brands in India belong to companies with strong rural presence as Asian Paints, Colgate, Unilever and ITC However reaching rural consumers is difficult because of poor media penetration To achieve significant market share like Unilever and Colgate, one needs to occupy the lower price points Unlike the urban market where the aspiration levels and behaviour patterns of the people, especially the youth, are the same all over the country, rural India behaves differently. Companies like Unilever, ITC have taken up innovative strategies to cater to these markets


Innovative Unilever For more than 50 years Hindustan Unilever Limited served India’s elite class who can afford to buy MNC products (top of THE PYRAMID) Nirma’s offering of detergent products for poor consumers in 1990s was an eye opener for HUL In 1995 HUL took to product innovation Drastically altered its traditional business model of high margins Approach towards profits driven by volume and capital efficiency Developed environment friendly detergent ‘Wheel’, launched with advertising blitz Decentralized production Marketing and distribution of product leveraging the abundant labour pool in rural India and cost optimization

Innovative Unilever Initiated micro-credit initiative “Shakti” expanding its distribution system Mutually beneficial alliances with rural Self Help Groups (SHGs) Shakti has over 19,000 women entrepreneur reaching out to 80,000 villages in 345 districts in 12 states of the country By the end of 2010, it aims to reach out to 1,00,000 entrepreneurs covering 5,00,000 villages and touching 600 million population HUL’s news business yield 20 % growth in revenue per year and a 25 % growth in profits per year between 1995 and 2000 Market cap grew to USD 12 billion- a growth rate of 40 % per year HUL’s parent Unilever transported these principles to create new detergent market among poor in Brazil ‘Bottom of the Pyramid’ is a corporate ‘strategic priority’ for Unilever now


ITC: e-Choupal ITC’s national crop procurement network of 6,500 ``e-Choupal,'' kiosks A two way rural direct marketing channel for rural India E-choupal: a computer typically housed in the farmer’s house linked to internet via phone lines Managed by a trained local farmer Serves an average of 600 farmers in 190 surrounding villages in 5 km radius The farmers can use the computer to access daily closing prices on local mandis as well as to track global price trends or find information about new farming techniques Order seed, fertilizer and other consumer goods from ITC or its partners

ITC: e-Choupal At harvest time ITC offer to buy crops directly from the farmers at the market price Farmers that come to sell usually go back with their required FMCG products from the ITC sells counters 3.5 million farmers connected through a IT network in rural India For the farmers E Choupals has became a way to liberalization from the netwrk of middleman It provides ITC a reliable source of quality raw material and a marketing channel for FMCG products E-Choupal has won the Stockholm Challenge Award 2006 in the Economic Development Category and many more


Behind LG’s success in India LG entered India as Lucky Goldstar in 1993 in JV with a local partner Rather unlucky start, JV entered into messy break up Six years after the Reforms, LG re-entered India as a 100% subsidiary ‘LG Electronics India Pvt Ltd’ LG took to localisation of its operation. Established manufacturing plant at Noida in 1998, introduced ‘digital manufacturing system’ ensuring local and efficient manufacturing to reduce cost Innovative product localisation Hindi and regional language menus on its TV Introduced low priced “Cineplus” and “Sampoorna” range for the rural market First brand to introduce gaming in CTVs. Cricket gaming in CTVs Created R&D set-up in India Indianised electrical goods matching the tastes of Indian consumers designed a standard 220 volt appliance to withstand India's 170 volt to 350 volt power surges

Behind LG’s success in India Adopted Regional distribution model, distributors work directly with the company, stock rotation Innovative marketing strategies Sponsored 1999 Cricket Worldcup, followed it up to 2003 Brought in four captains of the Indian Cricket team to endorse it products Cultural marketing in the form of discounts and special offers in time of festivals specially during Diwali LG today is one of the most formidable brands in the consumer durables and home appliances Total turn over of the company in the year 2006 was Rs 82.5 billion and is expecting a growth of 15% this year

And finally… For foreign entrants its important to adopt a fresh perspective Need to understand the market without looking at the past learning and experiences before choosing to apply learning from other markets Need to test the assumptions about local market and select partners who will challenge their perspective on the market and consumers

Thank You…

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