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Functional Area: Marketing

SAMIT KHANNA SECOND YEAR, FMS DELHI samit-khanna@fms.edu +91 9891 664 003

PUNEET SHARMA SECOND YEAR, FMS DELHI puneet-sharma@fms.edu +91 98719 59659

Executive Summary

"Local brands show what we are; global brands show what we want to be." Consumer Insight There is a general agreement that source of prowess of successful companies is the presence of big brands in their portfolio. Every company wants to create & own the ageless brands & does spend a lot of money towards this objective. Yet, many top executives are not very comfortable with following a structured approach to branding. Our research on the past successful and unsuccessful brands says otherwise. On a careful inspection successful brands show a lot of common threads. These commonalities led us to model the consumer behavior model that is the ultimate reason for the existence of any brand. Kevin Keller captures the essence of branding when he says A brand resides in the minds of consumers. A brand should move beyond its physical character to acquire a perceptual character hence representing itself as a means to achieve what is sought by a customer. In this paper, we start by discussing what a brand is from the perspectives of the organization as well as the consumer. This gives us the foundation for building the models subsequently. Next we build a model for consumer decision making process and bring in the perspective of the Indian brands vis-vis multinational brands. We touch upon the importance of various parameters in building the Indian brands and stress upon them with relevant examples. Its not just the initial creation of a brand but the reinforcements, evolution and revitalization that ultimately decides the winners in marketplace. We have also conducted a primary survey to analyze the quality perception and understand the consumer behavior and hence, help us arrive at the model. We conclude the paper by discussing a framework which could help build the Indian brand both domestically and globally.

Introduction

A Brand exists in perceptual space and is a perceptual entity. If Coca Colas facilities all over the world were to burn overnight, with all their physical assets going up in smoke, the company would be able to start up the next day due to the value of its most important asset the Coca Cola brand, which in 2005, was estimated to be worth $67.5 billion. Its hard to imagine that an intangible can have such value, but the statistic shows that a brand is much more than a mere name or a logo. So what is a brand all about that all the companies spend so much on creating? In todays scenario brands are the basis of consumer relationship. A Brand to some may be a simple name, logo or symbol whereas to others it may be a promise, guarantee, reputation or identification. But most importantly, brands are conduits. They bring together consumers and marketers closer and bind them together. As Indian companies seek to be major players in global markets, one of the key challenges they face is building global brands. Building brands is important as wages rise with economic development, competing on cost alone may not be sustainable. While brands may not necessarily translate into premium prices, they help companies gain higher market share in a crowded market place as they convey an assurance of quality and reliability. In this paper, we have tried to understand why Indian consumers have the perception of global brands as being better in quality and the factors that are determining factors for successful establishment of any product as brand. Examples considered for this analysis are mainly from India.

Consumer Buying Behaviour: The Model

The product can be copied, but a brand in its totality can not be. Strong brands have a distinct place for themselves in the minds of the consumers. Of course, all strong brands are differentiated and command a lot of awareness in mind space of consumers; still the attribute that actually results in increased sales hence generating billions of dollars is the powerful appeal these brands generate.

Create awareness

Blitz

Differentiation

Generate Appeal

Study Consumer Behavior Perspective

High Involvement Low Involvement Experiential

Extensive information Establish superiority Appeal to Reason

Focus on one attribute Concentrate on problem solution Short & frequent visual messages Appeal to toned down reason

Communicate feelings High Visual Content Appeal to Emotions

Global Brands Bastion

Global Brands Bastion

Indian Brands Bastion Figure 1: Model for Marketer - Consumer Buying Behavior

Marketers first have to create and then maintain a minimum level of awareness about the brand. When Mahindra & Mahindra went for a blitzkrieg for Scorpio it was to create a minimum level of awareness. The products that fail to maintain the awareness go into pavilion.

The prospects should be able to differentiate the product offering from the others in market. Ensuring this differentiation has become a major objective of communication. As emphasized earlier, a brand has to generate a powerful appeal to customers to be successful in market. Premier had a lot of awareness and differentiation with respect to Maruti or Ambassador, but still it went out of market, as it lacked the appeal. For high involvement products, marketers should provide extensive information to the user and establish their brand superiority over the rival brands. Hyundai ran a series of advertisements that compared Santros features to those of competitors to establish its brand superiority. Consumers in low involvement conditions tend to be problem solvers rather than satisfaction maximisers. So focus on one or two attributes will fall with in their limited cognitive inclination. Revive- instant starch, Disprin- fast relief etc. are some instances. Brand communication should attack the problem and establish brands as problem eliminators. Short and frequent messages increase the top of mind recall, hence facilitating the brand at point of purchase. High visual content is consistent with passive nature of consumer. Some products like flowers, cards, etc. are bought for their affective delivery or satisfaction. In such categories, the advertisements should arouse feelings in the consumer, hence generating an appeal to his emotions. Omegas sign of excellence ignites same appeal to emotions. Also point to note here is that, it is the Low Involvement products where Indian brands have been doing exceedingly well and being accepted by the consumers. As we move up the value chain to the high involvement and experiential products, there is a dearth of Indian brands and the global brands are more prominent and have consumer acceptance.

Global Vs Indian Brands

To remain domestically competitive, a brand has to be globally competitive. Gone are the days when a company could be assured of its success in its strong hold bastion. Today with the economy opening up, it becomes more accessible to multinationals with their proven track record can displace any domestic brand. Hence, it is becoming increasingly important for the Indian brands to establish their superiority in India and globally. So, what is it that sets them apart from the Indian brands. The following factors are considered as important and ratified by the primary survey (refer to annexure): ! Customer Focus: The Indian companies rank poorly on this aspect. Global players have a perception of better focused strategy towards the consumers and work towards satisfying the consumers rather than just selling the products. ! Symbolic Value: Owning and using a global brand has more symbolic value than that presented by an Indian brand. Global brands have a certain amount of aspirational value associated with them which makes them more desirable. ! Global Citizen: Consumers look to global brands as symbols of cultural ideals. They use brands to create an imagined global identity that they share with like-minded people. Transnational companies therefore compete not only to offer the highest value products but also to deliver cultural myths with global appeal. ! Social responsibility: People recognize global companies wield extraordinary influence, both positive and negative, on societys well-being. They expect them to address social problems linked to what they sell and how they conduct business. ! Perceived Quality: Consumers watch the fierce battles transnational companies wage over quality and are impressed by the victors. People like global brands because they usually offer more quality and better guarantees than other products. That perception often serves as a rationale for global brands to charge premiums. Perhaps the biggest differentiator and inhibitor for the domestic or local brands in context is the perception of quality. Lets discuss this in greater detail to come up with a solution to the problem.

PERCEIVED QUALITY Perceived quality is defined as the customers perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives. It is a perception created overtime by the customers and hence cannot be objectively determined. Global brands score higher than the Indian brands in perceived quality. So what creates a favorable perceived quality for these brands: ! ! ! ! ! Global success Functional Expertise Financial Might Strength in research Flexible

The advantages rendered by a favorable perceived quality can be seen in the diagram below:

Perceived Quality

Reason to Buy

Channel Member Interest

Differentiation/ Positioning

Price Premium

Strategies for Indian Brands: The Way Ahead

Competitive Marketing is all about 3 Ws War, Warrior and Wealth. The gradual integration of the Indian economy with the global economy marks the dawn of competition which is favorable for the customers. We suggest the following strategies for Indian Brands to fight it out with the Global brands: 1. Have a Vision for the Brand and Develop the Brand Essence Build a Brand Arrow for your brand and understand what the value for your brand is. The brand arrow is as shown below:

An understanding of the brand arrow enables a more focused strategy for the brand. This further enables to an understanding towards the subsequent brand extension and creating a stretch map for the brand.

2. Choosing the Right Brand Name In cases where the country of origin is closely associated with the product being sold, a brand name and a communication strategy that emphasize this origin are helpful. In other cases, the company and brand may actually need to dissociate themselves from the country of origin. Sometimes good brand

names can add intrinsic value to the product being promoted and make the task of the other elements easier. "Taaza" tea is a case in point -- it instantly communicates "freshness", a value consumers seek from tea. "100 Pipers" conjures up naturally pictures of Scotland to a normal consumer and it adds to the mystique and strength of the brand. And a good name can give a brand a "head start" rather than just a "start", as has been the rule in the past. "French Connection" in the UK is a great example. When the brand was re-launched in 1997, it was just middle-of-the- road brand appealing to diverse audience with little fashion connotations. The drama of the re-launch started with the name -- someone very cleverly recombined the initials of the company to come up with an interesting name, FCUK. The name was a great starting point for a brand with an attitude. Not surprisingly, it captured the imagination of a younger audience.

3. Creating Blue Oceans rather than fighting in Red Oceans The Indian brands should focus on creating uncontested space rather than trying to enter the already cluttered market. With its huge textile exports India can become the 'fashion apparel centre of the world' within a decade. India's dark colored Old Monk rum should take on the mighty white colored liquor, Bacardi, through 'gutsy, non-conventional, intrusive marketing' that highlights its history, toughness, color and irreverence of a challenger, which are the qualities that connect with today's young drinkers.

Create a different category Scan Competition Be opposite of leader

Create a Brand Personality

Create a Brand Identity

Unique & Relevant

Figure 4: Model for Blue Ocean Strategy

Indian mangoes can also fly India's flag high in international market; 'Ambo', the Alphonso mango brand of an Indian farmers' cooperative, has the potential to quickly expand its export sales by a conservatively estimated 1,000 per cent.

4. Pricing Strategy Well established brands ensure that the price they charge is not too high or too low. In fact base price should be based on the perception of the perceived value instead of delivered value.

Functional Value Symbolic Value

User Image Company Image

Perceived Value of the benefit package

Govt Regulations Market Factors

Pricing Strategies
Figure 5: Pricing Model & Strategy

The first step towards deciding pricing is to measure the perceived functional and symbolic benefits of the product. Maruti Swift scales high on functional benefits and symbolically, it is fresh, youthful & attractive. User image plays an important role in determining the perceived value of a package. Mont Blanc may not be the best pen around technologically but the user image attached with the brand increases the premium that can be charged. Palio had strong functional and symbolic benefit package but the image of parent company Fiat played major spoilsport in the brands downfall. Once we measure the perceived value of the brand, brand manager can set his eyes on deciding the pricing strategy. Psychological, Skimming or Penetration strategy can be decided upon. The market factors like the pricing of rival brands in market and government regulations on margins play their own part in determining the ultimate pricing strategy. Pepsi may score very high on every parameter but it cant charge more than Coke does.

5. Bonding with Customer Marketer must first understand the nature of his brand and opportunities it has, to forge relationships with customers.
Product Oriented Process oriented Relationship oriented

Experience = Perceived value

Manager Customer touch points

Get Retailers,

Be Socially Responsible

Trust

Willingness

Commitment

Affinity

Figure 6: Model for Bonding with Customers

In product oriented strategy, the delivered value should be greater than or equivalent to expected value as was done by Chetak which established itself as a major brand just on the basis of its product superiority. Brands like Pizza Hut follow more of a process oriented strategy when they try to create a unique experience for the customer. Sunflame follows relationship oriented strategy when it takes its dealers on a cruise ship trip. The ultimate objective of building bonds with customers is to get the trust, willingness and commitment of customers, hence making them loyal to the brand.

6. Brand Evolution and Revitalization Brand extension has found favors with modern marketing world because of the advantages it has over the other product launch options. Brand extension is not as simple as attaching an established brand name to a new product. Ponds in eighties tried with Ponds Toothpaste, only to disappear from the market. What determines the success of extension is character of brand which continues to evolve over time.

Evolution of Character of Brand with TIME Brand Evolution Know How Brand Formula Brand Product Brand AMUL MILK AMUL MILK Type I Type II Type III AMUL EXPERTISE IN MILK PROCESSING Milk Ghee Butter Condensed Milk Time Intangible Brand AMUL SYMBOL OF PERSONALITY Indianness Love Taste Fun

Brand identifies the product

Products are manifestations of brand

Look for fit with brand character

Figure 7: Model for Evolution of Brand

Many brands start as product brands i.e. there is close approximation between brand and product. MDH is a product brand for masalas. Sustained efforts and investments in the brand endow it with intangibles that get accumulated Over the time product brand goes on to become the formula brand i.e. it implies that a set procedure is used to create the product. The brand may begin to signify expertise in a particular field. This expertise may lend itself to related products & brand may be extended to products related with its field of expertise. Dettol has a long time association as effective protection against germs. It has successfully used this association to launch soap, shaving cream, plaster and talc in market. At this stage, the brand can lend character, style, image & soul to the products that carry its name. Cartier has strong associations with prestige, status and opulence. It successfully goes with a variety of products like watches, jewellery, bags and pens which are not related with one another functionally.

Conclusion

A brand is the most valuable asset that a company can own. Branding needs a shift of tactics and thinking on the part of marketing executives. With ever increasing customer awareness levels, marketers can no longer afford to be complacent about their brands & branding strategies. Successful branding needs a structured approach with due attention to what seem to be very minor details. It becomes difficult for Indian brands to create a niche for themselves because of the abundance and proven credibility of the global brands. Understanding the differences of perceptions of customers is the key to unlocking the market potential. We have to understand the credibility, positive associations and additional valuation that customer attaches with the successful brands. The perception of quality that is associated with the global brands is difficult to unlock but its easier to create a blue ocean of opportunities for Indian brands. The way forward for the Indian brands is to go global themselves. Unless and until, Indian brands become competitive globally they can not sustain their domestic dominance because sooner or later they would be over taken by the global majors. Finally the task doesnt stop with the one time creation of a successful brand. We have to measure its customer-connect, evolve it and consistently revitalize it to keep it relevant to the ever changing consumers.

Annexure

We conducted a small primary survey to find out the perceptions of people regarding the global and Indian brands. The questionnaire as well as the findings are attached below. Details: ! ! ! Sample Size: 58 Customer Contact Points: CP, Dwarka Main Market, Gurgaon Malls, Kamala Nagar Market Target Segment: o Males Age group 25-50 o Females Age group 25-40 o SEC Classification: A1 + A2 ! Methodology: In Depth Personal Interviews

Consumer Qualitative Questionnaire

1. Name: 2. Age: 3. Occupation: Student/Private service/Govt. service/Business/Self-employed 4. Family chief occupation (If student): 5. Position of responsibility: 6. Education: Literate/School (4 yr)/School (5-9 Yr)/SSC/HSC/Graduate/Post graduate/Postgraduate professional 7. What are the qualities of good brand, as perceived by you? Kindly mention some of them in the table below. Phone:---------

8. Rate the following needs on a scale of 1-10, where 1 2 5 1

Least, 10

Most wanted 9

10

Least wanted

Importance for you

Most wanted

1. Quality

2. Price

3. Service

4. Status

5. Indian or Global

9. Which of the following Deodorants would you prefer and rank them in a order Axe, Adidas, Rexona (Refer the need list above for the respective numbers) Rank 1 Deodorant 10. Which car would you prefer? a. Tata Indigo b. Chevrolet Optra c. Honda City 11. Which consumer durable brand would you prefer? a. Onida b. Samsung c. Hier 12. Name makes a difference in the choice of brands a. Yes b. No c. Cannot Say 13. An Indian brand compared to global brand on the following parameters: a. Price b. Quality d. Videocon e. LG f. Others d. Hyundai Accent e. Maruti Baleno f. Others Rank 2 Rank 3

c. Availability d. Status e. Service

f. Aspirational Value g. Trendy h. Variety/ Assortment

As per the survey we could spot the following trends in the results:
Indian Vs Global Brands
50 45 40 35 30 25 20 15 10 5 0

Tr en dy

Pr ice

lity

ce

Av ai la bi

Indian

Global

Perception of Brands
200 180 160 140 120 100 80 60 40 20 0 Quality Price Service Status Indian or Global

As pi ra tio

na lv al u

Se rv i

Q ua l

Va rie ty

ity

St at us

Prefernce for Consumer Durables

Onida Samsung Hier Videocon LG Others

Deodorant Preferance

Axe Rexona Adidas

Car Preferance

Tata Indigo

Chevrolet Optra

Honda City

Hyundai Accent

Maruti Baleno

Others

References

1. Douglas B. Holt, John A. Quelch & Earl L. Taylor, How Consumers Value Global Brands, 2004 2. Philip Kotler , Marketing Management, Eleventh Edition, Prentice Hall, 2004 3. Harsh V. Verma , Brand Management, First Edition, Excel Books, 2002 4. Rishikesha T. Krishnan, Anshu Goel, Sachin Sharma, Building International Brands from India. 5. Schiffman, Loen G, L L Kanuk, Consumer Behaviour, Prentice Hall, 1997 6. Keller, Kevin Lane, Strategic Brand Management, Prentice Hall, 1998 7. Jack Trout, Steve Rivkin, The New Positioning , McGraw-hill, Inc. , 2000 8. Blois, Keith, The Oxford Text Book of Marketing, Oxford, Oxford University Press, 2000 9. D C Court, M G Leiter, M A Loch, Brand Leverage, Mckinsey Quarterly, 1999, No.2, p 700 10. Harish Manwani, Equity: The Brands Lifeline, Brand Equity, 1995, pp 38-41 11. Aaker, David A, Building Strong Brands, The Free Press, 1996, p 67 12. D C Court, J E Forsyth, M A Loch, G C Kelly, The New Rules of Branding, McKinsey Marketing Practice, 2005 13. H L Schmidt, The Ten Commandments For Rebuilding A Brand, WNIM, Sep 2005 14. A W Ulwick, "Turn Customer Input into Innovation", Harvard Business Review, 80,1, Jan 02 15. G Eckhardt, J Cayla, Brand Strategies in Emerging Markets, AGSM, Issue 3, 2003 16. Madhukar Sabnavis, Why Indian brands prefer English names, www.rediff.com, May 27, 05 17. Eva Martnez, The Effect of Brand Extension Strategies upon Brand Image, Dec 2002 18. Hildebrand, Klosek, Brand Management Strategies:10 Key Points, GoodWin Procter, Jun 03 19. Paul Temporal, The Power of Brands, Orient Pacific, 2005 20. Bill Nissim, Brand Loyalty: The psychology of preference, brandchannel.com, Jul 2005