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As the world's seventh largest and second most populous country, India has always played a part in world affairs. But now India is making its mark on the map for a different reason.
While the troubles from the steep stock market decline—some investors believe the economy grew too much too soon, noting that the market was at an all-time high before its considerable slump—have caused feelings of uneasiness and anxiety to permeate throughout the country, political and economic reforms over the past few decades have enabled the country to focus on a vision: become a developed nation by 2020.
Thanks to a concentration on high-tech manufacturing, software engineering and outsourced services, a young, vibrant middle class has appeared with significant spending power. And the consumer goods sector can barely keep up with demand.
“The market has expanded many-fold in the past few years (than) it ever did during the decades before,” says Burges Dandiwala of Brand Catalyst, a brand agency based in Mumbai. “With this has come an inflow of foreign brands that are competing with the traditional, long-established Indian products. Before there was essentially a monopoly: one brand of soap for the low end, one brand for the high end, for example. People now find it difficult—there’s a choice for everything. People are just starting to realize the importance of branding.”
In fact, companies that build for the long-term and establish brand equity, rather than brand image, should outride any ups and downs in a volatile stock market.
“Branding expertise is very low in India. Manufacturers still think that branding means advertising,” remarks Shombit Sengupta, international management consultant and founder of the business strategy agency Shining Emotional Surplus. “Organized retail comprises just 3.5% of the market, and brand culture in retail companies is negligible. In most organized retail malls, international brands attract the Indian consumer.”
It is imperative to note the impact that international brands have on India’s homegrown brands.
“Indian consumers prefer to have a mystic understanding of foreign brands,” suggests Sengupta. “Homegrown brands perform well in the market when international competition is not present. When competing with international brands, homegrown brands become price sensitive and lose their value.”
According to Sengupta, homegrown brands sometimes look to homegrown celebrities for assistance in marketing its products.
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“Indian manufacturers have the notion that advertising promotions with film stars or sports personalities as brand ambassadors will make the brand successful. They are yet to understand that the rational factor of the brand, which is product quality, actually gives consumers the confidence and motivation for purchase and repurchase. In the absence of this quality perception of branding, manufacturers consider branding to be some entertaining television campaign. Traditional retailers in India are more conscious about the brand than manufacturers are,” Sengupta suggests.
Dandiwala holds a more pragmatic view: “In India people have two passions: cricket and film. People practically worship the actors and cricketers. If an actor endorses a product, you see a mass of people buying it. There's a given increase in sales.”
Dandiwala also sees indicators that Indian businesses are steadily becoming brand savvy. “Even retailers are a lot more brand aware, setting up chain stores and introducing own brand items,” he says, citing the India Lifestyle Store that uses the power of the retailer brand to attract customers and offer them a diverse range of Indian-manufactured home furnishings, wood and hand-made products and organic food. “It is selling Indian back to Indians and using branding to fight foreign imports on their own terms,” he asserts.
Martin Roll, CEO of brand consultancy Venture Republic and author of Asian Brand Strategy, has also spotted the trend. He agrees with Sengupta that “branding is an elite concept” and not seen as a strategic boardroom discipline, but he claims that branding as a corporate discipline is catching on faster in India than in other Asian companies. “There is a very high awareness about branding in the Indian corporate sector, though many still regard branding as mere advertising. A growing number of branding seminars at the national and regional levels is proof to the growing eagerness of the corporations to learn about branding. A number of Indian companies have built very strong national brands with very high brand equity within the Indian market. Jet Airways, Titan, Infosys, Reliance, Raymonds & Asian Paints are some of the well-known brands.”
Global giants must avoid thinking they can take the market by storm. “While Indians do aspire to consume well-known global brands, they are a pretty shrewd bunch,” warns Roll. “Branding in India will have to cater to the diverse needs of customers. At the same time, the winning formula would be one which would offer products and services of high quality at affordable prices. Further, Western brands that plan to enter the Indian market should customize their products to the extent that is necessary to appeal to the Indian customers’ hearts and wallets.”
When Motorola first launched a cell phone in India, for example, it retailed for 30,000 rupees; practically nobody bought it. When essentially the same product was placed on the market for 10,000 rupees, everyone wanted one (US$ 660; 220).
“Western style branding works well in India if the product is knowledge driven, in the luxury category, or if it’s desirable or hedonistic. But FMCG branding has to connect to people’s lifestyle here. For example, Kellogg’s tried to make Indians think and eat breakfast like Americans do, but failed miserably because it could not dislodge Indian culture and food habits. It was asking too much,” says Sengupta, “almost as though to change the skin of people here. On the other hand, Maggi has managed to enter Indian homes to change the traditional food habits of Indian children on their promise of convenience. This brand has understood the psychology of Indian mothers and positioned itself for mother-child indulgence.”
Similarly, Nokia produced a cell phone with a dust-resistant keypad, anti-slip grip and a built-in flash light; truck drivers and rural consumers enjoyed these simple-yet-useful features.
Along with a localized product offering, Western entrants also need to understand the scale and diversity of country. “The West first needs to understand the gamut of a billion people, rather than catering to the millions. A billion is a hugely different paradigm,” stresses Sengupta. “India is a country of over a billion people with different cultures, different languages, different geographies, different food habits, different tradition, different socio-cultural behavior... Nobody can successfully do business in India by reading its potential from quantitative market reports. Understanding the psychological, sociological and historical backgrounds is fundamental to hit the bull’s eye.”
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Dandiwala also points out the disparity between urban and rural India. “Even within India it is important to localize branding and marketing,” he remarks. “In rural areas it is price and value for money that are important and companies also need to consider how to set up credit facilities. In urban India there is more diversity in income and the prestige value of products is more important.”
But even the urban/rural division is starting to blur. According to Meeta Malhotra, director of Bangalore branding agency Ray+Keshavan, the recent media explosion signifies that rural and urban communities will be watching the same television. “Moreover, around 40% of young people travel to the nearest feeder town at least once per week. So the work that brands have to do to reach the rural population is much less than it used to be.”
Sengupta agrees: “While geographical difference is substantial, mental coherency from rural to urban is getting closer every day.”
Whether they are part of the urbanite nouveau riche or the aspiring rural poor, it is the huge number of twenty-somethings who will direct the path that branding takes in India once the country recuperates from the recent stock market decline. It is almost inevitable that the path will become more sophisticated through strategic discipline.
“Manufacturers, whether multinational or local Indian companies, have no choice anymore,” stresses Malhotra. “Young people will not accept things that don't meet their standards for quality and experience. Branding is a necessity and brands will have to move fast to respond to these consumers' demands.”
[29-May-2006]
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Edwin Colyer is a science and technology writer based in Manchester, UK.
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Jul 31, 2006
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Building Appeal -- Randall Frost
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Part art, part science, the field of branding architecture has never been more relevant to firms around the world.
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Mar 13, 2006
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Standards: Who Needs Them? -- Edwin Colyer
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By setting standards, organizations like ISO, EFQM, and Eco-label create a mark of distinction for brands to promote. But rules differ greatly between the groups on who gets to use the mark and how.
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