Copy for the Week

Copy for the Week


The Birth and Death of Brands by S L Rao

A criticism of Indian manufacturers as against foreign ones in the past was that they did little to build brands. They were therefore unable to withstand competition, and were compelled to rely on lower prices. An outstanding example was Bajaj who enjoyed a near monopolistic position in the two-wheeler market but spent little on marketing and advertising until liberalization brought competitors with access to the best technology and large production capacities. Another feature of many Indian companies was the tendency to cut marketing and advertising expenditures when the market was in a down turn.

A good example is that of fast moving consumer goods (fmcg). Soaps, detergents, ready made garments, etc, have had a bad last four years, unlike consumer durable products (like air conditioners, refrigerators, cars, two-wheelers, etc), which have climbed on the back of easy and cheap bank loans. Many of the manufacturers of these products have tried to buy consumers by offering special schemes and prizes. They have at the same time cut sharply on advertising their products. Good advertising not only conveys information. It draws the attention of the customer and places the product in the consumer’s mind. If it is supported by a relevant message that is imaginatively created and presented, it attracts attention and adds value in the customer’s perception that leads him to buy it. This is what building brands is about. Every manufacturer would like to have exclusive customers who buy only his brand. This monopoly position cannot be given as it used to be in the days of controls and licensing, by government policies. It has to be earned by the brand, through intelligent product design, advertising, pricing and distribution. The balance of expenditure between these may vary but none can be ignored. This is particularly so for fmcg’s.

The ready-made shirt manufacturers appear to have become so despondent because of the economic downturn that they seem to have almost forgotten that brand building is a continuous process. You cannot relax and hope that momentum will see you through. You can be certain that some other brand will seize the opportunity to grab some share of the market for itself. This is what happened to Bajaj. Hero Honda and TVS understood the consumer and the Indian market, designed and priced products to suit their requirements, and spent on advertising, distribution and servicing. The result is that Bajaj, the number one in the market for most of the time since independence, has been losing market shares to the other two. As they have grown and made profits, they become more dangerous competitors.

This may be happening also in the ready-made garments industry. For long, it was dominated by the foreign brands made by Madura-Van Heusen, Louis Phillippe, etc. Then the Birlas took over these brands after paying a big price for them. Presumably their ambition was to integrate with their textile mills and offer their fabrics in garment forms. But they also allowed the brands to almost disappear from the consumer’s attention. The same is true of Colour Plus, a brand built through excellent advertising and product design in a short period. Then Raymond, itself a heavyweight who has spent heavily in building the brand, bought over. Colour plus has now practically disappeared from the media.

This is not unlike what coke did after buying up the premier soft drink brands of Parle. ThumsUp was the top cola brand and Coke tried to milk it-that is, make as much profit as possible without spending on sustaining it. The end result is that Coke lost market shares for years to Pepsi. It is only now that Coke has realized that it does them good to have ThumsUp as well as a promoted brand in their stable in their war against Pepsi.

In the garments trade, a dormant market cannot last long in India. Indian lifestyles are changing rapidly and ready mades are the future. Not to build brands in times of recession is foolish, indeed suicidal. Old companies like Bombay Dyeing are also following the Birla strategy. They have bought Proline, a minor brand. They will be foolish to try and sell their fabrics on the back of their ready mades, and even more so if they push their fuddy-duddy brand Vivaldi in place of their acquisition, the financially poorly supported but youthful Proline brand. When others are hesitant as are the Birlas and Raymonds, is the time to take advantage and build a weaker brand like Proline in the market.

The problem is that Indian fmcg manufacturers are not sufficiently consumer oriented and do not combine strong product design and development capability with equally strong brand building.