India Story : Road blocks Ahead

This blog is dedicated to the India Story, the great belief that we would continue to grow at the same pace which we have witnessed in the recent past. The belief that the time for the Indian market and the consumer has come.....

But in the last few months we suddenly find the unending euphoria about India suddenly taking a hit. Lot of this is driven by what is happening in Europe, but within the country too, the increasing interest rates, inflation & the rising petrol costs has everyone wary. The sudden assurance that we would start growing at double digit rate is being rethought.

I had the opportunity to listen to Mr Nitin Paranjpe CEO of HUL. He spoke a lot about these issues and brought out the darker side of the growth story and how it needs to be handled if we need to keep growing. He reminded the listeners how we had wished away the issues of illiteracy, health, infrastructure, corruption , perhaps hoping that high growth would take care of it. He said that inclusive growth was not a political jargon but the need of the hour. And as a corporate one cannot be a bystander and not do anything….

He said that it was imperative that businesses come up with customer propositions which take care of the environment, make business sense and add value to the customers. This trisection is currently very small and in the coming years it needs to be expanded. He gave a few examples, which I will share in the next post. But all in all, corporate world is seriously trying to address issues related to sustainability and inclusive growth as they also realize their future is also intertwined with these issues..

Brands Losing their way

I have always felt in the country we have had many good brands, and they have lost their way either due to mismanagement or sheer greed. I will share a few examples to elaborate my point of view,

Let us start in the cookery segment, where we have really old brands like prestige and hawkins. We have the experience of using these brands across many years; some of us would still have the 20 year old pressure cookers in their houses in working condition. The brand was built on their performance many years back, but if some one has bought a cooker from either of these companies in the recent years would have a very different story to tell. Do not get me wrong, I do not want to buy cookers which last for 20 years, but I want to buy products which perform. I have had a couple of bad experiences and I thought probably it was a factor of chance, but then when I saw the queue of people waiting to get the valve replaced, or getting their cookers repaired it makes me realize that the problem is much more acute than a few one-off cases. The unfortunate part is that there are no viable substitutes in the market, or maybe we see them as inferior just because we are so used to the old biggies.

My second example is from the mobile services domain. I am talking about the market leader, airtel. Till the time they got into financial pressure, the services were good, but then for the last couple of years you would find them giving you new unasked service and start charging you for the same. One will have to fight out and by the time it is discontinued the company makes some money. My emails to the ombudsman of the company have gone unanswered. And this again is not just across one number, but across many which I know. The disappointing point is that when the going is good the brands fulfill their promise but the moment they are under a little pressure they go back to the pre-liberalization mindset of trying to squeeze maximum out of the consumer without worrying about the future.

The third example is from another brand which I have a lot of admiration for - 'Big Bazaar'. I use to be a loyal customer buying my monthly groceries from them. Then for the last couple of years I had stopped visiting them. The other day I went to buy some groceries and was shocked by the approach they have adopted. In many products there was a difference of 30/- kg if you were to buy a half kg versus a one kg pack, which I found very difficult to digest and ended up walking out of the shop after making less half of my planned purchases. The core proposition which the brand 'Big Bazaar' stood for me is low-cost and I felt that they were fiddling with that core proposition itself.

Building a brand takes many years but destroying it takes a couple of bad experiences!!!!!!! And rebuilding the trust with the consumer would take longer, if it can ever be done.

Most Trusted Brands in India :Brand Equity 2011

Globally we have many brand ranking agencies which rank brands, like Interbrand and Brandz Top 100, but in India not much of formal ranking is done. Though some of these agencies have started working in India too, but the Brand Equity Most Trusted Brands Ranking is an annual ranking which is keenly followed. A look at the top ranking this year,

The major change this year has been that Colgate has come back to the top slot after many years and Nokia has dropped to number 5. Nokia's drop is perhaps reflective of its performance in the market place. The ranking is accompanied with a series of interesting write-ups on various brands,

Starting with how Colgate regained the top slot again, to the analysis of why Nokia fell from the top. Then there is an interesting piece by Pankaj Ghemewat on Coke and Globalization and by Nirmalya Kumar on how brands need to gain trust of the consumers, and become a positive force in the larger community. There are few more stories which one can read.

Interesting local response

Tabs also ready for the explosive growth?

Indian government yesterday launched of the cheapest tablet PC in the world at $35, which adds to the dropping prices of tabs. Though this $35 tab might not change the dynamics of the tab market, but Amazon Tab might , which is predicted to have an huge impact on both Samsung Galaxy Tabs & Apple ipad. Earlier companies like Bharati & Reliance had also launched their tabs at $250.

I feel in the tab market is ready to take-off, as mobiles had done when prices crashed. The applications and use for which tabs are put also would increase(Ex - Salesmen of HUL use Samsung tabs for booking orders from retailers) . People would find it easier to use a tab to access internet, with its bigger screen and ease of use versus mobile phone. The volumes will have to come not just from people who would buy the tabs as a second PC or replacement for a laptop but also from users who do not have a PC. And it for the last segment where pricing would matter and the volumes would come from..

Honda Brio Another Made for India Car

I have written earlier on the effort made by multinationals in India on making products exclusively for Indian consumers. Honda Brio is new addition to that list; another notable recent addition would be Toyota Etios, again in the car segment. Brio is according to economic times the fourth new car to hit the Indian roads in the last ten days. This is in stark contrast to the pre-liberalization days when the choice use to be limited to either an Ambassador or a Fiat and Maruti 800 in the later days.

For both Honda and Toyota the new small cars are the cheapest cars in their stables, and both the companies are looking at them to drive volumes and reach out to tier II and tier III cities. But one does feel that it is a little too late, hope not too little though, given their reputation. Were they expecting that Indian's would line up for Corolla's and Cities. Though these models do sell and would keep selling, but would never be volume drivers. In that even the American auto makers (supposed to have lost their nimbleness to the Japanese) have had better offerings in the segment, in fact Figo has turned out to be a game changer for Ford in India. But then maybe they made an entry and the consumers will decide the winners.

Perhaps one more realization for the auto makers has been that maximum activity is in the 4-6 lakh segment and not the bottom of the market , which players like even Nano are finding it difficult to crack. So every serious player in the car market has a very strong offering in that bracket. The bottom line is that the choice for the consumer is increasing..........

King Fisher Red is Dead

When I read the news that Kingfisher has decided to close down its low cost operations Kingfisher Red, one part of me was happy , having traveled in many sectors on Red, but then I also felt sad as it was the erstwhile Air Deccan which was getting a final burial.

In the list of brands which we have lost in the recent past I have always felt that Air Deccan was on top of the list. To me it showcased the power of pricing and the influence it can have on expanding the overall market in a category. Air Deccan also was a sort of showcase example of power of opening up of the economy and the reflection of the increasing disposable income.

Captain Gopinath , expressed his disappointment at the closing down, but then his suggestion that all domestic should have been Red and international could have been First also goes against Kingfisher's positioning as the 'King of Good Times' . Closing down would also be a factor of the current finacial situation the airline is in. From a branding angle I would have felt that they should have used to Air Deccan name for the low-cost airline and retained the kingfisher as a full service airline. The synergies of combing the two airlines , in terms of ground operations and other logistics could still have made sense.

But then there is another theory where people suggest that acquisition was driven by the urge to start international flights which was restricted to airlines with a minimum years in operations and acquiring Air Deccan gave that status to Kingfisher.

Understanding the customer !!!!!!

Good Timely Ad

FMCG Majors and Indians

I was reading a newspaper article in TOI on how Asian Executives are increasingly in demand in corporate world worldwide . The article was written against the backdrop of the news that Harish Manwani is set to become first COO of Unilever, which is seen as an acknowledgement of the growing importance of Indian/Emerging markets. The recognition for the Indian talent has always there, historically many multinationals have looked at their Indian operations as a hunting ground for fresh talent.....

Harish Manwani is actually an addition to the list, other are PepsiCo chairman and CEO Indra Nooyi and Rakesh Kapoor the global CEO of Reckitt Benckiser. I have looked at only FMCG sector there are more people in other sectors also, and this probably is just the start...