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
INDIAN CONTEXT

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.

BRANDING INNOVATIONS
LESSONS LEARNT

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 2\\3rd 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

BRANDING INNOVATIONS
REACHING RURAL INDIA

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

INNOVATION

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

INNOVATION

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

A SUCCESSFUL BRANDING STRATEGY
LG ELECTRONICS INDIA

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…