Wednesday, August 24, 2011

Brand India: No thanks, we have our own.

For the second issue of The Analyst. Not sure how the edited version looks like, so this original draft would do.

Lately the media has been buzzing on how the western brands especially the luxury items have been invading the Asian market and how it has been embraced. It’s true in most cases, but not altogether the reality in India.

One such report quoted McKinsey and Co noting that spending on luxury goods by Chinese consumers is predicted to rise by 18 per cent a year to about US$27bn by 2015 – surpassing even Japan.

However, most excitement seemed to be centred on east Asia, hardly mentioned India which shocked Apple when it failed to make it to the list of top 20 companies in India. The maker of iconic iPhone and iPad, it seems, is not the apple of the Indian’s eyes.

The research that was conducted by research consultancy firm GlobeScan for TLG's Index of Thought Leaders 2011 says, "India has greater conviction about the leadership credentials of indigenous companies than in the UK; over half of the companies are privately owned or listed in India."

Leading the list are indeed home-grown brands like Tata and Infosys technologies. Aside from Apple, other major Western brands failed to make the cut of India's top 20 companies.

Microsoft, which was ranked number six in both the UK and US came in at number 37 in India and Toyota was ranked number 17 in the USA but only hit number 39 on India's league table.

In another survey earlier this year by Trust Research Advisory, a research and communications organisation, again finds name like Tata, Reliance, Maruti, LIC, Airtel, State Bank of India, Bajaj, Hero Honda, ICIC Group listed among the top 20 most trusted brand in India.

The comprehensive brand study featured 16,000 brands with over 100,000 touch points across nine cities.

A less informal survey, conducted by Indian online magazine, Afaqs, on “buzziest” brand saw Tata making an appearance again, alongside, to remind us that this is a cricket mad nation, Indian Premier League.

India, it seems, is comfortable with its own skin, or whatever is making it glow. It welcomes visiting brands, but not without growing and unleashing the potential of its own brands.

This will not be a revelation if one were to take history into account, whereby brand India once stood proud and mighty.

It boasted the word’s first university in Takshashila in 700 BC, was far ahead of others in medicine and surgery 2,500 years ago, led the world in astronomy and mathematics, taught the world how to navigate, and led the textile industry in the seventeenth and eighteenth centuries.

This was before the British company came and “carpet-bombed Brand India”, as Reliance Industry’s chairman, Mukesh Ambani once put eloquently.

Cultural brand burst

But all was not lost post-independence as it started to export culture and “spirituality” to the world. The world of pop-culture was awakened by the pop-rock band Beatle’s association with Indian sitar maestro Ravi Shankar, which helped trigger the entire hippy culture in the 1960s.

Yoga, which was basically a mix of turn of the century Indian gymnastic exercise and breathing technique, swept throughout the west and is still sweeping (it’s not as ancient as it is reputed to be). No matter which gwailo or mademoiselle is teaching it, it will forever be associated with India.

One of the most auspicious brands that have made its mark in the global arena is certainly its film industry. Brand Bollywood, a concoction of the word Bombay (its city, now Mumbai) and Hollywood, is now an international affair.

Once a much maligned industry that’s associated with heroes and heroines making musical around trees in the park, are now accepted as colourful celluloid entertainment.

For instance, audiences in US and UK flocked to see the opening of Bollywood’s science fiction feature, Endhiran, earning itself 12th and 11th position, a tremendous feat competing with Hollywood giants.

Its music composer, A.R Rahman, dubbed as Mozart of Asia (really) won two Oscars for a single film two years ago, and was widely nominated for numerous Hollywood related award functions.

Bollywood talents, including the “Mozart of Asia” can now been seen also working in Hollywood projects.

Historically, the Bollywood films are already accepted and widely marketed elsewhere. Nigeria, Egypt, Senegal and even Russia can be chalked up as major market for Bollywood for the last few decades.

Ditto the war-torn Afghanistan which needs the much needed visual break. In fact, even China in the early days (40s) before decline set in, and interest resurged ten years ago.

One of the non-Indian company that’s riding on the success of Brand Bollywood is Sony Music Entertainment which recently announced that its revenues from India to grow to US$50 million in the next three years vowing to continue to grow its presence in the Hindi film music segment with investments of about US$15 million this year.

The music group generates about $20 million in revenues from the Indian market. alone

A large chunk of Sony’s business comes from the Bollywood music segment, where it has a 20% market share and reportedly India's Rs 500-crore (US$112 m) music industry is growing 20% year-on-year.

In fact, it’s the same Bollywood that produced many willing brand ambassadors with veteran actor Amitabh Bachchan plugging no less than 60 brands.

The younger group joined in with acclaimed actor Amir Khan endorsing Indian tourism and an actress, a ex-Miss World, was chosen to hawk watchmaker Longines, cosmetics leader L’Oreal, and India’s own jewellery maker, Nakshatra.

Owners differ, Brand stays

The Indian identity is so strong with the brand that even when takeovers were mounted, many multinational corporations were forced to retain the Indian brands to satisfy the locals.

Take for instance, Thums Up, which was the carbonated drink of choice for Indians for decades, not by choice as the Government back then closed the door to Coca Cola.

When the door was open later, Coca Cola barged in, grabbed Thums Up by its collar and had it in its pocket immediately (they bought it). But Thums Up was holding up a huge market share, cramping space for Coke’s arch rival, Pepsi. Hence the decision to let the brand stay rather than showing thumbs down.

Similarly, Hindustan Unilever, which is 52% owned by Anglo-Dutch company Unilever, faced identical problem when it acquired Hamam, one of the oldest Indian beauty soap brands. It was owned by Tata Oil Mills Company (TOMCO), which HUL took over in 1993.

HUL tread to repackage and modify the brand but they found out that by changing the composition of the soap they were loosing the loyal customers, so HUL have gone back to old composition and is using ‘trust’ and ‘quality’ as this brand’s salient points in marketing it.

In fact, HUL should be credited for the rise of another home brand, Lakme, which was drowning, recording losses after losses. HUL took over the brand in 1998, and today Lakme is a household name in cosmetics in India as well as abroad.

Steady expansion

Moving out of India, the Brands has been selective about its market and has been targeting countries that sees Indian brands, as moderate as they are in hometown, as with luxury tag.

Recently India’s Bharti Airtel group announced that it earned a record US$13.3 billion in revenue from its 2010 operations following its entry into Africa. With 15 markets in Africa contributed a total of US$924 million, it was generated from telecommunication and television businesses across those markets.

No Indian story would be complete without acknowledging Tata Group’s towering brand value over its peers and competitors.

The companies under the group are itself formidable brands such as Tata Steel (including Tata Steel Europe), Tata Motors (including Jaguar and Land Rover), Tata Consultancy Services, Tata Technologies, Tata Tea (including Tetley), Tata Chemicals, Titan Industries, Tata Power, Tata Communications, Tata Sons, Tata Teleservices and the Taj Hotels.

Lastly, the moolah factor. Indians may be becoming more brand conscious, tech savvy and still gawking at musicals in the park; the price factor still plays a big part when it comes to the consumers.

According to a study by Global Retail Index end of 2010, after economic slowdown, 38 per cent Indian shoppers have become more conscious about the price than brand. The poll interviewed 19,000 shoppers, who are also Internet users, across 17 global markets to study in-store and online shopping behaviour.

The study noted while 39 per cent India shoppers spend more time looking for promotions and deals, 34 per cent spend more time looking at stores to find greater value.

Values that they would associate with brands at home. What’s Bud Light, when Kingfisher offers premium beers and cheap flight? What’s Marlboro when Gold Flake has been smoking Indian lungs for ages? Ignore Vodafone’s advertisement, when Airtel which not only provide great services, its advertisement also features A.R. Rahman’s music.

And speaking of whom, who needs Mozart when India has Mozart of Asia?

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