Renaissance by kylemangan

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Is there a Future for the Indian Brand?

How can an Indian brand fight back successfully after losing
  ground to an MNC brand?




V. Chandramouli
Vice President Sales, Marketing & Service
Delegates print version
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Is there a Future for the Indian Brand?

  “Indian” Brands or Indian “ owned” brands.

  “Indian” brands – those that have Indianised themselves
      Product and pricing Indianisation.
      Communication. Relatable yet aspirational.


  The future is only for “Indian” Brands, the moot question will
  be who will be owning those brands.

Will it be Coke, Honda, Levers, Sony, Pizza Hut
       Or will it be
TVS, Onida, Nirma, Nirula’s and Colorplus
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Is there a Future for the Indian brand?



How can an Indian brand fight back successfully after losing
  ground to an MNC brand?

The Onida Case study.
  2000-01 & Q1 01-02: the year of hit.
  Q2 2001-02 onwards: The year of partial recovery.
  2002-03: The year of strong performance
                                                                                   4
Situation analysis ( 2000-01)




  553635     (-7.76%)
                                                         55.37
                               797.19

                    510639              (-10.3%)                  (-35.4%)
                                              715.22                       35.76




 1999-00            2000-01   1999-00         2000-01   1999-00        2000-01

           Volume             Turnover (Rs. crores)     PBT (Rs. crores)
                                                                                                                                5
Situation analysis ( 2000-01)
18%                                                                                                                       900


16%                                                             790                                                       800


14%                                                                                                                       700


                                                                12.31%
12%                         12.05%                     11.95%                                                             600
                                     11.66%                       12.18%
          11.32%                              11.21%                    11.58%     11.30%
                   10.80%
                                                                   547
10%                                                    504              521                   9.71% 10.02%                500
                                                                               516      9.33%
                                                                                                        8.75%     8.68%
                            445
          433                                 428
8%                                   407                                                                                  400
                   387
                                                              Mkt Share                   389   374   383          386
                                                                                                            360
                                                              Volume (in 00s)
6%                                                                                                                        300


4%                                                                                                                        200
      April,    May   June    July         Aug   Sept        Oct      Nov   Dec,   Jan,   Feb March April   May   June
       00                                                                    00     01

                                                                              Volume – Onida secondary volumes as per ORG
                                                                              6
Situation analysis ( 2000-01)

Brand position
  Serious erosion in brand dimensions.
  Image issues
   “ A brand from the past, not relevant today”
   “Low aspiration, poor man personality, maharajah who had his glory days”
   “Does not have the latest technology, has dated products”
  Sustainability issues
   “Onida, hasn’t it closed down already”
   “Nobody buys a Onida today, its not there in the market”
  Severe loss of consideration
   “ Not for me syndrome”
   Over 50 % prospect consumers were unwilling to even consider the
      brand.
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Situation analysis ( 2000-01)

Internal position
   Loss of morale, fear and low confidence.
   Vacuum in Sales & Marketing, a very skeletal team taking the
   entire load.
   Paralysis on the front end, people did not know what to do,
   how to respond to the situation.
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Situation analysis ( 2000-01)

Product situation
  Overall quality outstanding.
  Large user base, High satisfaction scores but low pride of
  ownership.
  Huge strength on the sound dimension, strong launch of KY
  Thunder in the middle of all this.
  Delay in launching pure flat TVs.
  Overall pricing higher than the market and what the brand can
  command.
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What did we do?

First key step
   Put together a Sales and Marketing team
     Senior level inductions
     Strong corporate S & M team from internal field level people.
     Built a marketing function from scratch.
  Created a process for generating shared thinking in the team
     Think tank meetings.
                                                             10
What did we do?

Focussed on immediate actionables.
  Serious paralysis situation – lots of problems, no clear
  solutions.
  Pricing correction, matched the market.
  Worked on appearing as a happening brand to the trade.
      Retention schemes.
      Display contest.
      Mass mobilisation.



Displayed our intent, our willingness to stand and fight.
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Brand Direction

Key changes
   Root the communication in the product.
       We had lost credibility and hence we needed to give reason why’s.
       Focus on communicating high end products only ( Black & KY Thunder and KY
       Home Theatre)
   Look feel modernisation.
       Strong focus on looking premium and contemporary.
       Kind of clothes, kind of house etc.
   Consistency of presence
       Need to be visible all the time.
       But with medium level budgets.
       Spread spends, innovations.


All this while retaining the traditional Onida edginess in the communication
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High end product mix

Conscious focus on the higher end.
  Launch of Onida Black flat screen TV
     Innovative sub branding, retaining parentage yet giving a new flavour.
     Strong focus in communication.
     Strong stance in pricing.
  Building the KY range
     Converted KY from being a model name to a sound attribute.
     Launched the Home Theatres under the KY umbrella.
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Restructured key areas

  Reduced outstandings through a conscious CD policy.
  Restructured dealer incentives to focus on mix.
  Initiated a key retailer package to support 300 key retailers
  with Traffic Generation initiatives and premium inshop display
  support.
The results - PBT                                                             14

       First Half(00-01/01-02)                 Second Half(00-01/01-02)

20                                        35                         30.20
       15.58                              30             (49.6 %)
15                 ( -29.4 %)             25
                                 11.00          20.18
                                          20
10
                                          15
5                                         10
                                           5
0                                         0
      2000-01                   2001-02        2000-01              2001-02



       First Half(01-02/02-03)

35                               32.44
30
25             (194.9 %)
20
15     11.00
10
5
0
      2001-02                   2002-03
                                                                                               15
The results – Market Share
                                 15.54%            15.70%

                        14.43%


               12.02%
                                          11.02%                      11.04%


       8.68%

                                                              7.13%            7.30%
                                                                                       6.89%




           Total            29Inch           21nch               20Inch          14Inch

                                                   June, 01

                                                   Nov, 02
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The results
              Onida vs. LG Market Shares
                                         18.50%
                       15.90%                       15.50%

              12.00%
                                                             Onida
                                                             LG




                 Total                   >Rs. 15000/-
                                          Segment


                         Onida Flat Volumes
                       (Contribution to Total Sales)
                                                  7.40%




                  2.40%




                  2001-02                         2002-03
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The results

  Outstanding dropped from 45 days to 32 days.
  Clear focus on mix improvement has significantly driven the
  gross margin up.
  Stochastic shares and other key brand parameters showing
  improvement.
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What are the learnings?

  What are the key principles behind Indian companies fighting
  back against MNCs?

  Would we have done anything different if instead of LG our
  key competitor was an Indian company?
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Learnings


What are the reasons for poor performance?

Internal                       External ( MNC related)
  Management Quality             Financial Strength
  Systems & Process Quality      Technology
  Mindset Issues                 Consumer
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Learnings

Traditional beliefs on why Indian brands lose out to MNC brands.

External
             Muscle -
   Financial Strength How many Indian companies can say they
can’t compete because the MNC companies leverage their financial
    Technology – How many Indian companies, if they want, can’t
muscle to make sustained losses?
compete on technology?
    Consumer – Yes there is a starting point disadvantage, but this
is a fever and not a cancer.

No, the real reasons for poor competitiveness of Indian companies vis a vis
MNCs is not external.
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Learnings
  The real reason for poor competitiveness of Indian brands is purely
  internal.

   Management Quality - Not having enough world class talent in the
 Internal especially at senior levels. Sensitivity to the same.
   system
   Need for fresh thinking at the higher levels.
   Management Quality
   Systems & Process Quality – Not enough investment into Systems,
   Systems & Process Quality
   into Processes, into HR, into Organizational Culture and Effectiveness
    Mindset Issues
   Development.

   Mindset Issues – Surrendering before the battle has begun.
       Lowering pricing prematurely.
       Ceding territory mentally.
       Trying to become a Nirma without changing the business model
       Not investing enough in the brand, preferring to play the commodity game.
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Learnings

Indian owned vs MNCs

  Don’t take refuge under the tricolour
     This is the way of digging your grave and getting into it
     The consumer can see when you are clutching at straws.
        He will dump you and dump you badly.
     However stand up and fight and he will give you the credit and the
     business over a period of time.
        The Indian brands job is to prove to the consumers that they offer world
        class products.
        Do that and the consumer will himself give you the benefit for being Indian.
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Learnings

Fight for the “top end” and the belly of the market
   simultaneously.

  The top always rots first
  If you let that happen then it is just a matter of time.
  Volumes travel bottom to top
  But
  Brand image travels from top to the bottom.
  More than any commercial/ marketing logic, not fighting for the
  top end tells the consumer that you don’t have it in you.
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Learnings

Reinvent and rename yourself if necessarry
  You can catch the problem at two different stages.
     When there are symptoms and internal organisational issues, but the
     brand is still healthy.
     When the brand has completely lost it with the consumer.
  Stage II problems require drastic solutions
     Renaming, building a new brand or a new identity.
     Collaboration, joint branding.
     Strong sub branding strategy.
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Learnings

The Indian consumer
  Has a bias to foreign, esp in areas considered to be High tech.
  MNCs have a clear starting point advantage.
  However there is an effect of time
      With time the glamour comes down.
      The more the MNC brand tries to connect the faster it becomes Indian.


Hence managing an individual brand foreign association is difficult
  but not impossible.
The Indian brand simply has to work harder and offer more value
  for 4-5 years.
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Learnings

However the more difficult issue is the cluster dynamics.
  Unique problem in India due to one shot opening of the flood
  gates.
     Banks ( ICICI, HDFC, GTB)
     Two wheelers ( Suzuki, Honda, Yamaha, Kawasaki)
     Auto ( Hyundai, Daewoo, Ford, Opel)
  All the new entrants tend to form a cluster in the consumers
  mind and all the older players tend to form another cluster.
  So Apart from what you are individually, which cluster you
  belong to also impacts your brand preference.

This becomes a problem in the short to medium term.
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Learnings

How do you address this problem?
  Either the old cluster as a whole improves performance
  tremendously hence negating the clusters itself completely
  Or by breaking free of the old cluster and becoming a part of
  the new cluster.
      By consistently demonstrating that what you do
      Is different from the stereotyped image of the old cluster.
      Is superior or comparable to what the new cluster is doing.
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Learnings

This would be a tremendous achievement for an Indian brand.
 Advantages of the freshness of belonging to the new cluster.

 And the solidity and reliability associated with its heritage.



This would make the Indian brand more powerful than the MNC
  brands

And this is the crowning glory we are aiming for.
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Thank you

								
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