| Not adaptable
Discussions on globalization keep making references to the need for Indian companies to build their own brands that can compete with others in the global and Indian markets. Some also suggest that Indian companies did not build brands before the magic 'reform' year 1991. Having spent my working years from the Fifties to the early Eighties doing just that, that is, building brands in India, I can say that India did build brands. But market conditions were not as harsh as they are now. The principles of brand building however are by and large unchanged.
Brand marketing after 'economic reforms' is more complex and expensive. But brands were being built long before. Many have died or have changed beyond recognition. That has happened in other countries as well.
There are many reasons for brands declining or dying: changed economic situation (transistor radios); new consumer contexts, behaviours and preferences (tetra-packed fruit juices); many more competing products offering better value choices to the consumer (death of hundreds of television manufacturers like Dyanora or Televista); lack of nimbleness of companies in adapting to changing markets (the decline of Lever brands like Dalda); inability to change product images and product forms for meeting new directions in consumer behaviour (the decline of the scooter against the motor cycle; managements that have become lazy and complacent (Lipton teas versus Tata); inadequate care in assessing threats and risks (BPL white goods); loss of determination and courage (for a few years when Godrej sold its distribution and fast moving consumer goods brands to P&G which starved the brands of support till Godrej took them back and rebuilt them); lack of stamina to pursue an idea (Lever's and the death of the first packet food products HIMA).
From 1951 to 1985, India discouraged consumption in preference to saving and investment. Any kind of consumption, especially of manufactured consumer products, was subjected to severe restrictions: on factory location, production capacity, equipment that could be imported, raw materials that could be used, labour intensity (which had to be high), pricing that was administered or controlled or subject to government regulation, line extensions, expenditures on advertising and promotion, penal taxation of incomes as well as on the end products available for purchase by the consumer and severely restricted disposable incomes with consumers.
Imported products with better features and superior quality were illegally available in limited quantities through smugglers. Local quality of manufactured goods did not match the best in the world. Even multinational companies wanting to standardize their product offerings globally, found their Indian offerings inferior to what they would have preferred. Desired ingredients, materials, packaging, equipment and so on had to be procured only indigenously or from countries specified by the government. The incidence of new product launches and even upgradation or revamping of existing products was delayed. Any addition to capacity, expansion or extension required licences from the government that were difficult to get, especially for 'foreign' companies or those belonging to 'large' Indian groups.
Sales volumes were also limited by the absence of television as an advertising medium. Available media were press, magazines, limited radio and cinema; outdoor merchandising and display using point of purchase materials. Some had less immediacy; all had limited reach. When television advertising did commence in the Seventies, it was for many years only black and white; television sets were not freely available, were expensive and poorly distributed while programming was poor in content and scheduling. There was limited information on reach and readership of media and about multiple media exposures so that media choices for advertising were 'hit and miss'.
Costs of production were high and the quality of products was poor. Imports of materials were either impossible or highly taxed. High costs and prices also resulted in low volumes.
However, new product launches and re-launches of existing products did take place. Companies sought to hold on to their customer bases, add new products to expand their business, introduce line extensions, reduce costs and bring some excitement into their products. New product plans of competitors were never a surprise because everyone needed to submit detailed information to the government to get industrial and import licences. This information was easily available to anyone for a price.
Despite the restricted purchasing power and choice, understanding consumer behaviour still yielded good dividends to companies in sales volumes, market shares and profits.
So Indian consumers were supposed to be uninterested in consumption. It was thought that there was little scope for variety in manufactured consumer products for different uses and many brands between each of them. The Indian was said to prefer 'imported' to 'local'. 'Foreign' labels commanded premium prices. Since production and sales volumes could never reach high levels because of restrictions on production capacity, low purchasing power, and inadequate reach of advertising, manufacturers aimed for premium-priced products to maximize profits.
There are lessons from this past for today's marketing managers. Testing the market is more necessary and speedy non-market techniques are available. To identify new product opportunities, quantitative data and market research are important, but being 'in touch' with the consumer through personal observation is vital to identify prospective consumers, evaluate and forecast market size.
With no restrictions on production, being first in the market gives precedence to identifying the right marketing mix at the right time. Before liberalization in 1985 and the opening of the economy in 1991, being first could mean pre-empting another new entry. The restrictions imposed by government licensing meant that being first conferred a quasi-monopoly status. The consumer identified foreign products with quality and preferred them to domestically made ones. The possible sales volumes were limited because of limited reach of advertising. Few manufacturers aimed to reach mass markets and instead aimed for premium priced niche market segments.
This 'right' marketing mix requires more management courage behind it because failures today are far more expensive. Extending product lives can be done in many ways. Redesigning, extending the name and logo and image to other uses, changing to a different target consumer group are some of them. But they must fit with the consumer's mental image of the product and the brand. Constant attention must be paid to keep products up to date with changing consumer contexts, attitudes, needs and behaviours. Product forms must alter to meet consumer needs.
There is a right time for a new product or an idea. If introduced much before its time, it will require stamina to support it till the market is fully ready for it. Introducing innovative products into markets is tricky. It becomes risky and expensive when the consumers are not yet ready for it and the sales volumes remain low while spending on advertising and promotion continues. The company must have a commitment to support the product through these years. Kellogg's showed this stamina; HIMA did not.
Companies must periodically review the stage at which the product is placed in its life cycle. They must be ready to implement life extension plans even when the product is apparently doing well in the market.
Fifteen years ago I pointed out from NCAER data that the poor constitute a huge mass market (what C. K. Prahlad subsequently expanded into 'bottom of the pyramid'). But the products must be tailored to suit the disposable funds with the poor. This market is huge in volume if low in unit price.
Products and brands do not have a permanent life. Past experience teaches that life extension but not immortality is possible. It must be done when the brand is still healthy. This is risky and requires courage and determination.