Monday, January 01, 2007
Private Label Brands and the notion of Trust
Private Labels, Public Brands
Q: This is a cliché now: The ground realities of the Indian market have changed. The consumer is a different person altogether. Who is this new Indian consumer?
-Ramya Dasgupta, Mumbai
A: Ramya, the Indian market has changed very dramatically from what it was to what it is today. The earth has literally moved from under it. Marketing practitioners of yore who have not believed it relevant to re-define their skill-sets and efficiencies of understanding this new consumer are themselves getting redundant in this space of the dynamic Indian market.
The key change is all about the manner in which the Indian consumer has morphed over the years.
The new Indian consumer occupies a very different rung in the ladder of consumer development altogether today. This is so due to the huge economic resurgence seen in recent years. This is particularly so in the developed Urban and developed rural markets. Other markets, which I classify as "developing urban" and "developing rural" are however still the same.
Add to this complicity psychographic changes and the influence of media that is seamless in its dissemination of information and trends across the world. This is a complex dream we are living as marketers.
To an extent the new Indian consumer is pretty un-identifiable using the same old tools of consumer insight gathering we have used over the decades in Indian marketing.
Aspirationally this consumer lives in
The new consumer is tough to predict in behavior terms and the old tools of such assessment are antiquated. This is the marketing challenge at hand. We therefore use more exciting tools to unearth the potential of this new consumer.
Brands normally don't change as fast as their consumers do. This is something marketers are getting more and more conscious about today. The new consumer in the market-place is a consumer who is all about change. The cultural influences that shape her life are largely very dynamic. More dynamic than they were in the good old days of slow-paced change. Media itself is a very big catalyst of this change process.
In a scenario where the consumer is influenced by change factors in a big way, brands need to question themselves as to what they are meant to do and be. Should they remain static-state entities with strong brand propositions that never do change, or should they morph themselves to keep pace with the changing consumer?
I personally believe in a concept I have put forth in 2001. I call it 'Amoebic Branding'. I do believe that brands need to be amoebic in their orientations to meet the needs of the new consumer. Old branding believes in the dictum that brands must not change. The dictum believes that propositions, names, colors, symbols, and literally everything else about the brand needs to remain the same all the time. This is the concept of consistency of the brand at play as one of its biggest strengths.
I believe differently. I believe that brands must change and morph to remain contemporary, relevant, original and innovative for the new consumer at large. A brand needs to change....but change it must in tune with a complete and proper understanding of the consumer and not a knee-jerk reaction that lacks an in-depth feel of the consumer.
Brands must change names to stay relevant. An example I can give of this trend is the fact that Reebok is not a Reebok anymore. It is a trendy and 'sms' lingo 'RBK'!
Brands need to change compositions. The experiments of Coca Cola in its varianting strategy with Vanilla, Lime, Cherry and every other flavor worldwide is an example.
Brands must change colors of their product offers and not just the change of color on pack graphics. Heinz and its International launch of Purple Ketchup is possibly a good example. The concept is simple. Consumers are bored with the same stuff in the same color. Box shaped oranges and rectangular tomatoes grown in Japanese farms and aggressively branded organic produce are examples as well.
Taste must similarly change. And so must forms. Why must a Pepsi always be a liquid and why not a solid?
Q: The brand is a trust. How long can brands survive on the elusive notion of "trust" alone?
-Joseph Selvakumr, Chennai
A: Joe, long many years for sure. There comes a time in society when only the brands that are not advertised will be trusted the most. It happens this way. In the beginning, when competition emerges in a category, advertising emerges as
well. One advertises more than the other. This goes on till advertising
reaches ridiculous levels in society. Take for instance the tooth-paste with
Oxygen in it, the Healthy TV and lots more to boot!
And then society tires of it all. Society begins to trust brands that do not
advertise at all. This time will come. And that is the day and age of the
"No-brand".
Trust is a big notion. It is a complete intangible. It is a big brand in
itself....as "Trust" is a thought as well! It is quite like Maya. It is
there...and yet it is not there. So is the brand.
“Trust” is a difficult concept, but an enduring one.
Q Do ‘private labels’ make money? Private labels such as the ones put forth by our local Super-market chains?
-Sadhana Malik,
Sadhana, I can quote a blind example from a super-market chain in
A private label in the category of coffee or sugar or lentil does churn in
35% more in terms of margins....compared to the branded variants.
It is a difficult thing to sell as of now though. Consumers are still besotted by the big company brand on offer. The mass advertised brands are still preferred over these ‘private label’ brands or ‘dealers’ own brands’.
Super-market chains normally build these private label brands to leverage on the footfalls that they generate. These chains use private labels to get to negotiate tougher margins form suppliers of competing products as well.
Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.
