Sunday, February 07, 2010
By Harish Bijoor
Q: The 4-letter word SALE is suddenly all over in the market. Why? What is the rationale of the sale and what does it do to brands?
-Ron Jeffereson, Mumbai
A: Ron, you obviously belong to the tribe of the marketer, and that’s why SALE is a 4-letter word to you. To the consumer at the other end of the buying spectrum, this is the season of a windfall. A good time to shop.
Reebok offers a flat 40% off on most of its range. Except cleverly the latest styles. My friendly neighborhood Nilgiri’s departmental store offers two days of shopping where if I buy goods worth Rs.1000, I get freebies that I can eat and drink and use in my home worth Rs. 460. Puma offered two days of 50% flat discounting, except of course on my favorite Red Ferrari shoes.
Every retailer in the market seems to have gone berserk. Some have even gone out of the way to tell consumers to loot the store. Others have branded it well. On the whole there is a yen to get those big sales happening. It is raining discounts in the market.
The logic of the sale is a simple one. Money supply in the market is getting tight. The stock markets have been on the slump mode. Inflation numbers have hit double digit numbers over the last several successive weeks. Interest rates have gone up. And everything is being traced back to the price of a barrel of oil which has hit a record high, and which reigns currently at 129 USD per barrel at this point of writing.
Retailers are sitting on deep inventories. The SALE is a great way of liquidating stock. A great way of pushing out money which lies in clots in their godowns and warehouses and stockist points as stock. The SALE is a great device to move out such slow moving stock. A great way of creating that appetite appeal in the customer heart to spend and buy. Maybe even buy things he or she does not need.
A case in point. A friend bought 11 pairs of slippers for all of Rs.10, 000. And guess what, this meant that she can buy more slippers for Rs.10, 000 more! That would make it a possible 22 pairs! Possibly she just needs two.
The retail marketer understands the psyche of the consumer in the Indian marketplace. Time to flog the stock with the appeal of a store on SALE.
To the retailer this undercuts his profit line, but frees up stock. It frees up money stuck in stock, some of which is old style stuff. In tough times such as these, it is prudent enough to make these discounts happen and free up the blood clots of stock and convert it into free flowing blood. And blood here is good old cash.
What does a SALE do to brands?
Firstly it exposes the profit numbers that retailers make to consumers. Consumers suddenly start wondering why retailers keep such big margins. At times, this imagination of margin goes berserk in consumer minds and they do believe brands don’t necessarily make sense on the price side.
Secondly, sales devalue brands. It brings into brand consumption sets of consumers who would have otherwise not come in through their own volition. Such customers are really not positive influences for the brand in question.
Thirdly, it habituates customers to the SALE syndrome. Particularly in items such as shoes, fashion garments, durables and items of the kind, it makes customers wait for the annual sale to buy. This is bad for the brand, as the brand is not a brand at all in many ways. It is a brand for most part of the year, but assumes the avatar of a cheap commodity once a year, when it is bought.
There are several other downsides of a SALE, but let me leave them aside for the moment for want of space.
Q: ITC Foods’ Bingo is a success. If that is the case then what went wrong with ITCs’ apparel division “Wills Lifestyle”? Why is it not amongst the top 5 apparel brands in India?
-Manish Laddha, Mumbai
A: Manish, success in one realm surely does not ensure success in another realm. Further, the kind of work that has gone into by ITC Foods on the snack-food business is a far cry from the kind of consumer understanding that has been used in the Will’s Lifestyle business. The results are apparent, and this is not to say that Will’s is not a happening brand on its own.
Complexity of the fashion-wear business is very different and of a different magnitude than the branded snack-food terrain. The rag trade is a complex business terrain. Its size is huge, is fickle in its appeal, is totally fashion and design centric and there are far too many players attempting to cobble success.
I do believe Will’s Lifestyle is gradually attaining the status of a brand that is getting there. The moment you touch 150 Crore INR in turnover in this market, it means you are there and in the reckoning. From there to the next 850 Crore INR addition, is a long and uphill task for most brands. Fashion shirts such as Louise Phillipe, Arrow and Allen Solly have understood how tough it is to get there and are still on their journey. Will’s Lifestyle to that extent is a relative new-comer. Give it time Manish.
Q: In India (now having a freedom of choice in many sectors) can advertising make people buy something which they don't need?
A: Venkadesh, good question. I do believe this is just about to happen, if it is not happening already in the Indian market.
I would like to quote Scott Adams here and throw a Dilbertism at you which explains it all:
“In the future, the science of advertising will improve to the point where buying what you see in an advertisement is no longer optional”
Sad, but true.
Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.
Celebrity Endorsement and Real Estate
By Harish Bijoor
Q: Cities are pushing themselves to the fore in India by building themselves as brands that attract investments. What gets invested in building the brand image of a city?
-BP Gururaj, Hyderabad
A: Guru, the brand is an amorphous entity. The brand is a thought. A thought that lives in people's minds.
A city's brand image is therefore the collective set of thoughts that a city enjoys in the minds of people. These minds include the minds of the people who live in the city, and equally the minds of people who do not live in it.
The brand image of a city has therefore an intrinsic aspect, which is all about the image enjoyed within the city, and an extrinsic aspect which is the image enjoyed outside the city.
A city's image is created by a whole set of disparate elements altogether. It is about the weather, the culture, the politics, the society, the people, religion, language, attitude, tolerance and a whole set of 48 other factors included. To that extent, the brand image of a city is really not an engineered one. It is an accident. A literal small part of the chaos theory that abounds in much of our lives altogether.
In a technical manner of speaking, brand-engineering is a new science, art and philosophy on its own. Creating the brand image of a city is not about creating it from scratch on a drawing board. Instead, it is all about using its positives, its history and its heritage to advantage as one builds on the basic foundations that abound.
To that extent, Brand Hyderabad is all about leveraging on the image of its hoary past, its politics, its food, and everything that is old and super-imposing onto it the modern icons from IT. ITES, Real Estate, Retail and Biotech included.
Q: The Real-estate industry is getting onto the branding format. What are the fundamentals in branding the real-estate developer?
-Rohit Bhargava, Mumbai
A: Rohit, branding is very critical to the Real Estate industry. Particularly in times when there is so much clutter all around. And most certainly in times of uncertainty such as the ones we live in today with the big names of Wall Street having crumbled over the last week itself in the US, sending tremors of uncertain economic times the world over.
Cities and their Real Estate offerings need to re-invent themselves on the path of credibility for a start. Take Bangalore for instance. The city has been home for decades to builders, developers and the entire real-estate fraternity at large. We started with a high repute developer by the name of SI . Chennai and Bangalore saw developments which were unique. This builder promised the earth and delivered the sky. The builder promised delivery on a date and did it by that date.
Today, even as I answer your question, builders in Bangalore are getting a negative image on delivery, quality and at times consistency of what is promised being delivered. There are builders who have promised delivery and have defaulted on this count by more than two years. The stories abound. This is bad for the brand image of Bangalore and the builder at large. No amount of branding input will help correct a credibility issue.
While the real-estate industry benefits a lot from Brand Bangalore, it is time for the industry to start contributing back. The first step would be to follow the basic rule of transparency, credibility and honest delivery. The image of a city is the responsibility of all its stake-holders. The Real Estate fraternity is one such key stake-holder.
Branding helps only when the offering is honest. The brand is an honest consumer statement.
Q: There is so much being written on the use of celebrities and its impact on brands. What’s your view on this? Should we use? Should we not?
-Shefali Luthra, New Delhi
A: Shefali, celebrity use in advertising has fast emerged as a lowest common denominator item in Indian advertising. When there is nothing else that is working, just pick a celebrity, use his/her awareness scores to bump up your brand awareness scores as well.
Celebrity use works. But works at one level only. And that is at the level of building awareness for the brand in question. This works when you are launching a new brand, or when you are re-launching an old one that needs to get back into the awareness mindset of consumers again.
At awareness creation it works 8.2/10. At Interest development in the brand, it works 2.2/10; at desire development it works 1.6/10, on creating the action of purchase and buy-in: 1.6/10. At creating positive cues post-purchase (and in the process of reducing post-purchase dissonance) it works 4.1/10. This is as per a very recent study of ours across categories involving 81 advertised works over the last two years.
Celebrity use therefore works best at the stage of awareness creation, and a wee bit at the stage of managing post-purchase dissonance. But that's it.
This is the reason why you see celebrities being used for categories where they have no brand fit even. The brand-manager knows this, but is desperate to bump up his awareness scores, never mind if he is using Anupam Kher to advertise a new housing project. Brand fit goes for a toss. The immediate objective is celeb-linked awareness building.
The overuse of celebrities is causing the killing of the golden goose that used to lay silver eggs at least. Now, it is rotten eggs only!
Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.