Wednesday, May 02, 2012
Of Kingifsher, Apple, Brand-valuation and Brands
A: Purnam, brand valuation is an objective exercise done with the subjectivity that the brand valuing organization, its peoples, consumers of the brand and the current environment in which the brand lives bring to the table. In this rather complex exercise, one looks at current financial strength, potential value and future earnings. In addition one is looking at consumer strength the brand enjoys. The more consumer-centric you make the exercise, the more subjective it gets, and the more financial statement oriented you make it, the more objective it gets. Both have their own pitfalls though.
A: Sabapathi, Apple is the gold standard brand in the telecom handset market. The allure of an Apple is much beyond advertising. The brand depends heavily on peer group influencers in the market. To an extent, the Apple device is slowly but surely becoming a ubiquitous cult symbol in the hands of the young. Something that is beyond advertising. If I am to use Pharmaceutical language, the brand is prescriptive. Prescribed by the peer. And this peer-to-peer prescription holds immense value. Much more value than mere advertising tout.
Q: How have brands evolved in India? Can you help me trace history?
In the beginning, brands were all about the things we ate and drank. Then they got into the realm of what we wore. And then into realms those touch our lives and make them happen, stuff like education and Medicare and more. In each of these categories, branding happened only at the top end of each category. The bottom end remained a commodity. Over a period of time however, the brand started touching the bottom-rung entities in each category as well. Take tea for example. The category had a large loose tea orientation in the days gone by. Today, literally every tea is a branded option. The movement climbed top down and not bottom up, as has happened in other countries. The same is the case with salt and every ingredient and eatable there is. Stretch this to beverages as well...and you have a pattern.
The economy and its affordability indices spurred this on as well. As more and more money started getting the spend-tag of being a disposable income, more and more brands came in. The movement from cycles to mopeds to motorcycles to small cars to big cars is yet another aspect of this evolution. As India went through adjunct categories such as mopeds, the economy signified that it was in its adolescence. Products were kid products, adolescents and then mature products. The cycle is a kid product, the moped that of an adolescent India and the motorcycle of a grown up India.
Have brands kept pace with change? Not really. Brands have watched consumers evolve and have offered them products. The early ones which offered mature-market products had a bad time and a long gestation period towards profits and break-even. Therefore, most others learnt the tough way and did things as consumers wanted them, rather than give things that consumers might want. The Tea bag evolution on India is a classic example with Taj Mahal tea bags doing evangelical work and struggling with lack of profits for as long as 20 years.