Guest Lecture - Branding in new economic order

Session 1 – Brand & Branding in a new Economic Order

Guest Lecturer: Mr. Manoj Berry (CA, MBA from IIM-Calcutta)

Date: July 24, 2010 Time: 10:00 hrs – 11:30 hrs

Take away from the session:

1. Economic crisis of 2008 was mainly due to supply exceeding demand for a decade. One reason could be attributed to advancement in Technology (which drives the prices down & increases market penetration). Example: Reliance helping LG to grow in business of CDMA. The other main reason is availability of cheap credit which turned a tourism & travel destination into a booming property market – Dubai, making prospective entrepreneurs immediately jump into the market. The person buying last pays the highest price (Last Fool Syndrome) & losses heavily (as he/she hangs on to the property longer, hoping for a premium).Moreover, due to lack of cash flow now, the existing cash is locked up in incomplete property, which in itself has no value.
2. Injecting cash into the economy is not the solution to stimulate spending, hence, the economy because the gap between the rich & poor is widening (Rich getting richer & poor becoming poorer). Also, it is a misconception that affluent people spend in recession - a study in USA showed that it is the poor who spends for needed item even in recession (for equipments like tube squeezer to reduce wastage). Also, automation reduces human involvement, thereby increasing unemployment further.
3. Value = Benefit / Price (where Benefit = Rational + Sensory + Emotional). Value is benefit given for a certain price charged. It’s easy to reduce price & gain value, but it is also easily followed by competitors. The creativity lies in building benefit to increase value.
4. Brand, from its inception, symbolizes ownership & consistency in defining its quality (Marked Animals in Prairies, USA, transported from ranch to slaughter house), though many brands failed as symbol become of pre-occupation & failure to deliver the promises, though importance of marketing can’t be ignored. Example: Tea marketing shares 80% of total tea revenue & tea production shares 20% revenue. The other branding example can be of champagne & Swatch watch. Volkswagen (People’s car) is an example of using brand as functional name; though the name doesn’t have a brand value, if product is not changing & adapting.
5. Due to communication explosion, distinct brand name is not giving any advantage, as choices for customers become too much & hence, confusing– Positioning has gained importance (USP). The essence of survival is sustainable functional product performance (which is difficult – like AMD Vs Intel, delivering quality). Focus should be on giving a unique identity to the customer & not the product (as consumer competes among itself & not the product). User Profiling helps in creating a brand culture & brand identity, as people copy their respected idols & buy the same products without thinking.
6. A company is only acquired based on its expected future sales Vs demands generated in future. Apple crossed Microsoft in market capitalization in June, 2010. Apple (Core Value – More Leisure time to enjoy fruits of technology) branded their CEO – Steve Jobs, whereas companies like IBM (Core Value – WORK) didn’t had any face to project, but only processes. The success of Apple lies in its culture, which is the bedrock of brand. Apple is a CULT (sub-culture) brand & many people have blind faith in Apple’s product, which is seen in no drop in sales.
7. Brand power is a function of :
1. Brand weight (Dominance in category) which is measured by high awareness & high market share. Hence, companies spend a lot in Ad campaigns. Ranking: McDonalds, Coca-Cola, Kodak, Gillette, Microsoft. Only exception is Mercedes.
2. Brand Length (Brand extension, a brand stretching in various products & services). Example: Apple (I-Pod, I-Tune for online Music store). Ranking: Disney (licensing its brand to pampers), Johnson & Johnson, Virgin, Sony, McDonalds, Samsung. Failure rate with new product & OLD brand is less.
3. Brand Breadth (Ability to cross various cultures for brand acceptance). Ranking: Coca-Cola, McDonalds, Kodak, Sony.
4. Brand Depth (Brand segments the market on consumer’s emotion). Ranking: Coca-Cola, Microsoft, McDonalds.