Aug 06 2014 : The Economic Times (Mumbai)
BRAND BREAKOUT - How Indian Brands Can Go Global
Going global is all very well, but how?
Management guru and author Dr.Nirmalya Kumar has some suggestions
Management guru and author Dr.Nirmalya Kumar has some suggestions
Lists comprising the 100 most global brands, such as by Interbrand, demonstrate that all of the leading global brands pretty much originate from the developed world. India has been unable to develop true global brands such as Lenovo, Samsung or Toyota. In response, some argue that as India is a large country, it may be unnecessary to invest in global brands.
In other words, it is enough for indigenous brands to concentrate on the local market. For most Indian brands this is true. Rather than becoming global brands, they simply need to be globally competitive. By globally competitive, I mean they must be able to hold their own when multinational brands come knocking for the Indian consumer.Yet, over time, brands may find even being the largest domestic player in India does not allow them to remain globally competitive. Why? India accounts for 2%-3% of global GDP. As a result, in several industries, domestic firms playing on the limited India playground will find themselves at a scale disadvantage versus global competitors. For example, it may be impossible to adequately fund R&D if you are targeting 2%-3% of global demand while your competitors like Apple, Unilever, or Nestle are addressing 90% of the world market. Being global allows such brands to devote many more absolute dollars towards R&D, while simultaneously spending a smaller percentage of their sales on R&D. Ultimately, R&D resources are bought by absolute dollars, not percentages of sales. For locally focused brands, similar diseconomies may exist in purchasing, operations, and marketing.
It is challenging for emerging market brands, including those from India, to build a business with consumers in developed markets. Research indicates that North American and European consumers associate brands from emerging markets as being of poor quality, unreliable and cheap. Furthermore the cost of marketing to end consumers in these countries is prohibitive for most emerging market brands. In our book Brand Breakout: How emerging market brands will go global, we developed eight strate gies to overcome these challenges. Three of the recommended strategies are particularly relevant, and indeed, being pursued by some consumer brands from India that aspire to be global.
The “cultural resources“ route: or leveraging the country of origin for global advantage means positioning the brand on positive cultural myths. In spite of the general poor perception of the general poor perception of emerging markets, Western consumers do associate certain emerging markets with specific positive attributes.
These can be turned into a source of strength and differentiation. For exam ple, Brazil's Havaianas positioned its casual footwear (flip-flops) on the Brazilian national identity of beach, fun, sensuality, youth, and vibrant colours. It now sells on the high street in the US, the UK and many other countries.
Indian brands desiring to follow the cultural resources route should choose only one or two cultural meanings that the target segment will recognise anywhere in the world and will regard as credibly linked to the nation's culture.
Of course, these cultural meanings should be ones that no other brand has claimed, and that are relevant, or that the marketer can make relevant, to the product. Marketers can transfer cultural meaning to their consumer brand through three interrelated activities: brand development -developing the brand name, logo, slogan, and writing style that convey the intended cultural meaning; brand communication -determining the setting, the characters, and the media to use in storytelling and myth-making; and brand reinforcement -aligning the other elements of the marketing mix, such as pricing, product placement, promotion, distribution, and packaging, so that they amplify the cultural meanings. India is a country rich in culture (eg, Ayurveda, Indian hospitality, Taj Mahal, yoga) and there are many opportunities to successfully employ this strategy.
A second pathway is to “use the diaspora as beachhead“: As the cost of advertising and distribution in developed markets is very high, the idea is to go after one's own ethnic population living in the developed market. For example, the Indian diaspora is very large in the UK and the USA. It is usually already aware of the Indian brand attempting to go global. Furthermore, they can be easily and efficiently reached via Indian ethnic shopping areas. By first building a business with them, the aspiring global brand gets some scale and resources to subsequently target the non-ethnic consumers in the developed market. Dabur and ICICI bank are following this route.
For the diaspora strategy to succeed, some factors are necessary. The diaspora beachhead has to be large enough to generate the resources required for sub sequent marketing to the mainstream population. Secondly, the brand itself must have attributes with universal appeal such as “natural“ for Dabur or “high interest rates“ for ICICI. In contrast, Bollywood movies have limited appeal for crossover audiences and play mostly to ethnic audiences in developed markets. Thirdly, it helps to have a diaspora segment with a high proportion of “biculturals.“ Biculturals are those immigrants who have a sense of belonging to two cultures without losing their cultural identity. As they are more integrated in the host country's social networks, they are more effective promotional conduits to the host population.
A third pathway is to “brand natural resources“: A brand can be created for natural resources, standing in as both a quality guarantee and a provider of emotional satisfaction. This is achieved by associating the brand with a particular geography. France and Italy excel at this. Sparkling wine cannot be called champagne unless it is from Champagne region of France. To succeed with this strategy the geographical area must be tightly defined, preferably coupled with mythical qualities; expensive, elaborate, and transparent production process specified; an independent authenticating body that conducts regular audits; and finally, the area is marketed and branded globally .
Sri Lanka has been taking steps to obtain “protected geographical indication“ (PGI). Sri Lanka has now two global trademarks of natural resources Pure Ceylon Cinnamon and Pure Ceylon Tea. Manufacturers from other countries may not lawfully use Ceylon in their branding or marketing efforts.
Unfortunately, India has not exploited the vast untapped opportunity for branding natural commodities in any systematic manner. As a result, for example, 30,000 more tons of Darjeeling tea is bought every year than is produced. Just imagine, to name just a few, Golconda diamonds, Alphonso mangoes, Tussar silk, Jaipur jewellery, and Coorg cardamom. While there is an initiative currently underway, we could launch 100 Indian global brands with this strategy alone.
In other words, it is enough for indigenous brands to concentrate on the local market. For most Indian brands this is true. Rather than becoming global brands, they simply need to be globally competitive. By globally competitive, I mean they must be able to hold their own when multinational brands come knocking for the Indian consumer.Yet, over time, brands may find even being the largest domestic player in India does not allow them to remain globally competitive. Why? India accounts for 2%-3% of global GDP. As a result, in several industries, domestic firms playing on the limited India playground will find themselves at a scale disadvantage versus global competitors. For example, it may be impossible to adequately fund R&D if you are targeting 2%-3% of global demand while your competitors like Apple, Unilever, or Nestle are addressing 90% of the world market. Being global allows such brands to devote many more absolute dollars towards R&D, while simultaneously spending a smaller percentage of their sales on R&D. Ultimately, R&D resources are bought by absolute dollars, not percentages of sales. For locally focused brands, similar diseconomies may exist in purchasing, operations, and marketing.
It is challenging for emerging market brands, including those from India, to build a business with consumers in developed markets. Research indicates that North American and European consumers associate brands from emerging markets as being of poor quality, unreliable and cheap. Furthermore the cost of marketing to end consumers in these countries is prohibitive for most emerging market brands. In our book Brand Breakout: How emerging market brands will go global, we developed eight strate gies to overcome these challenges. Three of the recommended strategies are particularly relevant, and indeed, being pursued by some consumer brands from India that aspire to be global.
The “cultural resources“ route: or leveraging the country of origin for global advantage means positioning the brand on positive cultural myths. In spite of the general poor perception of the general poor perception of emerging markets, Western consumers do associate certain emerging markets with specific positive attributes.
These can be turned into a source of strength and differentiation. For exam ple, Brazil's Havaianas positioned its casual footwear (flip-flops) on the Brazilian national identity of beach, fun, sensuality, youth, and vibrant colours. It now sells on the high street in the US, the UK and many other countries.
Indian brands desiring to follow the cultural resources route should choose only one or two cultural meanings that the target segment will recognise anywhere in the world and will regard as credibly linked to the nation's culture.
Of course, these cultural meanings should be ones that no other brand has claimed, and that are relevant, or that the marketer can make relevant, to the product. Marketers can transfer cultural meaning to their consumer brand through three interrelated activities: brand development -developing the brand name, logo, slogan, and writing style that convey the intended cultural meaning; brand communication -determining the setting, the characters, and the media to use in storytelling and myth-making; and brand reinforcement -aligning the other elements of the marketing mix, such as pricing, product placement, promotion, distribution, and packaging, so that they amplify the cultural meanings. India is a country rich in culture (eg, Ayurveda, Indian hospitality, Taj Mahal, yoga) and there are many opportunities to successfully employ this strategy.
A second pathway is to “use the diaspora as beachhead“: As the cost of advertising and distribution in developed markets is very high, the idea is to go after one's own ethnic population living in the developed market. For example, the Indian diaspora is very large in the UK and the USA. It is usually already aware of the Indian brand attempting to go global. Furthermore, they can be easily and efficiently reached via Indian ethnic shopping areas. By first building a business with them, the aspiring global brand gets some scale and resources to subsequently target the non-ethnic consumers in the developed market. Dabur and ICICI bank are following this route.
For the diaspora strategy to succeed, some factors are necessary. The diaspora beachhead has to be large enough to generate the resources required for sub sequent marketing to the mainstream population. Secondly, the brand itself must have attributes with universal appeal such as “natural“ for Dabur or “high interest rates“ for ICICI. In contrast, Bollywood movies have limited appeal for crossover audiences and play mostly to ethnic audiences in developed markets. Thirdly, it helps to have a diaspora segment with a high proportion of “biculturals.“ Biculturals are those immigrants who have a sense of belonging to two cultures without losing their cultural identity. As they are more integrated in the host country's social networks, they are more effective promotional conduits to the host population.
A third pathway is to “brand natural resources“: A brand can be created for natural resources, standing in as both a quality guarantee and a provider of emotional satisfaction. This is achieved by associating the brand with a particular geography. France and Italy excel at this. Sparkling wine cannot be called champagne unless it is from Champagne region of France. To succeed with this strategy the geographical area must be tightly defined, preferably coupled with mythical qualities; expensive, elaborate, and transparent production process specified; an independent authenticating body that conducts regular audits; and finally, the area is marketed and branded globally .
Sri Lanka has been taking steps to obtain “protected geographical indication“ (PGI). Sri Lanka has now two global trademarks of natural resources Pure Ceylon Cinnamon and Pure Ceylon Tea. Manufacturers from other countries may not lawfully use Ceylon in their branding or marketing efforts.
Unfortunately, India has not exploited the vast untapped opportunity for branding natural commodities in any systematic manner. As a result, for example, 30,000 more tons of Darjeeling tea is bought every year than is produced. Just imagine, to name just a few, Golconda diamonds, Alphonso mangoes, Tussar silk, Jaipur jewellery, and Coorg cardamom. While there is an initiative currently underway, we could launch 100 Indian global brands with this strategy alone.
