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Failure of Branding
Authored By:
Aniruddh Mairal
IIM Indore – Batch of 2008
Mail :
p06aniruddhm@iimidr.ac.in
Introduction
There is
nothing more powerful than an idea whose time has come- the famous statement by
Victor Hugo has been quoted to death in literature in the years bygone. This
fact however, does not in any way, dilute the sentiment and logic behind
it. One might ask, how this quote is
relevant when we look at the present topic under discussion, that of
successful branding of commodities the world over, and in India in
particular.
Background
Branding as a marketing strategy has seen a significant increase
in interest in recent years due to a variety of factors.
 The increase in competition in just about every product category
coupled with the ability for most consumers to quickly and easily seek out
and compare all competing offerings via the Internet has put a great deal of
pressure on brands to strengthen their positions and continually seek ways to
deliver greater value to customers.
Companies are now fully realizing the importance of creating
strong brands that provide real customer benefits so they can avoid the
vicious practice of continual price slashing and cost reduction due to the downward pressure that exists in
commodity markets. They're discovering that it is desirable to compete on
more than just price and volume.
We read in our
marketing textbooks about branding commodities. We read about different
players in different markets, who to achieve more and more profits, sought to
differentiate their offerings by various means.
The
differentiation was brought about in many ways :-
- Ignorance of buyers
regarding the essential characteristics and qualities of goods they are
purchasing
- Pervasive sales
promotion activities of sellers and, in particular, advertising
- Possibility of
developing significant product differentiation through advertising is
greatly enhanced for so called “gift goods” or “prestige goods”
- Differentiation
in the locations of sellers of the same good where the product fills no
technical function but rather can satisfy many different
- sort of personal
needs or uses (psychological or physical).
Now the question we ask here is; have companies succeeded in creating
brands merely by following these and various other tenets that have been
prescribed? If a firm today wants to go about creating a brand in the
commodity it trades in, will it be successful irrespective of the location,
culture and level of social development? The answer obviously, is a big NO.
The concept of IK
(Indigenous Knowledge)
Armed with this information, let us go
ahead, and define a commodity.
Definition of commodity-
Commodity is a term that is often used loosely -- to denote both markets with
very intense price pressures and the strategies employed by companies
competing on the basis of low cost/low price.
We use
"commodity" to refer to a specific group of products and markets –
lower levels of (lowly) differentiated products or services with high levels
of substitutability and straightforward price discovery.
The “classic” mistakes in branding commodities
We see how often
new brands, which were very popular in the west, failed (fail) when
introduced in India. This possibly is the effect of how much of commodity
branding is done by foreign origin companies. They don’t exactly understand
how the Indian psyche functions. Ads and marketing campaigns are often just
translated. It is probably assumed that what western consumers see as “value”
or points –of –differences are seen as the same by Indian consumer too.
Therefore these,
just are “classic” mistakes that companies do while trying to enter the
Indian market. We are not concerned about these. The question that we are
trying to answer here is – even if a company does everything right,
why will still it sometimes fail to create a brand out of a commodity?
An often
propounded reason for this is that maybe consumers ‘allow’ and accept firms
trying to brand and charge a premium for manufactured good/services. They
however, in India at least, do not accept and subconsciously reject the idea
of firms or an individual selling them at a higher price, what nature gives
to us free of cost, and so abundantly.
This can be
rectified by companies , of course, as has been done in the case of coconut
oil etc, where a successful branding of commodity has been carried out by
introducing brands like parachute, hair n care and many more.
Now the question naturally arises; If hair
oil can be branded so successfully, why not indigenous shampoos? Why do sugar
n rice continue to pose problems when companies try to brand them? –where
does the answer lie?
New paradigm
We therefore
pose an interesting hypothesis which might offer a solution to this dilemma.
We say- consumers subconsciously reject any branded goods that interfere with
their traditional IK. This IK is not constant over time. Rather, societies
gain or lose this knowledge with the passage of time, with changing
demographics, changing lifestyles and changing cultures (what we call
Americanization).
When a brand
does not infringe on their “IK”, they accept it. Now since we say that the
“IK” is not constant, a commodity which is not successfully branded today
might be done so in the future. And again, the brands in some commodities
which we take for granted today, might have had problems with branding in the
past in the same market, inspite of the parent company getting all the
“basics” right.
So let us
further elaborate on this concept. Take soap for example. Not so long ago,
soap making at home was a common activity. People did not buy branded soap as
they had time to spare for making it, and they attached enough importance to
this activity to spend resources on it. With time, with the evolution of
society, as less and less time was available for leisure and more and more
time was required for other activities, soap making became just a nuisance.
Why spend so much time on something which could be bought over
the counter and
used instantaneously? Enter branded soaps, exit traditional soaps. Now if we look closely at what happened, we
see that IK (soap making in this case)
was lost gradually over time, and soap, which could not have been branded and
sold so easily in the market earlier, was sold exclusively by “brands”.
Take another example. Branded Pickles today are
popular in the market with different companies offering many types of
pickles. Now let us just try and envision selling of branded pickle on this
scale 30 or 40 years ago. At that time, pickle making was an integral part of
a housewife’s duties. She could not have dreamt of buying pickle from the
market for her family. This was an art, which was handed over from generation
to generation by the elders in the family. This was IK.
With passage of time, and the advent of nuclear
families, two income families etc, no one had the time to make pickles
anymore as it was just so much more convenient to buy them from the market.
Therefore, Enter branded pickles. Exit homemade pickles.
Now no one denies that the art of making home
made pickles is still alive and kicking, but it definitely has lost out in
some degree to branded pickles. The branded pickle makers therefore, target
primarily those families which have lost this “IK”, for any reason whatsoever
and ensure the success of their brand of pickle.
Now all this leads to an interesting phenomenon us to an interesting
thought that maybe in every market, in
every geographical region the world over, there is a time when one cannot
brand a particular commodity, whatever strategies /tactics one might employ.
In other words, If the time for branding that commodity in that particular market has not
come, if the consumers have not lost their perceived “IK” , then the
commodity will not be able get branded
successfully.
Only when that society matures, progresses, and
loses that “IK” or the importance attached to it, will the branding be
successful.
Possible arguments against the new theory
An obvious
argument against this line of reasoning may be given by citing the example of
salt in India. It can be said that it is a commodity, and no one ever made
salt at home! Why then, has salt branding been successful?
The answer to
this paradox lies in the simple fact that the hypothesis propounded above
never disagrees with the classic theories of branding commodities. It never
says that commodities will be branded successfully/unsuccessfully only if
they satisfy this criterion of “IK”. The companies trying to brand
commodities have to obviously look at all the primary factors which influence
successful branding, like providing points of difference and added value.
When salt is
successfully branded, we see that companies add iodine to it, thus adding
value of course, but never infringing on IK. Because as we see, iodized salt was
never made in India, at home, before this. So consumers accepted it as being
something new, novel, and a “value added product”.
We can take the
example of branded sugar in India also, if we try to poke holes in this “IK”
concept. We see that companies which tried to brand sugar are now
increasingly, giving up on this idea and returning to the commoditization of
sugar. This phenomenon obviously cannot be explained by the “IK” theory, as
no one ever made sugar in their home. But that is the whole point, that the
‘IK” theory never claims that it is the only factor that influences
successful branding. It is merely one additional factor that has to be
considered. In this light, we then see that branded sugar has not caught on
because consumers simply do not see any added value of branding by companies,
which as we said, is one of the primary factors affecting commodity branding.
What we have to
do is add this additional factor (IK) when analyzing why consumers reject the
concept of branding a commodity at a given time, in a given market.
All this might
explain why we see so many commodities being branded successfully in western
markets. For this, we
see that they lost their “IK” a long time ago as their societies developed
much earlier.
Therefore, when
a company which branded a commodity it successfully in western markets enters the Indian markets
and tries to brand that particular commodity here again, it might find that
it is failing miserably. And in that case, it will just have to wait for some
years before reentering the market and hope that the consumers will accept
the brand this time round.
Conclusion
We see that maybe the concept of fast lifestyles
and demand for convenience merge with the concept of blurring “IK” and enable
branding. The
lesson for companies the world over trying to enter new markets and brand
commodities might very well be that before introducing a brand, in addition
to checking all the basics about the added value and perceived “points-of –differences” of a branded commodity, they
should also check out whether the society as a whole in that target market
has lost its “IK” about that particular commodity or not. If it has, well and
Good. But if it has not, then either chucks
the idea of branding, or take steps to change the outlook of the whole
society towards that particular good. This which might prove to be too daunting a task, even for
companies with huge financial muscle.
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