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Mumbai , Nov. 18

BRANDING, as we know it is dead, but brands continue to be invaluable, according to experts at the Confederation of Indian Industry's second national FMCG (fast moving consumer goods) conclave here.

As the Rs 85,000-crore FMCG sector struggles to achieve sustenance and growth, the success of an enterprise will be determined more by "its ability to use its intangible assets than by its ability to amass and control the physical ones'', said Mr Ramesh Jude Thomas, Principal Executive Officer, Equitor Management Consulting (Interbrand), in a debate on the relevance of branding.

There is no longer security of demand as consumers have more choice, the cost of acquiring and retaining new customers has multiplied exponentially, while the average category growth is floundering within single digits and marketing expenditure is rising by over 24 per cent, Mr Thomas said.

At the same time, while intangible assets represented just 18 per cent of acquisition bids in 1981, they accounted for 71 per cent of the bid value in 1987. Also, brand value specifically accounted for 38 per cent of the business value component — up from 33 per cent just two years before, while the value of tangible assets fell from 45 per cent to 36 per cent.

"Of the 10 most valuable brands in the world, the brand itself accounts for 51 per cent of the enterprise value of Coca-Cola, 68 per cent in the case of Disney and more than 70 per cent for McDonald's," Mr Thomas said. "So a brand really creates and secures future earnings''.

Even so, branding, as we know it — as the end product of the product advertising — is dead, but brands themselves are invaluable, said Mr Kiran Khalap, Founder, Chlorophyll.

The notion that brands are entities with a fixed `dharma', owning certain attributes, benefits, values and experiences, and representing sacred pacts with consumers — is alive and well, he added.

What is also true is that brands have become marginalised in low-value, low-risk categories, said Mr R. Subramanium, Director, Subhiksha Retail Services.

Brands were relevant at a time when information was scarce, and consumers needed reassurance on the quality of the products. Now, there is easier access to information, and consumers have an intermediary in the retailer, and because of greater product parity they are also willing to trade brands within their choice set, he added.

"Brands are still relevant for products with long life-span or those which need after-sales service," said Mr Subramanian. "Also, if there is a huge perceived risk of use, and people need reassurance on the brand (like baby food), then brands are relevant."

The tremendous growth in the economy segment has led to price erosion among even more premium FMCG brands, and most brands are driven by promotions, so consumers don't really `walk far' for brands of their choice, said Mr Sanjeev Agrawal, Head-Marketing, Pantaloon Retail (India) Ltd.

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