The Hindu Business Line : Invaluable branding

PSU status notwithstanding, oil firms realised the importance of brand building. Hindustan Petroleum signed up tennis star Sania Mirza last year to endorse its products for two years.

That brands are a valuable asset is not a matter for discussion these days. It is accepted universally that brands are valuable assets. One might wonder aloud about the methodology of brand valuation and the investment-to-return ratios in brand building. One might wonder about what exactly adds to brand value. One might be clueless on how to add to and retain brand value. Yet, deep down in their hearts, everyone accepts that a brand delivers some great tangible and intangible benefits to a company, even though they might not always be monetised.

Rajesh Malik of Brand Finance kindly mailed me a list of India's Most Valuable Brands that emerged from an exercise undertaken by them. The methodology used was the `Royalty Relief Approach' that is, it seems, favoured by financial institutions, and it is not a "complete" exercise in as much as certain companies like Unilever could not be included due to constraints posed in the logistics of the exercise.

Yet, I found it very interesting to note some of the names in the list, their valuation, and observe some aspects of what makes the brand tick. I will hasten to add that the names have been selected in no particular order.

Indian Oil Corporation tops the list compiled by Brand Finance with a brand value of Rs 25,063.6 crore. Bharat Petroleum and Hindustan Petroleum are also in the dizzy heights of the leading few brands.

I find this very interesting. Typically, one would not have expected semi-monopolistic public sector companies having significant brand values. I guess the semi-monopolistic nature definitely helped them gain a great amount of visibility. Each one of us has driven past or pulled into one or the other petroleum companies' gas stations and filled our vehicles' thirsty petrol tanks. We could not just help noticing the name. However, visibility in itself does not make for brand value. If one were to apply the same token, MTNL or BSNL should have been in the list as well. The only telephones we used till a few years ago were theirs. This is where effective brand building comes in.

The oil majors read the writing on the wall and quickly realised that competition would be upon them very soon. They all went through major branding exercises. The shape and look of the customer touch points changed dramatically. Dowdy petrol stations sported house colours, proper lighting, prominent branding, and offered a host of amenities aimed at building relationships with vehicle owners and drivers.

Bharat Petroleum went a step further and pioneered the `Pure for Sure' petrol pumps which provided a phenomenal differentiator in a classic `me-too' market. It also delivered significant monetary margins. The oil majors also literally stepped on the gas when it came to mass media brand building exercises. Good advertising, and a fairly well-rounded brand-building exercises have clearly shown that they are doing something right. If only government policy did not dictate the colour of their bottomlines, I would wager long and hard that these companies would be very competitive.

In contrast, the only telecommunication company in the top 25 list was Bharti Televentures.

Tata Steel and L&T are two companies that figure in the list and with good reason. Their quality products and services, their commitment to nothing but the best and their consistent communication have all clearly made a difference. Public perception is an amalgam of several factors and public memory, though proverbially short, is also very fragile.

State Bank of India occupies pride of place in the upper reaches of this list. The banking monolith has obvious strengths. And even more obvious muscle. Both very important in the arena it plays in. Yet all the positive things it has going for itself combined with all the aggressive mass media communication it is wisely undertaking could come to nought if we see a couple of wildcat strikes like the one that tripped the economy a short while ago. Today's customer, corporate or individual, has several options, is well-informed and will not hesitate to make informed choices. Owners of brands would be well warned that brand value is very real, but brand loyalty is at best arguable.

Infosys Technologies with its awesome brand value is a great study of a company that hardly advertises, yet communicates with unerring effectiveness. Apart from the finesse it exhibits in its below-the-line offerings, it quietly realised that a brand ambassador like Narayana Murthy is invaluable. In fact, he is a brand himself, and a unique brand because he only endorses Infosys, not a plethora of products and services like other celebrity brands. They also use such seemingly innocuous opportunities like their quarterly results to extract huge media mileage for themselves. Couple that with their winning ways and the result is magic!

Ranbaxy is the only pharmaceutical company in the top 25 list. Something that needs to be remedied with alacrity. I do not buy the theory that pharmaceutical companies gain their value in the patents they file. That is one very critical way for them to attain value, but they are missing out on a great monetary opportunity by not building brand value as well. It must be borne in mind that many of the large pharma companies have been around for a long time and they have been rather profitable. They need to concentrate on this very real goldmine that is waiting to be tapped. The specialist health care communication companies need to look really sharply into this phenomenon.

ICICI, another prominent name in the list, is a very good example of a company that woke up to the necessity for well-planned brand building early in the day. It has projected technological benefits and tied this up with the emotional connect it achieves in its advertising, to great effect.

At the end of the day, putting a monetary value to a brand is very important. It immediately brings a great new dimension into very sharp focus. Anyone, from the CEO to the smallest stakeholder, begins to realise the worth of the brand and I believe this could eventually help in reducing the short-term perspective that seems to creep into any sincere brand building effort.

Anything built with proper understanding and sustained efforts will ultimately show results in the bottomline. And that is something everyone will understand.

(Ramesh Narayan heads Canco Advertising.)

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