question hour. Brain, bucks behind ITC’s success

Brain, bucks behind ITC’s success

What is the secret of the ITC brand’s success in India?

Kodagu

Joshna, ITC has proved it that a newbie can enter the foods market in India and make a success of it. The ITC success is because of its deep pockets, for a start. The company has been able to spend a disproportionate amount of money on advertising and promotion expenditure over the last decade. To an extent, I call it “irrational competition”.

Look at it this way. The existing market leaders understand this category very well. They have created brands in this space over the decades. They are also aware of how margins stack up in the game of foods in India. Many appreciate that margins are wafer thin, but volumes make up for what margins don’t promise. In such an environment, existing market leaders assume that they have set up strong barriers to entry in their respective categories, as a newbie cannot spend disproportionately. In came ITC and did just that. And made a whopping success of it as well.

One needs to appreciate that this ITC success is not one of spends alone. It is a success of a savvy distribution-led mindset as well. Differentiated products, product innovation, and a desire to dominate on taste has helped ITC do what it has done.

If there is one piece of advice you would give me, what would it be? Something that you follow yourself.

Hyderabad

Jyotika, here is something I actually believe in and practice. I believe in it passionately. Yesterday was happenstance and tomorrow is an uncertainty. The only reality is today and it is happening just now. So enjoy it. Contribute to it. Participate in it with your heart, soul, liver, gizzard and all. Give your best to what you are attempting just now. Stop gloating about all the supposedly good things you did yesterday. Equally, don't fret on all the real lousy things you did yesterday. That’s history. Treat it as a flash in the pan. Today is the only reality. And stop fretting about the future. It’s a mystery anyway. You don’t know if there is one as well.

Groupon, after spending loads of money has changed its name to Nearbuy. Why? Is it a good thing to do?

Mumbai 

Rohith, a change of name is always a well-thought out piece of brand strategy. A brand name is a big starting point. Any tampering with it must have reasons. Very strong reasons.

 I am sure the Groupon re-branding has its own set of strong reasons. While one may be the fact that there is a change in business model, the other may be the fact that Groupon’s couponing business model brought with it a fair bit of negativity among sets of consumers who used it. The dissonance factors in the business were a bit too large to grapple with, I guess. Nearbuy is to an extent a change of avatar for many reasons.

 In this case, it has been a prudent choice of name change and move ahead. Nearbuy is that much more descriptive of a different purpose. It is that much more about “near communities” and it is all about localisation of purpose in a very non-local market environment at large. Nearbuy positions itself as a solution provider for small businesses in local areas. This is a big need felt and articulated by local businesses. The name to that extent is a good fit.

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