Catalyst

Can India build an aspirational brand?

Pranav Thakkar | Updated on March 10, 2018 Published on December 17, 2015

Family affairs The Tatas, Birlas and many other family-based businesses account for much of India’s business big and small, but no Indian brand has acquired aspirational status. A Grasim factory

Family affairs The Tatas, Birlas and many other family-based businesses account for much of India’s business big and small, but no Indian brand has acquired aspirational status. The Tata Steel factory at Jamshedpur

Family-owned businesses, which account for much of India’s industry, should wake up to the potential of stronger branding



Seven decades since freedom, almost two-and-a-half decades since liberalised policies were introduced, India has the potential to become the third largest economy as early as the next decade. Today, India is the fastest growing economy, ranked seventh in the world by GDP and third in terms of purchasing power parity. With 50 per cent of its population below the age of 25 and 65 per cent of the population below the age of 35, India has become the consumption engine for the world. No wonder then that developed countries are making aggressive plans considering India as their key market for growth.

The liberalisation era

The year 1991 was important for transforming the way businesses were conducted in India. The economy opened up, trade barriers were reduced leading to the influx of multinationals, increased privatisation and economic activities led to increased competition, monopolies were eliminated and many new sectors opened up, creating immense opportunities for growth.

It was during this time that various business houses in India, most of them family-owned businesses, till then small-time traders and manufacturers, diversified into new ventures and grew their business multifold to create multi-billion dollar enterprises. While these business houses created huge wealth for themselves and their stakeholders, none was able to create even a single brand that was global and more importantly, aspirational. (Being heard of or having a global presence may not necessarily translate into becoming a global aspirational brand.)

Most of the Indian industries focused on providing key raw materials rather than finished products. Their approach remained more India-centric rather than global. Customer-centricity and employee welfare did not feature on their list of priorities until recently. Equally neglected were consumer insights, innovation and R&D.

To grab market share, pricing became the key factor. To combat competition, marketers resorted to price war tactics, which led to commoditisation and erosion of brand value in the eyes of the consumer, who by now was being exposed to and inspired by global organisations and brands, and was willing to pay a price premium for branded goods.

If we have to sit back and reflect, let’s think of the top three watch brands of India or auto brands or cosmetic or apparel or soap or cement brands that are truly worth flaunting, are aspirational and have a global repute. Very difficult to name even one in each category! Currently, there are no Indian brands in Interbrand’s Top 100 brands list. Now that’s ironic.

Why brand?

Family-owned businesses (FoBs) in India constitute nearly 85 per cent of all Indian companies and form 73 per cent of the top 500 firms listed on the Bombay Stock Exchange. It is these FoBs that built large business empires in the past few decades. A vast majority of these businesses continue to be led by first or second-generation business families. Their growth has been largely led from the front by the promoters themselves, who were (and still are) great visionaries and marketing and sales wizards but hardly understood the need to build strong brands.

They were satisfied by the brand equity that was built over a period of time which, more often than not, was built unintentionally.

The biggest challenge faced was their unfamiliarity and ignorance of the importance of a brand. With the next generation ready to take over the family business, both the old and the new generation of family owners are at a crossroads of identity… between old-fashioned and modern and between commodity and niche.

It is time these organisations realise the importance of brands. One needs to understand that brand is an investment in growth, an asset that strengthens relationships across multiple stakeholders and in crowded markets.

A recognised and trusted brand is critical to create differentiation and price premium. In its absence, even a good product can become a commodity with high probability of being driven out of the category where preference and purchase are driven by brand equity.

It is a myth that FoBs cannot build a powerful brand that is both global and aspirational.

In the global arena, 85 per cent of businesses in the European Union and 90 per cent of US businesses are family-controlled. Worldwide, family businesses account for approximately 75 per cent of the top 100 companies. Have these companies been able to create a strong brand? Yes!

Differentiation through value

The Indian consumer’s tastes and preferences are in line with the global trends with an overwhelming 84 per cent preferring to use branded items. The most critical barrier towards building an aspirational brand is overcoming the ignorance about importance of a brand. This should be a wake-up call for the brand gurus. Most of the organisations have a cosmetic understanding of brand. They need to realise that brand is a differentiator in the market place and crucial for the growth of success of business.

Over the past few years, in the quest for growth and global presence, Indian organisations have been acquiring businesses on foreign land, which has gradually led them into understanding the power of branding. They are starting to understand the changing behaviour of all their stakeholders, be it customer, investor, employee, vendors or anyone else. They have also realised there is an ardent need to connect and relate to these stakeholders. Exposure and access to global brands has driven the change in consumer buying and preferences.

Market dynamics have evolved, the customer is more knowledgeable and competition has increased, to keep pace with the times. Organisations have started to review their brands and started infusing value to create a differentiation.

Organisations have understood that a big proportion of the Indian population belongs to aspirational youth. For this segment which is well informed, travelled and educated, global brands stand for status and are symbols of success. Unless Indian organisations are able to create experiences and brands that can compete with these established and global brands, they will miss out on the opportunity to cater to the largest consumption engine of the world.

Published on December 17, 2015
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