When ‘brand' is a bad word

In the umpteen conversations we have had with businessmen, with many, one thing stands out. For them, building a brand is inconsequential to business success. Who, then, are these people, who refrain from entertaining us as we attempt to woo them with the dream of creating a formidable brand?

Picture an individual who has been involved in the trading profession for some time, has a wide network amongst the distribution community; perhaps been a distributor or C&FA for a brand marketer. Their network of relationships is strong enough for them to slide their own product through the distribution chain at an appropriate time.

This capability is coupled with their belief that rather than invest in expensive brand building that produces no tangible results, it's preferable to bet that money on lubricating the supply chain, as wholesalers and retailers are motivated to push products that offer them competitive margins.

There are umpteen examples of where this model has worked, these businessmen have found trade favour and given the established brands a run for their money.

These businessmen carefully select the product categories to operate in; they stay away from premium-end products, choosing to concentrate at the mass end of the market. Hence they would tend to target SEC C, D and E in the metros but more than that, in small towns and rural markets.

They plough the advertising investment they would have made into trade margins and bringing down MRP, and with a substitutable product (where the retailer has influence over the customer), their sales are ready to soar.

There are examples galore of local players who have cornered considerable share in the soaps, detergents and the dishwashing categories.

A trader's delight, a customer's budget planner and the large MNC marketer's nightmare!

This, then, is their business design; which, mind you, is a successful one. They may not have created a powerful set of brands, but manage to build a powerful business.

We have a case in point of a business contact, whose brand name you might not have heard of. Kinley, Aquafina and Bisleri roll off your tongue, but his mineral water has a strong presence in Karnataka, his margins to trade are superior and his product is consumed in copious quantities by the not-so-discerning customer.

His business is profitable and his revenue continues to grow. Would he be able to replicate this in a category of mobile handsets, which is a higher-involvement category? Perhaps not!

Why is it then that this breed is averse to creating and owning a known brand, which they have the option of doing? One immediate thought that comes to mind is that huge media spends are likely to draw the attention of the taxmen, be it Income Tax or Central Excise to their businesses.

However, there is another reason. This breed of businessmen is not emotionally attached to the enterprise. For them profit is the clearly defined motive, they do not seek the status that comes with being associated with a known brand. They do not want to be in the public eye at all, tend to be low-profile and are happy to be well known and respected in their business community.

My colleagues from our brand consulting practice often come on strong with this segment, because they see a great brand potential that these businessmen are sitting on. However, while we still battle and try to proposition these folks, we equally acknowledge that it's not imperative for everyone to chase the dream of building a brand.

There is an alternative model and this is it: That of businessmen, who, at optimised investment enter a product category, grow it to a certain revenue in a market where they are well connected; and then rather than trying to extend geographically or enter with premium products, extract profit from the market share they have.

Do they run the risk of similar-minded competition and shifting trade loyalty? Yes, of course.

Their recourse? Once their flagship business is bringing in steady revenue and profit, they ride on that, milk it and invest in a new line of business that can be leveraged through the same sales channel and strategy. It's a model that has worked, exists today and is here to stay, for a few decades at least!

(The writer is Founder & CEO of Carpediem, a branding and strategic HR consulting firm.)

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