Aug 25, 2008

Mktg - Brand value attracts funds & investors

When Nayan Shah launched his energy drink Current in March 2006, he was up against an entrenched player like Red Bull, and that in a very niche segment. So the Ahmedabad-based young entrepreneur put together a sales team and hired the services of a consultant to achieve quick visibility for the brand. It didn’t work.

“Big shopping malls, shopping complexes and stores were my major selling areas where a class of people come and can afford my can at Rs 60. Out of excitement I spent more than estimated on advertising and billboards. That was a mistake.”

Shah then decided cut down the sales force from 62 to 14 and took up the challenge of brand building on his own. What followed was a three-month promotional exercise across the metros with activities such as free-sampling and road-shows. Gradually, the brand began getting noticed among the target group of young consumers: Two years later, Current has found place on the shelves of retail chains such as Reliance Retail and Spencer’s clocking revenues of Rs 3.5 crore, and Shah says he’s looking at doubling this figure by next year.

Small businesses like Shah’s hardly have the resources or the money to splurge on brand building, the way large companies do. But their size can actually be an advantage, if leveraged smartly. Unni Krishnan, managing director, Brand Finance India, a brand valuation services firm says it’s a common misconception that brand building needs big money. “Entrepreneurs should not start with the premise that brands need huge expenditure on media or advertising.”

They should instead focus on other, simpler measures to develop the customer experience and invest in people and product development that will generate greater brand value, he adds. Citing examples of small, yet successful brands such as Forest Essentials and Chateau Indage, Krishnan says “Money and resources are extremely precious for small businesses, and these should be wisely deployed to unlock brand value.”

Orissa-based Pine Cask Beverages did exactly that when it entered the liquor market twelve years ago. It is difficult to show branding prowess in liquor since it is a highly regulated market forcing marketers to adopt surrogate advertising.

But the Rs 100-crore company launched with Couple, a pre-mixed gin brand with lime, a first in the Orissa market. The company now straddles all ends of the liquor market (barring beer) in West Bengal, Orissa and Goa, and has attained pole position in the gin category in its launch market.

“We have 94% in the gin segment owing to the first-mover advantage,” says Umesh Sharma, marketing director of Pine Cask. Together with Sandhurst premium whisky, Pine Cask rum and whisky and ‘Be High’ vodka in the regular segment, the company stands fourth in the pecking order by marketshare, in Orissa.

Six months back, it used to vend Pine Cask whisky and rum under the ‘Fort William’ banner. “But that had to change since we wanted our flagship brand to drape our products,” says Sharma.

The process of brand building starts from within, especially for small firms, says Santosh Desai, chief executive officer of FutureBrands, “Brand is nothing but a range of impressions formed over repeated or strong stimulus and these impressions must be coherently woven around an idea. In a small company all impressions are formed on the basis of internal action alone, since media is expensive. The team, HR policy and organisational framework are pivotal for a small company while establishing a brand,” he says.

Krishnan contends that a differentiated and strong brand is all a small business has to show, unlike larger corporates who can bank on their tangible assets to shore up their balance sheet. “For small firms, it’s even more important that they have a strong brand value to be able to attract funds or strategic investors,” he says. Moreover, new age SMEs are increasingly dependent on intangible products or assets such as software, media content or services, and monetising them is key, he adds.

This makes eminent financial sense as well. “If a brand is fully leveraged, you can almost double the business value,” he says. And since valuation is done on the basis of the commitment of promoters and the uniqueness of the intellectual property of the firm, the CEO becomes critical in all branding measures by a small company, says Desai.

When a company has a dedicated team to handle activities, it becomes easier for it to convey the brand to the end consumer. However, with skilled brand and marketing people being in short supply, smaller companies tend to suffer, as the most skilled brand management people quickly get snapped up by the biggies.

Harish Bijoor, CEO of Harish Bijoor Consults says, “In such a case, it is better if the management outsources these non-core activities to experts.” Consultants like Bijoor follow an ‘insource-outsource’ model. The consultancy seconds its partners (employees) to the client company on a project basis. These partners periodically report progress to the client as well as the consultancy. The benefit to companies with limited brand spends is that it does not need to get brand, sales or marketing managers on its rolls.

Another challenge that small and medium sized companies grapple with is the temptation to spread their brands too thin. Have distribution systems that allow people to experience your brand. Sunil Alagh, chairman, SKA Advisors, puts it succinctly. “Don’t end up getting into your competitor’s area of strength if you cannot handle the competition.” According to Alagh, a brand that has a local or regional focus, must concentrate on gaining purchase in that market before it moves on to larger markets.

One of the brands that has done this effectively in recent times is ‘Ghadi’ detergent powder, owned by Kanpur Trading Company. Ghadi first achieved a sizeable brand reputation in Uttar Pradesh and ensured that it built a good distribution network before it ventured into other parts of India. “As a result of that approach, Ghadi has successfully taken on the Levers and P&Gs of the country,” Alagh says.

Bijoor points out another mistake commonly made by smaller businesses, viz focusing primarily on external branding without realising that the management and every employee must eat, sleep and breathe the brand for it to be truly compelling. “If they don’t believe internally that they’re creating a great product or service, how will they deliver it?” he asks. Every representative of the company, right from the doorman to the CEO, should exude confidence in the brand at all times.

Image is everything, and it applies to corporate branding as well. The branding message, channels and activities you choose must all be in line with the business you are in. “For example, a politician cannot afford to look slick and white like a bar of soap in an ad for a political party,” Bijoor says, explaining, “So if you’re selling something to the masses, realise that being earthy will earn you more credibility. Always tailor your brand message after taking into consideration what is expected of you.”

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