Most successful brands have something in common. They come from a country, which has a brand image of its own and the products are strongly linked to the image of the country.
Italian cars are associated with qualities of style speed, innovation and design, French perfume is sold on chicness, classiness and style, and Japanese technology products are sold on high-tech expertise, miniaturization and value for money.
Just like manufacturer brands, nation brands conjure and evoke certain feelings and emotional triggers. No wonder, the world’s most successful commercial brands come from the top 10 nation brands, led by America. Over the last century, American brands have been extensively marketed across the globe. The global following of Hollywood has aided the seamless flow of American culture and brands into lives and households in other nations. Undoubtedly, therefore, the country of origin, or provenance, establishes credibility and authenticity of brands.
The provenance of the established brands are so strong that irrespective of the quality of competing brands in the developing world, brands from established provenance command a better price and outsell competition. But things are changing. Who would have thought European consumers would consume Chinese beer, or buy Malaysian-made Proton cars? In fact, one of the hottest selling perfumes in France is manufactured in India. Consumers are comfortable with the made-in-India or made-in-Mexico tag.
They know quality products need not come from the developed world. Yet, there is a paradox. Global brands with strong nation provenance still out-manoeuvre quality brands from inferior provenance. One recent article on provenance in Harvard Business Review magazine talked about Venezuelan brand El Rey. It processes some of the best cocoa beans in the world and commands a 30% premium for its cocoa, the raw ingredient in chocolates used by the great chocolate houses in Switzerland for use in their premium products.
However, El Rey’s chocolate brand is hard to find outside its home market and consumers are not willing to pay a price comparable to that of brands like Godiva or Lindt. Why? Because El Rey comes from Venezuela and not Europe. It could not break the stranglehold of ingrained consumer belief that “great chocolates come from Europe”. This problem confronts many top quality brands from developing nations. Whether it is Infosys in India or refrigerator maker Arcelik in Turkey, they are not being able to price products in a way that will give them sufficient resources to fuel global growth.
Indian companies are presumed to be good for outsourcing IT grunt work, but not for high stakes strategic consulting.
“Made in Brazil” implies high-quality coffee and not high quality aircraft. To overcome such perceptions, developing countries need to learn from Japan and, to some extend, South Korea. The ‘Made in Japan’ tag transformed from a negative to a stamp of technology, quality, style and value in a couple of decades.
This was made possible through consistent brand building efforts by Japanese majors and an unwavering commitment to providing innovative high technology products on a sustained basis. This gradually changed the perception of Japan.
Challenges for Indian brands
Although the relevance of India as an emerging economy is undoubtedly significant, Indian brands are yet to break through on the global scene. The equity seems to be high for raw materials like pulses, condiments and ethnic handicraft, but that does not help shore up the overall image in the “nation equity” stakes like automobiles or electronics will do.
The orientation of Indian manufacturers in the technology-intensive area has not helped matters. The overt association with ‘cheap’, ‘value’, ‘no frills’ and ‘frugal engineering’ are seriously impacting chances of building equity of the Indian brand. The focus on chasing volume and the mass market has been so overwhelming that a large chunk of the Indian majors are struggling to find a play in the premium end of the market.
This impacts their global ambitions, which in turn affects the equity of the Indian brand and therefore the provenance. Check out the auto space. The most successful Indian carmaker, Maruti Suzuki, in spite of getting a 10-year head start, finds itself trailing international majors in the premium segment. Apart from Grand Vitara and now Shizaki, it left the premium end vacant for the last so many years.
Obviously, market share leadership has been a much stronger motivator for the company than share of mind leadership. People buy a Maruti because they get good value at an affordable price. Maruti, going by the current play, can never be as desirable as a Honda. It’s the same with Tata and M&M. Japan’s successes in the auto space has numerous examples where premium, luxury variants like Infiniti, Acura and Lexus have pushed up imagery and acceptance to a different level.
The only example where a premium variant has shaped the equity in the Indian context is Bajaj Pulsar. A distinctive product and positioning for the brand turned around the imagery for brand Bajaj. But the Pulsar may not be enough to lead a substantial global foray. If India has to be counted as an emerging superpower in the next decade, it has to leverage its global play by establishing its brands and products in the global arena.
To build global equity, Indian brands will have to look beyond the lure of volumes. The greed for numbers will have to be replaced by along-term outlook. Innovation-driven quality products at the top end will have to be given currency and importance. Strong Indian global brands will do wonders to the India provenance.
Article by Arijit Ray, President, Mudra West. Article first published here.