Brand grows on vision, and vision earns equity for brand

JULY 20, 2009

By K R Bhargava, Chief Commissioner of Customs

A brand name can be a term, symbol or design or combination thereof that identifies and differentiates a seller’s products or services from other products available in the market. Once a brand name is marked or embossed on a product; it positively indicates that this is a product of the company whose brand name is embossed on it. In other words, brand name is a linkage of the product with its brand name owner.  If a product is not branded, it is like an orphan. It has inferior marketability in comparison to a branded product as it has none to look after its interests. As credit or discredit for good or bad performance of the product goes to the brand owner, he is expected to assure its performance to the satisfaction of the customers at his place by manufacturing quality product and assuring its performance by making appropriate arrangements. A continuous positive approach and action in this direction over a period of time assures consistent rise in demand of the product from the customers leading to development of a scenario known as customer loyalty. This process adds to the good will of the product and thereby builds its BRAND EQUITY. On the other hand, poor performance of the product and rendering of poor after sales services in relation to such a product during the warranty period and thereafter leads to shrinkage of market share. Such a post sales behavior of the brand owner is not acceptable to the customers as he pays higher price for the product purchased; having been disenchanted with the brand that used to be once his favorite, he shifts to other brands available in the market. This trend leads to decline in Brand Equity of the product.

The Brand Equity of a branded product can be measured in terms of the following equation:

Brand Equity = Market Price of the branded product - Market Price of the comparable unbranded product - Advertisement and Sale Promotion Expenses.
 
The Brand Equity can also decline for reasons of practices unethical in nature used in the conduct of the business of the firm by the senior executives of the firm for personal gains. Satyam Computers case is latest in this regard.

We often see in the market that certain brands are costlier than others for different reasons. These brands in the market are known as Luxury brands, High End brands, Premier brands etc. People buy branded products depending on their personal choice and affordability. Some consumers prefer to buy products of top brands irrespective of their price. Manufacturers tend to reach all consumers by designing, packaging and marketing their products in such manners that appeal to large range of consumers.  As needs vary from person to person and area to area depending on various factors, therefore, for:-

The efforts to reach the target segments of the large consumer base have to be effective and continuous and periodically reviewed to see the performance of the strategies. If a manufacturer / brand owner succeeds to secure growth in revenues and customers’ loyalty to a significant level over a period of time for a broad range of his products, we can say he is on the path of building Brand Image of his firm. A strategic businessman, to make his business strategy successful, will first assure that he manufactures defect free products for trouble free performance during the warranty period and later addresses customers’ complaints, if any, to their satisfaction to retain their loyalty. In a dynamic competitive market, it is necessary to make consistent efforts to build long term association with customers by providing them efficient, cost effective and trouble free services to meet their ever changing needs. A good response of the brand owner in this regard helps him to build his own Brand Equity i. e. firm’s Brand Equity. The test of success of these strategies is whether his customer later in life when goes to the market for a change of his existing product or for purchase of some other product, prefers to buy and in fact, he buys his old favorite brand. Depending upon the initiatives and efforts made to create brand popularity and retain brand loyalty among consumers; he succeeds to enhance Brand Equity of his firm and later succeeds to capitalize funds from the market in response to his Initial Public Offerings for expanding or diversifying his business.

A brand owner must remember that advertising or sale promotion measures or good Show Rooms alone cannot help in building Brand Equity, quality and performance of the product plays a very critical role. It must perform to the consumer’s satisfaction otherwise visible reputation is only a bubble. If consumer does not get the value for the money paid, he will neither revisit the Show Room nor the brand. A friend of mine who went to a reputed Show Room near Law Garden in March, 2009 in Ahmedabad says as follows:

“I bought two T-Shirts of a reputed brand; after second hand wash, length and width of one of these had increased by 20 %. I can’t use this. I have taken vow to follow the principle of - No, Never Again in regard to this brand. It is better to go to Sarojini Nagar market in New Delhi where you will get a product that will give you full money value.”

A sustained positive behavior of the brand holder in producing quality products will lead to developing and retaining the customer loyalty. He must note that people do not have time to re-indulge and re-engage with you to try you again and again when alternatives are available in the market. You cannot afford to be complacent.  You have to be innovative in your strategies keeping always customer’s interest at the centre. You have to ensure that he makes full use of your product by using it correctly. It is customer and not cash is the king. Cash comes from the customer, so, service him better. This will help your firm to build higher Brand Equity.

And when you are popular and neighbor’s envy, you have to be vigilant because there can be strategies as well conspiracies to displace you from the top position or even to acquire you. So you have to be constantly alert in your internal and external environment; not only to sustain your leadership position but also to further increase your market share or to face an aggressive acquisition. You will, therefore, need to develop a good intelligence apparatus to face these challenges and to develop appropriate business strategies to have an upper hand in the market. At times, your arch rivals may not be your competitors but even small timers can give you tough time; these guys may counterfeit your products and pose threats to your business or they can resort to other unethical practices to eat your market. The presence of such players in your marketing territory may not only affect your volumes and revenues but bring disrepute to your brand. Therefore, you need to take administrative, legal and other innovative measures to identify such entities and their products not only to sustain credibility of your brand but interests of your loyal customers and community at large. The case to quote is of a major Indian Business House manufacturing Shaving Cream under their family brand name facing tough challenge from an unknown manufacturer with unregistered Brand Name –V-Mohan (Name Changed). The quality of both products was comparable but selling price of V-Mohan was less than half of the Premier Brand. Since V-Mohan was eating their market, they gathered market intelligence and found that this small timer had not been discharging excise duty on half of the production. They informed the law enforcement authorities and not only protected their own interest but interest of the community too.    

As mentioned above, it takes hard work of years for the new entrepreneurs to build a strong brand in pursuance to their vision. They face many challenges, many ups and downs before they successfully establish their name in the market. In beginning, they lack resources, friends, market knowledge, technical know how, correct awareness of the legal framework of the prevailing environment etc. They are also unknown in the new world and there is always fear of failure; but in spite of all these odds, many succeed. And those who succeed are courageous, willing to take risk, unstoppable in their mission, strategically convert threats into opportunities and succeed to realize their vision and become role model for others. We often find many people complaining that independent India remained under-developed because of its controlled economic regime or License Raj. But to many enterprising spirits, this scenario did neither deter, nor dishearten, or stop their journey in realizing their vision. They looked for opportunities in that difficult scenario only to realize their dreams. Dhirubhai Ambani founder of Reliance Industries who left a business empire of Rs. 990 bn for his people to manage started his career as a Petrol Pump boy; while working at this site, he dreamt to create a business empire. 

He established first Textile Plant of Reliance Industries at Ahmedabad in 1966 and using the contemporary legal framework got converted this plant in 1973 into a Manufacture in Bond facility under the Custom Act, 1962, a status that can be considered at par with current units in Special Economic Zone. The company could import duty free raw materials for manufacturing fabrics for export purpose and availed this and other export schemes effectively to increase the business within India and beyond India. In1977- 1978, Reliance imported Partially Oriented Yarn ( Polyester) for manufacture of fabrics and soon realized the necessity of backward integration and in 1982 established their own POY plant at Patalganga. The process of backward integration went on in subsequent days also not only to meet their own demand but of the Indian industry also. As a visionary, Mr. Ambani  realized the importance of 90 % / 10 % Principle of Stephen Covey and, therefore, rather than cribbing and finding faults with the prevailing environment; he scanned the environment carefully, did SWOT analysis, developed appropriate strategies to deal with stakeholders, employees and others. He faced the challenges by leading, guiding and using talent of his men and availed the opportunities to grow, making sure that people associated with them also grow. In course of this process, not only Reliance flourished but it shared its wealth with other stakeholders also. This approach to business always assured reliance to increase its shareholder base for future businesses.  To further appreciate his strategic acumen, we may recall that though in seventies Ahmedabad was known as Manchester of India having so many composite textile mills but it is only Reliance that made use of the aforesaid legal provisions of the Customs Act, 1962 to establish Manufacture in Bond facilities to grow in domestic and overseas market at lower costs.

There have been many stories similar to the preceding one in our past and present environment. And on the basis of these stories, we have identified some tips for our readers to follow for promoting themselves, their products and their organizations as BRANDS to be reckoned with. The only thing to remember is that at the base level of all human achievements is vision and entrepreneurship of human talent. It is the human being who can dream to fly; it is human being who can think how to fly; and then, only he can think how to sustain the flight. And this happens when you use your talent and talent of those who are around you. Another point to remember is - Vision and Entrepreneurship do not relate to business of producing and marketing consumers goods alone. These relate to all areas of human activities. So, tips for a budding entrepreneur in any field are:

Entrepreneurship produces amazing results and there is enough evidence available in history. We often hear that in market X is a premium brand, Y is a Luxury brand and Z is a market leader; and undoubtedly, it gives great satisfaction and sense of pride to the people associated with these brands but achieving these heights had not been easy and once achieved, these entrepreneurs did not rest; they continued their efforts to sustain their leadership position. And we note that all these efforts give huge success and success gives huge dividends to the organizations, their entrepreneurs and all associated with them. Outside people look forward to have association with these great people and these great organizations in one or the other form to have good Return on Investments they are willing to make. We have names such as TATA, Sony, Nokia, Microsoft, Infosys, Raymond, L G, Reliance, T C S, G.E. I B M and many more who command respect in the market not only from the consumers of their products but from all stakeholders associated with them.

The promoters of the premier brands and teams led by them must have toiled day and night to bring these organizations at their current level of repute and scale. For producing these brands of national and international repute, promoters needed talented, committed, skilled, hardworking, effective, innovative people in their organizations; without them, the present heights could not have been achieved. Some of these employees too were brand in themselves; and undoubtedly world class organizations need world class employees. As we see, many Fortune Companies prefer graduates from reputed Management and Engineering Institutes. In India, IIM and IIT graduates are preferred over graduates of other Institutes because these graduates are products of institutes that have huge BRAND value and produce quality people. Though getting admission to these Institutes is extremely difficult but life is not easy thereafter also. Strategic hard work, commitment, devotion, desire to excel etc shown by the students at the time of seeking admission to these Institutes have to continue thereafter during and after the study days. We can certainly say that being a top brand or product of a brand is not enough, product has to perform to sustain its own and its producer’s Brand value. It is only long term quality performance of the products that enables the promoters to establish themselves as a durable and reliable BRAND in the market. The same logic applies to all young men and women who want to achieve grater heights in their career. Being a product of a reputed institute or having been selected through a competitive examination is not enough.  They must deliver as expected by their organizations. In order to realize their own vision and expectations of their organizations, they must follow the leads / path shown by great entrepreneurs in history who made their organization as one of the greats. 

To explain the concept of individual as Brand, we may discuss classical case of Indian Premier League. Though, it has a short history but it has become a huge success in sports / cricket circle. It is a next level of entrepreneurship. It is entrepreneurship of brands of repute. The organizers, team owners and players who participate in it are brands in their own right; and people of all walks of life are willing to spend money on them in whatever they do. In this League, team owners invest huge sums of money to select best players for their teams. And, we see in auctions cricketers are auctioned like commodities and they are purchased on the basis of their Brand value. X cricketer is auctioned for Rs. 20 mn, Y for Rs. 15 mn, Z for Rs. 7 mn and so on. The auction price is as per their brand equity / brand value. The brand value can be measured in terms of money they get as a Brand Ambassador or the money they get from BCCI. For enhancing their Brand value, each cricketer is required to consistently perform in the cricket field. If he consistently fails to perform, his brand value goes down. His products are Runs, Centuries, Fifties, Sixes, Fours, Wickets and Catches etc besides his attitude, teamwork, leadership skills, temperament, conduct, commitment etc on and off the field. Higher the ranking on these indicators greater will be the brand value. Based on this Brand Value, Tendulkar, Dhoni and others get contracts from BCCI and further based on such value of higher equity, some of them get their assignments as Brand Ambassador of highly reputed national and international brands. This status of an individual can be termed as Next Level of Entrepreneurship.

Taking the discussion forward, we may say that for an actor besides his talent, acting skills, photogenic looks, attitude, conduct, temperament, values, etc, number of hit movies he or she has given will determine his brand value. For a doctor, besides his qualifications, experience, attitude, commitment to patients etc, number of successful surgeries he has performed will determine his Brand value. Based on this value, he will be in demand in hospitals and among patients. For an employee, in an organization, be it corporate or government, besides attributes like intelligence, technical knowhow, managerial and leadership skills, discipline, sincerity, commitment, integrity, attitude etc, results he or she delivers in terms of responsibilities assigned will determine his Brand value. If he or she has been a consistent comprehensive performer, they are likely to command good reputation; in other words, good Brand value within the organization. Thus budding cricketers, actors, doctors and employees in organizations are also entrepreneurs in their respective areas of activity who have to consistently work hard and innovatively deliver in their respective fields to grow as one among the best in their respective fields. They need to create a vision of their own to become a brand and prove their brand value by delivering in terms of expectations of their employers. If they follow xi points mentioned herein above seriously and with sincerity, they are bound to become BRAND of huge repute. If their organizations also put catalytic strategies in place to groom them as future brands, results can be wonderful.

(The author is Chief Commissioner of Customs. Views expressed are personal)