Thursday, December 30, 2010

Should Hero go for a new logo?

Last couple of years has seen a lot of rebranding exercise. Godrej, Shoppers Stop, India Post, CEAT Tyres, Essar, Bajaj, Videocon and the latest being Airtel. Some have been praised, some not. But that is not the topic of discussion here. The 26 years relationship between the Hero Group and the Honda Group has been finally ended with the announcement of the Munjals buying the 26% stake from the Honda group. Tensions had been simmering and it was inevitable after Honda could no longer be happy with the 26% stake and started their own set up in India with Honda Motorcycle & Scooter India Pvt. Ltd.

This opens up the market for other Indian motorcycle players since Hero Honda was the largest player in terms of volume of sales. Now with both breaking up, Hero can enter segments where Honda was present and Honda can enter segments where Hero was present. Increase competition could lead to price wars in the immediate future with both brands wanting to gain market share and build an individual brand identity. Here is the catch.

Honda has an individual identity in India. Hero does not. It has always been in the company of Honda and has leveraged the Honda name for Japanese technology in the minds of the Indian consumers, directly or indirectly. Thus should Hero go for a corporate rebranding exercise with its logo if not the name? Hero can now also export its motorbikes to the developing nations which are such a big market. Baja Auto would testify to that with its huge exports. Changing name would not be a good idea but creating a new logo would seem to be good.

With the Honda name gone, Hero would need to tell the consumer about its technological expertise and R&D facilities as well. It would need to spend on increasing its product mix with only the hero name with the individual brand name. a factor which would hinder Hero also would be its existing products which are strong names such as CBZ, Splendor, Karizma in the urban markets whereas the other good names such as Passion, CD 100 which are strong in the rural markets. They would bear the Hero Honda name. Hero would need to launch new bikes to not just take on market competition but also the competition within. Not in the short term but in the long term where it would slowly need to take away these big brands and move its own brands ahead without losing on the cash inflow which these current brands would bring. A sort of catch 22 situation.

The same problem doesn’t arise for Honda since it doesn’t mind taking on these brands since the name is only attached and the earning they get is only through royalty which isn’t much high compared to what Hero would be getting form Hero Honda

It could also lead to dealer poaching by Honda from the Hero Honda’s intensive penetration although it is said that it’s a mutual understanding that it should not happen. Price would be an advantage to Hero vis-à-vis Honda. The spare part availability and its lower price would be of a greater advantage to Hero than Honda.

Speaking from a broader perspective with long term focus, it’s a good thing for both Hero and Honda with opening up of newer markets for both. A new logo by Hero would seem to be a natural step ahead with its own identity creation. Just some food for thought would be, can Hero think on the lines of what Bajaj is thinking i.e. change over to a house of brands with individual brand names. Bajaj has strong brand equity with Bajaj name with lot of hindrance from the other Bajaj players in the family. It would take a lot of gumption to do that. Hero on the other hand would do well to go ahead with it this and take a head start over its immediate competitor.

Saturday, December 25, 2010

Creative Inspiration- any one??

Religare ad- ET- 24th Dec 2010

BNP Paribas ad- Mumbai Mirror- Dec 2009

Do we see any similarities??

Focus- Size of the fund

Creative depiction- Sumo wrestler

Quite an inspiration, i must say. Sumo wrestling is surely not a sport for the Indians as yet but Sumo wrestlers sure do influence them if one goes by the ads!!

Thursday, December 16, 2010

A pleasant marketing problem

Mergers and acquisitions were the order of the day during the pre 2008 days. It took a break after the fall of Lehman Bros and the ensuing recession. They are back again in town with the buying out of Paras Pharma by FMCG giant Reckitt Benckiser. Paras Pharma owns over-the-counter brands (OTC) such as Moov which is a pain relief ointment, Krack, a heel care lotion, and D'Cold, a cold remedy among others. RB adds these brands to its already established brands such as Dettol, Disprin, Clearasil, Veet and Durex.

This acquisition would leave RB marketers in a bit of a quandary. What sould they do about Dispirin and D’cold which almost are used for similar purposes. Headache, cold, clear throat. Although not a direct competitor with each others, it begs the question that what would be the solution when two competitor brands merge or are taken over for inorganic growth. Should they continue with the existing own brand and the newly taken over brand or should the new brand be killed to make way for a stronger home brand. To make it clear, consider this very hypothetical example. What if P&G takes over HUL? Or visa versa. Would P&G kill the powerful brand Surf Excel to further its own Ariel brand? Would it kill the powerful Sunsilk and Clinic for making Pantene and Head & Shoulders the favourite?

In this uncertain world with flexibility being the buzzword, can there be an obvious way for this problem to be solved. I know that the answer for this cannot be an absolute one but would depend on the type of companies involved and the power of brands taken over. For Arcelor steel merging with Mittal Steel or Tata with Corus, there isn’t much to think. Commodity market as such doesn’t give marketers sleepless nights as does consumer goods. But what about a Ranbaxy which is so ingrained in the Indian mind after it being bought out by Daiichi Sankyo? Would they kill the Ranbaxy brand to make DS a global brand?

A bigger dilemma would be when a ‘House of Brands’ takes over a ‘Branded House or a ‘Branded House’ taking over a ‘House of Brands’. What if Tatas take over P&G or HUL? Would we have Tata Pantene and Tata Clinic or would the brands retain their identity? What if P&G takes over Mahindra & Mahindra? Would Mahindra Tractors be replaced by an individual brand name without the family brand?

One thing is certain that creating a brand and an appeal requires a lot of resources. Maintaining requires even more resources and is difficult as well. Thus it seems at least that when two power brands come together under one roof, its better to pursue both separately and let them cannibalize the market as it would be a win-win situation even then.

Tuesday, December 7, 2010

Management graduates for the Indian economy?

An article in the Times of India, Mumbai edition on 6th December 2010 drew my attention. It even made me think. And this article is a result of that thinking. Two pieces of opinion in the article were so contradictory that it made me smile. One, ‘a fancy MBA’ degree and two, ‘it accelerates growth’. It is agreed that MBA is a fancy degree yet head hunters are appreciative of the degree and find it a differentiating factor.

Having myself being a management graduate and working for more than a year now, I have a slightly different opinion on the management degree in the Indian context for an Indian professional. The Indian economy requires technical people more than management people. Engineers, commerce graduates, arts graduates, lawyers and other graduate streams. What is the reason for this erudite opinion of mine?

Lets look at the major streams in MBA. Marketing, finance, Human Resources and Operations. Of these 4, I will leave out HR and operations since the number of students opting for it are less compared to the more preferred marketing and finance. What is the use of a marketing degree? To increase sales in an ultra competitive marketplace and strategize to be one-up on competitors.

In India, apart from FMCG, telecom and white good companies, hardly marketing is required. The Indian consumer market is so big that even without marketing acumen, there would be sales. In the industrial goods sector, India’s cost competitiveness is going to hold it in good stead at least for the next couple of decades. The Indian PSUs such as ONGC or SAIL or NTPC are run by people who have tons of experience in the technical filed but not in marketing. Why can’t an ONGC be the next Chevron or BP? Why can’t a SAIL be the Arcelor or Severstal or Corus? Companies which inspite of being commodity producing companies are big brands.

The top managements of all companies barring a few who have the vision give the management graduates an opportunity to explore and work in a way which is transformation to the company. The other managements are very much resistant to change and like the comfort zone which management graduates try to break free from. The MBA graduates too are partly to blame for. They consider themselves equipped to change the company without understanding first the basics of the business. Their arrogance sometimes can be annoying.

The MBA degree has been seen as a magic wand which transforms the career of students. Students believe that the MBA degree should give them six figure salaries. They don’t think of whether the skill sets they have are applicable in the industry. Theory knowledge can take you only past the interview round. But the actual industry skill sets are to its extremes making it difficult to survive. The mushrooming of management colleges without affiliations and proper B-school teachers has resulted in students lacking the basic skills expecting to be in strategy teams of the corporate world.

Thus I think, a management degree is not essential to the Indian economy. Functional skill sets are more important except in certain industries and markets.