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.

Bajaj- only automobiles or more than that?

Taking on the establishment or taking risks, runs in the Bajaj family. From Rahul Bajaj championing the cause of Indian industry to stop foreign players into India to his son shifting focus from the cash cow scooters to motorbikes to take on the Japanese players in motorbikes to the radical thought of making Bajaj Auto from a ‘Branded House’ to a ‘House of Brands’, surely they are a family who think to out-maneuver competition.

Rahul Bajaj was initially averse to the idea the bikes sporting individual brand names and Bajaj Auto will be a house of independent brands like FMCG giants Unilever and P&G. The focus was to be on four brands – Pulsar, Boxer, Discover and KTM. It would not use the parent name on its identity. But with the success of Bajaj Auto as one of the leading motorbikes manufacturers and stopping the scooters with Rajiv Bajaj at the helm, the senior Bajaj has to accept it.

Now with the help of one of the leading Marketing gurus and management consultants Jack Trout of Trout and Partners who has given the positioning bible to us, Rajiv has taken an enormous step. An attempt to associate the Bajaj brand name exclusively with the motorcycles made by his company and the removal of Bajaj name from other products/ services ranging from hair oil, home appliances, insurance to financial services.

The strategy to do this is based on Trout’s thoughts that a particular brand must stand for only one thing in the mind of the consumer. Line extension is the gravest mistake any brand can do. This though not a line extension has similar areas. According to them, Bajaj should stand only for motorbikes in the consumer’s mind. All other Bajaj brands such as Bajaj-Allianz, Bajaj Electricals, and Bajaj Finserv among others should remove the brand name and try to get an individual identity. This would not only help them stand on their own accord based on brand qualities and brand values but also act as a differentiation from competition.

I tend to differ with the thought because the principle which applies to brands in the developed world is being applied to the developing world that have emerged and evolved in a different way. The consumer behavior is starkly diverse and the emotional quotient among brands in the eastern world is far more pronounced than in the west. In India, line extension has worked till now because of the trust that has been instilled in the brand. Tatas, Birlas, Godrejs, Ambanis and a host of other family have run businesses have ventured into diverse fields with using the same brand name. And they have done well and continue to do so.

These brands have evolved since the pre-liberalization days and have a trust and understanding among Indian consumers. New brands have emerged since then but these old brands have stood the test of time. The Tatas cannot even think of removing the name from their diverse offerings to make Tata a ‘House of Brands’.

Changing the automotive business and marketing it individually is one thing but doing it across industries is slightly off target I would presume. One of the biggest brands in the world GE, which has a product offering which no company, can boast of. There are into all products and services ranging from consumer goods to aviation. They have not changed their GE lineage inspite of being in the most competitive and diverse market as the US. Bajaj name is even more important in the rural and semi-rural areas of the country which are yet to be tapped. Bajaj name would give the company a head start over other foreign brands.

All said and done, this is even more difficult since some of the Bajaj businesses are run by other family members who are strictly against the name change. So such a thing happening would be highly improbable if not impossible.

Volkswagen Vento- the emotional car

Consumer involvement in a purchase decision is highest when it comes to buying a house be it in India or anywhere around the world. This is not only important from a marketing point of view but also from an economic scenario. We have a live example of how the urge for buying a house i.e. the US housing bubble created an economic crisis. Closer home, we have HDFC which has one of the highest recalls amongst home buyers and general public alike because it helped the Indian consumer buy a house during the pre-liberalization era.

After a house, the car becomes the second most important decision concerning a family. A car is as much as practical decision on price and features as it is an emotional one. Don’t we all remember our first cycle in childhood or bike in during college days. How we took care of it. Similarly there is an emotional bonding we have with our car. Not just for the husband but also for the wife and kids. The family has been used in umpteen numbers of ads on television to sell cars.

The Volkswagen Vento TVC currently running on GECs on prime time takes this emotional quotient a step further. The communication route adopted for the TVC is ‘tears of perfection’ by car engineers. It shows the various stages that the car goes through during manufacturing with so much emotional involvement that it is difficult for them to let go off the car from the plant. It indirectly also refers too its old communication of German engineering. The plant snaps show the sophisticated equipment and the fabulously clean set-up.

Volkswagen had to build an emotional connect with the Indian consumer for whom Tata, Bajaj and Maruti are natural preferences in terms of sentimental value. A wonderfully executed ad which brings out the emotions which surely will ad to the already high brand equity which Volkswagen enjoys. Not an ad which breaks the clutter but certainly will make the male of the house and young professionals take notice.