A 33 percent rise in brand value sets record for BrandZ™ rankings
Brands that contribute to India’s growth can benefit from it
The BrandZ™ Top 50 Most Valuable Indian Brands 2015 increased 33 percent in value, a rate that exceeds the growth of the Global Top 100 for every year since the rankings were launched a decade ago.
This remarkable growth rate illustrates the overall strength of the Indian market, with a GDP growth of 7.5 percent, faster than any other major market worldwide. And it also points to the particular strength of the financial sector, banks and insurance brands, which increased 49 percent in brand value year-on-year.
Most important, the brand value rise reflects the renewed sense of empowerment and possibility in India, which most dramatically impacts women, but touches the entire society. Brands that excelled in brand value growth responded to this spirit by understanding the changing consumer and responding with innovative products and communication.
As noted in the following headlines, rapid growth produced not only many unprecedented opportunities, but also some potential threats:
- Growth spread across categories: Not only the financial services sector increased sharply in brand value, home and personal care brands rose 32 percent, and the increases of many other categories exceeded 20 percent.
- Growth spread across ownership models: State Owned Enterprises (SOEs) led in brand value growth, but private brands, and brands owned by multinational corporations (MNCs) with long history in India, also grew in brand value.
- Growth alone sometimes wasn’t enough: Seven brands dropped in rank, although they increased over 20 percent in value, and four brands dropped out of the ranking completely.
In addition, disruption is on the near horizon. Some brands, particularly in e-commerce and mobile handsets, have not yet been included in the India Top 50 because they’re not publicly traded, a BrandZ™ country ranking eligibility requirement. But that condition could change, imminently.
INDIA IS DISTINCTIVE
The headlines tell only part of the story. India is not simply growing quickly; it’s growing differently. Brand building in India requires gaining the deep insights needed to understand these differences.
Indians prefer Indian brands. But what is an Indian brand? In fact, 70 percent of the brands in the BrandZ™ India Top 50 are of Indian origin. Only 18 percent of the India Top 50 brands are SOEs, while 52 percent are private, either owned by individual companies or by large Indian conglomerates, an indication of India’s entrepreneurial energy.
The other 30 percent of brands are owned by MNCs publicly traded in India. However, many of these brands have operated in India so long and effectively, they’ve established themselves as Indian brands in the minds of consumers, suggesting that the “Indianness” of a brand depends more on how it’s perceived than on its provenance.
Indian consumers trust brands. While trust in brands is declining or settling at low levels in much of the world, trust in brands is growing in India for variety of reasons, including consumer appreciation for brands and the rapid expansion of brand choice. Indian consumer trust in brands seemed to hold even during a recent food safety crisis similar to scandals that eroded brand trust in China.
BRAND SUCCESS REQUIRES DEEP INSIGHT
While the opportunity in India is great, it can’t be realized by simply implementing the strategies or tactics that proved successful in other country markets. India is complicated for many reasons that are distinctive to India. Indians are comfortable with dualities and tensions that don’t exist to the same extent in other markets, and making decisions based on appearances alone can lead to costly mistakes. These dualities include:
Modernity and tradition: As Indians welcome more brands, and the modern comforts and conveniences they offer, they try not to displace cherished traditions, but rather integrate them. Brands need a strategy for responding to this reality.
Individual and collective: As brands in other parts of the world try to infuse brands with purpose beyond simply making money, higher purpose remains a basic expectation in India. Building a brand also means helping to build India. The government mandates Corporate Social Responsibility spending.
Urban and rural: Almost 70 percent of the population still lives in rural India, and these individuals overall are poorer and less well educated than the growing middle class of India’s cities. But the urban-rural divide is changing. And the most successful brands are trying to close the gap.
OPPORTUNITY TO BUILD BRANDS
In May 2014, Indians rejected the Indian Congress Party, which had governed the country for most of the almost 70 years since independence, and elected a new government led by Narendra Modi and the Bharatiya Janata Party, which presented a transformative vision of a more prosperous and equitable India.
In less than two years in office, this government has promulgated several initiatives to advance this vision in ways that both support brands and invite their participation. The permitted levels of Foreign Direct Investment (FDI) increased across many categories, for example, and FDI rose almost 25 percent in fiscal 2015, according to India government sources.
The government’s Make in India initiative and other programs, such as Digital India and Smart Cities, are aimed at increasing access to education, health care, jobs, and adequate housing. Brands have an opportunity to engage with these endeavors, which ultimately can result in a larger and more affluent consumer market.
Brand building in India requires some patience, however. India is a democracy – the largest democracy on earth. Change often happens slowly and not without rigorous debate. But when change happens, it tends to be stable and sustainable.
India has the possibility not only to become a more prosperous and equitable nation, but also to achieve this goal in a different, “Indian” way that becomes an alternative economic growth model – slower, perhaps, but more sustainable, adding financial value while maintaining cultural values.
Brands can participate in this growth and build successful brands, while at the same time helping India develop as a modern state with products and services that add convenience and comfort, but leave the planet more intact and individuals more emotionally and spiritually nourished.