Diverse - Different - Determined

In India, many people who drink cola prefer a local brand. Sports fans follow cricket rather than football. And while brands matter, a brand’s reputation often is closely linked with that of the parent conglomerate.

In other words, as a consumer society, India is much the same as the rest of the world and also very different. This paradox informs the growing importance of brands in a rapidly transforming society of more than a billion people of diverse languages, cultures and beliefs—a few incredibly wealthy, others entering an expanding middle class and many still extremely poor.

Marketing approaches that work in other parts of the world are not automatically effective in India where individuals at all income levels are being exposed to brands either through travel, entertainment or the increasing presence of global brands in India. While desiring international brands, Indians also are increasingly selfconfident about their national identity.

This duality, to an extent, depends on product category. In fashion, footwear and accessories—categories that exhibit personal taste or status—foreign brands exert great appeal. When Indian heritage is a consideration—which also could be in fashion and accessories as well as food and beverages—local provenance becomes important both for domestic consumption and export.

Consumers also prefer local brands that excel at innovating and improvising to create products that precisely meet local needs. This resourcefulness, considered a particularly Indian talent, is known by the Hindi word Jugaad. In another market characteristic unique to India, large conglomerates control much of the Indian economy, and consumer trust often depends on a combination of corporate and brand reputation.

Conglomerates and government influence brand growth

Usually run by powerful entrepreneurial families, the leading conglomerates include Tata, Reliance and Bharti. They operate in multiple industries, such as telecommunications, cars and retail, and market many of India’s leading brands. As in other BRIC countries, the government also influences the rise of local brands with regulations that moderate the entrance of foreign companies.

Early in 2012, India relaxed restrictions on single-brand retailers, enabling brands such as Nike to expand more freely. Walmart, and retailers that sell multiple brands, must combine with an Indian partner and operate only wholesale outlets. Walmart entered India in a joint venture partnership with Bharti. Tesco partnered with Tata.

An effort to liberalize the Foreign Direct Investment rules (FDI) failed during 2011. The regulations are primarily designed to protect the estimated eight million mom and pop grocery stores in India. By entering India as wholesalers, rather than retailers, the big box multinationals became suppliers of the mom and pops rather than their competitors.

Because this is India, the preferred outcome is not just one winner, but instead a reconciliation of competing interests that eventually produces more opportunities. In this complicated process, the multi-nationals gain market expertise from their local partners, while the partners learn from the multinationals and gain time to strengthen their own retail brands. Meanwhile, anticipating the eventual end of the FDI regulations, all the major players invest in much needed improvements to infrastructure including roads and refrigeration for food.

Understanding market diversity is key

Penetrating India also requires understanding the country’s rich diversity. The local dairy brand Amul, formed as a farmer cooperative in 1946, is well regarded, for example, because it’s trusted and its products appeal to the Indian palate. Similarly, the dominant cola brand in India is Thums Up in part because of its somewhat spicy taste and its consistent positioning as a macho drink with a strong flavor. Coca-Cola purchased Thums Up in the early 1990s.

And as often is the case in fast growing markets, consumer product multinationals, such as P&G or Unilever, introduced brands to India years ago. Unilever, for example, arrived as Lever Brothers in 1933. Since merging with an India company over 50 years ago it’s operated as Hindustan Unilever. In some cases the multi-national brands are so insinuated into the market they’re considered Indian. Maggie Noodles, popular in India and other Asian markets, is a Nestlé brand. The Maruti Suzuki car, one of the first popularly priced cars in India is seen as an Indian brand.

The proliferation of local brands is most evident in telecommunications where 15 operators resist consolidation and battle for a share of almost 900 million mobile phone subscribers. The Indian brands have done a relatively good job of differentiating in a category where telecoms worldwide struggle against being viewed simply as the commodity conduits of voice and data.

One of the pioneer brands, Airtel, known for its network strength, appears in the BrandZ™ Top 100 ranking for the first time this year. Vodafone Essar focuses on customer care. Another brand, Idea, emphasizes value-added services and has built awareness with advertising. Price competition heated up in the crowded telecom sector last year when Tata DoCoMo lowered prices. With extensive market penetration, the telecom leaders are shifting their efforts from gaining new users to increasing per-user engagement and revenue. The change in part reflects growing consumer affluence.

Aspiration becomes a factor

Greater prosperity also impacts the car category, which is experiencing increasing sales and brand segmentation both at the high and low ends of the market. Tata’s repositioning of its Nano brand illustrates these developments. Tata introduced the Nano, in 2009, as an entry-level car for people transitioning from two-wheel to four-wheel vehicles. Marketing emphasized relative safety and affordability. When sales flattened after an initial surge, Tata realized that customers liked the car but not its association with their limited financial circumstances.

Adding some amenities, Tata made the car more aspirational. Customers, it seems, wanted a symbol of new possibilities not a rearview reminder of their recent and limited past. The Tata brand overall has benefited from the knowledge gained from its acquisition of upscale Jaguar Land Rover, although the marketing for those brands has been low key so far. The rising Indian economy continues to drive sales of other Indian car brands, such as Mahindra.

Exports are increasing, too, particularly to Africa where the Mahindra brand exports its less expensive models. Tata trucks are popular in Malawi. The Indian brands best known internationally are the IT giants Wipro and Infosys, which provide B2B solutions in most industry sectors, and ICICI Bank. A major integrated financial institution, with offices worldwide, ICICI ranks in the BrandZ™ Top 100.

ICICI competes with other growing Indian bank brands such as HDFC and Axis Bank.

Even in banking, a global brand implies a greater sense of status than a local Indian brand, generally. In practice, however, people in smaller, rural markets may find that the Indian bank brand understands their needs more deeply. And government regulations may provide regulatory protection for the local brand. Amid all of these developments and apparent contradictions it’s important to remember they’re shaped by India’s long history and modern status as the world’s largest democracy.

Fundamentals for brand building in India

  1. Be meaningfully different
    Indians generally like brands. And they are familiar with many brands from the West and other markets. Success requires bringing something new and different.
  2. Be consistent in thought and execution
    These qualities will help to build trust in the brand.
  3. Take into account the regional differences
    Many countries are diverse. But few are as large and distinctive as India in language, diet, beliefs and customs.
  4. Emphasize fashion, if possible
    For some categories, such as telecoms, cars or banking, Indians might prefer an Indian brand. When it comes to fashion, however, international brands tick all the boxes.
  5. Remember it’s a democracy
    India is the world’s largest democracy, which means that working underneath apparent chaos and slow process is a system that respects the individual and attempts to fairly balance competing interests.

BrandZ Top 100 2012

BrandZ Global 2012 Report Top 100 Report

Top 100 Chart

Methodology and valuation by Kantar Millward Brown

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