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The numbers that must have noticed the impact of the Wills, Coke, Pepsi and Hero brand names during the one-day cricket tournaments must surely run into millions. So too with MRF and Vimal in earlier cricket series. Combine a game that has become a national institution, a national brand and an almost national medium; the result is a heady mixture that produces strong reactions. And this before the Internet cafes became a common feature of the urban landscape!


The liberalisation wave

The second feature is an immediate outcome of economic liberalisation in South Asia - the advent or resurgence of some truly global brands such as IBM, McDonald's, Sony, Ray Ban, Coke, Pepsi, Arrow, Lacoste, Marlboro, Ariel … to mention just a few. And this we are assured, is just the beginning! There is something in these very names to fuel the fires of populist political debate. However the days of "either - or" choices between local and international brands are mercifully behind us. The customer will become more discerning and demanding as she realises what she has been missing in terms of world class quality. Manufacturers must stop thinking that there is something patriotic in accepting second best! They ought, instead, to get on with the more serious business of delivering to the consumer - a housewife, the working man or even a company - competitive value and something approaching world class.


How managers see competition

In a survey amongst 90 Asian top managers conducted in 1993, the single most significant result predicted of the globalising process was an increase in the quality standards of the Asian product made for the domestic market. This point needs to be carefully listened to. The need to dramatically improve the attractiveness and performance standards of Third World products for export is, of course, obvious. Without certifications such as ISO 9000, we will not even begin to matter in the global market; but what may not be so readily apparent is why the same quality must be offered to the domestic market also. The compelling reason is the emergence of unprecedented competition - both present and potential. When barriers to entry into the domestic market are lowered or removed altogether, the prospect of one's loyal customers switching to another brand becomes an everyday reality. In several studies it has been established that retaining customers is considerably less expensive than replacing a lost customer with a new one. Some estimates put it at a ratio of 1: 6 in terms of total cost to the enterprise.


Product quality is not enough

It has also been established by research that objective product quality alone does not explain the reason for loss of market share. Among every 100 customers who switch - in the US market at any rate - as many as 70 report dissatisfaction with the company and its delivery/service quality. Against such a fickle customer-base, loyalty to brands and brand equity are the minimal first level of defence one must erect to protect the business.

Brands are not built in a day. Some have evolved over centuries, as can be seen in the table below:

Historic Brands

Brand	CountryofOrigin	ProductCategory	Date
1.Schweppes	UK	SoftDrinks	1798
2.Colgate	UK	Toothpaste	1806
3.Levi's	USA	Jeans	1850
4.Nestle	Switzerland	Beverages	1866
5.CocaCola	USA	SoftDrinks	1886
6.Omega	Switzerland	Watches	1894
7.Martini	Italy	Liquor	1896
8.Fiat	Italy	Automobiles	1899
9.Gillette	UK	RazorBlades	1902
10.MaxFactor	USA	Cosmetics	1909
11.Hitachi	Japan	DomesticGoods	1910
12.Marlboro	USA	Cigarettes	1924

It is, of course, possible to compress the time it takes to establish a new brand, by investing heavily in promotions in a short burst. This may accelerate the attainment of a peak level of trial and market share; but sustained repurchase, which reflects loyalty, can only be gained over time. Greater spending power does not automatically ensure success - a lesson which both Procter & Gamble and Pepsi have learnt at great cost recently in India.


The elusive brand image concept

Yet the brand image or personality is a term which is treated in somewhat cavalier fashion by the practitioner and informed layman alike. Brands evoke images and perceptions - especially of style, class, modernity, quality and so on. One has only to think of Parker, Johnny Walker, Gucci, Rolex, Chanel, Revlon, Nike, Apple Macintosh, Toyota, Sony, Panasonic, Philips … a formidable array which, one can safely predict, would be instantly recognised by nearly anyone who has ever shopped duty free at an international airport. Yet a brand image resides not so much in the product itself but in the collective eyes of the beholders. They are, indeed, imagined benefits. They also reflect expectations, beliefs and attitudes that surround a brand like a halo; and in the most successful examples, giving it, in David Ogilvy's memorable phrase, 'a first class ticket through life'. Most important of all, they may have nothing whatever to do with the ingredients and components or verifiable performance of the product in question.


Research evidence

Many economists, especially of a socialist persuasion, argue that rich multinationals will swamp the Asian market and liberalisation will sound the death knell of local brands. This argument has an emotional appeal to some. But it is easily disproved by facts. In 1994, University of Michigan Business School and the Academy for Management Excellence (ACME), Madras, India conducted a survey amongst housewives and professionals on Global Brands and Marketing Strategies. Some of the critical issues researched were:

• What do consumers consider as global, i.e. made or sold all over the world as opposed to local for local only?
• What are the strengths and weaknesses of local brands?
• What are the perceived strengths and weaknesses of global brands?
• Under what circumstances do global brands have a competitive advantage?
• How much does the country of origin matter?
• If the perceived 'globality' of a brand is important, does it vary between product categories and consumer segments?

The results were indeed revealing and, sometimes, counter-intuitive. Consumers considered Coke, Citizen and Ariel detergent to be distinctly world-wide brands. At the same time, they thought HMT watches - made by India's largest and once-profitable public sector enterprise - as well as its most recent and successful rival - Titan Watches - to be bought by consumers outside India as well. An entirely locally developed herbal toothpaste under the brand name Vicco, was also similarly perceived. Indeed, amongst 32 brands, covering eight product categories very familiar to the housewives, HMT evoked the greatest warmth and affection. Interestingly, the intention to buy switched in favour of the glamorous rival. In the soft drink category - universally recognised to be the stronghold of truly global brands Coke and Pepsi - two Indian names, Limca and Thums Up, showed remarkable strength to associations and purchase intent. Five years later they remain so despite having changed hands in terms of the owners.


Local -Vs- Global

On the whole, the executives interviewed were more anxious about competition from the most prosperous and powerful marketing companies, fearing the might of their advertising dollars. Naturally, a Pepsi or a Coke can afford to take a much longer term view. While the per capita consumption in the rest of the world is in hundreds of bottles per annum, in India it is three and in Indonesia, six per year. Further, the proportion of their Indian business is so small compared to the world-wide turnover that the risk to their net work is minuscule. Not so with the local brand. Therefore, the more internationally oriented an Asian brand, the less vulnerable it is to global competition in any one geographical area.

The markets of local brands have the unique advantage of more intimate knowledge of the market, greater familiarity with the nuances of distribution and personal relationship with the trade, a better understanding of the packaging and transportation required by extremes of climate. All of these are disadvantages for the multinational corporate (MNC), for some years at any rate. Typically, the headquarters of the global company tends to rely more on the conventional wisdom that all humans are the same, or becoming so. They tend to apply as far as possible the same elements of the marketing mix, as they do elsewhere in the world. Whether markets the world over are growing closer (a view strongly urged by Professor Theodore Levitt of Harvard since the '60's) or drawing apart, is an interesting but inconclusive debate. Yet MNC top managements tend to imagine that markets are more homogenous. They will, therefore, be more inflexible in localising their marketing mixes, thus losing adaptability. The recent failures and faltering starts of many new multinationals in India tends to confirm this.


The battle for the emerging markets

The battle for the emerging markets of Asia and Africa is not so much between the local and the global, as between old and new competition. Even within the countries, domestic markets have seen the onslaught of a new wave of entrepreneurs who have brought in brands such as Daewoo, Gold Star, Samsung, Acer … all of which have become household names in less than a decade. Some Indian names such as Bajaj, Birla and Tata, are becoming so. The research suggests that the consumer is willing to give them a try more readily than the marketing specialist would suppose. However, in sunrise industries such as consumer electronics, entertainment and computers - which are fast converging with telecommunications - brand names do convey technological superiority, which mere advertising cannot deliver. The same is true of high-fashion products such as cosmetics and clothes. Thus, a Nokia or a Motorola or a Levi with a powerful media presence in print and Satellite TV, is bound to carry a significant premium image. Such an association is not necessarily true in a more familiar, low-tech category.

The country of origin, per se, does not confer any advantage unless - as with jeans, soft drinks and fast food - they are universally identified with one country, such as the USA. Hence, the exceptional dominance of brands such as McDonald's, Levi's, Coca Cola … over the consumer imagination, even in Communist China. In more neutral categories, familiarity with the use of the product, perceived quality, reputation of the manufacturer and such other issues strongly weigh in favour of brands that have always been near the top. Ironically, the brands which led the pack in several categories as long ago as 1923, continue to do so in 1993. Examples: Kodak, Avon, Levi's, Coke, McDonald's, Ford, Xerox, Philips … and so on. Equally, even local brands, which have sustained their marketing effort and continue to please customers, remain leaders after several decades. This has also been borne out by Indian brands. Incidentally, brands are seen as local, totally regardless of who is the ultimate owner of the equity in the company! A good example is Tata's Hamam and Lever's Lux, both of which toilet soaps have been the housewife's favourites for over six decades. The fact that Unilever has now acquired Hamam as well as Kissan jams and squashes is irrelevant to her.

Thus, brands that seek proactively to build consumer loyalty and deliver more than what they promise will always have a future. Those that mistakenly believe that the image of a brand delivers more competitive punch than the reality behind it, are merely chasing a mirage and are doomed to die.


De-mystifying branding

Another major misconception about branding is that it magically confers on the product the power to hold consumers in thrall. Nothing could be farther from the truth. Nothing destroys a brand faster than a promise which the product or service fails to live up to. If it is a new brand, it becomes exposed in the initial trial stages itself and quickly sinks without trace. Even established brands such as HMT (watches), Dunlop (tyres), Raleigh (bicycles), Binny's (textiles) … to mention but a few age-old names, can be repositioned by later entrants and steadily lose market share; or expire altogether.

What does a Brand mean? (A schematic view)

Before we look at such home truths or remove misconceptions, however, let us examine what brands really mean. The figure above shows the marketing exchange process as a trade-off between the producer's surplus and the consumer's. Let us take an example of a ready-made shirt or a food product, such as a ready-to-eat snack. The housewife knows the ingredients that go into it, and she knows how much effort and cost it would mean for her to make it at home. And yet, given the right assurance of quality, she is willing to buy the same snack, off the shelf of a neighbourhood retailer at a price.

We may conceptualise the difference between the price she pays for the snack and what it would cost her to make it at home as comprising the cost of packaging, transportation, retailing and building in a profit for the manufacturer. She does, however, willingly part with a premium because she not only saves herself the labour and hassles, but also knows that the brand is "an assurance of dependable and consistent quality". The brand is also less risky than buying the same product from an unknown source, considering the potential damage to her children's health, which she values greatly. Indeed, she might even be willing to pay much more than she actually pays up to a point.


The consumer's surplus

In a famous definition of this 'stretch' inherent in any price, Alfred Marshall, the classical economist, called it The Consumer's Surplus - the difference between what she actually pays to possess a good and what she would rather pay than go without it. As the gap between the brands in terms of perceived quality narrows down, the premium that she is willing to pay will also come down. To the extent that the product is not a familiar one, without an alternative source of supply and seen to be a product of high technology or specialist skills (such as a fashion house or a famous surgeon), the brand premium commanded will indeed appear disproportionate to the inherent ingredients.


The paradox of a no-name brand

This is the clue to understanding the paradox of a no-name brand dress-shirt being available at factory gates in Thailand, Indonesia or India at $4, while the self-same shirt - with a Van Heusen label - retails within Asia itself at $20 - and in the US at $35! This also explains why a local brand in some cases commands a smaller premium and is priced between $4 and $20.

Perceptual paradoxes are not confined to the realm of fashion or personal products. For many years, TI Cycles of India made two brands of regular bicycles - Hercules and Philips. While Hercules was known as the tough, sturdy, loan carrying bike and a favourite of milkmen, vendors and farmers, Philips had a much more urban white-collar association. Back in the '50s and '60s it was the coveted reward (costing all of nearly 300 rupees!) for entering college. In market surveys people consistently described Philips as lighter and easier to ride while Hercules was seen to be physically heavy. In fact the two brands were identical in most respects, including weight - and their components were totally interchangeable. Yet perceptions persisted stubbornly - proof of the amazing power of brand personality to influence minds!

Brands convey three things - an identity, a set of associations and an image beyond the mere functional qualities or performance of the product. Most of all, brands raise expectations. The reassure: In a formal phrase, brands serve to 'reduce the perceived risk' inherent in any purchase decision. This basic feature of brands applies in practice across most categories, including services.

To the marketer, the great attractiveness of brand distinctiveness has always been the opportunity to charge a premium, while distancing himself from all competition. To the traditional businessman, it once seemed the answer to a prayer, because the premium enabled him to build a profit pile or use the surplus via advertising, trade deals and consumer promotions to erect a competitive barrier. Alas, such euphoria has proven to be short-lived, especially in the USA - the acknowledged home of marketing warfare.


The Private Label Challenge

In 1993, Wall Street was shaken to its foundations when hugely successful brands led by Marlboro, cut prices and offered deep discounts on sales in supermarkets, in response to the onslaught of private label and store-brands. For years, conventional wisdom had held that while purely functional, external and impersonal products (floor cleaners, dish washing liquids, wrapping paper etc.) could attract low priced competition, personal products (soft drinks, toothpaste, cigarettes, cosmetics) would not be so challenged.

Housewives would 'go to the extra mile' to buy their favourite brand at a premium. Three years of continuous recession, unemployment, and static incomes have proved this to be untrue. Part of the reason is the myopia of mega brand marketers, driven by Wall Street to show short-term profits at the risk of losing long-term brand loyalty. They kept on raising prices until the consumer screamed 'Halt!'

There is a lesson in this for all of us. In David Ogilvy's deathless phrase: 'The consumer is not a moron. She is your wife!' Over the years, she has been sufficiently educated to know that store brands or cash-and-carry sales are excellent value for money. The frills absent in the store brands are irrelevant to the use of the product, so that when push comes to shove, she can afford to do without them.


Corporate Brand

Asia has a number of brands, including corporate house names, which if imaginatively developed and look after, will become world class brands and international household names. Take the case of a trusted name like Parry's or Jardines, probably among the oldest 'names' in the commercial sphere in Asia. It not only identifies a legendary business over two centuries old, it is associated with a well above average standard of quality (no matter that a brand can sell confectionery, financial services, fertilisers or bathroom fixtures all at once!) and conveys an image of respectability.

Many brands have already held their own for years in some everyday product categories against strong competition from the so called MNC brands … Margo soap, Tiger balm, Mysore Sandal soap, Parle biscuits, Singha beer, Amul chocolates, cheese and dairy products, Sumeet mixies, Bombay Dyeing furnishings and fabrics and so on. Some of these brands do not even belong to large, well-established companies with huge resources. They have not had the advantage of protection from existing foreign companies or new Asian entrants - unlike others in totally protected industries. Most important of all, they do not have any inherent superiority of raw material, technology or skill that could make them especially competitive in any way, versus other competitors.

The continued consumer confidence in brands such as these (over nearly four generations in some cases) is sure proof against the facile argument that mega brands with mega bucks alone can survive. To attempt to sustain a premium only on advertising puffery is, however, a gross and tragic error.