Competition is Necessary

Last week an incident happened with me, I was having lunch at a restaurant, and a guy sitting on the table next to me was having a chat with the restaurant owner and simultaneously having his lunch. The conversation was like this :

Guy: Aur sir apke restaurant ke samne apka competitor aa gaya hai.

Owner: kahe ka competition, who bhi koi competition hai, hum to khud hi chahte hain ki sala yahan do char restaurant aur khulen to kuch logon ko aana jaana badhega.

Now after hearing to this conversation, I was forced to think, because all this time in our MBA and our respective jobs we have been learning , how to kill the competition, we all want competition to be cleaned up from the market, but don’t u think that this will in turn can also affect our business in a negative way. What I want to say is like assume that there is only one player in a particular category, so the cost incurred to establish himself as a brand will be much more than the situation if the competitors have been present in the market, because the company not only have to market itself but also have to market its category.

Now many of you would say that if there is no competition why to do marketing, because consumer will ultimately buy our product, it might be the case in the basic needs of the people, but its not the same case in every category. Remember how Kellogg’s strived to make its mark in Indian market as there as no existence of the player which the served the market with same product.

In a simpler way, you are walking on Delhi streets, with 45 degrees and sun above your head, and you see a Pepsi banner or a glow sign board, at first sight of that Pepsi banner you do not get attracted toward the Pepsi, but instead you get attracted to the category, and then if you are a die hard coke brand loyal, you would go and ask for coke rather from the retailer. So, in a way your competitor not only market itself but also spread awareness about your brand because it spread awareness about the category to which it belongs.

And if we closely observe the statement given by the owner, which shows if competition is not present then the chances to achieve the pinnacle in case of sales number, will also be not possible, that is why we also find a lot of shops of same trade in a lose vicinity.

The next good thing about competition is that it increase the scope for you to improve, As in imagine bajaj scooters having no competition and maruti udhyog with no other player in indian market. competition forces you to work hard to survive in the market, but it in returns also helps the company to innovate and grow. The best example to quote would be telecom industry, with increase in competition, we are witnessing the most innovative services and solution offered by the companies.

So, what i believe is Competitors are very much required .................

Branding for SME’S: Myth or Reality

In this over advertised world of brands, where every brand is trying hard to be a TOMA brand, and brands like Microsoft are spending around $ 2 billion on advertisement just to win the mind space of the consumer. Today where celebrities like Dhoni are earning above $25 million just through endorsements and “Brand” has become the one of the most indiscriminately used and therefore, abused words in market , In India still more than 50% of business are SME’S and have no such deep pockets to spend money on advertisement.

In a world where large businesses attract attention thanks to their sheer size, small and medium size businesses are often seen struggling to make their presence felt. Branding and marketing has become relevant to the Indian small and medium enterprise (SME) sector today as it was never before. From a time when your work was strongly believed to be your best method to sell yourself, the industry has come a long way as the thinking has shifted to “one must not only do excellent work but also be known to be doing excellent work”. The process of being ‘known’, however, is limited by a variety of factors, principal among them being the size of the business

Some people say that SME’s will find it incredibly difficult to build international and global brands. Their reasoning is that most of the world markets and the product categories in those markets are already dominated by powerful global brands. Furthermore, they claim that companies have to overcome significant global consumer perceptions of sub-par quality and other concerns relating to the country of origin of the brand. Some say global brands have deep pockets to expend on branding, and built their brand through above the line advertising.

Well, true that SME would actually be avert to this idea in the beginning because, SME is always surrounded with things like branding is only for big brands, which can pour in enormous money to win the mind the space of the consumer, but rather branding is not just a information spreading exercise but it also involves stabilizing the product, establishing distribution/marketing channels, highlighting/identifying USPs and making it actually needed in the market.

There’s a common misunderstanding that branding is good advertising and design. These activities are important because they help brands communicate with customers. But without good systems, procedures, service, training and other things that form the customer’s total brand experience, these can be wasted.

Seven myths

The first myth is that quality is a brand differentiator. Most Asian countries have overcome the problems of poor product quality, and smart CEOs see that product quality is no longer a differentiator. It is the price you have to pay to get into the game. If you do not have top quality products and services, you will never have a strong brand. Service quality still remains a differentiator in Asia, however, and local companies often lose out to their foreign counterparts in this area. So, quality is not which sells the product, perceived quality is what sells the product.

Secondly, there’s a common misunderstanding that branding is good advertising and design. These activities are important because they help brands communicate with customers. But without good systems, procedures, service, training and other things that form the customer’s total brand experience, these can be wasted. Importantly, the promise they make, if not delivered, can cause irreparable damage to a brand. So, gap analysis at each and every point is important.

Thirdly, some companies claim that as the market place is too crowded, branding is impossible. While competition brings with it a bigger range of products and more frequent product enhancements, the real issue is not product proliferation, but the existence of too many similar products. Rarity and authenticity are coveted by consumers but are difficult to find. Where are the innovations and ground-breaking products and services? Branding is possible in a crowded market but you cannot brand mediocrity. So, finding the gap and positioning you brand in that gap is what is needed by companies

Another mantra that is commonly heard is “We know what consumers want”. There are still companies that produce ideas that turn into products which they attempt to sell with a demonic fervor, instead of concentrating on what consumers really want. This leaves a large gap between product strategy and consumer satisfaction. Finding products for consumers, not consumers for products, develops successful brands. So, stay close to the Customers.

A fifth mistake is to believe that more customer means greater brand strength. Many companies try to increase their customer base in order to grow, but few focus on keeping existing customers happy as a cheaper and more effective growth strategy. Companies that neglect their existing customers are placed in jeopardy by deteriorating rates of customer retention and brand loyalty. Brand is, which only few customers value enough to buy, and making a new customer is difficult than retaining your old customer.

Under intense competitive pressure, many firms turn to lower prices as a means of adding more brand value. The issue here is that price discounting often means less brand value – to the customer and to the company. Lowering prices lowers image power, and although consumers may buy cheap things, they treat them as commodities instead of nice things to have. People will pay premium for perceived value, but value goes beyond mere price and quality.

The last myth is that the world is rational and so is branding. Nothing could be further from the truth. The world is driven by emotion. Rational thought can lead consumers to be interested but it is emotion that sells, and emotional thoughts that companies need to elicit from consumers. Asian companies have yet to learn the power of emotion in marketing, and it is all too often that we see advertisements crammed with information about product features and attributes, instead of emotional benefits. It means non functional benefit are given more importance rather than functional benefits by the consumers.

So, what should companies bear in mind when developing a winning brand strategy?

Seven musts

The first thing to focus on is differentiation. The best strategy in developing a powerful brand is to create the perception of difference. Being seen as both different and better than the competition is the biggest step in becoming a well-known brand and not just a well-known name.

Secondly, claim share of heart. Strong consumer relationships are found in strong brands, but companies still tend to focus on capturing “share of wallet” as opposed to “share of heart”. This philosophy might generate short-term sales but it will not build enduring relationships. Achieving “share of heart” by delighting customers will not only produce loyal customers, it will transform those happy customers into an effective sales force. In short, share of heart leads to share of wallet.

Thirdly, develop brand charisma. Emotion sells and companies must continually try to create an emotional association between their brand and consumers. The best way to ensure that emotion is built into the brand and its relationships with consumers is to build a strong brand personality – using values that consumers like and can relate to.

Fourthly, remember to build a brand culture. Staff training is critical to brand success. Everyone in the company must be trained to both appreciate the brand and what it stands for, and to contribute in their daily work to brand development. People deliver great brand experiences! They are your brand ambassadors. So, creating an employee loving culture is required to develop a customer loving culture.

Fifth, install a brand management system. Every touch point with the consumer has to be handled with the utmost care to ensure that the total brand experience a person has is consistent and appropriate. This involves physical evidence, people, processes, service scape etc to engineer a great customer experience. This would involve service blueprint or rather blueprint of the interaction between consumer and product/service.

Another crucial brand building element is to balance consistency with change. While consumers like familiarity and consistency, they also want new things. New products and services are essential to give consumers modernity and relevance, but keeping the brand name and values constant adds reassurance and trust. So, delight your customer with a variation in product/service by keeping consistent service.

Last but not least, companies must treat branding as an investment as not a cost. The appetite for brand investment in Asia is poor. Too much emphasis is placed on short-term thinking and performance, and branding fails to receive the funding it needs. All too often, the cash tap is turned on and off as the “feel-good” factor varies. It is time to realize that brands are strategic assets that can be worth multiples of the tangible net assets of a company if nurtured properly.

“Stretch your brand, but watch your limits”

“Brand” is one of the most indiscriminately used and therefore, abused words in market place today. Many of them create an illusion of being a brand through their high profile campaigns, celebrity endorsements etc. But brands are not built overnight. Nor can they become powerful after one or two campaigns! It takes time, sometimes even years or a lifetime.

Brands are created to earn revenues. After creating a brand if brand name is not being leveraged, then the motive of creating a brand is not fulfilled. So, to leverage on to the brand equity of a brand it is important to extend a brand. But this concept have been contradicted by many scholars. Some say that the easiest way to destroy a brand is to put its name on everything .

AL Ries says that slowly but surely line extensions would take your brand off course. By giving an example of Budweiser, he says that introduction of bud light caused the downturn of Budweiser as a whole.The company thought that introduction of bud light would not be positioning that against the bud regular but taking the market away from miller light. This loss in focus caused the downturn of famous beer brand.

Experts call line extension the “hockey stick” effect. Short term you get the blade & score a few goal. Long term, you get the shaft. Line extension is a loser’s game. It doesn’t usually work, but even if it does it almost always damages the core brand. On the other hand, there’s the well documented evidence that line extension doesn’t hurt a leading brand as much as it does an also-ran.

Taking miller, introduced nationally miller lite in 1975 also didn’t hurt miller high life, the regular beer. With a powerful marketing program, by 1979 Miller High Life & Miller lite was rapidly gaining on market leader Budweiser. (It got within 20% of the King of Beers). Then Miller lite introduced as a bevy of line extension brands stopped Miller High Life cold. If they had little more patience they would have realized that line extensions are inherently more unstable. A successful line extension almost damages the core brand, if not initially but in long run.
Now, seeing the other side of the coin, practically speaking “a Brand can never stand still” if it does so brand will die. You are in a business to grow your business & it cannot be done without stretching your brand & leveraging on the brand equity of a brand. Brand creates associations in the minds of the customer & customer relates brand personality with his own personality. This is what drives Customers to build bonds with the brands & in doing so he wants to interact with the brand as much as he can. If the brand would not be present in different categories, that bond with the customer would not be possible.

Imagine kurkure with only one flavour, would not be able to serve customers with different tastes & become a Toma brand. Likewise lays coming with different flavours as line extensions & becoming the most dominant brand in the market. If kurkure & lays would have only limit itself to the original flavour it would have only able to cater to only few customers & would have lost on a larger customer base.

Moreover launching a new brand for every category would be difficult for the master brand. The probability of a new brand being unsuccessful really becomes high due to unawareness of brand & the cost incurred to launch a new brand & market it. To launch a new brand will be like missing an opportunity of leveraging on to brand name which already has been established. The brand creates association in the minds of the customer & it takes a long time to create those associations. A new brand would possibly be unable to create those associations initially which can affect the brand in a competitive market.

Now looking at both the sides, I would really say that line extension does not always affect the brand in a negative way. It all depends on industry to industry & how you project your extension. While proceeding with the Extension of a brand, a brand should see to it that its extension carry all the associations attached to it. So, finally “brand should stretch itself, but watch its limits”.