Wednesday, August 11, 2010

A multi-billion dollar question – does the Indian consumer really care about the ‘brand value’ of the four wheeler the family so desires?

Brand valuation experts Millward Brown was quick to make its claim in a report titled, “Brand-driven shareholder value creation’ which proved empirically how “Brands with greater market presence and a superior ability to convert customers from brand awareness to strong relationships significantly outperform the market, producing annual average total shareholder returns of 10% to 20% in the period 1998 to 2006. In comparison, the market on average yielded a mere 4% return to shareholders annually.” A paper by McKinsey & Company titled, ‘The New Rules of Branding’ also proves how “companies with strong brands have shareholder returns of 1.9 points more than their industries’ average.” This was doubled up by another McKinsey product titled, ‘The Power of Brand Delivery’, that interestingly put forward its proposal of an emotional connect. “Strong brands create value for shareholders by building emotional bonds with customers,” is what it claims. But who better to talk about emotional bonding and emotional attachment than the Indian consumers. It is therefore surprising then that the global automakers’ claims of great intangible brand value score low on Indian frontiers when it comes to performance in the market. Value-for-money is what the Indian middle-class consumer generally looks out for in everyday consumption, from the time she makes her choice of detergent to choosing the ‘right’ kind of four-wheeler. The Maruti 800s, the Altos, the Zens, the i10s, the Swifts, the Santros, the Indicas – these are of the ilk that made great headway into the Indian market, having sold millions of units till date. But ask an ordinary consumer what characteristic he associates with these abovementioned brands between being ‘performance-based’ and ‘goodwill-based’, and the answer would be nothing but the obvious – these are value-for-money performers and not brands which command billion dollar goodwill in the market (compare them to the BMWs, the Audis, the Mercs and the Land Rovers and you’d understand our point here)!

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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