Brand power shifts

Brand Melt-down is here

By Harish Bijoor

Brand Power is the one elixir that has made many of us brand folk heady in the past. It is this very power of the brand that has gotten many of us to occupy the positions we do. The reputations we command.

Does not matter whether you are brand-owner, professional CEO, brand-manager or any other entity of modern organization who manages a brand, the very power we took for granted is under siege.

This elixir of power is however under threat. Under the threat of a possible shift of power from the brand of yore to the demand of organized retail for the non-brand of the future. This threat is a one that many of us will not see. Many of us who have spent decades in the marketplace, decades in consumer space and decades still in the midst of the folks we work for, will deny it all the way. The younger you are, the more will you believe in the direction I point at in this article.

Let’s begin with the oldest marketed categories of them all in India. FMCG. There is a brand melt-down at our doorsteps. The challenge is typical. The power of the brand is under question. This begins first in the categories consumers are used to for a while. Let’s say all of two generations?

The brand melt-down in our lives is all about top-line volumes being under stress in most categories that have been around for a while. Categories that are pretty 'parri passu' in their offerings even. Categories which have over the years seen a host of clones in the same territory of consumer space. The fight is a journey-cycle to journey-cycle fight. Top-line volumes just refuse to budge in the right direction. Growth rates are at best static numbers. Numbers that even define a new nadir to the standard Hindu rate of growth at hand.

Every working day is therefore a story of volumes under stress then. This has gone on for a while now. What’s the solution?

A brilliant gent in the marketing department gives way to the repeatedly articulated demand of the sales team. The sales team has been under the stress and stick to perform by top management at corporate office. The sales-team in turn is all about asking for those price-cuts which seem to promise those magic numbers of growth in volume.

One excited top management therefore yields. If you take a price cut, it must be dramatic enough to yield enough of a volume chunk. No point in twiddling the marketing thumb with price cuts of 10 per cent anymore. Takes a dramatic price cut of 35 per cent. Wow! The market is stunned. The lead competitor in the market is stunned as well. Everyone is.

The lead competitor cannot sit quiet on this. He needs to respond. He does. He cuts his price a whole 35 per cent as well. All in ten days flat. Wow! The consumer is stunned now.

The situation in the market place in terms of price, and most certainly in terms of product and all the other dimensions of a marketed item, is back to 'parri passu' status then. The price cuts have happened. The consumer has gained.

The consumer is quizzical as well. Did these guys enjoy that kind of a big margin all these years? Or worse still, there is yet another question in the air. How can they cut their prices this way? Have they tampered with the quality they offer today at these low prices? The image of the brands in question is sullied in more ways than one.

Quite likely as well that the marketing organizations in question have diluted their spends on the brand in terms of advertising and below the line promotion. How can they afford to cut price and do all of advertising and promotion as well in any case? Has this hurt the brand?

The brands in question have largely regained top-line volumes at the levels they have been for a long-long while now. Despite the price cuts.

These very brands have however lost a very deep chunk of their profit margins on the brands. The slash is as deep as 35 per cent at the minimum.

One of the most classical definitions of the brand is the simple line: the brand is a premium. Where is the premium now? What did you do with it?

Is a brand without a premium a brand at all? The brand melt-down is here.

Brand melt-down is a reality in our lives. This melt-down has struck a bit like the much threatened Bird-flu at the oldest marketed category of them all for a start. It will then follow into every other category there is, age-wise in terms of presence in market. This is therefore a reality to grapple. This is the pain of not the FMCG marketer alone. Ask the question who’s next, and if the finger points at you right away, start planning the demise of the brand. Or think different.

The author is a brand-domain specialist and CEO, Harish Bijoor Consults Inc.

Email: harishbijoor@hotmail.com