Brand India fails to strike a bond with Modern India
24 Apr 2009, 0556 hrs IST, Nirmalya Kumar ,
Brand India is currently receiving a lot of positive press. Yet Brand India is weak in many ways. In the minds of most citizens of developed countries, India still conjures up images of exotic lands and customs, or masses of poor.
Not surprisingly, this a source of much frustration to Indians who would prefer that Brand India be associated with the more modern India, resplendent with world-class businesses, skyscrapers , and malls. Why does this image of “old India” still persist in Western media?
Brand India Constraints
In branding, it is what is different or unique vis-à-vis other brands that gets attention. Modern India, while new to Indians, is not unique compared to other, more advanced countries. In fact, if anything, it is still lagging. The unique India from a global perspective is still largely the “historical India,” the “poor India ,” and the “exotic India.”
Given this branding principle, it is to be expected that the IT sector, where India is uniquely claiming to be the back office of the world, is the only part of “modern India” that receives significant global press coverage.
The Duke of Edinburgh, in one of his many gaffes, once remarked that a shoddily installed fuse box in an Edinburgh factory he was visiting looked “like it was put in by an Indian.” Countries go through an evolution with respect to brand image as they develop economically.
The initial market entry strategy for a company from a developing country is usually based on offering cheaper products of acceptable (sometimes barely acceptable ) quality. We have seen this before with Japan, Korea, and now China. Because consumers in developed countries are unfamiliar with the developing country, they can be persuaded to buy products made in that country only on the basis of price.
Over time, as the country develops and some of its companies take global leadership positions with regard to quality — as determined via objective product performance tests conducted in developed countries — the country brand image starts climbing . Consistent with the higher brand image, prices can begin to rise and may even sustain premium positioning, as Sony, Toyota , and Samsung have demonstrated.
Yet brand image always lags behind the rise in quality enhancements. The shackles of Brand India, where even sophisticated people outside India see it as associated with call centers and software engineers, are not consistent with creating and managing sexy consumer products. There are important exceptions in certain niche specialist areas, where the stereotypical image of India may have a beneficial effect.
For example, “exotic India” has a positive impact if one is selling ayurvedic medicines, spas, exotic foods, or fabrics . The general country of origin effects described above apply primarily to consumer products. In business marketing, the country brand image has smaller, though still significant, effects as firms are dealing with a few knowledgeable buyers.
Confronting Brand India
Brand building, besides being an expensive, long-term effort, has to be funded through internally generated cash. Not content to be toiling away at the bottom of the global brand pyramids for decades, impatient companies from India realise that it is easier to buy existing global brands and raise the funds for these acquisitions through external sources.
Yet as Mittal’s experience with Arcelor and Tata demonstrates, country of origin brand image does have spillover effects when attempting to acquire global brands. It was also responsible for the resistance that Tata faced in buying global luxury brands like Orient-Express , Land Rover, and Jaguar. The U. dealers of Jaguar objected to Tata as a potential owner of the brand. Ken Gorin, Jaguar Business Operations Council’s chairman, said the American customers were not “ready for ownership out of India of a luxury car brand such as Jaguar.”
Kumar Birla noted that Indian companies would “take some time to move up the ladder of brand recognition.” His firm’s experience was consistent with the hard work that it takes to overcome the initial negative perceptions of Brand India. He observed: In the 1960s, when my father, fettered by the Licence Raj, looked beyond the Indian shores, it was truly a visionary act. We take great pride in the fact of our group being the first truly Indian MNC, having established major companies in the South East Asia.
But in this region, it has taken us years of sustained performance — following best employment practices and being a good corporate citizen — to earn brand recognition. Brand India is also complex. Undoubtedly, in terms of hard power (cash and armaments) India is poor, especially compared to China, its Asian competitor on the global stage. However, when it comes to soft power (ideas and values), Brand India — because of its history, large private sector, functioning democracy, and free press as well as the relatively peaceful coexistence of its multicultural, multireligious population — has a positive image.
Thus, when confronted by a takeover, many Western companies and their managements would prefer an Indian company as an acquirer compared to a potential Chinese, Russian, or Middle Eastern suitor. Furthermore , over time, perceptions of India as being associated with the Third World will become weaker.
As Sir Martin Sorrell, chief executive of advertising agency WPP, remarked, “India and China might have been on the wrong side of history for the past 200 years but for the next 200 years they will be on the right side of it.”
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