Thursday, November 26, 2009

Brand building through advertising

Economic liberalization and boom has coerced Indian marketers to be committed to brand building and innovative advertising in the past 15 years. India being a very diverse market attracts a lot of attention in terms of both demand and supply from all parts of Maslow’s hierarchy. Brand building and advertising has become a very prominent part of any company’s strategic plan considering the competitive global environment that the world is in today. The business dynamics are changing in the current context with brands being valued and considered as a crucial intangible asset within an organization. Brand Securitization is slowly becoming a trend in the Indian market, with Kingfisher airlines raising around US$400 million on the basis of Kingfisher brand as collateral. This form of raising debt is certainly a boon and a confidence builder among corporations that seek to raise debt and have an established brand identity.

Advertising being a major vehicle for corporations to build brand, has gained a lot of importance in the past few years in India. With the growth of working population, changing lifestyle, changing consumer perception and a highly competitive business environment, India is seeing some major strides forward by marketers to gain that extra market share. Speaking to a sample of varied age groups, I was able to develop certain insights on consumer perception on today’s advertising environment.
Metros and Tier I cities being my major region of interest with focus on FMCG and Telecom advertisements, the sample was spread across the age group between 20 to 45 years.

Are Ads getting better with time?

68% of respondents (see Figure 1) thought that TV and Print ads have got better with time in the past two decades. Whereas 30% still think that ads have gone down in terms of quality. Of the latter 30% which thought otherwise from majority, over 65% are in the age group between 20 to 25 years and said that quality of ads has dipped in the past decade major reason being too many brands leading to too many ads and hence a decline in creativity. Quality of ads as a matter of fact depends not only on the brand ambassadors endorsing it but also on the theme and message for Brand Recall. Of the Majority 68%, about than one-third of respondents said that ads have evolved with time and they enjoy watching humorous ads.

Consumer preferences in advertisements and marketing budgets
When asked about the importance of a celebrity star/sportsman in commercials, there were mixed reactions from the respondents. About 64% said they preferred watching a celebrity endorsing brands (see figure 2). Advertisements from Food products, health drinks and beauty care products were most preferred with celebrities. Of this 64% crowd, about one-fourth of respondents were married woman and according to them it’s easier to convince growing children on food and health products when a celebrity endorses it. Remaining 46% thought otherwise and did not find celebrities important in ads as compared to the theme and message derived from the ads. A common perception among the majority who voted for celebrities was that if a company can afford a popular celebrity for brand ambassadorship then it definitely has a capability to make quality products.

When it comes to advertising FMCG products, companies look at the number of individuals they could attract from a pool of 300 million people(Indian middle class; lower to higher – IMF, 2005). According to the senior management of a leading advertising firm in India, corporations over the past five years are desperately trying to tap the sentiments of Indian middle class and hence are widening their marketing budgets especially in industries like FMCG (Marketing budget of an FMCG company is ~10% of company revenues, industry average, MTI research). According to a few key management personals of various FMCG corporations in India whom we spoke to, there has been a strong attempt to streamline the entire branding processes within marketing departments of FMCG companies including consumer electronics.

Creative and Humor concepts scores in advertising

Creativity and humor scores when it comes to advertising. About 73% of the respondents preferred ads with newer concepts and were bored of watching ads with known concept or theme. According to TAM media research 2009, Brands such as Vodafone and IDEA were the most popular among TV audiences. Response from our findings complimented TAM’s research as we got nearly a similar result when respondents were asked about the most popular Ads by brand in 2009 (see figure 3)

Though it is a fast paced competitive business environment but it takes time to create brands and their identity. Advertising is a crucial medium through which corporations get to position their brands by communicating the differentiation that their brands offer to consumers. Marketers need to look through effective brand communication processes to reach out to the consumers and it’s not only effective branding but also service and quality of the product that matters to a large extent to an Indian consumer.

Key Takeaways
• Significant (30% in a sample of 150) number of people who are in the age group between 20 to 25 years (young group) still feel that the creativity is lost
• A common perception - if a company can afford a popular celebrity for brand ambassadorship then it definitely has a capability to make quality products
• Easier to convince growing children on food and health products when a celebrity endorses it
• Not many respondents (less than 10%) were found to be brand loyal. Majority (90%) of respondents were ready to try out new brands and were enjoying the product options available to choose from
• Creativity and humor scores when it comes to advertising

Wednesday, October 28, 2009

High-speed trains in India? Fingers crossed…..

Forbes magazine had an article on the introduction of high-speed trains in India that would be connecting major Indian cities and would be running at speeds as high as 350Kmph. The feasibility study is still under progress by an International Consulting firm and is expected to be complete in another 6 months. The routes that are being commissioned by the Indian railways initially for feasibility study are Delhi – Chandigarh -Amritsar and Mumbai – Pune – Ahmedabad. It’s been close to two decades post liberalization and nearly 12 years since the IT boom that bought India into the global map of outsourcing and we still are not blessed by any such high-speed rail services. The fastest known rail service we currently have is the Shatabdi that runs at about 140kmph. Connectivity in this modern era where people look to save time and are ready to pay that extra premium is becoming important and this has been a greatest challenge that we are facing over the past few years. An emerging economy like that of India needs its major cities to be connected by such fast commuting services which would ease business travelers to a large extent giving more options for them to reduce their travel time.
There is a significant addressable market in India for high-speed trains taking into account the business travelers who fly economy class, the rail passengers who travel in AC coaches and those who travel short distances (200 to 500 kms) by private vehicles. The first two segments of customers above would be a major market for high-speed trains. By targeting frequent airline travelers and premium segment rail travelers, Indian railways can possibly give sleepless nights to the disguised airline owners who are finding it difficult to control the operating costs due to high turbine fuel costs and the economic slowdown all across the globe.
There were about 77 million premium segment customers (traveling in AC coaches) for Indian railways who contributed to about USD 1 billion (Rs 5000 crore) in 2008. Speaking about the airline economy class passengers, there were about 12 to 15 million passengers (approximation) that traveled (domestic) last year and were better off as compared to the business class segment (which according to a various airline owners did not generate enough revenues due to economic slowdown). So, do we have a segment of passengers if catered to, which can bring in big moolah for Indian railways? It’s easier said than done, this will require huge investments for services, technology and maintenance apart from the cost of laying tracks and getting the coaches done.
The cost of building such high-speed tracks and trains are high and it is estimated to cost about Rs 100 crore per km to build them. Hence the cost of tickets would come with a price tag, at least Rs 5 per km, so to travel from Delhi to Amritsar which normally takes eight hours, would take about an hour and half, costing around Rs 2000. It would be interesting to see the feasibility report of the consultant organization; I am sure this will raise over a billion eyebrows and definitely put India into a new dimension.