Brawn, Brain, Strategy and Micromax

What do you call a company which manages to touch Rs 2000 crore revenue and achieves third position (volume) in an intensely contested industry in just five years? The answer can be none other than, brilliant.

When it comes to thinking about electronics space only giants of the world come to mind like Samsung, Apple, Sony, and Intel. And narrow this search down to the field of mobile phones, the mind does not stray beyond a small but firmly established brand like Nokia, Samsung, Blackberry, HTC, Sony and Apple. Try stretching the category further the list gets enlarged with more brands but only with powerful (in own way) like LG, Motorola, Philips, Dell, and Acer. Prima facie it appears as if the industry is only meant for big and powerful hence a simple ‘to enter or not to enter’ analyses would yield a negative result. Any entry in such a situation is likely to invite fierce retaliation aimed to prevent the entrant from getting a toe hold in the market. The battle could really be bloody especially when players are armed and have deep pockets. But then, the joy of winning is in outmaneuvering and outwitting the big. When physical resources can’t be matched, the fight should be shifted from brawn to brain.

An opportunity identification exercise normally fails to yield structure defying perception and hence hints at the most obvious clusters of customers. The ‘most obvious’ ways of looking at the market creates majority fallacy (the attractive segments get more competitors than what can be absorbed). So when everybody is going up, it may be a good idea to go down. When competition is about ‘value enrichment’, ‘stripping down’ may make sense. A fresher structure defying perception is what is required to apprehend an idea which has been escaping the attention. So what makes Micromax, an Indian start up take plunge in a market of ‘big boys’ and steal the thunder under their nose?

Consider the implicit and tacitly agreed code/ structure: quality and price are positively correlated, aesthetics (form) is for the top tier and bare functionality is for the lower ends, new and innovation take time to diffuse (or reach the lower end of the market, cautious buyer); brand building (customer pull) is meant for the top players, push is the strategy at the lower end; and post purchase care is the preserve of top end brands. The codes of operation in a market evolve after a complex negotiation between the structural impositions and market considerations. Now consider how Micromax’s strategy is based on the reconciliation of the irreconcilables. An appropriate brand name (unlike Lava or Fly or G- Five, right for the technology space), functionality fused with aesthetics, and brand esteem (sign off ‘nothing is anything’, association with cricket events- IPL and Akshay Kumar).

First of all is Mircomax a challenger brand? Probably not. The brand did not rub the established players the wrong way by choosing to target the customers left out by them (deemed unattractive). It is first phone was aimed at rural market packed with a huge standby time (X1i- to take care of electricity problems) priced affordably at about two thousand rupees. It hit at the uncovered flank. Then their strategy moved on to target lower end of the segmentation spectrum.

The common wisdom narrowly limits the concept of value to price if the brand targets the economy segment. Micromax recast the value equation and focused on the total value proposition (TVP) rather than price proposition. The brand focused on maximization of TVP by simultaneously focusing on price as denominator and brand attributes as numerator. Factor in qwerty pad, dual sim, battery life, built quality (touch and feel), operating system, processor, brand esteem and confidence with the reasonable price. This is true for their other products like tab. People tend to be value sensitive not price sensitive.

The brand managed to create a pull by shifting customer thinking away from the price to the’ form and functionality’. This imbued the brand with aspirational value within its class. Take a look at brand’s A70 ad which showed an i-phone look alike with a headline which read ‘i-phone with a scribble ‘can afford this’in between ‘i’ and ‘phone’ making a complete line ‘I can afford this phone’. This strategy of linking Micromax with the iconic ‘Apple’ brand (incomparable) cleverly makes it comparable (similar strategy was used by Avis once upon a time ‘we are number two … therefore we try hard’). Twinkle Khanna acted out as endorser for its ‘Bling’ range, especially designed to attract women customer. The ads using Akshay Kumar seek to transform customer experience by instilling pride of brand ownership (‘Hide anything but your phone’ and ‘If you have it, flaunt it’).

Another distinguishing aspect of Micromax is its branding strategy. The brand instead of putting all product variants into one umbrella has very carefully adopted sub branding strategy to clearly signify segments and their propositions (avoid confusion). Consider sub brands in its range include Bling (style conscious urban women ), Ninja (android phone for working professional), Modu (technology enthusiasts), and Superfone (people who want applications). The company has been creating a portfolio of brand that is sync with emerging demographics and consumer life style. As dividing line between customers get sharply etched the use of one brand runs counter to market reality.

Starting as a mobile instrument player, Micromax has moved vertically and horizontally in the market- space of its origin. Its quest of growth has found expression in its expansion into adjacent space of tablet market (Funbook). The company has met with fair amount of success in the tablet space. In its latest move the brand has been extended into television monitor and home theatre space. Tablet and mobile phone appear to be in close physical and mental proximity hence success in one category may rub off equity well in the other. It is worth watching how this plunge of Micromax works out in consumer electronics space.

Often success breeds its own seeds of failure. The move to create a ‘be all’ brand militates against the idea of market fragmentation. One of the oldest icons of consumer electronics has been Philips. The news that Philips is moving out of consumer electronics was painful reminder of the fact that one brand cannot hold it all.

Levi Strauss, Growth, Brands and Architecture

Every marketer must walk through market to reach profit goal. Revenue is essential for profit, the surplus left after deducting costs. The revenue goals and profit targets necessitate participation in market or markets. The growth imperative manifests in targets related to market share, sale and profits. Firms pursue their growth differently, a choice involving considerations of horizontal and vertical participation in the market. Branding and brands are important in this context.
Levi Strauss & Co has come a long way since 1873 which invented riveted tough denim wear (‘waist overalls’). The leather patch with an image of two horses pulling the jeans apart was used to demonstrate the pant’s strength. Within the rough jeans wear the company went on to increase its market participation by launching products meant for different segments like ‘Koveralls’ (one piece play wear for children), 501 (made exclusively from 10 oz. red selvage denim), jeans for the ladies by the name of Lady Levi’s, Lighter Blue line (sportswear), Preshrunk and STA-PREST (wrinkle free), wear in corduroy and polyester (to keep up with style changes). This way the brand went on to expand its reach to many jeans consumer segments. In 1996 LVC was introduced based on the reproductions of clothing from the Levi’s Archives. Then came super low waist jeans for women.

In early eighties the Company in an attempt to expand its footprint in upscale dressier clothing market created Levi’s Tailored Classics (LTC) line. The purpose was to tap ready to wear formal wear segment. But the brand failed to appeal to the sense and sensibilities of the target customers. The obvious question was what credibility a hard core denim wear brand has got to offer a classic range of suits which can be picked off the racks. Second if these were tailored then how these are available pre-fabricated off the rack? Levi name did not make sense to this segment and the line was discontinued.

With the progression of time, the concept of dress further fragmented from the binary classes of formal and informal wear. The dress besides operating at the functional level also functions at the symbolic level. A lot about a wearer is expressed by what he or she wears in terms of class, affiliation, personality, attitude and life style. The highly formal dipped in the starch formal clothing was pushed aside by a new generation of entrepreneurs and professionals (25-45 years baby boomers) who were free spirited white collar workers and wanted clothing to reflect their orientation (relaxed not tensed). Dockers brand was introduced in 1986 making company’s foray into what is called Khaki (non denim) market. This sub brand was created to take a plunge into emergent business casual clothing which young people wanted. It was a segment in sandwiched in between highly formal and highly casual jeans wear segments. This brand saw innovation such as StainDefender, Never Iron and Thermal Adapt. The brand was later extended into sunglasses, bed linens, & bath categories.
The Company’s portfolio was further expanded in 2003 with the launch of ‘Signature by Levi’ brand. The idea was to reach out to men, women and children with a product denim and non denim casual range of clothing. In terms of price this was an attempt to capture value conscious customer who aspired to own a Levi. The brand ‘Signature’ sought to appropriate style, quality and fashion and affordability and the words ‘by Levi Strauss’ directly supported it by making an explicit endorsement. Signature promised ‘Superior Fit, Comfort and Style’ to its customers. This move of the certainly allows the company to expand its presence by going out of its top end niche (minimum price 2200 rupees) which contributes to top end metrics like sales and share. But this strategy has its own risks. This kind of reaching out to the lower price points (between Rs. 799 and Rs. 1,499) can harm the mother brand by diluting its equity (exclusivity and class connotations). Titan reached out to economy segment by ‘Sonata’ brand with endorsement coming from ‘Tata’.
Later in 2006, the Company made a course correction by changing the Signature brand into ‘dENiZEN’ this was probably done to protect the Levi brand from potential image dilution harm. The dENiZEN brand was also a response driven by a strategy to fight local brands like Killer and Flying Machine. This brand was slightly differently positioned as a younger brand. In the visual communication ‘dENiZEN’ name stands dominantly out signifying something independent and different which supported by words ‘from Levi’s’. Unlike in its previous avatar as which used the expression either ‘Levi Strauss Signature’ or ‘Signature by Levi Strauss’ the identity of two brands were merged which signified a ‘different kind of Levi’ . But dENiZEN’s branding seeks to reconcile two opposing ends of belongingness and un-belongingness. When one sees the signage of dENiZEN, it signifies there is somebody new and different (denim and non-denim, trendier, young, economy and gender neutral) on the block but it comes from the house of Levis (credibility and trust).
In a new brand consolidation exercise, Levi Strauss & Co is in the process of phasing out its dENiZEN brand from markets other than North America. The Company will instead focus on its core Levi’s brand.

Sachin, Politics, Cricket and Brand Prototypicality

Sachin Tendulkar’s nomination to the Rajya Sabha has caused almost everyone from indifferent to intensely involved reacting to this development. And unlike many other nominations to the Upper House which go unnoticed, Sachin has become topic of discussions this time not for some cricketing record but for his new role in the world of politics.

Leaving aside the ‘indifferent’, people with opinion take two opposing positions. One group has welcomed this development and they find nothing wrong with their star playing his new innings at the political stadium. On the other hand, the other group does not find it comforting to see their legend donning a new role in political theatre.

How can this phenomenon be seen from a marketing angle? This seems to be a case of brand extension but with one difference, here the extension decision is not taken by the firm that owns the brand but by an external agency. For instance the decision as to what product categories (spaces or markets or categories), Pepsi brand should get into is a decision choice of PepsiCo not anybody else.  Brands are extended to harness their full potential and make them bigger. This often involves taking them into spaces (categories).  The Dettol brand ventured out of its antiseptic category to toilet soap and hand wash category to become a mega brand. But does it mean that a brand can travel into ‘any’ category in its journey to become a mega brand. Here lies a catch. It may be very difficult to think of Colgate on a category other than toothpaste. This concept is called brand prototypicality. It is how closely a brand is linked to its category. Prototypical brands get intrinsically anchored to their category so much that their alternate conceptualizations become difficult.

Some questions become important in this context. Is Sachin a prototypical cricket (concrete attribute) brand? Is he more about achievement and excellence (abstract attribute)? What is the commitment and liking level of his followers and fan? What associations are linked with the world of cricket and the world of politics in peoples’ minds? Are competencies needed to excel in these two fields same or different?

The opinions are highly divided on this issue. Some people have called this as ‘dirtiest play’ and some think he is used ‘to divert attention from the problems’. Many are concerned that ‘he does not suffer the same fate as another legend’.  One of the voices is said that ‘The kind of person Sachin is we never expected him to take up politics’. Then there are people who have welcomed this development. Many of the former cricket players have expressed their shock and echoed concerns have to how an apolitical person like Sachin plays political game.

These reactions are very similar to how consumers react to a brand extension. Consider Ponds marketing toothpaste or white beauty cream. One simple exercise can reveal why people have reacted to the way they did:

1. List the words associated with politics and politicians.
2. List the words that are associated with Sachin Tendulkar.
3. Now mix these two sets of associations and create a new list.

Now check the third list whether the words/ associations in this list create a harmonious mix (do not militate against each other) or have high degree of harmony.

An inconsistent mix would signal that two concepts, Sachin and politics do not  make a nice cocktail.

Brand, Focus and Sacrifice

If you are not growing someone else is. This phenomenon can be psychologically very discomforting. This relativity in the market gets the managers to be possessed by competition. The Boards which set their eyes glued on the stock prices and market capitalization send memos down the hierarchy to grow and grow fast. The ultimate point of where marketers and customers intersect is a mental spot called brand. Brands create revenue streams and hence are also the growth drivers. One of the shortcut growth strategies is to expand the number of products that a brand offers to the market. But such tinkering with the brand with an eye on the stock market but away from consumer often sows the seeds of decline for the enterprise as a whole. A strong business cannot be built on the foundations of weak brands.
Consider the following:

• When you want to buy a T shirt would you like to go to a Woodland store?
• Would you consider a brand like Jaipan (mixer and grinders) while buying a mobile phone?
• What would be your perception if Bata also sold jeans and formal wear?
• When looking for a perfume, would you like to consider Lee Cooper?
  How about Pepsi selling urban wear?

Branding is about appropriation of an idea which is both relevant and different. The idea should be relevant from the customer perspective and different from competitive angle. Brands are built by establishing a differentiating idea. Consider the following brands and their appropriation of differentiating idea: Band Aid, Dettol, Marlboro, Nike, H&S and Duracell. What makes a brand successful also imposes a constraint. An attempt to increase the revenue by hanging different products on the brand can lead to idea dilution and thereby weaken the brand in prospect’s mind. The market logic often runs counter to the financial logic. How good an idea is to offer vanilla in a Coke bottle or synthetic running shoe in a Woodland store? How about Levis formal wear or a A luxury car from the stable of Maruti Suzuki? Branding success comes from carving out a narrow idea territory in prospect’s mind. It is inappropriate for a brand to transcend this territory. But if a brand does try to jump over, it seriously endangers its strength.

Branding is about focus not spread. Strong brands are built on the principle of sacrifice. Jack Trout suggests that taking everything can be bad for business and giving up can be good. Stretching a brand can erode or damage or dilute the very idea on which brand success is build. Hence firms must learn to sacrifice. Three forms of sacrifice are: product sacrifice, attribute sacrifice and target market sacrifice.

• Some brands have product at the core to their identity. Branding success in these cases is built on a differentiated product. Consider KFC (Chicken), Duracell (alkaline batteries) Indigo (economy travel) and McDonalds (burger).
• At the core of some brands is the pull based on a product attribute. Staying close to such attribute is the reason why these brands remain successful. Consider H&S (antidandruff), Volvo (safety) and Rolex (prestige).
• Then comes target market sacrifice. Brand should stay focused on their target segment an attempt to get new customers from a different segment may alienate brand’s original customers. When Kingfisher name was hung on an economy carrier what effect would it have had on customers true to Kingfisher brand? Consider the effect of Lux (beauty bar for film stars) trying to woo men. Brand must stay true to their target customer.

Are you reminded of brands that suffered because of the violation of the law of sacrifice?