Nano, Premiumization, Repositioning, and Big Cat Is Not Cat It Is Tiger, Stupid

Nano was launched with great fanfare in March 2009. But before its launch, Nano became talk of motor world in almost all corners of the world. Nano cut into news channels and newspapers for something that was considered undoable in automobiles.  Cars or four wheelers were finely segmented in to different clusters on price-performance curve.  Lower performance came at lower price; compare Maruti 800 sitting at the base and BMW or Audi at the center and high performance sports cars on the top like Ferrari or Porsche.  The important point in Nano’s case was it challenged the point at which so called car value curve originated.  Implying for a vehicle to qualify as a car it must have some minimum engine capacity and thus minimum price. This was set by then prevalent  automobile engineering, manufacturing and marketing paradigm. 

Breaking a paradigm is often called ‘out of box’ or innovative thinking. It is critical challenge for many companies to break away from their low performance levels by rule breaking. Therefore innovation is a cherished idea in corporate circles. It is something like questioning ‘why the apple must fall on earth’ again and again. An out of idea when translated into a product and process may win accolades with the technical community of researchers and engineers but fail to ring with market.  For instance a refrigerator with see through door was rejected but designers saw great utility in its ability to convey stock levels of various things without having to open the door. Sony’s Betamx and Apple’s Newton are some other examples.

In a market typically products are clustered along price-performance dimensions. And this clustering is determined both technical or engineering constraints and customer expectations.  Consider bikes or cars or tractors or computers. The engine capacity and price if plotted on a two dimension diagram would reveal distinct clustering (bikes like 100cc, 150cc, 350 cc). A product created out of altering these combinations comes with both opportunities and risks. My best way to exemplify this is to imagine a cat making company in its attempt to expand market goes on to increase its size and it keeps increasing it. What happens beyond a point (on price-performance/power axis) it ceases to be a cat and becomes tiger. And if you decrease its size, again beyond the minimum psychological limit of cat category again it ceases to be cat. Product categorization is purely is a mental scheme by which mind creates ordering and classification to make the external reality manageable.

Each of categories of a product is usually tied up some consumer motives. For instance high power bikes (like Harley, BMW, Hayabusa) tied with dominance and ‘against’ identity. A car per se is a visible or item of conspicuous consumption. It conveys who you are (identity expression, existing psycho-socal group) and it assumes instrumentality in belongingness role (desired psycho-social group). In a consumption society which works on the construction-‘ you are what you  have’ – possessions both give self and social identities. How much would be the desire in people at the bottom tier of market (non car customers) to belong to car buying category (psycho-social group in terms of power and status). They certainly would like to buy a car for its psycho- social significance. They would like to  ‘unbelong’ or ‘disassociate’ from their present group to gain assertiveness and power (in new society the old sources of identity have diminished in their role).  Now consider how Nano fits in this scheme of things.

 

A car which is publicized for being the cheapest car is likely to a contender for accolades in academia and technical circles. This publicity simultaneously invests meaning in the car which renders is irrelevant for the target customers. The vehicle becomes an open display of one’s non-car buyer status. It marginalizes and pushed the owner the car to the bottom of the road power politics. Nano may be an excellent solution to driving in city conditions, but the publicity and hype that made it hog limelight extraordinaire became its own cross.

So what is the solution? Nano needs to break complete away from its price centric perception. Give potential buyers a reason to buy the cheapest car wrapped up in a motive other than price. It can become for instance, choice of smart pro planet people or ‘I am me’ group who buy cheapest car not for price’s sake but for ‘that’s how they are’.  Nano’s new campaign aimed to reposition it, ‘you re awesome’ trivializes the brand. A car is serious product category and people seek seriousness first before emotions of fun. Now BMW is pure joy and thrill to ride but much before this position it established itself as the ‘ultimate driving machine’. 

Relationship, Brands, Personification and A Tale of Two Brands

Recently I came across two buying episodes which throw light on how brands interact with customer:

In the first instance one of my students shared her wrist watch buying experience. She went to buy a watch in a store and asked the sales person to show some timepieces for her. She wanted to be shown some good quality decent to wear watch. Form a large display of watches the sales person pulled out one and handed her to check it out.  No sooner than he passed on the watch to her to try she rejected the watch even putting it on her wrist.  The thought that echoed her mind was ‘a round, golden watch, it’s my mom’s watch not for me’. Then she moved on to Fastrack counter and picked one from their collection, a watch that had an ‘odd’ shape for a watch and  did not conform to the stereotypical image of a time keeping device.

The second instance involves one of my known lady friends. She wanted to change her phone not because her current mobile instrument was giving her troubles rather she wanted to try something new. Her prime consideration was a ‘decent’ phone not ‘very expensive’. To her a mobile for is for primarily for calling and SMSing purposes and ‘applications’ scare her for she has no technology attitude or aptitude. Upon glancing through various options and brands we chanced upon a device that looked good, pleasing to hold, easy to use and bore a trusted name. But learning that it was a ‘Asha’ variant from Nokia was like a bomb destroying her choice for the phone in a spur of a moment. Suddenly all evaluations and deliberations lost relevance and her reluctance seemed like an impregnable wall. No amount of reasoning and cajoling would make her yield to this brand name. She eventually went on to buy ‘Lumia’ but without any understanding of what a Windows phone is what purpose it serves.

In both of these cases the thinking mind finds it baffling as to why a time keeping device is rejected on a ground that it was round (one of the most popular shapes) in shape and how on earth mobile phone selected after due deliberation (features and functionality) suddenly become unacceptable simply because of its name? There is something more at work than that meets eyes. An act of buying involves much more than surface utility centric considerations. Here in the first case the ‘keeping of time accurately’ and ‘being able to talk and send messages’ in the second case. Here the rejection seemed to be stemming out not from ‘what the product does’ rather ‘what the product/brand means’. The shape and name symbolism probably has subversive effect on relationship creation.

Customer – brand exchange transcends the narrow confines of economic utility considerations. Marketing is a two way street. Customers also invest in their relationship with brands. In above two cases, the customer’s rejection is based not product functionality rather unwillingness to have a relationship with the brands in question for reasons extraneous to product. Relationship is a humanistic construct. Either by deliberate design or unintended default brands develops human character which determines their relationship potential. In the cases mentioned above brands fall into ‘dissociation’ set for they embody meaning discordant with customers’ life project. It is probably brand’s failure in making of meaning that a customer wants to make in a specific context. The dissonance stems from friction that customer is likely to experience on psycho-social plane.

Why does a round dial golden watch does not deserve to be a companion of a young girl? The round dial is symptomatic of conformance and tradition. Conceptually the idea that this kind of watch stands for does not gel with the ideas and ideals of the current generation. Watch shape signifies tradition, conformity, power asymmetry and subordination with which a young girl does not identify. You don’t want to be friends with a person who is like your father or mother. Every new generation reinterprets culture and modifies it. The Fastrack brand’s signs offs- ‘move on’ allows free flowing interpretation of symbols and relationships. At the form level Fastrack watches are formless or shapeless which symbolize a break away from past. This also implies cracking of old structures (ideas and ideals) which held our society. A watch in this case becomes a narrative of new generation in search of its own story. The unconventional shape that breaks away shape is like a piece of modern art which shifts the locus of meaning from the communicator to the interpreter. A watch on the wrist is not about objective time that its pointers signify rather about its shape, the container of time. Time is an objective reality encased in a subjective container, whose progression in measured units remains constant but it is its constancy in progression makes every arriving unit different.

In the second case is about subversion by the subconscious of the conscious. The brand name ‘Asha’ upsets the value equilibrium and throws the brand out of consideration into disinclination. The reason is stymied by the invisible effect of the brand name. Brand name not simple signifiers of a person or object. Names plug on to the collective consciousness and fill meaning. Naming is identity giving process, without a name a person will have no self identity. Here brand rejection stems not from what the product is rather the identity connotations that brand bestows upon it. Names can revels cultural values and cherished ideals. Brand name ‘Asha’ translates into ‘hope’ which is not a dissonant idea. But name draws it symbolism from people (e.g.Asha Parekh), movies (Asha movie starring Jeendera), and role (homemaker, dependent). The brand develops a disconnection with the buyer not for reasons of ‘what it does’ rather ‘what it means’ in his or her imagination. It for this reasons some brands become aspirational and desirable.

Consider why typical English or Italian names are considered desirable in ready to wear apparels like Van Heusen, Allen Solly, Louis Philippe, and Armani. A perfume is unlikely to a ring bell with customers with a mature sense of smell if its name is not French sounding. A heavy sounding name in German language certainly adds substance to an engineered object. Naming is one of the processes by which an object can be given distinct human characteristics and mythologies. Imagine the mythologies names like Apollo or Venus or Rama or Arjuna would bring to an inanimate object. This is where customer’s visualization begins whether a brand is worthy of having a relationship with or not.

Value, Branding, Cool, and War between Apple and Samsung

There is war out there. And the war is no longer cold, hush-hush; rather it is an explicit direct bloody combat. Apple’s strategy to expand its market by diluting affordability barrier through its attractive installment plans launched in collaboration with its trade partners has been met with almost identical campaign by Samsung for its Galaxy range. The body copy, message and creative execution appear remarkably similar to each other.

Galaxy and Apple are both aspirational brands. People want them but their high price restricts their market to top tier of the market. Price advantage is one of the measures of a brand’s command over its customers. Apple’s products including mobile devices have for long commanded huge price premiums. People use expressions like ‘cool’, ‘cult’ and ‘iconic’ to describe Apple products. There is something amorphous about Apple which makes its offers / products beyond comparison. The mystery and mystique of Apple brand has not been any short of what cult gurus have on their followers. Take for instance the connection between Osho and his followers. There is everything but reason why people follow Osho. The connection transcends logic and rationality. Like gurus, some brands manage to intersect with people on highly sacred and valued spaces to create reason defying bonds. At the heart of cult following is dedication stemming out of emotional commitment.  Apple has been of such brands besides Beetle, Saab, Vespa and Harley Davidson. These are magnets to their followers.

But recent advertisements of Apple iPhone are quite opposite to the idea of a cult brand. The appeal is purely rational and attempt is to reach out to a larger set of customers. It is reverse of magnetism, madness, spell and euphoria.  Apple through its new installment program has made its handsets within the reach of a larger set of audience. The new ads questions: ‘Why wait?’ along with a picture of iPhone 5 and mention of words ‘for Rs 16,990’. The body copy of the ad describes three attractive installment plans with a monthly outgo of as small as Rs 1376. 

The competition between Samsung and Apple is quite palpable and direct. In almost identical format, Samsung launched a counter campaign to promote their Galaxy range of smart phones. The headline goes as: ‘The incredibly creative Samsung Galaxy Note II own it for just Rs 99 per day. The message is that now a potential buyer can choose from Galaxy range (Galaxy Note 800, SIII, Note, Grand and Galaxy Camera) of instruments on easy and attractive EMI scheme (monthly outgo as little as Rs 1790).

The two things common to both Galaxy and iPhone communication are focus on price and promotion. Price and sales promotion assume importance when brands become similar. The brand parity or commonality renders customer choice slippery. Apple for long enjoyed a status of a brand as ‘beyond compare’. Customers took pride in its ownership and the experiential ‘wow’ rendered its demand inelastic and insulated from competition. But things now appear to be different for brand Apple.  Jan 17, 2013 Forbes post was headlined as ‘perception scores show Samsung, Apple at parity’. The BrandIndex data mentioned in the post says that ‘perception of the iPhone is outpacing perception of the Galaxy; those scores have been trending closer over the past few months’. The crux of the issue here is not which of the two phones is better rather iPhone has become an object of comparison with others.

Brands derive their strength from connections that they forge with customers. There are three fundamental routes to value creation: utility, symbolism, and experience.  Functional brands thrive by delivering utility though performance of certain functions (use ability). Brands in the symbolic space are valued for self-concept enhancement and social esteem (symbolic meaning). And brands can be desired for experiential aspects or hedonic pleasure (sensory gratification).  Performance centric brands compete on logic and reason and hence fail at creating ‘mindlessness’ and ‘passionate devotion’. They continue to be trapped in comparison discourse.  But brands that that jump over cognition and forge affective links through hedonism and psychological significance escape ‘thinking scrutinizing mind’. The ‘cool’ factor stemmed from Apple’s touch, feel and psychological meaning.

The current campaign focused on price and EMIs appeal to reason which is antithesis of what cool brands are all about.  

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.

Coke, Cadbury, Being good, Doing good and Branding

Marketing conjures up images of a salesperson aggressively pushing his products. It is popularly believed that marketing is all about selfishness wherein seller seeks to enrich himself at the cost of consumer. However in last couple of decades marketing practice has evolved and companies have begun to put consumer at the center of their marketing efforts. Accordingly marketing is emerging as a practice directed as satisfying customer or moving them on a higher level of existence (by solving their problems) making profits in the process as a consequence. But his shift of focus on consumer does not liberate marketing from selfishness or self-gain.

 In consumer centric paradigm, what do marketers offer? The marketers are made subservient to goals that consumers pursue or ends that they want to achieve. Consumer needs and wants present spaces on which brands are created. Branding mandate is consumer dictated. A brand cannot be anything other than want its target consumers want it to be. So what do brands offer to their consumers? Brands become agents of the delivery of material wellbeing- consumers’ material existence becomes the areas of focus. Brands position themselves as solutions to their problems emanating from their physiological or psyco-social spaces. Consider: Dove prevents damage to hair or skin; Dettol provides hygiene: Amul makes you healthy; LIC covers risk: MDH makes food tasty; Maggi saves time; Asian paint weatherproofs walls; Cherry shines and protects leather; Airtel connects with the friends; Ceat gives grip on the road; Sansodyne comforts sensitive teeth; Louis Vuitton makes you stand out; iPill gets rid of unwanted pregnancy and Fair & Lovely bestows confidence.

Within the overall imposed needs/wants structure, marketers work out branding strategy. Brands appropriate attributes (Castrol’s synthetic oil/ Vicco contains turmeric) and benefit (Bisleri’s safe to drink, Phillips bulbs saves energy). Mostly branding discourse is narrowly confined to the means and methods of making consumer’s material life better. Brands establish justification by delivering material gains or becoming devices enabling effective negotiation of material world. Rarely do brands tread the non-material or existentialist concerns. It may be due the fact that existentialist aspects do not translate into sound value propositions. May be being good and doing good make good theoretical sense but do not translate into branding opportunities.

Quite contrary to popular branding practice two brands that have taken the branding appeal to a higher existentialist level are Coke and Cadbury Dairy Milk. Both of these brands have been subtly shifting focus away from the product. Products are a physical construction and hence open to deconstruction and reconstruction. Objective differentiators are easy to outmatch. And in a reason based environment more is perceived to be better. Competition based on specifications can degenerate into collective annihilation. It creates dog eat dog situation by narrowing consumer focus on to objective product based criteria.  Therefore better brands develop escape routes by not being ‘more’ rather ‘different’.

Coke had its own share of product focused branding. It for a long period of time it used drink as the center piece of communication (secret formula/ hobble skirt bottle, tingle, taste, fizz, and refreshment). The brand also called itself ‘the real thing’ to suggest that Pepsi is not real or fake. But the question is how far these propositions can take the brand. The larger reality is that the product is nothing more than carbonated water packaged in a bottle albeit with different brand names. When the taste and sensations come close to a narrow threshold, Coke has taken the brand to compete on feeling platform but feeling here is not about activation of bodily senses  rather engagement with higher order consciousness.

Consider the brand communication. Last year the brand ran a campaign. ‘Ummeed wali dhoop sunshine wali aasha’. The core idea was to promote ‘ummeed’ and ‘aasha’ (hope, expectation) about the future. The brand tried to fight an overall sense of hopelessness about the way things are moving in different spheres of life (tomorrow is going to be better). And now ‘haan mein crazy hoon’ campaign takes the concept of happiness (‘open happiness’) from drinking (sensory pleasure- selfish) to doing things that make others happy. There is a shift from getting to giving. It urges people to discover the joy of giving, an appeal to higher order consciousness. The modern combative and overly competitive environment creates a heightened concern for self and a complete disregard for others. Sanity/ logical and mindfulness means concern for the self. But this singular quest for self-betterment/ concern for ‘I’ makes the collective existence hostile/ unlivable. The communication suggests break the rule, be crazy and do something good for others and bring smile on their faces. This kind of craziness (selflessness) is good

Cadbury Dairy Milk brand’s growth trajectory is almost similar to that of Coke’s. The brand sought to establish its legitimacy in the market by focusing on goodness of milk (brand’s logo depicts dairy goodness- milk being poured into the chocolate). This has been attribute based positioning which was necessary to get approval from mothers. Recently the brand took the communication from the literal ‘meetha’ to metaphorical ‘meetha’. It was transformation of the brand from sweet confectionery meant for kids to something that could be enjoyed by adults. The meaning of sweet was reinterpreted (meaning extension by subversion of sensory sweetness to sweet moments- remember cricket ad). The statement ‘Kuch meetha ho jaaye’ is a double layered with two meanings running parallel with each other (sweet occasion and sweet thing). Later brand changed its communication to ‘kuch meethas ho jaye’. With this the brand took upon itself to appeal higher order consciousness by urging people to  become agents of happiness – how small gestures can bring sweetness in relationships (wish your uncle Diwali who you have not spoken to for years).   

The only purpose of life is not to indulge in pleasure for the self. Humans are born with high order consciousness. It is a source of happiness for many. This gives brands an opportunity to forge deeper connections.