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'India as a brand only needs repositioning'

February 08, 2006 09:33 IST

Jagdish Sheth's résumé runs into 35 pages! But when you've got over 200 published books and papers on marketing to your credit, have taught at Columbia and MIT, and are an American Psychological Association Fellow, that probably covers just the bare bones.

The 60-something Sheth is currently the Charles H Kellstadt Professor of Marketing at Emory University's Goizueta Business School. Prior to that he was the Robert E Brooker Professor of Marketing at the University of Southern California, the Walter H Stellner Distinguished Professor of Marketing at the University of Illinois, on the faculty of Columbia University, and at the Massachusetts Institute of Technology.

In India to deliver a keynote address on Innovative strategies: idea to execution, Sheth spoke to Govindkrishna Seshan on how the "power of three" will impact India, which companies could be easy targets for takeovers, and how he would build Brand India.

What are the latest trends in the marketing world?

The first is the impact of the Internet on the marketing function. Compared to all other media, the Internet combines all aspects of marketing pre-selling, selling and post-selling. Also it's an inexpensive medium and a public information highway. So it's a very good information tool. 

Secondly, as market growth is coming from emerging economies like India and China, affordability will be the key issue. As a result, advanced countries like the US and the UK will have no choice but to make their products affordable to emerging nations.

The third area of major change is in retaining consumers. Now, 95 per cent of the population in developed countries are already covered by companies. So, it is becoming difficult to find new customers. Hence, the focus of marketing will now be more on retaining the consumer.

Do you think companies have realised the potential of the Internet as a medium and done justice to it?

Companies that are realising the power of the Internet are of two kinds. One is those who are altogether new players in the industry. For instance, in the publishing and book distribution industry, traditional players never realised the power of the Internet. made it big through the power of the Internet; eBay further leveraged the power of the Internet.

The B2B segment is another area that has recognised the power of the Internet. Look at Cisco, where 65 to 70 per cent of purchases are made online. Cisco has revolutionised marketing by creating a reversed floor - it doesn't make and store inventory anymore. Items are made only after customer place orders and make payments.

Why have some industries - like music and book selling - been very successful with the Internet, while others have not?

If a company's existing approach is successful, it creates an incumbency. When you are good at what you do, it is difficult to do something else. Then, when  someone from outside the industry comes in and makes a major impact, the incumbents wake up and get aggressive. For instance, last Christmas in the US, major sales were made on the Internet by traditional retailers.

This is because traditional retailers had the merchandise variety, which made their offerings niche and unique. Second, the traditional retailers offered customers the choice of either visiting the store in person or shopping on the net.

Is the rule of three (only three major players in any market) relevant in India?

The rule of three is happening in India. For instance, over a year ago, I had forecast that Air Sahara would not survive. The rule of three says that when the two major competitors become dominant players, and the market is not growing fast, the number three player lands in the ditch.

Indian Airlines [now Indian] and Jet Airways have always been the dominant players, leaving little scope for Air Sahara to survive on its own. While Jet and IA will continue to maintain their positions, the other new airlines that have opened shop won't survive. There will be some consolidation and out of the many one will emerge.

I have identified 12 industries where the rule of three is likely to happen in India. The airline industry is clearly one, because it is competitive; next is television. Of the top three general channels - Zee, Star and Sony - my prediction is that they probably won't remain independent. Media companies from other countries will acquire Zee soon (the other two are already part of international media companies).

The same is true for the cellular telephone industry. BSNL will be one survivor, because of its scale, Bharti will be another one, but the rest will have to consolidate. The cement industry is yet another example.

Where does the rule of three not come into play?

The rule of three is a universal concept, except when certain characteristics of the industry don't allow it. One is if the country does not allow full blown competition to come in, but allows competition selectively. Another exception is where the industry is organised around patent rights, since patent rights give rise to artificial monopolies or sub-monopolies to patented product categories (the pharma industry, for instance).

Third is industries that are owner-based or owner-managed, such as consultancies, law and accounting firms. Consolidation does not happen as fast in these firms because ownership interests come in the way.

Chinese goods are everywhere, with their strongest pitch being dirt-cheap pricing. Can marketing and branding successfully ward off the threat posed by them?

The key point here is that price alone does not sell. Unless price creates a value for the customer, it is meaningless. If Chinese products are poor quality products at cheap prices, they will die very quickly - as is the case with their light bulbs. On the other hand, if they can give quality at a low price like the Chinese luggage makers, then they can be tough competitors.

What must Indian companies do to enjoy a stronger global presence?

Indian companies have to do three things essentially. The simplest thing to do is make well-known Indian brands global, by supplying them to western countries through uncommon channels. For instance, Amul butter is now consumed in as many as 34 countries by non-resident Indians. They are now tying up with Wal-Mart; this will ensure them a strong distribution network.

The other thing that Indian companies can do is acquire smaller companies abroad. The best example is Mittal Steel, which has become the No. 1 steel company in the world.

Three, go into areas where you are pioneers. Yoga and basmati rice are good examples.

If you were the brand manager for Brand India, what would you do?

Considering that India is well known, as a brand it only needs repositioning. First, most people have an image of India as the land of cows and snake charmers. They  wonder how they can do business in an underdeveloped country. I would not promote India as a country of ancient culture.

Instead, I would promote images of a more contemporary India. Second, Brand India should have more ambassadors. They should be people and opinion makers like the CEOs of top companies. And I would showcase more of what India aspires to be rather than what it is.

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