Conventional marketing wisdom suggests that the Hutch brandname is too valuable a property to discard, even though the mobile operator has now been acquired by Vodafone. Leading marketing gurus, though, don't share that view: they believe 'Hutch' should give way to 'Vodafone', quickly. Here's why:
"Mobile company brands have awareness, not equity. Brand names have not yet been made to matter." -- Nirmalya Kumar, Professor of Marketing and Director of Aditya Birla India Centre, London Business School
Vodafone's decision to change the Hutch brandname to its own makes complete sense. When you pay billions of dollars for a company, won't you want it to reflect your association with it?
Seriously, mobile company brands have awareness, not equity. Ask anyone if they can name one or two unique attributes of the Hutch brand; I will be surprised if they can.
Of course, Vodafone probably also doesn't stand for anything, either. But then, these are brandnames, not brands. They don't really mean much to customers beyond being generic mobile service providers.
All mobile service operators have more or less the same plans and offer the same services with same add-ons. Rather, brands are created through meaning that is differentiated. Compare mobile operator brands with brands like Coca-Cola or Sony, which have deep, articulated brand values that go along with their high degree of customer awareness. The lack of brand image, and the consequent low brand loyalty, means that mobile service operators are forced to lock in customers with contracts.
Yes, Hutch and its predecessors have spent heavily on advertising and communication. But that has not helped create a brand. It still has a very shallow brand image. For Vodafone to migrate Hutch customers to its name, thus, becomes only a matter of spending enough money to create awareness for the change in name.
If it spends enough, that task may take just a week! Unlike with handsets, with mobile services, consumers do not feel they are buying a brand that reflects their life. All they need to know is where to pay the bill or buy the next prepaid card. Brand names have not yet been made to matter.
"If Vodafone doesn't switch brands, it will not enjoy flexibility of resources." -- Jagdish Sheth, Holder of the Charles H Kellstadt Chair of Marketing, Goizueta Business School, Emory University
Most brand literature relates to product branding and using that as the norm for services doesn't work because brands in the context of products and services are very different. Product brand names have a longer life and are much more difficult to change -- the brand is a function of the product, not the manufacturer. In services, on the other hand, brands are synonymous with companies.
When the corporate name is synonymous with the product (think Intel, IBM, Dell), the consumer has no trouble in transitioning from an old name to a new one. Such name changes are also more common now due to the increase in M&A activity across all sectors. Telecom especially has seen huge consolidation over the past several years, across the world and some companies have changed names five or even six times in a short span.
In the mid-1980s, Pacific Bell Mobility spun off its wireless business as a standalone company and created Air Touch. This was later to sold to Vodafone, which changed the brand name to Vodafone. A few years later, when Vodafone sold all it US properties, the Vodafone wireless business was sold to Bell Atlantic, which combined it with another acquisition, GTE, to create a new company -- Verizon. Consumers of the wireless service had no problem in transitioning from one brand name to another, and then yet another.
Here's another instance, again in the US, again in the telecom industry. BellSouth (brand name BellSouth Mobility) combined with SBC (One Cellular) to form Cingular. Meanwhile, SBC bought AT&T Corp and adopted the AT&T name. Less than 18 months later, AT&T acquired BellSouth and renamed Cingular Wireless as AT&T.
Did it matter to the consumers? Consider this: At the time of the breakup of the Bell System, less than 10 per cent of consumers knew AT&T by name. It was strictly a brand name for the financial community. Consumers related to the phone company by the Bell logo. In less than a decade and after spending more than $10 billion, AT&T created a world class brand name with awareness and recognition levels of Coca-Cola and McDonald's.
But really, branding has nothing to do with the brand name. In services, especially, the provided service is important but post-sales service activity, such as billing, customer care, and consumer experience is equally important. In services, therefore, brand names are not as important as customer experience.
Therefore, it will make no difference to wireless customers in India whether Hutch Essar becomes Vodafone or not (for the record, it will).
Of course, Vodafone has to put its brand name on the product. Internationally, wireless costs are equally divided between infrastructure, capital costs for licenses and brand-building. In India, since license costs are not an issue due to revenue-sharing agreements with the government, most costs relate to cell phone marketing activities.
For Vodafone -- and, indeed, any cellular service provider -- maintaining two separate brands will be prohibitively expensive. There will be duplication in call centers, logos, advertising agencies, handsets, billing... the list goes on. If Vodafone doesn't switch brands, it will not enjoy flexibility of resources. For instance, with a single brand, it can negotiate better deals with handset manufacturers and even set up a global call centre.
Consumers will not have any trouble adjusting to the change in brand name. They will migrate with the next bill.
"Vodafone has already invested heavily to establish the brand. It's time it leverages it to benefit." -- Shombit Sengupta, Founder, Shining Emotional Surplus
If Nokia as a telecom hardware organisation buys a handset company today, it can keep that brand for expansion in another market. But a telecom network service provider may not choose to take this scope of promoting more than one brand as it unnecessarily involves extra cost to maintain another brand. Vodafone's acquisition of Hutch suddenly gives it a billion potential customers. It just needs to put a marketing strategy in place to acquire them.
Vodafone has already invested heavily to establish a robust infrastructure and brand. I would advise it to replace the name of Hutch to Vodafone as quickly as possible.
In the context of Vodafone's worldwide strategy, India could be a significant strategic resource and mega volume-consuming village.
Hutch is an urban brand with just 16 per cent market share. Its emotional billboards over-promise, so consumers think there is network availability in every corner of the country, but rationally, its signals are inconsistent in many areas.
Accumulatively, the pug advertisement and the recent brand colour change may not have created a brand relationship for Hutch that Vodafone's global reputation cannot overcome. If Vodafone uses its global reputation and delivers accordingly, the brand change cost will not be a major factor. A telecom network service brand that is not visible implicitly connects to its consumers with the quality of its network, service and differentiating package.
With appropriate marketing effort comprising strong visibility and overwhelming consumer proximity, Vodafone will make the Hutch name disappear from consumer minds very quickly. Vodafone needs to simply roll out its well-tested add on features to India after the required customisation, and let the mobile revolution take over.
If Vodafone establishes a benchmark of uniform, impeccable, differentiated service from metro to rural, of course with whatever gradation is required for differentiated consumer economic layers, there will be a homogeneous standard that could quickly win them market share and sustain their business. How fast and how efficiently Vodafone manages to do this will determine its success or failure in India.
"Hutch is no stranger to brand name changes. With each change its canvas became bigger and gradually greater things were expected from it." -- A G Krishnamurthy, Chairman, AGK Brand Consulting
The Vodafone-Hutch issue is more about change management and not so much about the change itself. Yes, 'Hutch' as it is known today and will probably be known as 'Vodafone' tomorrow, is no stranger to brand name changes, and it has managed its string of changes very well.
About 15 years ago the brand was called Max Touch and was, in fact, a Mudra client at that time; it turned Orange five years later and recently became Hutch. But if you noticed, with each change the brand's canvas became bigger and gradually greater things were expected from it.
Brand names go through a change invariably when the company charts out a more ambitious future. Reliance used to be known as Reliance Textile Industries until around 1985 when it became Reliance Industries Ltd. This change coincided with the chalking of the blueprint of the company's greater vision of backward integration. The company no longer aimed to remain in the textile industry alone, which was why the "Textile" was dropped from the name.
There are many companies that have moved from old to new brand names seamlessly simply because they never let the expectations of their customers down. When British Telecom decided to become BT, it was because the company had set its sights farther than just the world of telecommunications. Indian Airlines became Indian and even though it was just a word drop, the new name makes the domestic airline company sound a world removed from the original, but yet the brand has remained unaffected.
Branding is much more than just a name. To quote branding expert Vincent Grimaldi, "The value of a brand resides, for the audience, in the promise that the product or service will deliver. Brand management then becomes the organisational framework that systematically manages those customer-centric processes. It aims at gathering intelligence, allocating resources, and consistently delivering the brand promise over time at each contact-point with the customer. The name is only a subset of branding."
So, will the brand Hutch be affected if it is known as Vodafone tomorrow?
My answer would be no. The mobile services company has a history of very efficient brand change management. But yes, if Vodafone does not deliver or live up to its formidable reputation as the world's No. 1 telecom brand here in India, then it might go through a difficult patch.
"Brand morphism in telecom is a quick process. An SMS on day one can change the name in nanoseconds." -- Harish Bijoor, CEO, Harish Bijoor Consults
Brand buy-outs are essentially cruel events. A brand is created from scratch, nurtured with care, galvanised into activity and made to happen. Consumers gravitate towards the brand, involvement deepens, value creation is at work and the brand buzzes. And then, all of a sudden, in comes a buyer, buys into its equity and all things physical, non-physical (and meta-physical alike) that surround a brand name. And the buyer has a call to take. Change the name? Or retain it the way it is?
The brand is a name, a slogan, a logo, a colour, a differentiation and 43 other things altogether. But is it a name alone? Not really. The Hutch name, for instance, is not a name alone. It is much more. It is the collective equity that is represented by the name, the service, the dependability, the experience at large, the colour, the logo, the fonts that speak of Hutch and everything else that lies in the amorphous space of other attendant attributes.
I do believe Hutch as a name will be changed to a Vodafone eventually. As the early statutory issues are cleared, you can expect intelligence in the transition. The tool of 'Just noticeable difference'(JnD) can be used to advantage. In the first six months, expect to see "Vodafone" at 30 per cent of its correct font size and Hutch at 70 per cent of its correct size. Over the next six months, wait for this ratio to invert. And then, in 12 months, expect to see to see a Vodafone at 100 per cent font size.
Brand morphism in telecom is a quick process. In telecom, an SMS on day one can change the name in nanoseconds. The service provider tag is another tool. What is more, the touch point of first billing cycle happens in 25 days! The touch points with the consumer are continuous (24x7) as the mobile phone is perennially "on", and possibly the only item kept closest to the human body for the longest amount of time!
In sum, I do believe we need to think new in branding. Think equity of the brand beyond the equity as represented by the brand name. The brand is much more.
The name is but a dog-tag. Change it, and the dog remains the same.
"The trick is to transfer the accumulated properties of brand Hutch to Vodafone." -- Abraham Koshy, Professor of Marketing, Indian Institute of Management, Ahmedabad
Perhaps fans of Manchester United football team may have high recall of Vodafone brand name and the logo; but many ordinary customers of mobile telephone services in India may not even know what business Vodafone represents or what properties the brand possesses.
Hutch, on the other hand, is well-known in India. What will Vodafone do with brand Hutch? Will the brand continue for some more time or will Vodafone replace it? If brand Hutch will go, then did the amount Vodafone paid exclude the value of the brand? If no, then did Vodafone acquire Hutch only for accessing the market and the customer franchise? If Vodafone will continue to use Hutch brand in India, how will this fit the global brand strategy of Vodafone?
An examination of consumers' association with brand Hutch would evoke properties such as good network coverage (an important brand benefit), the pug's loyalty to his little master (an emotional association with the brand), the colour pink (an important elements of the brand's identity) and the signature tune (a significant memory shortcut).
Should the acquiring company overlook such strong, high quality accumulated brand capital built over time at a high cost? Unless Vodafone is prepared to write-off the brand properties of Hutch, it appears prudent to leverage the high recall values of a brand that has strong emotional connect with the customers.
However, Vodafone itself is a strong brand in countries where it operates. It needs to establish itself similarly in India. In the long run, it simply does not make sense to promote a brand that is owned only in a limited geographic market, however strong it may be. The trick, therefore, is to transfer the accumulated properties of brand Hutch to Vodafone.
Observation of Vodafone's strategy in international markets suggests that Vodafone is likely to replace Hutch brand. It has three routes open for this. The first is a high decibel campaign that "Hutch is now Vodafone" -- straight and to the point. This will involve "educating" consumers that all the brand benefits of Hutch will now be available in Vodafone.
The ease and depth of acceptance of this straightforward message will depend on the decibel level and the creative power of the campaign. A second approach is to use a sub-brand strategy of using Hutch-Vodafone or Vodafone-Hutch as the brand. In either case, the name Hutch would be less prominent than Vodafone in graphical properties. Over time, "Hutch" can be dropped.
The third option is to just drop Hutch altogether and use Vodafone instead. This will work only if the new brandname can offer superior customer benefits and altogether new sets of brand associations than Hutch offered. In this case, the Hutch acquisition would have had only the value of market access.
The most likely move? Hutch is now Vodafone! The pug and the boy will become archive material and academic examples of good creative execution. Vodafone will come out with a new value proposition that integrates the brand's global appeal.