Globally, cross-badging is accepted marketing strategy used by group companies or partners and is done to shorten the lead time for product introduction, to save costs and accelerate volumes, reports Shally Seth Mohile.
Sanjay Gupta, a Delhi-based businessman recently bought a Toyota Glanza, a rebadged Suzuki Baleno for his 22-year-old son.
He chose a premium hatchback for his son's first drive and the Glanza ticked most of the boxes.
Most importantly, his choice got an instant stamp of approval from his son, a freshly minted engineering graduate from IIT Delhi.
Why did the Guptas choose the Glanza over the Baleno? Same car, just different names after all.
It was the overall sales experience at the Toyota dealership, attractive warranty offerings and the premium positioning that swung the deal, said Gupta.
For marketers who have long slotted the auto market into neat price buckets, even spinning their brand narratives around mass or premium, Baleno marks an interesting twist in the tale.
Under Maruti Suzuki, an automaker associated with hardy, utilitarian wheels on the road, Baleno (Rs 5.67-8.99 lakh) was seen as a way to trade up for old loyalists.
Under Toyota, a new name and attractive offers and service deals has made the Glanza (Rs 7.28-8.99 lakh) a millennial buy.
The rebadging experiment is the outcome of a broader agreement that Toyota Motor Corp and Suzuki Motor Corp stitched up in March 2018.
Deepening this association, the two companies announced an equity alliance on Wednesday. And its early tryst with success is an indicator that Indian auto buyers, who in the past rejected cross-badged models, are warming up to the idea.
Globally, cross-badging is accepted marketing strategy used by group companies or partners and is done to shorten the lead time for product introduction, to save costs and accelerate volumes.
Toyota started selling the Baleno as Glanza from June this year. As part of the agreement, Toyota and Suzuki will supply hybrid and other models to each other in the Indian market.
Apart from Baleno, Suzuki will provide the compact SUV Vitara Brezza, while Toyota supplies its sedan Corolla to Suzuki.
Since its launch, the Glanza has sold close to 8,000 units. While the numbers pale in comparison with the Baleno that has an average monthly sales of 13,000 to 14,000 units, it is significant for Toyota that has struggled to break into the competitive compact car segment in India with Etios and Liva.
So, what has worked for Glanza? Besides a superior warranty of three years/100,000 kilometres extended up to five years/220,000 kilometres, a sharp focus on young first-time buyers in its marketing campaigns in a language understood by millennial buyers have helped, says N Raja, deputy managing director at Toyota Kirloskar Motor.
"A good purchase experience is not just about the product but about the entire purchase process," he added.
The company launched a corporate campaign called 'Arey Waah' (Oh wow) which elaborated on the deal, Toyota's low cost of ownership and high resale value.
Toyota has been able to attract three times more first-time buyers for the Glanza as compared to other models, said Raja.
Shashank Srivastava, executive director, sales and marketing at Maruti Suzuki India, points out that when a buyer considers a brand, she takes into account a combination of factors.
It is a sum total of product, showroom experience, brand image, after sales. "No conclusion can be drawn just as yet, as Indian buyers are still evolving," he said.
Other companies for instance have struggled to push their cross-badged models. The Volkswagen Group in India had adopted the same for a subcompact sedan and sold it as Volkswagen Vento and Skoda Rapid.
But it backfired and the brands cannibalised each other. A similar effort was made by Renault Nissan Alliance when they launched the rebadged Nissan Micra as Renault Pulse.
Rohit Kumar, associate vice president, automotive, India at market research firm Kantar points out unlike previous instances, the cross-badging between Suzuki and Toyota is a perfect fit.
"While Baleno has proven its credentials, Toyota's premium brand imagery and superior sales and after-sales service is helping," said Kumar.
It helps that the two have chosen models that fit perfectly. For instance, Toyota would have struggled to sell a Celerio, he adds.