 "How much is too much?")
Maruti Suzuki recently announced plans to drop the 'Maruti' label from the bootlids of its upcoming premium products and featuring an 'S' badge denoting Suzuki instead. The move was complemented with the unveiling of an exclusive, high-tech chain of showrooms, branded Nexa. The idea behind all this was to get a firmer foothold in the premium segment of passenger cars, in which the country's largest automobile manufacturer has been, at best, an also-ran. From the company's perspective, dropping the Maruti association is as much a way to move up the value chain, as it is a strategy to de-clutter the rear of the vehicle for a more premium look and feel. "The Maruti Suzuki name continues to be part of our corporate identity and retail channels," asserts RS Kalsi, executive director, marketing and sales, Maruti Suzuki India.
Branding experts say there's more at play here than an exercise to spruce up vehicle aesthetics. Because Maruti Suzuki represents a very strong idea in the consumer's head, it becomes difficult for her to accept products at a high price from a company known for being rooted in a value-for-money proposition. So the move away from 'Maruti' to being simply 'S'. But what are the potential dangers in jettisoning a well-known brand name? More importantly, is there a way to mitigate the risks?
Get the intention right
When companies acquire other brands, they often kill some brands to rationalise the existing portfolio. Microsoft, for instance, dropped the 'Nokia' label post takeover and went ahead and rebranded its high-end smartphones as Microsoft. A clear signal went out to the ailing brand - that its glory days were over. So Brand Nokia would be 'tolerated' at the lower-end only. The whole brand reconstruction and planned dissociation from the past was prompted by its performance in the consumer market and its desire to rebuilt itself in a completely new avatar.
Other brands take other routes but the whole reconstruction is tied to what the brand would like to be going forward and, therefore, what it was trying to communicate to its audience. "In the case of Maruti Suzuki, the message is: you are used to seeing us in a particular way so even when we give you something better you don't look at us," says Santosh Desai, MD and CEO, Future Brands. "So the communication at the top-end now becomes: please look at us seriously, we have a good product here."
Dropping part of a name creates far less discontinuity than a complete change of name. While it signals change, it retains a link with the past and therefore not entirely disruptive. "To my mind it is a low-risk strategy," says brand consultant Samit Sinha of Alchemist. One possible risk though would be that the more commonly referred to part of the brand is dropped. For instance, many people would refer to a Harley-Davidson motorcycle as a Harley, so it would involve less risk to drop Davidson than to drop Harley from the name. In the case of Maruti Suzuki, while the 'Maruti' name offers a strong sense of reassurance, it was becoming a liability in the higher price segments, with its strong association with 'economy' as a selling proposition. "Therefore delinking the two without being entirely disruptive seems to be good move," says Sinha. "However, whether the Suzuki name has enough equity to be successful in the higher price segments remains to be seen."
As a category matures, the inverted pyramid structure begins to take shape. That means the bottom is smaller than the layer above, and that is beginning to happen in India with cars as well. "So here, Maruti is at a disadvantage, because of its brand associations," cautions chlorophyll co-founder Anand Halve. "Look at Hyundai - it is international, but it hasn't been able to pull it off either."
Play to your strengths
There's no denying that the 'Maruti' name has strong positive associations. "But going by Suzuki's foray into two-wheelers, which hasn't quite worked, it can be said that the Suzuki name by itself does not have overwhelming familiarity or equity in India," says Desai. Is there a risk then of alienating your current loyalists? "I don't think it will affect the lower-end of the market; it will just reduce the chances of success at the higher end," says Desai. "You are going up against the Hondas of the world, with a brand that neither has the emotional familiarity of Maruti, nor the heritage value of Suzuki."
There are categories where you look at the product largely through the lens of the brand, and there are categories where the product is the hero, with the brand purely a framework for it. One has to decide which side of the fence one is while transcending segments or embarking on a brand name change.
Take Micromax, which flagged off a separate company altogether (Yu Televentures) marking its foray into the services end of mobile telephony. Micromax has been delivering a low-value-good-product combination for a long time, so it got locked into such imagery. For Micromax, the brand was a consequence of the product strategy. "So here, even more than Suzuki, one question is relevant: is the cost and effort of establishing a new company in a highly competitive space worth it or should you leverage a familiar name," says Desai. "Unlike Suzuki, Yu started from scratch."
Agrees Maruti Suzuki's Kalsi, "We have unlearned a lot, as we are used to doing things in a certain way. We have had to disconnect from the 'incremental improvement' mindset."
It is tempting to chase what you don't have and land up devaluing what you do have, which then becomes an expensive pursuit. So the strategy that this-box-already-has-a-tick-so-let's-tick-the-next carries the risk of dilution of focus and frittering away of valuable resources into areas where you are fundamentally not so strong. The second risk is at the consumer level where a brand can end up giving out mixed signals. The consumer may not get what the brand represents anymore. "It is a case of product winning over the brand," says Desai, hinting that Maruti's is a product-based strategy, not a brand-based one.
"Few companies that come in from the bottom have been successful in stretching to the top beyond a point," says Halve. "Toyota created Lexus and Nissan created Infiniti - both fabulous high-end cars - but why is the fight still between three boys, Audi, Mercedes and BMW?" From the bottom, he advises, you can move up a couple of notches, no more. "A McDonald's hiving off a fine-dining restaurant under its own brand name may just not work."
How then can one mitigate the risks while following one's ambition to move to other and often higher segments? "By ensuring that the part of the name that is being dropped has no important residual equity or familiarity with the segment of consumers being addressed," Sinha concludes simply. In other words, being better than what you were yesterday is not good enough; can you rub shoulders with competition in the new segment? Managers have to be, therefore, realistic about the finiteness of the 'brand stretch'.
Once a brand has a strong perception in consumers' minds, it is almost impossible to change. Look at IBM, an incredibly strong brand, which failed when it tried to market IBM personal computers. Why did this happen? Because IBM meant ‘mainframe computers’, not ‘personal computers’. Maruti means ‘inexpensive vehicles’, so it is a mistake to try to use the Maruti brand name on more-expensive vehicles.
So what ought to be done? Give the more-expensive vehicles a new brand name. Take Toyota, for example. When Toyota introduced a line of more-expensive vehicles, it didn't call them Toyota Premium or some other line-extension name. It called them ‘Lexus’. Today, Lexus is the world’s fourth largest-selling luxury vehicle brand. I question, however, whether ‘S’ denoting Suzuki is going to be successful. Consumers are going to look at the ‘S’ and think, “What does that initial stand for?” Eventually, they will find that it stands for Suzuki.
So the company might as well have called the new vehicle brand ‘Suzuki’.
However, business is going global. And the Suzuki brand in most countries of the world is perceived as an inexpensive brand of automobiles. In the American market, for example, Suzuki was a total failure in automobiles along with two other Japanese brands, Daihatsu and Isuzu. All three brand names sound terrible to English-speaking people. Long-term, that perception is going to hurt the Suzuki brand in India.
Years ago, I was giving a speech talking about the dangers of line extension: using an existing brand name on a new category. The audience listened with no sign of involvement. Then I said, “Now, there are a few times when line extension can work.” And everyone in the audience picked up their pens or pencils and prepared to write.
For some reason, managers want to use existing names. They find all sorts of reasons not to create new brand names. And yet when you look at the successful new companies in the world today, they all were built by new names – Tesla, Airbnb, Google, Uber, Alibaba, Facebook, Amazon, Twitter and many others. If Maruti wants to build a brand to sell more-expensive vehicles, it should create a new brand name.
Branding experts say there's more at play here than an exercise to spruce up vehicle aesthetics. Because Maruti Suzuki represents a very strong idea in the consumer's head, it becomes difficult for her to accept products at a high price from a company known for being rooted in a value-for-money proposition. So the move away from 'Maruti' to being simply 'S'. But what are the potential dangers in jettisoning a well-known brand name? More importantly, is there a way to mitigate the risks?
Get the intention right
When companies acquire other brands, they often kill some brands to rationalise the existing portfolio. Microsoft, for instance, dropped the 'Nokia' label post takeover and went ahead and rebranded its high-end smartphones as Microsoft. A clear signal went out to the ailing brand - that its glory days were over. So Brand Nokia would be 'tolerated' at the lower-end only. The whole brand reconstruction and planned dissociation from the past was prompted by its performance in the consumer market and its desire to rebuilt itself in a completely new avatar.
Other brands take other routes but the whole reconstruction is tied to what the brand would like to be going forward and, therefore, what it was trying to communicate to its audience. "In the case of Maruti Suzuki, the message is: you are used to seeing us in a particular way so even when we give you something better you don't look at us," says Santosh Desai, MD and CEO, Future Brands. "So the communication at the top-end now becomes: please look at us seriously, we have a good product here."
Dropping part of a name creates far less discontinuity than a complete change of name. While it signals change, it retains a link with the past and therefore not entirely disruptive. "To my mind it is a low-risk strategy," says brand consultant Samit Sinha of Alchemist. One possible risk though would be that the more commonly referred to part of the brand is dropped. For instance, many people would refer to a Harley-Davidson motorcycle as a Harley, so it would involve less risk to drop Davidson than to drop Harley from the name. In the case of Maruti Suzuki, while the 'Maruti' name offers a strong sense of reassurance, it was becoming a liability in the higher price segments, with its strong association with 'economy' as a selling proposition. "Therefore delinking the two without being entirely disruptive seems to be good move," says Sinha. "However, whether the Suzuki name has enough equity to be successful in the higher price segments remains to be seen."
As a category matures, the inverted pyramid structure begins to take shape. That means the bottom is smaller than the layer above, and that is beginning to happen in India with cars as well. "So here, Maruti is at a disadvantage, because of its brand associations," cautions chlorophyll co-founder Anand Halve. "Look at Hyundai - it is international, but it hasn't been able to pull it off either."
Play to your strengths
There's no denying that the 'Maruti' name has strong positive associations. "But going by Suzuki's foray into two-wheelers, which hasn't quite worked, it can be said that the Suzuki name by itself does not have overwhelming familiarity or equity in India," says Desai. Is there a risk then of alienating your current loyalists? "I don't think it will affect the lower-end of the market; it will just reduce the chances of success at the higher end," says Desai. "You are going up against the Hondas of the world, with a brand that neither has the emotional familiarity of Maruti, nor the heritage value of Suzuki."
There are categories where you look at the product largely through the lens of the brand, and there are categories where the product is the hero, with the brand purely a framework for it. One has to decide which side of the fence one is while transcending segments or embarking on a brand name change.
Take Micromax, which flagged off a separate company altogether (Yu Televentures) marking its foray into the services end of mobile telephony. Micromax has been delivering a low-value-good-product combination for a long time, so it got locked into such imagery. For Micromax, the brand was a consequence of the product strategy. "So here, even more than Suzuki, one question is relevant: is the cost and effort of establishing a new company in a highly competitive space worth it or should you leverage a familiar name," says Desai. "Unlike Suzuki, Yu started from scratch."
Agrees Maruti Suzuki's Kalsi, "We have unlearned a lot, as we are used to doing things in a certain way. We have had to disconnect from the 'incremental improvement' mindset."
It is tempting to chase what you don't have and land up devaluing what you do have, which then becomes an expensive pursuit. So the strategy that this-box-already-has-a-tick-so-let's-tick-the-next carries the risk of dilution of focus and frittering away of valuable resources into areas where you are fundamentally not so strong. The second risk is at the consumer level where a brand can end up giving out mixed signals. The consumer may not get what the brand represents anymore. "It is a case of product winning over the brand," says Desai, hinting that Maruti's is a product-based strategy, not a brand-based one.
"Few companies that come in from the bottom have been successful in stretching to the top beyond a point," says Halve. "Toyota created Lexus and Nissan created Infiniti - both fabulous high-end cars - but why is the fight still between three boys, Audi, Mercedes and BMW?" From the bottom, he advises, you can move up a couple of notches, no more. "A McDonald's hiving off a fine-dining restaurant under its own brand name may just not work."
How then can one mitigate the risks while following one's ambition to move to other and often higher segments? "By ensuring that the part of the name that is being dropped has no important residual equity or familiarity with the segment of consumers being addressed," Sinha concludes simply. In other words, being better than what you were yesterday is not good enough; can you rub shoulders with competition in the new segment? Managers have to be, therefore, realistic about the finiteness of the 'brand stretch'.
| Get the basics right: Al Ries |
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So what ought to be done? Give the more-expensive vehicles a new brand name. Take Toyota, for example. When Toyota introduced a line of more-expensive vehicles, it didn't call them Toyota Premium or some other line-extension name. It called them ‘Lexus’. Today, Lexus is the world’s fourth largest-selling luxury vehicle brand. I question, however, whether ‘S’ denoting Suzuki is going to be successful. Consumers are going to look at the ‘S’ and think, “What does that initial stand for?” Eventually, they will find that it stands for Suzuki.
So the company might as well have called the new vehicle brand ‘Suzuki’.
However, business is going global. And the Suzuki brand in most countries of the world is perceived as an inexpensive brand of automobiles. In the American market, for example, Suzuki was a total failure in automobiles along with two other Japanese brands, Daihatsu and Isuzu. All three brand names sound terrible to English-speaking people. Long-term, that perception is going to hurt the Suzuki brand in India.
Years ago, I was giving a speech talking about the dangers of line extension: using an existing brand name on a new category. The audience listened with no sign of involvement. Then I said, “Now, there are a few times when line extension can work.” And everyone in the audience picked up their pens or pencils and prepared to write.
For some reason, managers want to use existing names. They find all sorts of reasons not to create new brand names. And yet when you look at the successful new companies in the world today, they all were built by new names – Tesla, Airbnb, Google, Uber, Alibaba, Facebook, Amazon, Twitter and many others. If Maruti wants to build a brand to sell more-expensive vehicles, it should create a new brand name.
Al Ries
Co-founder, Ries & Ries
Co-founder, Ries & Ries