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The road to the top

Big Bazaar and Tata Nano are trying to climb the value ladder, moving away from a price-based product proposition to own a more upmarket imagery. They have a long road ahead

Devina Joshi
In a country where cost has always been a decisive factor, it is ironic that the average buyer now seems to be looking for something beyond price.

A case in point is Lifebuoy, which, due to its attractive pricing, was a value soap brand for the longest time until its re-launch a few years ago. But Lifebuoy had an advantage: apart from the value offering, its core credentials were rooted in 'health through germ protection'. The brand leveraged this credential effectively during its re-launch as a family health brand.

But what about brands that do not have an additional benefit to leverage beyond price/value, the way Lifebuoy did? Examples are aplenty. Long focused on the lower-end of the price spectrum, Wal-Mart has been looking to gain a following among wealthier customers. In 2009, it expanded the presence of brands such as Dell and Apple in its stores. It also remodelled most of the chain's stores in the US and Mexico. As you read this, Wal-Mart's efforts to reach the creme de la creme are still on, globally.

"Or take Marks & Spencer, which has cracked the formula of 'mass-premium'," says Nabankur Gupta, founder CEO, Nobby Brand Architects. The concept is also called 'masstige', a mix of mass and prestige, an area that brands catering to both ends wish to excel in.

Closer home, Micromax successfully moved away from the same space as its 'cheap' peers by latching onto the smartphone wave. It now jostles for shelf space with the likes of Apple's iPhone and Samsung. Retailer Big Bazaar known for its affordable products recently unveiled its makeover to cater to an aspirational India, while Tata Nano, better known as the world's cheapest car, has made efforts to move on to an affluent avatar. FMCG companies like Hindustan Unilever and P&G have been at it for years, with several of their personal care brands hopping on from 'value' to 'premium'.

Just what does it take to make that leap? How can a brand move up the value chain without looking like a wannabe or a 'has-been'?

The Big Bazaar story

Few know that Big Bazaar was launched 13 years ago modelled on a typical American hypermarket, with huge shelves and ladders for consumers to climb up and reach products. The model flopped in India. Big Bazaar was quick to identify this failure and changed itself to latch onto the low-cost premise: a winning formula in price-conscious India.

And this is how the price positioning was deeply entrenched in consumer minds: in the early years, it introduced trials for steam irons at an entry price point of Rs 699 at a time when they cost a minimum of Rs 3,000. It also introduced DVD players starting at Rs 1,299. Five lakh DVD players flew off the shelf from a total of 50 stores at that time.

"We created magic in every category and saw the average Indian change her consumption habits," says Sandip Tarkas, president, customer strategy, Future Group. But there was this perception at the back of their minds that Big Bazaar was 'too crowded' and spelt narrow alleys and jostling. "It is this experience that we hope to change, even as the competitive pricing remains the same," asserts Tarkas.

Two years ago, Big Bazaar started housing expensive brands alongside its private labels. So consumers saw a Rs 1,299 Lee Cooper jeans sit beside the Rs 499 Big Bazaar one. The retailer found that while its own labels were selling, the consumer didn't bat an eyelid before purchasing the more expensive brand either. Similarly, Big Bazaar played around in other categories. With 24 crore-plus footfalls that the retailer now gets every year, it found that there were people looking for brands at both ends of the spectrum.

Here's how the hypermarket is making the transformation: Big Bazaar earlier had black terracotta floor tiles to add to the commoditisation factor. Such tiles absorb light, and hence, the merchandise didn't look premium. Big Bazaar also had white CFL tubes for lighting, typical of value stores. The new stores use yellow lights and white flooring, with revamped mannequins and wider alleys for easier navigation.

The goal is clear: to make customers spend more time in the store, as opposed to the 'less time and more efficiency' based navigation earlier. Big Bazaar now runs 230 stores versus 40-50 stores during its early years, which also implies that its buying volumes have gone up. So while pricing will pretty much stay the same, Big Bazaar plans to get higher margins from its suppliers, justified by higher bulk buying. "We are managing our inventory better, have improved our margins, and even for our private brands, the margins are higher now," says Tarkas. About 15-17 per cent of Big Bazaar's total sales come from its private labels now, as opposed to 12-13 per cent four years back.

The stores are being revamped catchment-wise: premium catchment stores are being revamped first. Advertising isn't spared: the retailer's new campaign is backed by media spends of Rs 100 crore. From 'Isse sasta aur achha kahin nahin' (functional) to 'Naye India ka bazaar' (physical) to finally 'Makes India beautiful' (psychological), Big Bazaar's transformation has taken a completely new turn. And the results are ringing in: Big Bazaar's sales have gone up by 35 per cent over the last year and a half - which is roughly since the time it started introducing the upgraded line-up.

A long, winding road

"Brand makeovers are of two kinds. The first is the slow and steady makeover without which a brand will die. The second is the more dramatic makeover, which brands like Olay have successfully done: from an old 'mythical' brand to a modern one, known for fighting the signs of ageing," says MG Parameswaran, advisor, FCB Ulka.

Let's face it. It is arduous to move from 'popular' to 'aspirational'. A brand like Micromax had it easier because, being a relatively new brand, it hadn't struck its roots too deep. It introduced high-end phones and set on a new path. This brings us to the next thought: sometimes, such a change is about the category where price is no longer the differentiator, like in the case of low-cost airlines. IndiGo had to outgrow its price benefit and flag its on-time performance.

Having said that, the transformation for many brands may not be egged on by a favourable environment in the category. As the consumer's economic health improves, she wants better products, and if a transformation has to be achieved, all the 6 Ps of marketing (product, place, price, promotion, packaging and positioning) need to be changed.

Consider this. Vaseline was just a petroleum jelly available at chemist stores till the year 2000. It diversified its product portfolio to include winter moisturisers, fairness creams, body lotions etc, with an upmarket, holistic 'skincare brand' imagery and increased pricing. Ditto for Pond's: its extension into new segments like anti-ageing, skin lightening and face-washes has transformed the brand, which was largely a cold cream and talc brand till 2006. "Today more than half the business comes from these extensions, as each of them is rooted in strong consumer insight," says a Hindustan Unilever spokesperson. In other words, product diversification is one way of going upmarket. "It is important to flag off a different brand altogether, and not go with the value-oriented mother brand equity," cautions Shripad Nadkarni, founder director, MarketGate Consulting.

Here's how Tata Nano is doing it: realising the folly of positioning the product as a cheap car for entry-level buyers, it is now pushing the Nano as a second car for the family. Based on customer feedback, it has unveiled new features such as remote keyless entry, a four-speaker AmphiStream music system with Bluetooth, more cabin space etc. "We have recently started offering personalisation kits, which enable consumers to customise their Nanos," says Ankush Arora, senior VP, passenger vehicles (commercial), Tata Motors.

Besides launching new variants, Nano's retail experience is also undergoing a sea change, through technology-enabled dealerships and showrooms, where customers can use the video-walls for configuring cars on tablet PCs. While some of these showrooms have been rolled out in Delhi, Mumbai and Pune, the plan is to rollout 100 such signature showrooms all over the country. The Nano is also going all out on its advertising to the youth: it's 'Awesomeness' TV commercial hit 5 million views on YouTube within 30 days of release.

Many brands looking to improve the aspiration score through advertising have turned to celebrity endorsement and interactive social media campaigns. "Whatever be the route, ensure that the transformed product has perceptible selling distinction," advises brand consultant and author, Shombit Sengupta.

The other pieces of the puzzle

When it comes to a change in packaging, a common technique followed by premium brands, or high-end brand extensions, is offering products in unique shaped containers. "Curves are commonly used to highlight premiumness," says ISB's marketing professor Tanuka Ghoshal. Logos lose their angles, as do brand name typefaces as well as product containers - all softening their harsh edges and angles to take on more curvilinear avatars.

A distribution strategy overhaul is equally important: a line of clothing looking to enhance its premium image would rather be seen in a store like Shoppers Stop, or possibly have a dedicated counter in upper-end malls. "Take Gurgaon's value mall SRS, for instance," says Gaurav Gupta, senior director, Deloitte. "The pasta available there would be of a lesser price point than the same one available at Le Marche, a more premium store. So distribution depends on catchment really."

After all, there needs to be synergy between the brand image and the image of the store it is made available at. In some cases, limiting supply creates an impression of scarcity, and can enhance the premium perception of the brand.

"Another key way of making the transformation is to do it slowly," says brand consultant Anand Halve, co-founder, chlorophyll. "Metro Big Cinemas did it by improving its digital software, seats, introducing a food-court etc, while still maintaining its old charm."

Clearly, trying to migrate value brands into the lifestyle/premium bracket is a task fraught with challenges and would need considerable investment over a period of time. It also needs commitment of the senior management to accept this long-term vision, and accept short-term set-backs. "The top management has to stay committed for at least three-four years, which is the minimum time it takes to change positions," says Pranesh Misra, CMD, Brandscapes Worldwide.

Fine-tuning Skoda
Shombit Sengupta, brand consultant

Skoda is an extraordinary example of how a low-profile brand went on to mesmerise high-end customers. Skoda vehicles ruled the market in the Soviet satellite countries till the end of Communism. After the Czech Republic was formed in 1989, Skoda faced the full rigour of free market capitalism. Skoda cars were so basic and of perceivably poor quality that the brand was considered a 'joke' in Europe. After Volkswagen acquired Skoda, the top management acknowledged the problem. In 1991, Skoda implemented changes in design, HR, management training, production and marketing. It marketed Skoda in countries where the brand was not previously known in. Skoda personnel worked closely with the suppliers to help them improve their quality. The turnaround has been remarkable. Skoda topped the chart in the 'Driver Power' 2013 survey by the UK's Auto Express magazine, conducted among 46,000 car owners. Based on factors such as reliability, running costs and performance, Skoda Yeti was number one, Skoda Superb was in the second place and Octavia stood at sixth position.

AG Krishnamurthy
  Changing perception is a humongous task: AG Krishnamurthy
Expert take

Brands are built on two pillars: identity and continuity. Therefore, once strong perceptions are formed, it is a humongous task to change them. Mulberry, a British brand for bags, in its eagerness to go upmarket, began using more expensive leather and increased its production too. The price shot up. A bag that was sold earlier at £800 went up to £2000. Sales fell. This was surely not a desirable transition.

On the other hand, we have the Seiko watch example. Seiko was strongly associated with the Quartz revolution in the 1970s. Cheap imitation products had forced Seiko to do a double take. The brand launched an innovative new watch movement called 'The Spring Drive' and forayed into the high price segment. Seiko is a premium watch today.

There are other approaches too. Why not launch a new brand? Titan offers a range of watches from Rs 450 to Rs 2.65 lakh. It has several brands for different customer segments like the Nebula, which is its premium range. Mere quality and price upgradation cannot do the trick. The brand has to undergo changes at every brand touchpoint. Also, after all these changes, it has to cope with perceptions in consumer minds.

Moving upmarket is really like reinventing the brand, the way Vaseline did. It was a performance/delivery driven product. It offered a range of innovative, niche products for high order consumer needs. Along the way the brand transformed itself. Packaging, pricing, advertising, product quality, retail ambience and finally branding - the entire brand experience has changed and reached another level. This is an excellent case study of a brand moving upmarket.

AG Krishnamurthy
Chairman, AGK Brand Consulting

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First Published: Apr 14 2014 | 12:15 AM IST

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