Business Standard

A slowdown hits home

Lessons, micro and macro, from a year's product launches

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Business Standard New Delhi
It is widely believed among marketing experts that 90 per cent of new products fail. The difference between one that survives the difficult initial period and one that does not is frequently the positioning of the brand's launch. This is one point that comes through very strongly in the results of this year's Brand Derby, an annual survey of brands launched over the past year conducted by this newspaper. The results of this year's survey were published earlier this week. One major take-away for marketers is that the first-mover advantage may not be the power that it once was. This year's top brand, the Duster from carmaker Renault, entered the automobile market just when SUVs (sport utility vehicles) as a category were becoming increasingly fashionable - but the first movers in the segment, especially the market leader, Scorpio, were beginning to look either jaded or overpriced. Similarly, this year's No 3 brand, Samsung's Galaxy, entered its category four years after HTC Advantage did - but just when "phablet" (phone plus tablet) was beginning to be seen less as a fancy term and more as a cross-over category. In both cases, the nature of the category was tweaked ever so slightly; the Duster, for example, is noticeably less "macho" than some of its SUV predecessors.
 

The list of successful brands, however, has an additional and bigger lesson - one about the current state of consumer India. A notable absentee from the list this year is the consumer durables category, a Rs 35,000 crore, MNC-dominated industry that sees a flurry of launches every year. In that sense, the year 2012 was bad; there were fewer launches and only one made it to the list (Samsung Smart TV at No 20). In addition, there were far fewer fast-moving consumer goods launches that were successful than would otherwise be expected. However, high-end tech launches did extremely well, as did those for cars at the upper end of the market.

What does this mean for India's economy in 2012-13, and going forward? It suggests that companies that have depended for their growth on the ability of India's middle-class consumers to lap up new and better products should not perhaps be as sanguine as they have been in the past. On the other hand, certain industries, especially those at the higher end of the spectrum and in "replaceable" categories like technology, appear insulated from the downturn. The India growth story itself, to the extent that it has been driven by demand conditions in the past few years especially from the middle and the bottom of the pyramid, is not robust. Nothing is more revealing about a growth downturn hitting home in India's aspirational classes than a decrease in interest in new launches in categories like consumer durables. Investors should take note: consumer-focused companies are still trading at high price-equity ratios in the markets. Perhaps assumptions about demand growth that some market participants are making should be re-examined. And the government, too, should take note: this is a clear sign of the lack of dynamism that the last few years of policy paralysis have induced in the Indian economy.

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First Published: May 30 2013 | 9:46 PM IST

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