JULY 7, 2002
 Cover Story
 Editorial
 Features
 Trends
 Automotive
 Personal Finance
 Managing
 Case Game
 Back of the Book
 Columns
 Careers
 People

Nasscom Does Some Brain Racking
Slowdown or not, NASSCOM is still eyeing Indian software revenues of $77 billion by 2008. Just what will make it happen? To get a strategy together, it got some top minds to meet in Hyderabad at the India it and ITEs Strategy Summit 2002. A report on what came of it.


Q&A With Ashraf Dimitri
The CEO of Oasis Technology, a key provider of e-payments software, tries to win over converts to a new system.

More Net Specials
Business Today, June 23, 2002
 
 
The Case Of Brand Reinvention
A No. 3 confectionery company mulls a contemporary makeover to take on bigger rivals. S. Srikant of PriceWaterhouseCoopers India, Harish Bijoor of Zip Telecom, and R. Ravi of Godrej Appliances debate.

The silver-coloured, 2002 edition of Lexus GS 430 looked stunning on the eStore. A 4.3 litre, v8 engine that churned out a whopping 300 hp. But Suneet Singh knew he had to wait at least another year before he could even think of importing one. The 26-year-old had only two years ago graduated from Purdue University's business school and, last year, taken over as the CEO of the Rs 200-crore family-owned confectionery company, Safe Foods. His father and Chairman, Hari Singh, belonged to the old school that believed in austerity. While the family did own a couple of Mercs, Singh Sr. wasn't willing to indulge his son. He had been asked to show a 15 per cent jump in net profits ("no, gross won't do," the father had said sternly).

It was half-past eight Friday evening and he was expecting an e-mail from his market research firm, Insight. Sure enough, preliminary findings of the brand perception survey were waiting for him in the inbox. The survey had covered the six metros of Bangalore, Chennai, Delhi, Hyderabad, Kolkata, and Mumbai, besides 150 towns, and polled consumers between ages of 5 and 18. Now, Suneet had a chance to find out what his consumers actually thought of their flagship confectionery brand, Sneha.

The young CEO wasn't surprised by what the survey revealed. In the metros, awareness of Sneha was low, and in smaller cities, where 60 per cent of its sales came from, there was a shift happening to competitor brands. And that was not so much because of a shift in preference per se as because of Sneha's core consumer base growing old.

In the last one year, Suneet himself had sensed that all wasn't well with Sneha. He discovered that again and again whenever he met younger siblings of any of his friends. "It just isn't cool enough," they'd say.

For the past three months, he had been asking his father to let the 'unthinkable' happen: rebrand Sneha. Predictably, his suggestion had raised a furore among the old guard in the group (his father included). "Do you know this is the name that made us our fortune?" his father had asked rather emotionally. The sentiment part was easily explained. Sneha had actually been the name of Suneet's eldest sister who had died in infancy. Hari Singh at that time was a petty agent for a baker, who made the Sneha-like toffees and a bicycle-borne Singh distributed them in the city.

When the issueless baker died, Singh bought the bakery for a pittance. That's how Safe Foods and Sneha the brand were born 40 years ago. Thereafter, Safe Foods had a steady climb up. Singh believed the company's success was due to the blessings of his departed daughter. The brand name, therefore, had a lot of emotion attached to it. The research, then, was Suneet's way of gathering ammunition for another assault.

"First thing Monday morning, I am going to show the survey findings to dad," the hot-blooded CEO thought to himself, as he logged off his computer.

'Let's Reinvent'

Monday morning, Hari Singh came into work only half past eleven. By that time, Suneet had already shared the survey's findings with Marketing Director Upkar Chauhan, and General Manager (Sales) Neeraj Rao. Chauhan was Singh's first employee and had toiled with him to make Safe Foods what it was today. Still, Chauhan had no modern management concepts, and his sole objective was to push sales and profits year after year. And until recently, he had managed to do that exceedingly well. Rao was 34 years old and hired from a big FMCG company at the behest of Suneet.

The difference in reaction of the two men amused Suneet. Chauhan had looked at it and merely 'hummed'. "Have you shown this report to sa'ab?" Chauhan had asked. He still referred to his employer as sa'ab. Whereas Rao had immediately wanted some action, depending on the final survey report.

At quarter to one, the Chairman called for his CEO. "I believe you wanted to see me," the 66-year-old, who seemed at least 10 years younger, said, as soon as his son had taken a seat at his huge East Javanese teakwood table.

"Remember the brand perception survey we had commissioned? The preliminary findings are in."

"And what do they tell you?"

"That we are losing touch with our core consumers," said Suneet.

"That's rubbish," snapped the old man, pulling out a bar chart from the top drawer of his table. "Here, show me one year where our sales have declined." Indeed, in the last 15 years, Safe Foods had been only growing. "You can't achieve that kind of growth if your brand is not strong," the Chairman said, stuffing the chart back into the drawer triumphantly.

"But have you noticed how the sales growth is slowing?" the CEO asked. "The industry is growing by 15-20 per cent year-on-year, and this year we'll grow only at 10 per cent."

"Yes, but our base this year is Rs 200 crore," pointed out Singh Sr. "We don't even have the manufacturing capacity for that kind of growth."

"You know well enough that's not an issue at all," argued Suneet. "There are plenty of small-time confectioners who'll manufacture for us."

"May be...I want to know what my other senior executives feel. Also, I want Chibber's views too," the Chairman said.

"The only way we can do that is by getting them under one roof... but as soon as possible. The final report from Insight comes in next Monday. Can we have a meeting on the following Wednesday?"

"I don't leave for Kasauli until Friday next... so it's fine by me. Check with the others"

"Thanks. And, dad," the Chairman instinctively looked up, "let's reinvent the company." Before Singh Sr. could reply, the 26-year-old was out of the room.

'But It Ain't Broke'

On Wednesday, by five minutes to nine, all the executives-including Suneet, Chauhan, Rao, Mewaram Singh (Finance Director and Singh Sr.'s brother-in-law), Neeraj Chaturvedi (General Manager, Production) and Rajeev Chibber, Safe Foods' largest and oldest distributor, were gathered in the conference room. The Chairman walked in and stopped to embrace Chibber. It was obvious that Safe Foods was one big happy family.

The Chairman looked at his son as he began the meeting. "I am sure all of you know why you are here. The CEO, who is also my son and the heir to Safe Foods, wants to rename our flagship product, Sneha. He thinks the name does not quite go with the image the category has acquired over the years. I want you all to give your honest opinion."

Chauhan, as the Marketing Director, was the first to offer his take. "In the last 35 years that I have spent with sa'ab, I have only found the brand Sneha getting stronger. I say that not because of the pace at which we have grown, but because of many years of dealing with distributors and retailers."

"More important than that, Upkar," said the Chairman, "is the fact that even today none of our competitors has been able to make the kind of deposit candy that we do."

Suneet saw the discussion digressing and quickly brought it back on track. "I am not disputing any of that," he said. "My only contention is this: The next leap for Safe Foods cannot come from Sneha. It has to be a brand that conveys contemporariness to our consumers. We need slicker packaging and better advertising. Have you looked around lately to see what's been happening in the market," he said, looking at Chauhan. "Better still, here, take a look at this," and he spread an assortment of toffees and chocolates on the table. The people around the table picked up brands variously. "Tell me," Suneet continued, "what's the first thing that strikes you about the assortment here."

None of the older guys spoke for fear of giving the wrong answer. Rao looked at Suneet and said, "All of them have foreign names."

"Odd, but it's true," agreed Finance Director Shah.

"Bingo," Suneet said. "And what does that say about the consumers?"

Rao hazarded a guess again: "May be they only want to eat imported confectionery."

"If not imported, at least one that connotes foreign origin," said Suneet. "But that's an important shift in the consumer psyche. In the years to come, we can expect more western influence on our lifestyle. Just refer to your copy of the final survey report. You can see that Sneha's maximum awareness is in respondents between 16 and 18. That means in a few years time, our brand would have ceased to have any pull. It will be purely impulse driven."

"That's scary," quipped Rao.

"Aren't we overplaying the brand thing?" asked Chauhan. "Volume growth will never be a problem for Safe Foods."

"I agree with Upkar," said Chaturvedi, the production guy.

"Yes, but as a commodity, and eventually we'll become a contract manufacturer for a rival," said Suneet. "Only a brand will give us market power and financial muscle. A brand identity is supposed to be a unique set of associations that we want the brand to imply and promise our consumers... things like quality."

"If you think a new brand identity is so important to Safe Foods future, why don't we retain the Sneha name and create another brand," suggested Singh Sr.

"We could have if we were launching a new product," said Suneet. "But deposit candy is our only product, and we can't have different names for the same product. Besides, when we go national our media spend will increase, without becoming any more effective, if we have two brands."

"I think Suneet is right," said Chibber. "There is a huge shift in consumer behaviour, and a company like Safe Foods may not have systems that red flag such changes. I think we should rebrand Sneha while it is still in healthy shape."

"More importantly," added Suneet, "when we move into key metros, we will need a product that can compete with multinationals. On that will depend the success of all our future brand launches. I am not talking of just a change in brandname, but a complete reinvention."

Should Safe Foods agree to Suneet's proposal?

1 2

 

    HOME | EDITORIAL | COVER STORY | FEATURES | TRENDS | AUTOMOTIVE | PERSONAL FINANCE
MANAGING | CASE GAME | BOOKS | COLUMN | JOBS TODAY | PEOPLE


 
   

Partners: BESTEMPLOYERSINDIA

INDIA TODAY | INDIA TODAY PLUS | COMPUTERS TODAY | THE NEWSPAPER TODAY 
ARCHIVESTNT ASTROCARE TODAY | MUSIC TODAY | ART TODAY | SYNDICATIONS TODAY