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?
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