AUGUST 18, 2002
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Durable Defiance
The Indian consumer market for durables has defied the direst predictions of market cassandras. Category after category, from CTVs to refrigerators, is showing buoyancy in an otherwise gloomy scenario. Is this a market trend-or just the result of some smart marketing by a few players? An investigation.


Question Of Reliability
Foreign tour operators are fed up with India, and are fast deleting 'India'-specific pages from their websites and brochures. Could this be happening? Well, passenger traffic is down, and could fall further. The reasons are many. Among them, what's seen as an uninviting stance of the Indian authorities.

More Net Specials
Business Today,  August 4, 2002
 
 
The Case Of Brand Envy
Should the commodity king turn into a brand player? P. Nedungadi of A.V. Birla Group and Arvind Singhal of KSA-Technopak debate.

For a moment, Mohan Ghanshyam Tarla couldn't even believe he was spending time on this. At 35, he was king of a commodity empire with sales of Rs 5 lakh every minute, and he was conscious of maximising the value of every second of thought.

It wasn't often that he allowed his linear time-schedule to be warped by an intrusion. "Where there's passion, there's money-c'mon, you know that, Mohan," K.K., a B-school batchmate, was telling him, having dropped by to 'catch up'. "And passion's all catharsis. Squeeze those tears out, for joy, anguish, whatever. Hit that 326th run, die for love... and the show's all yours."

"Brands don't do that," objected Tarla, who only got every tenth rupee from consumer brands, the rest of his turnover coming from cement, aluminium and the like.

"Maybe not," said K.K., who'd quit the corporate 'rat race' recently, "but brands are also about mass relationships. They keep millions hooked."

Tarla didn't bat an eyelid. The young inheritor was content with his first major 'brand play' with the acquisition of Shatranj Garments, a marketer of shirt brands with sharp personalities. As for other 'new economy' bets, he'd taken a stake in a software house. But even the turnover of these businesses was less than his profits from commodities.

Putting up huge capacities in basic economy-builders, after all, was the vision by which Tarla's grandfather had created the business group. His father had pursued even bigger economies-of-scale while making it clear that cost-efficiency was the group's operating principle. The competence? Mastery of production processes.

"For such a big group, your share of voice is rather pathetic"

Acquisition decisions occupied most of Tarla's time. These, plus restructuring decisions. Such as recasting the group's debt. Now, if overall demand conditions were to improve, Tarla was in a position to get a return-on-capital that his rivals would envy.

K.K. had barely begun speaking again, that Tarla's mobile phone buzzed. It was Srinivasan Reddy, coordinator, group strategy, with a highway construction update. "No, can't they accelerate?" asked Tarla, of his handset. "Logistics can't really be the problem-get to the other reason. We're geared for optimal cement production only if this supply deal is assured, and we can't afford any pile-ups, okay? Inventory targets will not be reset," he said, switching off. "It's never ending," he sighed, at K.K. "For half those clowns, good roads are an end in itself, something they think is needed to show off to the rich countries, not a means to get there. Take attitudes to broadband..."

The phone buzzed again. This time, it was Prakash Rastogi, the chief of the aluminium firm, with a word on the business' cost-revaluation report. "Oh," said Tarla, with an air of irritation, "But they said that could be managed... no, we can't wait that long. Without gas assurance we can't even begin the revamp. Nobody can be globally competitive if the local environment is going to remain self-defeating." K.K. watched, grinning. He had some idea of what the hitch was. Electrolysis to make aluminium was an energy-devouring process, and gas turbines were the cheapest power source, if natural gas could be piped to the location cheaply. But this wasn't easy, with populism reigning steady.

Tarla returned to K.K: "Resource scarcity. We've internalised it. And it won't go away so long as it's giving somebody a halo. 'Come hither all you needy people, my reserves are small but my heart is big.'"

"Need an 'upright shirt' to rid us of our national illusions?" quipped K.K, referring to Jack Inland, a mid-priced brand in Shatranj's portfolio. "Hah," Tarla smiled, "maybe we should all loosen up a bit, and rethink our priorities, Cherry Garcy style." A reference to the casualwear brand that had been instrumental in reforming Corporate India's attitudes to office decorum.

"I'm serious, Mohan," said K.K, glancing at a crowned portrait on the wall. "I know you've got Ashim as a group brand. Nice art work in the TV spot. And Tarla Cement's getting a premium. But don't you want to be a 'new economy' guy?"

"Listen K.K.," replied Tarla, "My chief strategist Reddy is on the mission already. We're buying intellectual assets. Even without this, we're not exactly pre-historic, you know. Commodities will always be needed, and we're also into e-this and e-that in our processes. Besides, I don't buy all this 'old' and 'new' bunk. Value delivery is value delivery, period."

"Yeah, value-but to how many consumers?"

"Numbers is not the issue. To the consumer, we stand for a consistent set of values in whatever we do. The lines between commodities, brands and services are getting blurred anyway, and people want Ashim and Tarla by name. That's pricing power, alright?"

"No, no, no," said K.K. "That's all fine. I'm saying you need to become big on the brand scene. You don't have a single consumer brand with a four-figure turnover. For media impact, a group your size should have the concentrated firepower of an ad budget of at least Rs 100 crore, on one single brand, which is 1 per cent of the Indian ad pie. Your rival group Wawa now has a car on the roads, and its brand score has shot up. The colas run a big part of the show, and HHL owns a tenth of the whole pie. Tarla's share of voice is rather pathetic."

"Raise adspend? Big deal, even our ad agency wants us to do that," Tarla responded, narrowing his eyebrows in mock suspicion.

"Any spend has to pay for itself. I'm saying restructure the group. Sell off some smokestacks and go brand shopping-make it 25 per cent of your turnover, and then go for at least one Rs 1,000-crore consumer brand with a Rs 100-crore budget."

Tarla paused, glancing at his watch. Minutes were ticking away, but maybe this meeting wasn't to be classified under 'friend indulgence', after all. The word 'impact' resounded in his head, as he spoke, "I think I see exactly what you're trying to say, K.K. It's just like you, from your guitaring days, the hydraulic engineer singing odes to relevance instead of reverence."

They both laughed, in recollection. "But brand-building and consumer engagement are specialised skills," argued Tarla, "which could take years to generate."

"I didn't come for a job," clarified K.K., "I just see Tarla bags of cement being lugged around by labourers-and I think, 'hey, these guys should hear your solution to the backward bending labour supply curve', remember that?" Laughter, again. "I mean," continued K.K., "you're into simplifying things. They'd be blown. But they're not thinking cement, they're thinking food. So why not sell them food? Anything. Just get through."

This was getting fun. But Tarla had a strategy meeting, so he walked K.K to the door, saying, "Maybe you're the only one who wants to hear my mind."

"Good," his friend replied, "I'm just an ordinary guy. Perfect sample. You've got me tuned in. Get the rest." And K.K. clicked the door behind him.

Should Tarla accept K.K.'s suggestions?

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