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Dying Differentiation

Discount upon discount upon discount. Whatever happened to brand differentiation?

By Shailesh Dobhal

Brands: Losing sheen

Call it what you will. A take-no-chances approach to the market, lazy marketing or simply die-hard old habits. Price-cuts and promotions, the textbook elixir of growth that Indian marketers rediscovered in the past two years, are here to stay.

Sure, the market has been tough. In 2001, growth either slowed down or went negative across almost all consumer product categories, be it televisions, refrigerators, audio systems, washing machines, apparel, foods or whatever.

Classic above-the-line advertising, some concluded, was not working. Even if it was, marketers were losing patience with the five-year-on gains (brand pull, enhanced loyalty and so on) that advertising promised. For an immediate boost to sales, what better than the bait of a price cut?

After all, goods must be made to move off shelves. In the just-in-time world of efficiency, and with product cycles shortening, nothing can be allowed to gather dust. If it doesn't sell now, it may never sell ever.

Take the 20 million units per annum, Rs 15,000-crore consumer electronics and appliances market, for instance. Even while the market has shown the first signs of revival, with January-September 2002 showing a growth of 8-10 per cent over the corresponding period last year, discount-happy marketers (as most, though not all, have become) seem reluctant to return to the classic old way of marketing their wares.

Godrej Appliances has upped its promotional spend on its range of refrigerators and washing machines this year by as much as 30 per cent. Sansui, Samsung, LG, Onida... they're doing similar things. "Actually, everybody is afraid of losing marketshare," says Rajeev Karwal, Senior Vice President (Consumer Electronics), Philips India. In such a scenario, price-cuts become a crutch that remains directly in the marketing department's hands. Any other sophisticated tool would require the service of other brains.

Oddly, even the categories that have traditionally resisted discounts -- for fear of eroding brand appeal -- are using price-offs. Example: the Rs 9,000-crore branded apparel market. Supposedly premium brands from such top-end players as Madura Garments, Zodiac, Raymond and Arvind Brands, are all busy disguising their price-offs as buy-two-get-one-free deals. The assumption seems to be: if everyone's doing it, nobody can lose brand sheen. Meanwhile, short-term sales targets must be met.

It's come to that.

Maybe the price cuts are helping stuff move off the shelves. But that still doesn't mean that value is being generated. In fact, many of these discounted brands might find it hard commanding their erstwhile premia, even once the market recovers -- at least according to brand purists who see premium-ness in virginity terms.

If the price-offs are actually expanding the market -- roping new customers in -- then perhaps one can argue that the entire market's value will take a leap once consumer sentiment recovers... but there is little evidence of this.

In all, what we are witnessing is large-scale brand commodification. Product differentiators seem to have got blunted over the 1990s. Meanwhile, 'innovations' seem to be having trouble going beyond the frivolous and the trivial (except in rare cases, such as Philips' wind-up radio).

Yet, differentiation is something that can be achieved in a multitude of ways. And marketers know it. It's a sad reflection of the thinkalike times, with everyone playing safe, that few marketers are summoning the courage the do what it takes. Differentiate their brands, that is, and go for value-creation instead of value-erosion.

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