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Fight For The Challenger Role

Telco's recent displacement of Hyundai as the 'challenger' to Maruti Udyog is interesting. Here's why.

Tata's Indigo: Racing for No. 1

What's it about being the 'challenger' that so excites marketers? In that question is the answer to the question. The challenge.

That Maruti Udyog is way ahead in the race is not even worth mentioning. All the dust being kicked up by all the roaring, screeching, swerving and pedal-pumping is for the second spot. The numbers are still coming in, and it will take another quarter's sales to confirm this, but on current indications, Telco has narrowly edged past Hyundai on sales volumes in the Indian market for cars.

How it happened is well known. Maruti cruised along unchallenged for years and years. And then along came competition. Hyundai zipped off to an early success with Hyundai Santro. And even before you could bolt the door, by mid-1999, this small car with yuppie appeal and SUVish pretentions was a zoom-away success. It was a spiffy upgrade from the entry-level Maruti 800, even the Zen. Telco's small car, Indica, on the other hand, came a few months later as an 800-plus ('more car') - and then suffered adverse user feedback on account of small quality glitches. Hyundai, with a basic service network already in place and Santro volumes fast approaching 'economic' level, launched its mid-size sedan Accent - and found success as a family sedan that sold on sheer performance value and service promise.

But despite a longish pit-stop for an engine rehaul, Telco vroomed back onto the tarmac with its reengineered Indica, which was relaunched as the V2. Trouble-free at last, it didn't take a rocket scientist to predict a high trajectory for it, powered as it was by the brand's inherent 'Indianness'. And then, while Hyundai ventured into the minuscule luxury segment with Sonata, Telco did the obvious thing. It stretched the Indica to the sedan segment, and launched Indigo, competitively-priced. And the company did another interesting thing by way of consumer engagement (a switch of Hyundai's market approach). While the Indica made a purely product-centric proposition, the yuppie-ish Indigo plotted a markedly more creative route into consumer mindspace.

So net, net - yes, cars have become personality statements. At last. And after half a year of some spirited rubber-burning, Telco seems to have manoeuvred itself ahead of Hyundai - for the title of 'challenger'.

Maruti remains comfortably ahead, of course, but Telco has gained a psychological boost. If it can retain this position, be assured of a gripping season of car racing. Being challenger is a huge adrenaliser.

That's not all. The game is no longer Maruti versus Hyundai. It is Maruti versus Telco. This could change the dynamics of the competition. Change the race-track, so to speak. Note, for instance, that both these have strategic independence as domestic marketers; none of their brands are imported. The more important thing to watch is the nature of the strategic challenge Telco mounts - and how this comes to dominate Maruti's management mind as the rival to worry about.

Hyundai's challenge was driven not just by rapid volumes and service network efficiencies (classic Korean pluses), but also a high degree of empathy in engaging the consumer, be it on value-for-money considerations or the specific Indian experience (the 800 experience in particular). Hyundai was the quintessential good listener.

And Telco? The company has a different model of cost-containment, which spells a different sort of multi-segment price competitiveness. More interestingly, Telco's marketers see the Santro sort of empathy as a given, since this was Indica's starting point to begin with (even if conveyed rather less flamboyantly). This grants Telco the strategic freedom now to do two things. One, make brand-oriented propositions, to maximise the benefits of its 'indi'-idiom branding. And two, play the change agent, nudging the consumer's aspiration curve upwards, to gain a pragmatic new get-going edge. Telco is a good listener. But also an activator.

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