Mad(e) in America!

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American brands are dying much faster than ever, notes Pawan Chabra of 4Ps B&M...

Tales concerning the likes of the Lehmans and Merrills have made their way into the history books by now. The world has already witnessed stock market indices in many developed and developing economies touching newer lows in the face of the global slowdown! But the point worth noting here is that it is mostly the heritage American brands facing the heat of the slowdown moment... and perhaps only the well-established American brands are bearing the brunt of the meltdown.

4Ps B&M recently discussed the plight of the falling American brands (cover story dated 26 September-9 October 2008, titled ‘Some iconic American brands are dead… many more in trouble.’), and it was no coincidence that Brand Finance, after releasing its 2008 Brand Value Annual report, re-released its report with the corrected (eroded) values of the Top 100 Global and Top 100 US brands. And this was appropriate, because post-January 2008, US economy has been the key victim, badly hit by commodity price rise, credit crunch, rising unemployment and tumbling share prices at the bourses all across the continent. As Jeff Kagan, Telecom industry expert asserts, “Once established American brands can stumble, they need to reinvent themselves.”

And if the words of Brand Finance is to be believed, the current economic downturn has wiped-off a cumulatively thundering $67 billion from the list of Top 100 global brands. And as per the latest report, the world’s number one retailer and Fortune 500 No.1 Walmart has climbed three spots up the ladder to capture the top spot in the new listing of global brands. “Walmart has remained true to its core and has a history of being creative which has given it success even in this downturn,” points out John Crossman, President, Crossman & Company. Interestingly, amongst the top ten brands, Walmart was the ‘only’ brand that was able to appreciate in brand value. “Companies like Lehman Brothers and Citi never had strong brands; they are commodity companies (in this case, the commodity is credit) who are highly vulnerable to unanticipated events,” said Brent Scarcliff, Creative Director, Scarcliff, Salvador Inc.

The picture is getting clearer by the day, of the reasons why these traditional brands are suffering the most: clearly, it’s the lack of innovation. Apart from Walmart’s logo change campaign in July this year, there was hardly any innovative initiative from other brands to help them increase respective brand values. The logo change exercise of Walmart surely helped its brand, even in the face of this downturn and severe criticism on the grounds of ethics and in-store experience.

Then, we have brands like GM, Ford, Microsoft, Yahoo! and others, who have always been known as the strong brands in US, but their lackadaisical attitude towards brand building efforts and value maintenance has given them a big beating in the economic slowdown. “I would argue that Microsoft has been resting on its laurels rather than creating a strong brand,” Scarcliff added. It’s not only Microsoft though. Even Yahoo!, once the best search engine hasn’t done anything spectacular in the recent past which therefore enabled Google to run past in value. And then we have the speculations surrounding the GM-Chrysler merger which makes their respective brands even weaker given the low-success rate of a merger between two loss-makers in the auto industry [read the story on page 48, titled ‘Christ(ler), the GM Saviour].

One thing is clear though – American brands are falling in brand value, and emerging brands from the Third World are fast rising to dethrone them, slowdown, or no slowdown!

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Africa is an interesting market

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Throw some light on Dabur’s business units in Africa?
Dabur had forayed into Nigeria in 2004 with the setting up of African Consumer Care Ltd. (AFCC) – a joint venture between Dabur International Ltd., which holds 90% stake in the venture, and Dabur UK. The company successfully launched its oral care brand Dabur Herbal Toothpaste in the market in December 2004, followed by Dabur Herbal Gel, Odomos Mosquito Repellent Cream and Medicated Soap in 2007. We also plan to enter into the Skin Care and the Home Care categories in future.

What feature of this market attracted you to invest?
The market offers huge potential. Nigeria is today one of the fastest growing overseas markets for Dabur, and we have already seen our business in Nigeria grow manifold in recent quarters.

What are your future plans as far as Africa is concerned?
Dabur has already set up a new manufacturing plant in Nigeria to make a range of toothpastes. This facility is being expanded to include a range of skin care products too. In addition, Dabur also has a facility in Egypt.

Is the time really ripe to enter the African market?
Africa is an interesting market and has a huge growth potential. This can be gauged by the fact that Dabur Egypt grew by a robust 49% in FY 2007-08, while sales in Nigeria more than doubled.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Corporate China and India Inc. have also jumped into the fray

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While China has till now adopted a largely heavy industries led investment approach in Africa, India’s approach is more entrepreneur and brand led. No doubt this once again pops up the debate of one’s superiority over the other. “One doesn’t have a choice in these matters. Certain business ecologies already exist in certain regions of the world and it is from that position of strength that entrepreneurs are able to venture into new markets and seek new partnerships or business opportunities,” Sood tells 4Ps B&M.

In as much, Africa is fast becoming the testing ground for India Inc.’s ‘brand’ battle with corporate China. According to the Emerging Economy Report by CKS, “Indian companies will have a far more prominent role in Africa’s economic development than China, even though China has been a far more aggressive investor into Africa over the past decade.” Certainly, Indian industry is itself a private sector driven industry and this is what drives the Indian economy. The private sector moves where it sees opportunity and this instinct is what gives Indian brands an upper hand. “Anyone who has lived in both India and China will agree that the Chinese have been far more successful at creating mass urban and cross-country infrastructure. On the other hand, just having quality infrastructure is not enough for Africa - the continent needs jobs, and that’s something Indian service sector companies can provide,” says Sood.

But there are many who reject the avowal. “I don’t think there is any question of a ‘brand war’. There are so many unexploited opportunities in Africa and believe me, both Indian and Chinese companies can co-exist,” avers Thatty of Bank of Baroda. But in reality, the Indian brand building prowess is fast becoming a major plus for Indian biz in Africa. Agrees Sood, “Indian corporate and consumer culture is almost a generation ahead of China in terms of understanding how to participate in branding relationships.”

Analysts shun comparisons, believing that the question should not be what is going to help India or China, but what is going to help develop African countries better and faster! But it is a fact that today comparatively speaking China has a far better investment record in Africa than India does. In fact, till a few years ago, Indian companies were not prepared to take risks in the low credit rating African markets. China scored better largely because of its state-led investment climate. But with their new found zeal Indian entrepreneurs may yet top that score card. What’s more, critics say that China is more restricted to the B2B model in Africa as the perception about Chinese products is comparatively lower than Made-in-India stuff. While the West has already encountered under-quality Chinese goods, it’s now Africans who talk of “zing zong” products - by which Zimbabweans mean products that ‘break easily’.

Which is not to say that India and China are going head to head around the world. In fact, it may never come to such a pass. But for now, India has an upper hand so far as front-end or consumer oriented businesses go, while China is strong in manufacturing and infrastructure development. If China’s over-arching presence in the oil and mineral rich northern Africa is a reality, then the fact that Indian brands are driving the more metropolitan regions of the continent crazy. Hope you’ve not forgotten the mom and her three kids in that Lilliput store in Cairo?

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
Now IIPM's World-Class Education... for everybody!!
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
IIPM’s 36th Glorious Year of Academic Excellence
4Ps Power Brand Awards 2007
When IIPM comes to education, never compromise
Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...