Thinking

Consumers seek ‘identity’ through brand choices

September 19, 2018
By Lulu Raghavan

The link between strong brands and shareholder returns has been very well established across numerous studies. The most recent data point is the BrandZ India Top 50 Portfolio which outperformed the Sensex between August 2014 and July 2018. Clearly, brand value is a critical driver of business performance and shareholder returns. But what drives brand value?

This year’s study provides at least one clear answer: premiumisation. In the BrandZ 2018 India ranking, the value of brands that scored high on Premium (110 and above) was 85% greater than that of brands that scored below 96 on this parameter. Brands including Maruti Suzuki, Amazon, Kotak Mahindra and Airtel have improved their ability to command a premium and therefore increase brand value. FMCG has probably seen the maximum amount of premiumisation with consumer durables not far behind. Service industries like e-commerce (Amazon Prime), hotels and airlines are also recognising the power of premium offerings.

 

 

How have these brands improved their price premiums? Being ‘meaningfully different’ is the key ingredient, which means brands need to meet consumer needs in ways that are relevant and distinctive. A nuance that applies in India: because so many brands are new, ‘difference’ for its own sake does not work. It works best when based on real and useful innovation. So, premiumising should bring some new meaning, substance and experience of the brand in a manner that connects back to its core.

Brands that scored in the top third in meaningful difference and innovation achieved a high brand premium score of 132; brands in the bottom third scored only average. In addition, brands that scored in the top third both in Meaningful Difference and Innovation were valued 80% higher than brands that scored in the bottom third.

The driver of all of this is the consumer and her changing attitudes, aspirations and notions of value. Well-traveled (or globally exposed via social media) and armed with increasing levels of disposable income and willingness to spend, Indian consumers (both urban and rural) are now more discerning. It is no longer just about cheapest price or pure functionality. In almost every industry, the premium category is growing faster than the overall industry rate. Consumers are seeking the absolute best quality at any price point. We are willing to pay for better aesthetics, technology, comfort, convenience; anything that adds value to our hectic lives. We are seeking an identity through brand choices which premium products give us. Consumers are always in an upgrade mode: a great opportunity for brands to tap into.

Indigo Airlines has been recognised to deliver a superior customer experience at an affordable price. It attracts even fairly price inelastic business travelers who value on-time performance. Indigo Airlines was so successful that when you were at check-in, you had to wait for a long time. This is where the brilliance of Fast Forward comes in. For just ?400, a traveler who is time crunched or impatient can skip the queues, during boarding and baggage pickup. Now the airline has upped the ante even further. Purchase an Indigo 6E Prime offer at ?700 and you get seat selection, snack (food and beverage) and Fast Forward. A great value-add that underscores the brand essence.

Parachute has been a beauty staple for generations. But when it launched Parachute Advansed Deep Conditioning Hot Oil which promises to penetrate three layers deep in just 20 minutes flat and to make hair 3x softer and smoother, I was totally sold. The packaging design aesthetics of this variant are superior to the regular Parachute and the bottle can take its pride of place on a modern beauty shelf. All upgraded benefits allow the brand to charge about 20% more while staying true to its brand promise.

These are just two of examples. Understand the consumer deeply and uncover her unmet needs. This will help you to develop meaningfully different products, services and experiences. This will lead to increase in brand value and growth for your business.

This article was originally published on brandequity.com

 

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