Developing cutting edge on brand strategies

Rohantha ATHUKORALA

In a recent visit to India, the hype surrounding IPL - fifth edition really amazed me. The advertising budget for IPL, which includes the team sponsorships is estimated to exceed thirty billion rupees which is colossal given that it is a brand that lives only for eight weeks.

Sri Lanka on the other hand has invested over a 56 billion rupees only in above line advertising in 2011. May be it could have been equally below the line front as some companies are not allowed to advertise as a policy. Which means the bombarding that a typical consumer of Sri Lanka must have exceeded a 100 billion rupees in the given financial year. TV advertising takes the lion share of this value with an investment of 40 billion, which is up by five billion from 2010, and gives us an idea of the medium of this communication.

Sometimes I wonder if the relationship of Share of Voice (SOV) to Share of Mind (SOM) and market share actually exists. I yet remember the famous words that was exposed by Lord Lever Hulme who said 'Half the advertising is wasted but which part is the question".

What he meant was, was it on the creative development side or was it in Media scheduling. Incidently, advertsing spent on press has declined in 2011 as against last year's value which is worth understanding.

Sri Lanka

Whilst Sri Lanka boomed in the last two years with a seven percent plus growth and the private sector making strong gains, today the country is in a catch 22 situation with the dollar depreciation by almost twenty percent and inflation picking up that can lead to a wage price spiral in the future if not managed.

From a marketing context this can lead to the penetration of brands going down and there by affecting not only the usership numbers but also the consumption levels in the future.

Which means that business in 2012 is going to be tough, unless moves in high growth sectors like tourism which is driven from external forces.

An interesting point to note is that credit to the private sector hit a record 515 billion in 2011, with the latest research done by the World Bank reporting that the biggest obstacle of doing business in Sri Lanka remains the access to finance. Which gives us an idea of the potential growth that Sri Lanka can generate by addressing this critical issue of finance.

What is more strange is that on this attribute of access to finance it is not confined to a specific region but it cuts across the country. Given the focused investment on programmes like Divi Neguma and the thrust on industrial estate development, its is time Sri Lanka corrects this issue of access to finance especially in the SME sector of Sri Lanka.

A point to keep in mind is that in the next three years the Indian housing programme will also require 49,000 owner driven recepients to find funding of around two hundred thousand each for the completion of a permanent home. This will add more pressure to the access to finance issue.

India today

India too is also experiencing a similar economic delema with the S& P down grading the country and consumer power pushing the legislator for relief given the global economic downturn. In this backdrop IPL edition 5 has hit the limelight even though it is yet called Pyjarma cricket. But to me, it's the only success story in the South Asian region where a new brand conquered the world stage and today it's valued at $4 billion dollars.

Even though the games have lost their leader Modi, as per the Economic Times of India last week the BCCI has estimated that IPL will bring in approximately $1.6 billion revenue in the next five to ten years which gives us an idea of the consumer power behind this brand. Let me try to capture some of the lessons from IPL in developing cutting edge brand marketing not only to the private sector but also the public sector and link it to the 2012 big spenders.

Cutting edge decisions

The concept of selling cricket stars for big money auctions can be termed shrewd but to my mind it was the cutting edge decision that changed the nature of the game. In the 1st edition I remember there was a lot of money in the offing but no one knew if this business of IPL will catch the world. The one man who saw the future was Laith Modi who was the Chief Commissioner of this brand. Today the business is worth $4 billion dollars. If I am to draw a parallel in Sri Lanka, I will pick the brand Harpic. It has clearly understood the needs of a urban consumer household and developed a range of products with impactful communication that has made it win for the 3rd time the most popular household product at the Peoples Awards of the Sri Lanka Institute of Marketing.

I guess from a macro end, a parallel could be what Ceylon Tea is up against in today's market. A particular brand that I do not want to mention started its business with a single origin platform on the theme 100% Ceylon Tea. Over time, reduced the component of Ceylon Tea and moved to a multi origin combination with cheaper imported teas and today has taken out the Ceylon Tea' proposition.

This is one of the reasons cited for the need for a Tea Hub in Sri Lanka. Whilst this concept is interesting it require careful planning given that there can be severe negative ramifications especially from a supply chain perspective given that our tea stock is ageing and the yields dropping. A point to note is that this situation of an aged tea stock is not only in the Corporate tea sector but also in the small holding sector which is alarming.

Move out of the safety net

Apparently the founder of the Modi empire Gujmal Modi, in 1932 had started the company with only Rs.400 in his pocket and had to let go the security of his parents and home. Today the company is within the largest conglomerates in India with joint ventures with some of the top company's like Philip Morris, Estee Lauder, Revlon, Rank Xerox and Walt Disney to name a few.

A parallel in Sri Lanka to me is Brandix that started business as an apparel company and now own a 1000 acre industrial estate in India and the latest the Aviation venture with John Keells.

From a macro perspective I would single out the sheet rubber latex branded as 'Lankaprene'. I strongly feel there is opportunity for Sri Lanka to brand its top end rubber as Lankaprene and there by target the surgical gloves industries in the United States. The distribution network is yet intact and what is required is commitment from a policy perspective given that the private sector already has set up a company and from a supply end is ready to go global.

Even though rubber is fetching high prices currently with Lankaprene we have the potential to get an extra premium of around thirty percent with a brand name.

Work closely with the Government

When the IPL season 2 ran into tough terrain due to the Indian Government wanting to give priority to election from a security allocation perspective Lalith Modi very clearly made it known to the world that he will co-operate and not get into a 'turf war' even though billions of rupees was at stake. This came from the upbringing from one of his mentors Sri Kumar Modi who personally used to work closely with the government of India and local state that resulted in the company having the space to venture out to industries like Silk Mills, Nylon and Polyester threading, tyre and tube manufacturing, Industrial leather to name a few that boarders on political power. The relevance to Sri Lanka is that organizations cannot work in isolation. It has to be closely threaded to the government policy. This might require the organizations of today to recruit a person who has a new skill set. If corporate Sri Lanka does not do that the growth can be stunted.

From a macro end we see the Tea Industry getting their act together and now the private sector together with the public sector has raised almost 10 million dollars and are poised to launch a global campaign on the Ceylon Tea proposition that will be the 1st to the Tea industry of Sri Lanka.

I guess Sri Lanka Tourism can do the same in the near future.

When Lalith Modi decided to commercialize the 20Twenty cricket by launching the IPL brand he believed that nothing was as powerful as an idea that the time had come. He passionately drove the idea when a few actually believed it.

Today this is a $311 million brand. I remember the day that it was announced that IPL could not be staged in India due to the Indian Election. Lalith Modi took the high ground and said "I am going to Export this product to another market". The event that was staged in South Africa was a master piece. It was an Indian-African mix that attracted the President of South Africa to be the Chief Guest at the final which tells us how hard this single idea was driven to.

I feel the implication to corporate Sri Lanka is that things will never be perfect but what is required is to grab the opportunities in the market place as it emerges. We can see how companies like Anchor when faced with spiraling cost structure due to the depreciating dollar whilst the brand remains under price control is taking on the position to drive penetration and brand switching from other brands than just resorting focusing on profitability. At least in the short term this is an interesting strategy that other players can pick up.

Heavy Weights behind you

Laith Modi got the best talent to back him. Be it Sharuk Khan or Priety Zinta Dhoni at 1.5 million dollars, the best young lifestyle TV presenters to be the voice for IPL even though he is no more in the seat on many corruption charges against him. Apparently the franchisees were told to focus on the 10-12 year olds as they will be the target consumers of tomorrow and they also have the power to influence the family. The brand will have a revenue turnover of over 1.6 billion dollars in the next ten years which is the strength of the demand pull.

The best parallel to me in Sri Lanka is Cargills that has revolutionized the shopping experience with its 'Food City' brand. It now has a set of farmers who are part of the extended community. May be the Cargills agricultural Bank will further innovate the banking industry of Sri Lanka.

From a macro I would like to focus on the Atchuchuvely Industrial Zone in Jaffna. The 1st post war industrial estate has been able to attract over a fifty industrialists some with BOI concessions that sure demonstrates that if the correct partners are got together some outstanding work can be done.

Performance over reputation

A key success factor at IPL was that big names did not count. All that matter was performance. In fact there were many instances where the top names of cricket were spectators. The winners were those with the right attitude with skill. Age was also not a barrier. Shane Warne proved it of being selected as the most valued player in season 1. In Sri Lanka, my pick from the corporate brands is Venivel Soap. The herbal brand took away the consumers of the powerful beauty soaps which indicates that a Sri Lankan consumer also picks brands that perform and not just on past reputation From a macro end I admire the performance of a brand like Sensal that has changed the market dynamics targeting the middle income segment of the market not on in the area of bread and savouries but also for lunch and dining. This has led to the attraction of global brands like BreadTalk into the Sri Lankan market. I guess the pressure is on, household brands like Perera and Sons that sure demonstrate that in todays world it is performance over reputation.

IPL is a case study of modern day marketing where guerilla techniques of business work. But more importantly it tells us that with focus even with a two-year toddler a $311 million brand can be built.

The government of India earned almost 16.2 million dollars as taxes and the BCCI is estimating a 1.6 billion dollar in the next ten years. This proves that brand value indicates the future moneys that can be earned by a company. Which I guess why one of bosses once told me "Brands are the life blood of an organization". Now the challenge is how we make Sri Lanka absorb these concepts from a macro end and there by stabilize the economy that currently under shock.

The author is an award winning business personality and sits on many public sector Policy Boards.

(The above thoughts are strictly his personal views.)