PSU brands pave way for private brands

MUMBAI: It was almost 25 years back when all of us were familiar with HMT watches. They really ruled the market and even I remember in their slogan they called them as Time Keeper To The Nation.  And their advertising message said if you have the inclination we have the time.  And when they launched the quartz brand they said if we you have the inclination we have the exact time. Here they were emphasising the exactness to the correct time a quartz watch is supposed to deliver.

But in 1987 when the Tatas came to the market with Titan they came with lot of planning and a well thought out strategy to rewrite the watch industry which they ultimately did so. And within a matter of few years they dislodged HMT and just surged ahead by bringing in variety and innovation in all their marketing efforts. Be it distribution or product innovation they did it differently to only be the undisputed king in the watch business. From a watch brand they have moved into to a whole range of brand extensions and the latest being the launch of perfumes.

By the time we entered the 90s with liberal policies we saw several categories where private brands entered and started giving a tough time to the PSU brands. Let me recollect a few categories where private brands have made deep inroads.

Lubricants: This category was primarily dominated by the PSU brands due to their strong hold on distribution. As no private brands were allowed to sell their products through petrol stations. But that did not stop the private sector to push their products. Castrol was the first to aggressively market their product. Their strong communication strategy helped them gain good visibility to get into the consideration set. They used the bazaar trade for distributing their products and also cleverly opened outlets opposite petrol pumps to make easy availability of the product which gave the car owners one more choice apart from what the fuel station was stocking. They constantly kept innovating and improving their product offerings through strong R&D and became partners to many OEM automobile manufacturers. Today the private sector put together holds close to 40 per cent market share. We have several brands like Gulf, Elf and Tide water that also had their share in this market.

Insurance:  Life insurance was synonymous with LIC. In fact the lingo that was used is LIC kar leya… Also since this PSU brand had backing from the government, the credibility scores were very high which helped them to gain loyalty  as against the private brand. But today desk research say’s that LIC has only 50 per cent share and the combined private insurance brands control the balance 50 per cent. There are at least 10 brands which are fighting to get their pie in this highly competitive market which has lot of government norms that one has to adhere to. Most of these private brands have pumped in huge marketing spends to create awareness but besides that they also bought in the use of the online tool for people to buy polices, which is still lagging behind with the PSU brands. With the rapid penetration of internet and a younger population that will rule the Indian market these private sectors will have an upper hand to woo this new generation?

Airlines: The Indian skies were ruled by the Indian Airlines (Now Air-India). But over a period of time starting in the 90s we saw the downfall of the Indian Airlines as private operators flew in. There was a huge shift towards private airlines and the result being that Air-India only has 20 per cent market share according to published reports. In the airlines business service matters a lot and that’s where Air- India dipped very low to surrender their market; besides the constant staff and pilot issues have also eroded their equity over a period of time. And the continuous newness in the service and the competitive pricing by the private operators never allowed Air-India to regain their glory which they sat on for many years.

Telecom: BSNL and MTNL were the household names in the wired connection when it came to telephone. One had to wait for a long period of time to get a permanent connection. At one point of time having a telephone was a luxury but since the 90s with the advent of mobile connections it very soon became a necessity. While both the PSU brands are also present in the mobile space but I am unaware of their exact market share. Nearly 85 per cent market share is held by the private brands. Here again technology and aggressive marketing helped these private sector brands to hold the market with lot of ease as there is no fight or competition from the PSU brands.

While red- tapism and vested political interest has been by and large the deterrent for PSU brands to grow. We must also keep in mind that the mindset of Indian consumers have shifted and changed in the last few years. The new breed of Indian customers seeks value in whatever they buy and hence it is important for both the PSU brands and private brands to get their value proposition right. With internet within reach, the narrowing of buying decisions have become easier as with price comparison more product information is being provided by many aggregators. Unless there is huge overhauling done by PSU the story will not change and private brands will just keep on cashing them.

By Ganapathy Viswanathan, an independent communication consultant, in communication, branding and public relations.

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