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Brand building and innovation paramount amidst price wars

MUMBAI: For a couple of years now, consumers have been subjected to the ongoing price war between the detergent and shampoo brands of Hindustan Lever Limited (HLL) and Proctor & Gamble (P&G). Keeping these rigorous price wars in mind, the first day of the India Brand Summit held in Mumbai on 30 October saw a session on 'Role of brands in the wake of price wars.'

 

The session was chaired by Reliance Infocomm head marketing and branding Sanjay Behl and the panelists included Monginis Foods chairman Zoher Khorakiwala, UDV India Ltd director marketing Santosh Kanekar and The Times of India Group executive president Bhaskar Das.

 

 

Behl kicked off the session by naming various companies like HLL, P&G and Reliance, which had cut costs of their products and hence increased competition in the market. "HLL and P&G indulged in bloodied price wars of their products a couple of years back. Phone calls from Reliance were cheaper than post cards. And factor this; Philips is going to roll out a mobile handset, which will cost less than Rs 1000. The company has set a 2007 launch target but my guess is that it will be rolled out in the next six months," he said.

 

 

Posing a question as to whether price was the only real differentiator left for brands in the market and in the wake of this how do brands manage themselves; Behl opened the floor to the panelists.

Khorakiwala set the mood of the audience by saying that the world's oldest profession was prostitution wherein women provided the same services but the prices they charged were different based on the quality of their services. "That's how branding was born," he said.

Laying down the ground realities of what initiated the brand wars, Khorakiwala said, "Brand wars were created by owners, market forces, customer and technology. Generally it is a new entrant that creates these price wars to generate trails and thus poses a challenge to the leaders in the space. Another reason would be to expand the category and also to prevent a new entrant from succeeding."

He went on to say that in order for a product to survive in the wake of the price wars, brand building was paramount. "The higher the brand equity, the lower is the resistance to price. The brand has to create a value positioning statement and there has to be product differentiation. Your product has to stand for 'something' and not for 'everything' in the consumer's mind space. Finally, price as a sole positioning platform does not create a competitive advantage in the long run," he said.

DAs, on his behalf said that the concept of price wars was highly over estimated. Citing the example of Jumbo Vada Pav, which copied the McDonald model albeit a much cheaper one, DAs said, "There is a huge process that is involved in low cost operations. One has to keep the value proposition of the brand in mind and the same time figure out how to handle low costs. With all the choices that are today available in the market, the challenge for brands is to be strategically different and know your target audience. One has to apply fluid knowledge and not crystallised knowledge to stay ahead in the game because while price is transparent, value is opaque."

Bhel closed the session by saying that the changing paradigm of innovation was what was going to be the trigger for survival in the competitive market.

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