Nikhil Bahadur | ‘India and China are still happening’

Nikhil Bahadur | ‘India and China are still happening’
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First Published: Tue, Mar 10 2009. 01 15 AM IST

Changing dynamics: Bahadur says organized retail is going through some ‘growing up’ problems in India but will do well in the long term. Harikrishna Katragadda / Mint; Location courtesy: Hotel Ambassa
Changing dynamics: Bahadur says organized retail is going through some ‘growing up’ problems in India but will do well in the long term. Harikrishna Katragadda / Mint; Location courtesy: Hotel Ambassa
Updated: Tue, Mar 10 2009. 10 52 AM IST
At a time when economies the world over are battling a deep downturn, Booz and Co. Inc., a US-based strategy consulting firm, is bullish about businesses in India. “Companies are saying ‘we won’t do any work in the US for now, but India and China are still happening’, so the focus has shifted to emerging markets—and that’s why we’re here,” says Nikhil Bahadur, principal of the firm who leads the company’s consumer, media and retail practice in India.
Changing dynamics: Bahadur says organized retail is going through some ‘growing up’ problems in India but will do well in the long term. Harikrishna Katragadda / Mint; Location courtesy: Hotel Ambassador
Booz has been here since January although the company, which serves sectors such as health care, automobiles, retail, oil and gas, power, information technology (IT), telecom and financial services, has been servicing the Indian operations of its global clients for decades.
Bahadur says there’s a need for strategy consulting now because there is no better time for companies to create a brand. In an interview, Bahadur identifies the current trends in the retail, consumer products and media sectors, and the opportunities India offers to revive old brands or launch new ones. Edited excerpts:
Booz has been servicing clients in India since the 1980s. So why did it take so long to set up shop here?
Till last year, the company was called Booz Allen Hamilton Inc., and apart from commercial clients we also had the US government business, which had some clauses that did not give us the freedom to be physically present here. When the two businesses separated last year, the legal entities became different and the first thing we did was come to India.
Have you got any Indian clients on board so far?
India is a major market for us because all our global clients have operations here… in all, we have some 70-80 major clients in consumer products, retail and media and 200 or so clients in other verticals that we have been servicing in India. So those operations will continue. But we are also beginning talks with local companies because they are only getting bigger and moreover, they are getting into the global markets. So the need for (a) global understanding of business operations is the highest now for India.
What are the trends that you see in India’s consumer products, retail and media industries?
The fast-moving consumer goods sector has seen phenomenal growth and will continue to grow but the drivers of this growth will change. Last year, we saw 10% price increases and size reductions in consumer products. But now there is a pressure on price (and) one cannot reduce it. So it will be the volume growth that will drive this sector. The focus will be on enhancing penetration. Also, trading down will take place, which means that a consumer may not buy less but she might switch to an inferior or less expensive brand.
Also, as the market matures, we will see competition increasing. Five-10 years ago, the Indian market was under-penetrated but now it’s all about winning market share. In media, for instance, it was all about TV ads and distribution till now, but we will (now) see big promotional activity for on-the-spot purchases. It will be about which brand is giving a good deal “today”.
Organized retail is going through some “growing up” problems in India but in the long term, it will do well. It has already changed the dynamics of retail completely for the country. Going forward, the days of the dominant brand will come down and it will give a lot of opportunity for new brands to come in to offer that good deal of the day.
Please explain brand vitality assessment, the methodology developed by Booz.
We have developed a set of methodologies to access how strong a brand really is. So we look at underinvested brands that have strong equity and awareness, one that brings “in my childhood” recall in a customer’s mind. But this doesn’t translate into sales because people behind the brand did not manage it well. So we go in and revive the brand using our methodology. So we do a brand vitality assessment where we first look at the core equity and see how translatable it is. Second, we do a funnel assessment where we determine if consumers buy the product on awareness or familiarity or desirability or loyalty.
Here we make an assessment on where the gaps are, how much more there is to invent and how much more to spend. Third, we do a competitive dynamics assessment where we analyse the space or the market for the product…is there an opening for it?
Can you give us an example of a revitalized brand which used this methodology?
Globally, the best example is Procter and Gamble Co.’s Old Spice fragrance. It was known as a manly fragrance till the 1990s and it was what Booz thought was underinvested. People recognized it as something their father used to use but today, it is more of a youth brand—they have made it contemporary and expanded category offerings.
Are you applying this methodology to any company here?
We cannot disclose any names yet, but there is tremendous opportunity here. A lot of Indian companies underinvest as there are a lot of old brands that have died (out) or got acquired. For MNCs (multinational corporations) that are already here, the challenge is that India is a very different market (compared to) mature markets. For Unilever Plc. too, their portfolio here does not have all of their top 10 most powerful brands. MNCs are not sure where to focus their investments. So we then come in to revive an existing brand or adapt this brand in a new market.
Are your existing clients bringing more brands to India?
Dialogues are on. India is garnering a lot of attention as companies are saying “we won’t do any work in the US for now, but India and China are still happening”, so the focus has shifted to emerging markets and that’s why we’re here.
Won’t companies wait for the economic slowdown to pass before they bring these brands here or invest in new ones?
There is no better time than recession to create a brand. Apple Inc. and AMD (Advanced Micro Devices, Inc.) were born out of recession. So prices come down for advertisers and the noise is comparatively much less... so for a brand looking to enter the space, it’s the perfect time to do so... and many are (doing so).
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First Published: Tue, Mar 10 2009. 01 15 AM IST