Time for regional brands

Time for regional brands
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First Published: Wed, Feb 25 2009. 10 33 PM IST
Updated: Wed, Feb 25 2009. 10 33 PM IST
The global downturn has claimed far too many victims. But one segment in India that may reap the benefits of this recessionary climate is regional brands.
It’s important to understand that for the average consumer a recession is not just a bunch of statistics or an inconsequential—though recurring—news headline. It is a very real phenomenon that forces him to rationalize consumption behaviour more than he would have during good times. It is when the average consumer is worried about his future income stream and is desperate to trim down his spending.
However, trimming spending happens to be the first thought that strikes every company executive worth his corner office as well. Then comes the proverbial inter-departmental memorandum entitled “Cut Costs”: And nothing takes the axe quite like the marketing and advertising budgets. The issue came up at last week’s “Frames” summit organized by the Federation of Indian Chambers of Commerce and Industry (Ficci) in Mumbai. Punitha Arumugam, chief executive of Madison, one of India’s largest media agencies, noted that while Indian advertising grew by overall 17% in 2008, the November-December period actually saw a drop of 20-30%. January 2009 saw another 30% dip. This means that there are probably several “Cut Costs” memos floating around.
Couple the two together—big brands trying to hold back expenditure on marketing and advertising, and a consumer trying to trim his spending—and what do you get? It’s not really catastrophe, because there are brands there to fill the vacuum. In a downturn, you find a lot of demand for regional brands. As national brands are forced to break their connect with consumers, the latter will turn to regional brands, which almost always offer better value for lower price.
But are the big national brands just going to sit back and watch? The obvious strategy for them would be to continue to focus on reinforcing brand values and maintaining the consumer connect. Yet, the fact remains that after a year of rising costs and declining profits, concepts such as brand equity and consumer connect begin sounding too abstract, especially when you have shareholders demanding answers. Reality bites.
I presume this sequence of events is not about to change anytime soon, which brings me back to the huge opportunity for regional brands. There is a chance for them to get a foothold in the consumer mind-space, slowly but surely nudging out the big national brands. This is their day in the sun: They should improve product quality, bring packaging up to speed and pump up distribution. Nothing will connect with consumers quite like “value” in this trying time and this is what the regional brands need to shout about. This is the plank most regional brands have always operated on; yet, somehow this voice gets lost in the loud intonations of the Shah Rukh Khans and the Sachin Tendulkars of the world under bigbudget brand endorsements.
This is the much-awaited breather for regional brands: They get a private space and a listening consumer. It is indeed a blessing, but the need of the hour is to act fast as this window of opportunity might not last long.
Amit Budhiraja is an international marketing executive based in Chennai. Comments are welcome at yourviews@livemint.com
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First Published: Wed, Feb 25 2009. 10 33 PM IST