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BrandZ™ Analysis of Market Dynamics

Resilience and Agility

Amid challenging circumstances, new forms of inventiveness and purpose

It’s too soon to talk about recovery. The traditional language of business cycles - of winners and losers, booms and busts, bears and bulls - don’t apply to the magnitude or uncertainty of the current moment. India took two full years to bounce back from the damage it incurred from the sidelines of the 2008 global financial crisis. COVID-19, by contrast, has struck at the heart of India’s metropolises, and touched off country-wide waves of mass migration and upheaval. All this, in a country that was already contending with trade tensions, political division, and persistent unemployment in the months before the pandemic hit. No wonder, then, that according to Kantar’s June 2020 COVID Barometer, urban Indians are more concerned about their current situation than the population of any major country surveyed.

And yet. Indians are, at their core, a hopeful people. And India is an optimistic society. That is why the theme for this year is not survival, nor subsistence, but Resilience. Resilience is about hunkering down, yes - but Resilience is also about using adversity to uncover new and transformational ways of thinking.

Indian brands, in particular, have the advantage of being more battle-tested than their global peers. They have faced uncertainty and upheaval before, in the form of events like demonetization (after which they quickly resumed their paths to growth). It’s true India didn’t yet have a robust e-commerce system in place when lockdown hit, as Chinese brands did. But India has built out a unified payments infrastructure over the past few years, which in 2020 has meant that brands could rapidly scale up their online shopping channels.

No amount of brand resilience would matter, of course, if Indian consumers weren’t themselves highly resilient. Indian’s resourcefulness and jugaad spirit may be something of a hoary cliché. But it’s one of those clichés that’s born out of deep, undeniable truth.

India’s daily wage earners have been especially vulnerable to the disruptions of 2020 - and are in dire need of more social security protections and health care assistance. But they have also touched the world with their determination to return homeward, and to aid their friends and loved ones. India’s middle and upper classes, meanwhile, have been diligent over the past decade in saving money for harder times - all in preparation for just such a moment as this one.

Indian brands, in short, could hardly ask for better partners to get through this period than Indian consumers. This is, therefore, a time for brands to be honest and vulnerable with their customers. They should lean into concepts like reciprocity, honesty, and mutual trust.

Resilient brands will discover new ways to cooperate - with consumers, and also with other brands. In doing so, brands can uncover surprising new channels for their offerings. (Think of the ways that, for example, food brand ITC has partnered with platforms like Swiggy and Zomato to get its products into homes, or that soap brands have united to promote proper hand washing.)

Of course, all of this is easier said than done. The road ahead is a hard one. Brands will need to change and innovate just for the privilege of breaking even in the years to come. Any business that doesn’t realize this… is due for a rude awakening.

But wait: What do change and innovation have to do with the steady work of Resilience?

More than you might think: Somewhat paradoxically, it turns out that the key to Resilience in these times is Agility. More than ever, Resilient brands need to be flexible - Agile - in the ways that they adapt, asses, and execute brand strategies.

If Resilience and Agility were ever truly opposites, they are no longer so today. Instead, they are two indispensable, complimentary drivers of brand value in this difficult economic climate.

One major facet of Agility is innovation. Not all brands will be able to roll out entire new product ranges in the middle of a pandemic. But they may be able to unlock intelligent “micro-innovations” in the realms of packaging, product bundling, inventory management, and last-mile delivery. Now is not the time for retrenchment: this is a moment that calls for flexibility, speed, and clear-eyed action.

But at the same time, Agility doesn’t only involve physical improvements and innovations. Consider, too, what might be described “Emotional Agility”: the ability for brands to pick up on shifting consumer moods and needs, and adjust their messaging accordingly. It seems clear that this pandemic’s effects will lift from Indian towns in unequal, uneven fashion - with huge shifts in consumer moods from week to week.

Will consumers be looking for a nostalgic escape into the past? A glimpse of a more hopeful future? A quick laugh? A helping hand? Brands will need to be able to monitor these attitudinal shifts and adjust their local communications accordingly - all in line with what consumers will need on a given day, and across a range of ever-changing occasions.

Similar kinds of emotional intelligence may well be needed to keep other forms of Agility in check. We have already seen examples in lockdown of Indian brands become too Agile: of moving too fast and loose in order to make a quick sale — and in the process, tipping over into the kind of mercenary opportunism that consumers abhor. Agility, then, is about more than just speed: It’s about a culture of intelligent adaptability.

There is also the risk that misapplied Agility could lead to wrong-headed corporate transformation. In the race to “disrupt” and “adapt,” brands easily can lose sight of their core purpose and value propositions. Agility should not be taken to mean “trying everything at all once, with no regard for brand reputation”.

That’s why the combination of “Agility and Resilience” is so important. An Agile and Resilient mindset is one that constantly ladders back to a brand’s true, essential reason for being - and protects that quintessence at all costs.

In sum, it is India’s Agile and Resilient brands that have the best shot at transcending mere survival in the years to come. As perilous as this moment is, strong brands will nevertheless have the opportunity to emerge on the other side… as somehow more themselves - and profitable - than ever before.

The Indian Consumer

United, yet diverse

In some ways, the events of 2020 have united Indians as one. The first half of this year was a time when everyone in this vast nation - urban and rural, North and South - was asked to come together and lessen the crisis by staying indoors. And there have been, indeed, real moments of commonality and solidary to be found: In the ways Indians have expressed pride in their country’s first responders and essential workers. In the ways that they’re learning how to commemorate big life moments within the confines of home. In the ways that a fragmenting culture has once again converged toward everyone watching the same old nostalgic TV shows to pass the time in lockdown.

Everyone has been thinking more about the importance of family and the fragility of life. Everyone has been worried about job security. Everyone has lamented the difficulties of raising kids in such uncertain times.

In some ways, too, this has been a good time for mass brands and mass advertising. It’s not always easy - or even desirable - to go broad in a country with so many diverse and demanding consumer segments. But 2020 campaigns like Lifebuoy’s message to “prevent the spread of COVID-19 by using any soap available” hit exactly the right broad notes for the times. Advertising is the perfect medium to spread important messages of health, hope, and hygiene to more than a billion anxious Indians.

Some aspects of consumer behavior have also converged in 2020. Suddenly, almost everyone - even citizens - become open to trying out online banking. (How else would they access their money?). Everyone has gained a newfound appreciation for the experience of shopping at their local neighborhood store. Demand for hygiene and health products have soared across all segments of society. And everyone has wanted to buy Parle-G biscuits.

Most of all, from a brand-building perspective: As shopping occasions decline in frequency and move online, consumers are increasingly sticking to their mental “shopping lists” versus making impulse purchases. As a result, the need for brands to be mentally available (Meaningful, Different, and Salient) has never been greater.  

 

It’s also true, that, even before the pandemic, there did exist a few commonalities that united all Indians. These include shoppers’ love for the “ultimate deal”, as well as their affinity for nostalgic triggers like cricket and Bollywood musicals.

But for marketers, these commonalities, while real, should hardly spell an end to segmentation and consumer insight. Even before the pandemic, the early months of 2020 - with their protests, legislative controversies, and social media firestorms - made it clear that Prime Minister Modi’s second term would not be a festival of unity. Serious divides have persisted in the Indian body politic - and by extension, its consumer base.

Precarity among India’s poorest

Lockdown has further exposed key economic fault lines in Indian society. The pandemic experience of an upper-middle class family in metropolitan India is that not the same as that of a daily wage laborer confined to a single windowless room. For many of India’s daily wage earners and rural citizens — about whom more will be said in the next section of this report — life in India was already an exercise in precarity. The pandemic has only made the situation worse.

The State of Kerala’s system for televised educational programming (and its TV-equipped Neighborhood Study Centers, for those who lacked viewing capabilities at home) is perhaps the most prominent example of a pandemic-era “campaign” geared toward Indians at this more precarious level of society. In metro areas, meanwhile, Uber’s call for donations to its Driver Fund represents a notable brand effort to address the lives of daily wage earners - albeit in the form of a campaign that’s directed toward upper- and middle-class viewers.

Discretion and trading down

While the wealthiest Indians may still have the funds to make major purchases, the channels and frequency with which they will do so have changed for the foreseeable future. Some gold and jewelry shopping has moved online - but not enough to forestall a significant decline in sales for those sectors. There may be a renewed focus on discretion, as people reevaluate the concept of “status” in light of what’s truly important. Think luxe materials, but in quieter packaging, with fewer logos and bling.

Meanwhile, India’s HENRI’s - “High Earners, Not Yet Rich” - will feel the squeeze as job cuts go forward. Though it will vary from category to category, expect some degree of “trading down” behavior. Consumers who once drank imported single malt whisky will trade down to blended Scotch. Those who drank imported Scotch blends will opt instead for local labels. And so on down the line.

A focus on home

For middle- and upper-class urban Indians, the experience of quarantine can best be summed up in one word: Home. In 2020, the home has evolved to be more than just a shelter. Increasingly, it’s also Indians’ primary workplace and entertainment center. Indians are streaming more movies, TV, music, and online videos from home than ever before - while also rushing to meet their latest “home office” deadlines. They are posting their latest DIY cooking triumphs on social media, while also scrolling longingly through online shopping sites and food delivery platforms.

At the height of the pandemic, home became a sanitary oasis - so long as it was kept carefully scrubbed and sanitized. But home has also become also a site of mental stress, as people struggle to complete chores and regain equilibrium amid so much family togetherness. Not surprisingly - and especially after households have become separated from their domestic help - interest in time-saving home appliances like roti makers, vacuum cleaners, flour mixers, and air flyers has grown in 2020.

Brands have responded to these shifts in home life by retooling their consumer offerings. For brands like Coca-Cola and Lay’s, which once did significant business in on-the-go retail, this has meant a shift toward winning a place on families’ grocery lists and offering large format innovations geared toward family consumption.

Marketing, too, has shifted to focus even more closely on home occasions and scenarios. At its best, marketing content itself has served to improve people’s at-home lockdown experiences. Advertising can offer consumers practical advice on how to tackle new family challenges, as with Milo India’s #MiloHomeground program of indoor workouts for parents and kids. And it can also play with bringing new types of events into the home sphere, as with the “at-home red carpet celebration” thrown by Hotstar for the launch of Disney+. Both the Milo and Disney+ campaigns made significant use of prominent influencers - but in a less polished, more down-to-earth way. This is another trend for 2020, one with implications for industries ranging from home cooking to Personal Care: Perfection is out, while comfort and “realness” are in.

In some households, men and women have begun sharing labor more equally. This, too, has been a focus of some recent ad campaigns. But there’s also, indisputably, more labor to go around — and less privacy to retreat into once the work is done. So, households today are hardly feminist utopias. Even though a family’s primary homemaker may now be receiving more help around the house from her spouse and children, she has also lost out on the “me time” she used to enjoy when the rest of their family was at home and school.

For brands, then, home today represents a site of great upheaval - but also an opportunity - across a variety of categories. From appliances to healthcare, beauty to beverages, entertainment to e-commerce, home is surely where the heart is. It’s also, not incidentally, where the profits lie as well.

Small Town and Rural India

A population whose time has come

When historians look back on this period from 20 or 40 years down the line, one of the biggest legacies of 2020 may well be the rise of “Bharat” India. India has long population of more than 100 million rural migrant workers to function economically — but until now, this was a fact that was easy to overlook and take for granted. (Indeed, a lack of data on the exact size of this migrant workforce has long gone hand-in-hand with a lack of social programs geared at helping this population.)

In the wake of a difficult, disruptive, heart-wrenching period of reverse migration, their needs of India’s rural workers can no longer go ignored. As an executive at a BrandZ™ Top 75 company recently told LiveMint:

The biggest learning during the lockdown was that we do not pay attention to migrant laborers. The execution of our projects depends on migrant laborers, and it is stalled now. So, we are working with our contractors to understand how we can make things better for them. First, we are thinking of how to bring them back. Since the situation in Delhi is still not conducive, it’s a challenge. Second, once they are back, we need to provide better facilities. We are also working on providing them with shelter, putting them up in one location, and educating them on how to work while maintaining social distancing, and with personal protective gear on.

Bringing this workforce back to metro India will be easier said than done. Bharat India’s ranks include a number of skilled laborers - welders, fitters, fabricators - who may choose to apply their talents closer to home. So-called “unskilled” returnees, too, may prove anything but. Among them are budding entrepreneurs of all stripes, who may realize that their old hometowns have become sites of economic opportunity (thanks in no small part to the remittances these migrants had been faithfully sending home). Existing business people in these rural areas - and there are many - will find new opportunities in providing the types of housing, products, and amenities that these new returnees became used to while living in urban areas.

Even setting this new influx of migrants aside, demographic data suggests that residents of the country’s thousands of small urban towns - and tens of thousands of developed rural towns - are on the economic upswing. Indeed, economists expect that they will attain similar incomes to their striving big city counterparts over the course of the next decade or two. Brands looking to uncover pockets of growth potential in the difficult years to come cannot afford to overlook these markets.

Patterns of rural spending

Even after the shocks of early 2020, the hope for rural India is that the rest of the year will see renewed spending behavior. It helps that 2020 is on track to have a normal monsoon season - and that urban areas have tended to be harder-hit than rural zones by COVID-19.

According to KANTAR Worldpanel data, rural FMCG volume growth in the first half of 2020 continued to grow above the previous year’s levels - with an especially strong bounce-back recorded May.

Average monthly household spending in rural areas also increased in the first half of 2020, with hygiene-related products proving especially popular in the Home Care and Personal Care categories.

According to KANTAR Worldpanel analysis, growth in rural household spending could outpace urban spending growth as early as Q3 2020. While manufacturing has largely ground to a halt countrywide, rural farming activities have largely continued as normal. The expectation, then, is that many of the migrants who’ve returned to rural India this year will find farming jobs before plotting their next moves.  

What’s more, even at the height of lockdown, rural Indians have retained an expansive mindset in their shopping behaviors - with most households actually increasing their number of product categories purchased. Meanwhile, Urban India saw varying levels of retrenchment in categories purchased.

National brands have taken notice of these trends by making it easier for rural consumers to sample new products - as seen, for instance, ITC’s launch of a 50 paise sanitizer geared toward the rural market.

Brands have also invested wisely in rural-focused celebrity and influencer marketing. Even more so than their urban counterparts, Indians feel proud when people from their home regions “make it” to become celebrities in the real-world and social media realms (by winning a spot on an IPL team, say, or placing well on Indian Idol).  

By and large, brand strategies for courting rural customers have paid off. From February 2019 to February 2020, sales volumes for national FMCG brands grew by 10 percent year-on-year in rural areas - as compared to a sales volume growth rate of only 6 percent for urban areas.

Forget the clichés about small town and village India. This is a population whose time has come.

Local and Global Brands

According to Kantar’s COVID Barometer - India, two-thirds of people surveyed in early June agreed that it was “important to buy local/Indian brands” - and more than 60 percent agreed that “shopping at local stores is important”. Certainly, the experience of lockdown has rooted modern Indians more firmly to their neighborhoods, cities, states, and country. The experience hasn’t all been positive - lurid, possibly overblown stories abound of Resident Welfare Associations gone rogue in metro India - but on the whole, Indians feel increasingly invested in their country and their hometowns.

Businesses are taking the local view, too, optimizing their delivery networks to emphasize hyper-local, block-by-block distribution networks and efficiencies. The Swiggy Genie courier service, which launched in April, is a prime example of such an optimization.

Going forward, brands of all stripes would do well to emphasize their ties to Indian communities: from the roles their products play in Indian household rituals, to the ways that their supply chains support community development and empowerment. Brands that were founded in India will understandably have a leg up in this regard.

But interestingly, “Indianness” can also encompass brands that may have more global codes in their DNA - so long as they have also demonstrated a lasting impact on Indian society. As part of a 2020 survey of Indian consumers, KANTAR Worldpanel found that 61 percent of people considered Pond’s to be a “local” brand, while 43 percent saw Maggi as a “local” brand. And in a very real sense - who’s to say they aren’t?

Brands like Ponds and Maggi have long run advertising that’s emphasized their ties to the social fabric of India - as have as Colgate, Horlick’s, and many other leading entrants in the BrandZ™ India Top 75. This should help them immensely in an India that’s increasingly “Vocal for Local.”

PepsiCo’s snack division is another case study in how a brand with global codes can adapt to “local-first” tastes and sentiments. In 1999, the company launched its Kurkure sub-brand of corn puffs, which it manufactures locally alongside global brands like Lay’s (which in turn has incorporated more chili-forward flavor profiles in its Indian range of crisps). This year, PepsiCo and Lay’s have further emphasized their local ties with a campaign called “#Heartwork” that celebrates the company’s hardworking workforce and robust Indian supply chain. PepsiCo has also emphasized “localness” on the distribution side, by partnering with Dunzo to ensure easy last-mile delivery for brands like Lay’s, Kurkure, Doritos and Quaker.

Purpose and Innovation

Two keys to continued growth

As discussed earlier in this report, Indian companies will need to exhibit both Resilience and Agility to flourish in the difficult years ahead. In BrandZ™ terms, this means that brands will need to pay special attention to how well they communicate - and embody - the attributes of Purpose and Innovation.

First, a refresher. Brands with a strong sense of purpose are perceived as making people’s lives better. Brands with a strong claim to Innovation, meanwhile, are perceived as leaders and change agents in their sector.

Purpose and Innovation represent two of the five “vital signs”—Purpose, Innovation, Communication, Experience, and Love—that work together to build Meaningful Difference in the proprietary BrandZ™ metric of brand health called vQ. When Brands want to understand how they can improve or protect their Meaningful Difference, they should first look at their vQ indicators.

Even at the start of 2020 - before the pandemic, but after several key economic indicators had pointed toward the possibility of an Indian recession - the importance of brand Purpose and Innovation were clear in the BrandZ™ data.

In this year’s BrandZ™ 2020 rankings, the 15 Most Purposeful brands rose 11 percent in value relative their performance in 2019 - while the 15 least Purposeful brands fell in value by 15 percent. (All in a year where the total value of the Top 75 fell by 6 percent.)

Innovation - and specifically, the perceived lack of Innovation - played an even stronger role in brands’ valuations in 2020. The 15 brands with the lowest scores for perceived Innovation fell by a combined 54 percent from their 2019 valuations - as compared to a decline of 10 percent for the most innovative brands.

Levelling up to higher Purpose

At the most basic level, “Resilience and Agility” means transforming to meet new challenges - but always, always doing so in a way that enhances a brand’s core values. Those core values are intimately tied to a brand’s Purpose.

In BrandZ™ terms, Purpose involves more than just Corporate Social Responsibility. (Although India is unique for the ways that conglomerate foundations like Tata Trust can provide a “Purpose halo” for an entire family of affiliated sub-brands.) When properly nurtured and expressed, Purpose flows beyond charitable activities to nourish a brand’s entire ecosystem - from the brand’s product design and offerings, to its mission statement, to its marketing and brand assets. Purpose is the unique “Why” that each brand possesses. It is ways in which a brand exists to make its customers’ lives better.

In the times ahead, the importance of Purpose should only grow. People will remember and reward those brands that helped them in difficult times - just as they punish those seen as particularly un-Purposeful, mercenary, or exploitative.

At the same time, in a pandemic era when seemingly every brand has claimed to be “here to help,” standing out in consumer’s minds as truly Purposeful may well become harder. It’s well and good, for instance, that so many outfits have pivoted to making hand sanitizer or masks. But only a few hygiene- and fashion-related brands will be able to connect these activities to their existing commercial activities in a way that enhances their brand’s overall perceptions of Purpose.

The most successful brands find ways to “walk the talk” on Purpose in a natural, authentic manner. To do so, they will not need to reinvent the wheel, or risk sounding holier than thou.

Brand managers at a loss for how to focus on Purpose should strip away all the rhetoric, and think of ways that their brand can simply a little weight off of consumer’s backs.

Maybe Purpose that means offering the consumer a new kind of a good deal, or showing them that you trust them enough to extend a little extra financial credit. This is what many auto and motorbike companies have done at a time when demand for personal transportation is high, but the ability to pay is somewhat constrained.

Maybe Purpose involves saving consumers a little extra time in the daily ritual your brand touches - while keeping families safer, to boot. Think of the ways home appliance companies like Dyson and Crompton have refocused their messaging to emphasize both safety and convenience.

Maybe Purpose involves saving people from undue mental exertion - by, for instance, implementing new kinds of safety protocols, so the customers don’t have to improvise their own at-home sanitation schemes whenever they want a product delivered. In the early months of the pandemic, Domino’s moved quickly and aggressively to roll out its “Zero Contact Delivery System” at a time when consumers were still figuring out how to best keep themselves safe. Domino’s also built on its reputation in the delivery space to offer customers a variety of new grocery staples - thus expanding the Domino’s offer in a way that felt reasonable, non-opportunistic, and altogether in line with the brand’s purpose of providing the most reliable food delivery in India.

These are the kinds of concrete, action-oriented manifestations of brand Purpose that brands will need to deliver in the months and years ahead. At the core, they are about communicating to consumers: “We understand what you’re going through — and here’s how we’re going to help.”

Innovation across all areas

Especially in these times, “Innovation” needs to be understood as involving more than large-scale research and manufacturing breakthroughs. Some companies with local manufacturing networks have been able to design and debut new product categories - the Veggie Cleaner launched by Marico in April comes to mind, as do new “Immune-boosting” ranges launched by a variety of local food and beverage companies. But such pivots are by no means a requirement for brands seeking to boost their Innovation scores amid these strange times.

For most companies, “Innovation” in 2020 will mean finding agile new ways to package, deliver, advertise, and recommend products on an everyday scale.

Innovation can involve new types of communication, as in the case of L’Oréal and their network of in-store beauty consultants. In recent months, these brand ambassadors have shifted their focus away from physical retail, and toward serving as online micro-influencers who can “go live” with their smartphones to demonstrate L’Oréal’s latest products and techniques. What began as a lockdown concession has become a new L’Oréal brand channel for social commerce.

Innovation in these times can mean new forms of distribution, as in the case of HDFC’s fleet of mobile ATM vans. This was a surprisingly nimble and local-scale offering from India’s largest bank, but one that’s wholly in line with the brand’s purpose of serving all Indians.

Innovation can also mean new standards of service, as in the case of HP’s lockdown-era campaign to offer tech support to anyone who owns a laptop - regardless of the brand they own. Ford India, for its part, scaled up its “Dial-a-Ford” program once the pandemic hit: this involved bring cars to consumers’ front doors for test drives, as well as door-to-door servicing for car repairs and maintenance.

In the FMCG realm, Innovation can mean new types of product bundles, brand tie-ups, and packaging formats - the better to capture, for instance, the shift from individual occasions to family consumption. In the finance and retail categories, it could involve new forms of insurance, credit, rewards and discounts.

In sum, events of 2020 have not constrained the possibilities for Indian innovation. They remain endless - and vitally important for brands of all stripes.