India’s intense growth alters brand landscape
Building and sustaining value becomes more challenging
India has changed dramatically over the past five years since the inaugural BrandZ India study in 2014, which corresponded to the change in political leadership with the election of Narendra Modi a prime minister, and the acceleration of efforts to strengthen the Indian economy, increase opportunity, and distribute wealth more equitably.
The programs to advance these goals produced both progress and disruption. They included efforts to digitize India, diversify the rural economy, incentivize foreign investment, and broaden the formal economy to curtail corruption and increase the tax base to gain the revenue necessary to pay for the government’s reforms.
Understandably, the transition of a diverse country of 1.3 billion people of manifold cultures and languages has not been easy. But in many ways India is different five years later. In 2014, a total of 213 million Indians used the internet. In five years, that number has more than doubled. Internet use is increasing more rapidly in rural areas and changing peoples’ lives throughout the country. These changes have altered the brand landscape, increasing the access people have to brands and their ability to pay for them.
Five years ago, Amazon, new to India, announced plans to invest $2 billion in its Indian operation, enough to challenge India’s e-commerce leader, Flipkart. Five years ago, Walmart was knocking at the back door, aligned with a wholesaler but prevented from rapid expansion by protective regulations limiting the entrance of multi-brand retailers. It opened its India e-commerce business in 2014. Five years later, Walmart announced plans to buy a majority stake in Flipkart.
Five years ago, FMCG growth was strong and dominated by multinational brands. Today, signified by the Pantanjali phenomenon, local Indian brands are growing in quality and trustworthiness, and multinational brands are reacting with new products and communications that respond more closely to the Indian preferences.
These developments are indicative of the many changes and trends—rising wealth, the influence of young people, erosion of trust, growth of nationalism, empowerment of women—that are impacting Indian brands. This BrandZ analysis explains how these trends have influenced brand value growth, and it recommends the actions required in today’s India to build and sustain brand value.
1. Brand Equity
India Top 75 score high in equity
but future growth not assured
Brands that survived and thrived during the past five years—those that remained in the BrandZ India ranking or joined it—share in common a key factor—strong brand equity. These brands score high in the two BrandZ metrics that comprise brand equity: Brand Power and Brand Premium.
Brand Power measures a brand’s ability to predispose existing and new customers to buy more, and it correlates with market share. Brand Premium measures a brand’s ability to predispose existing and new customers to pay more, and it correlates with higher profit margins.
In Brand Power, brands that stayed in the ranking since 2014 scored 239; brands new to the ranking in 2018 scored 199; and brands that dropped from the ranking scored 129. The new brands scored somewhat lower than the brands that stayed because newcomers to a country ranking typically enter in the lower ranks.
In Brand Premium, brands that stayed in the ranking scored 121; brands new to the ranking in 2018 scored 114; and brands that dropped from the ranking scored 107. The lower scores in Premium compared with Power indicate the difficulty of commanding a premium, a challenge that is not specific to India.
An average score is 100, which means that even the dropout brands did well. But India has moved on. And the strengths that were sufficient for brand success in 2014 are no longer adequate today, raising the question: what brands will thrive in the future? The BrandZ Brand Potential metric provides answers.
Brands that stayed in the ranking since 2014 scored 111 in Potential; brands new to the ranking in 2018 scored 106; and brands that dropped from the ranking scored 100. These predictive scores show the greater strength of brands that stayed in or are new to the ranking; they indicate that strong equity today will help assure growth tomorrow. The somewhat lower scores, relative to Power and Premium, acknowledge the future’s inherent uncertainty.
Brand equity is key to financial success. Brands that are strong in Brand Power and Brand Premium today are also likely to score high in Brand Potential, signaling good prospects for future growth. Conversely, the weakest brands are likely to be superseded by brands with propositions that are more relevant to today’s consumers.
But scoring high does not guarantee success. Brand equity needs to be constantly refreshed by strengthening its three drivers: being Meaningful (Creating an affinity with consumers and meeting their needs); being Different (Being distinctive or trend setting); and being Salient (Coming to mind quickly at the time of purchase consideration). Brands that have stayed in the ranking since 2014 and those that joined in 2018, score high in all three drivers, while dropout brands score barely over average.
Both the stayed-in and new brands score highest in Saliency, which is important. But equally important is the need to be Meaningfully Different. Salience is less effective as a purchase driver when it is not rooted in Meaningful Difference. The challenge for brands is to be Meaningfully Different first, and then make those qualities Salient.
Stayed In brands score highest in Brand Power…
In Brand Power, brands that stayed in the ranking since 2014 scored 239; brands new to the ranking in 2018 scored 199; and brands that dropped from the ranking scored 129.
… Stayed In brands score highest in Brand Premium…
In Brand Premium, brands that stayed in the ranking scored 121; brands new to the ranking in 2018 scored 114; and brands that dropped from the ranking scored 107.
… And Stayed In brands score highest in Potential
Brands that stayed in the ranking since 2014 scored 111 in Potential; brands new to the ranking in 2018 scored 106; and brands that dropped from the ranking scored 100.
Stayed In brands also score highest in brand equity drivers
Brands that have stayed in the ranking since 2014 and those that joined in 2018, score high in all three drivers of brand equity, while dropout brands score barely over average.
2. Brand Value
in equity grow
faster in value
And strong brand equity helps
sustain future value growth
Brands with strong equity—high scores in Brand Power and Brand Premium—also grow faster in value. A comparison of the 2014 BrandZ India ranking with the 2018 ranking reveals that brands with low Brand Power scores rose 76 percent in value, while brands with high Brand Power scores increased 131 percent in value.
The five-year analysis divides the 2014 and 2018 rankings in half according to Brand Power scores. Then it compares the brands with the lowest Brand Power scores (bottom half) in the 2014 ranking with the brands with the lowest (bottom half) Brand Power scores in the 2018 ranking. The same comparison is done for the highest (top half) Brand Power scores in the 2014 and 2018 rankings.
Using the same methodology for Brand Premium, the brands that scored lowest increased only 56 percent in value, while the brands that scored highest increased 168 percent. The results for Brand Potential are similar: value increased 59 percent for brands that scored lowest in Brand Potential, and 160 percent in value for brands that score highest in Brand Potential.
The increase in brand value for brands with the highest Brand Power scores was almost double the increase in value for brands with the lowest Brand Power scores. In Brand Premium the brand value growth was three times greater for the highest-scoring brands compared with the lowest-scoring brands. The results indicate that brands with the strongest brand equity can justify a premium, which is an opportunity to drive growth. In addition, brands with high scores in Brand Potential are likely to increase value much faster.
High Power brands grew value twice as fast…
Brands with low Brand Power scores rose 76 percent in value over five years, while brands with high Brand Power scores increased 131 percent in value.
… Brands strong in Premium grew value three times faster…
The brands that scored lowest in Premium increased only 56 percent in value over five years, while the brands that scored highest increased 168 percent, three times faster.
… Brands strong in Potential also grew value three times faster
Value increased 59 percent for brands that scored lowest in Brand Potential, and 160 percent in value for brands that score highest in Brand Potential.
3. Meaningful | Different | Salient
Uniqueness of India
Ingredients of brand equity
sometimes behave differently
As the BrandZ five-year analysis shows: In rapidly-changing India, strong brand equity—high scores in Brand Power and Premium—are required to remain in the BrandZ India ranking. And strong brand equity correlates with faster brand value growth. These findings raise a vital question: What actions do brands need to take to strengthen brand equity?
The answer is straightforward, but the execution can be complicated. Brands need to cultivate the drivers of equity: Meaningfulness, Difference, and Salience. This formulation has been tested globally and works similarly across country markets. The formulation works in India, too, but the country’s distinctiveness produces some inconsistencies.
Meaningful A comparison of brands with the lowest Meaningful scores in 2014 and brands with the lowest Meaningful scores in 2018 revealed a 47 percent rise in value over that five-year period. In contrast, a comparison of brands with the highest Meaningful scores revealed a 149 percent increase in value between the 2014 and 2018. In other words, the most Meaningful brands grew value almost three times faster than the least Meaningful. This correlation between Meaningful and value growth is consistent across country markets.
Difference A comparison of brands with the lowest Different scores in 2014 and brands with the lowest Different scores in 2018 revealed a 225 percent rise in value over that five-year period. In contrast, a comparison of brands with the highest Different scores revealed a 53 percent increase in value between the 2014 and 2018. In other words, the most Different brands grew value much more slowly than the least Different. This finding reverses the usual positive correlation between Difference and value growth, which is consistent across country markets other than India.
Salience A comparison of brands with the lowest Salience scores in 2014 and brands with the lowest Salience scores in 2018 revealed a 103 percent rise in value over that five-year period. In contrast, a comparison of brands with the highest Salience scores revealed a 107 percent increase in value between the 2014 and 2018. In other words, the most Salient and the least Salient brands grew in value at about the same slow speed. This finding, that Saliency alone does not accelerate growth, is consistent across country markets, but it is exaggerated in India.
The importance of having Meaningful brands that meet the consumer’s needs and cultivate love is always important. But it is especially critical in India, a society where tradition remains strong and even young people attempt to fit traditions into modern life rather than abandon them. This need for brands to be Meaningful in part explains the sharp rise of Pantanjali and its ayervedic range of products.
In most countries, especially mature markets, Difference often signifies innovation and distinguishes brands from an overall sameness within their category. In India, experiencing a rush of foreign entries and local start-ups, Difference also can connote being relatively unknown and perhaps less trustworthy.
For marketers entering or expanding in India, it is important not to assume that brand building experience gained elsewhere can be applied without modification. The same ingredients of brand equity creation—Meaningful, Difference, and Salience—remain vital, but they need to accommodate the nuances of Indian society. Regarding Difference, for example:
Difference can be counterproductive in India if it is perceived to cut against the fabric of traditional Indian life and the comfort that comes from consistency. Brands in India need a good reason to be Different. They need to be especially useful or introduce relevant, life-improving innovation.
Difference also can be critical in India. Many of the brands that are lowest in Difference are in categories like banking and insurance. These high-value brands until now have dominated the BrandZ India ranking. But India—and the ranking—is changing, and brands that have succeeded without being Different are now vulnerable to newer brands that are Different with good reason.
These big brands need to work on building Difference, which is possible. And some have already succeeded. Not every financial brand is low on Difference. HDFC Bank, for example, is among the brands that score highest in Difference.
The slim gap between the value growth of brands with high or low Salience suggests that too many brands in India, as in other country markets, are not using Salience most effectively. Too many brands may be expecting scale to translate into Salience. BrandZ analysis indicates that brand value increases much more rapidly when brands first establish Meaningful Difference and then communicate their Meaningful Difference to build Salience, suggesting these takeaways:
Multinationals that have built brands in India over decades would benefit from building more Meaningful Difference into the brands, especially as local Indian brands rise in quality and are often perceived to be more relevant.
Marketers building new brands in India need to start with Meaningful Difference. And the Difference needs to be real and useful. Brands then need to make the Meaningful Difference more Salient.
It is not easy to build Meaning Difference. If fact, it is becoming more complicated, but also more essential. Until recently, the consumer market in India was mostly concentrated in urban pockets of relative wealth. But digitization and infrastructure improvement are spreading opportunity more evenly, adding new communities of consumers with unique cultures, preferences, and languages. This transformation requires brands to be Meaningfully Different in manifold ways.
As in most markets, being Meaningful drives value growth…
The most Meaningful brands increased 149 percent in value over five years, three times faster than the least meaningful.
… But in India, familiarity, rather than Difference, drives value…
In a reversal of the typical pattern, brands that scored highest in being seen as Different increased in value 53 percent over five years, while the least Different brands increased 255 percent.
… And saliency alone does not accelerate growth
The slim gap between the value growth of brands with high or low Salience suggests that too many brands in India, as in other country markets, are not using Salience most effectively, which requires first building Meaningful Difference.
4. Brand Health
depend on five
key vital signs
Purpose and communication
especially important in India
Meaningful Difference has important financial consequences, as evident when the 2018 BrandZ India Top 75 are divided into two halves—the most Meaningful Different and the least Meaningfully Different. The Most Meaningfully Different brands are worth a total of $131.8 billion, one-and-a-half times more than the least Meaningfully Different brands, which are worth $84.0 billion. This finding raises a critical question: How does a brand build Meaningful Difference? BrandZ answers the question with a diagnostic metric called vQ, which measures the five vital signs shared by healthy, strong, and valuable brands.
These five vital signs—Purpose, Innovation, Communication, Experience, and Love—work together, each building on the prior vital sign starting with Brand Purpose, which creates the impression of making people’s lives better. Brands that imbue Brand Purpose with Innovation are seen as leaders and disruptors. These qualities require Communication for consumers to understand them and consider the brand, which can lead to a positive Brand Experience. The outcome of this progression is Love, which helps sustain a brand’s connection with consumers as it cycles through normal periods of innovation and iteration.
Each of these vital signs is scored on an index where 100 is average. And the scores of the individual vital signs combine into a composite vQ score. The composite score of the 2018 BrandZ India Top 75 is 110, while India brands overall score 100, or just average. More important, the scoring reveals that almost half of the India Top 75 brands are Healthy and only 5 percent are Frail. In contrast, only 17 percent of brands in India overall are Healthy and over a third are frail. The takeaway is that brands in India have some work to do.
Healthy brands increase value much faster than Frail brands. A comparison of brands with the lowest Health scores in 2014 and brands with the lowest Health scores in 2018 revealed a 44 percent rise in value over that five-year period. In contrast, a comparison of brands with the highest Health scores revealed a 200 percent increase in value between the 2014 and 2018. In other words, the Healthy brands grew value five times faster than the Frail brands. This relationship is consistent across all of the five brand Vital Signs.
Purpose A comparison of brands with the lowest Purpose scores in 2014 and brands with the lowest Purpose scores in 2018 revealed a 90 percent rise in value over that five-year period. In contrast, a comparison of brands with the highest Purpose scores revealed a 120 percent increase in value between the 2014 and 2018. The perception that a brand makes the consumers’ life better improves the chances that consumers will purchase the brand.
Innovation A comparison of brands with the lowest Innovation scores in 2014 and brands with the lowest Innovation scores in 2018 revealed a 44 percent rise in value over that five-year period. In contrast, a comparison of brands with the highest Innovation scores revealed a 196 percent increase in value between the 2014 and 2018. The sharp distinction between the brands that are low in Innovation and those that are high reflects changes in India, and in the BrandZ India ranking, with more brands becoming strong in Innovation.
Communication A comparison of brands with the lowest Communication scores in 2014 and brands with the lowest Communication scores in 2018 revealed an 8 percent rise in value over that five-year period. In contrast, a comparison of brands with the highest Communication scores revealed a 249 percent increase in value between the 2014 and 2018. The wide gap indicates the enormous payback on investment in communication.
Brand Experience A comparison of brands with the lowest Brand Experience scores in 2014 and brands with the lowest Brand Experience scores in 2018 revealed a 39 percent rise in value over that five-year period. In contrast, a comparison of brands with the highest Brand Experience scores revealed a 202 percent increase in value between the 2014 and 2018. Brand Experience is important because it is the point where the consumer fully appreciates the brand and its benefits.
Love A comparison of brands with the lowest Love scores in 2014 and brands with the lowest Love scores in 2018 revealed a 91 percent rise in value over that five-year period. In contrast, a comparison of brands with the highest Love scores revealed a 116 percent increase in value between the 2014 and 2018. The narrow gap reflects how Love endures, and how brands that have cultivated the consumers’ Love over time continue to benefit from it.
Brand Purpose is especially important in India, where successful brands connect with the communal nature of the Indian people who increasingly expect brands to contribute to the growth of India and the nation’s efforts to expand economic equality. Purpose needs to be relevant and understood. Purpose poorly understood results in low Purpose scores.
Innovation drives a faster increase in brand value when it is perceived to provide the consumer with the most up-to-date, unique, and useful products. But innovation is not restricted to technical advances, it could be about packaging, services, or communication. Innovation should be unique to the brand and make consumers feel as if they are getting something special and genuinely different. Among the three factors that contribute to Innovation, creativity is the most important factor by far in India, where Difference just to be different can arouse distrust rather than approval.
In a rapidly changing market, where Indian brands are growing much faster than the foreign brands, communications—getting the word out—is massively important as a driver of brand value growth. The impact of Communication on the increase in brand value is consistent across the world and more pronounced in India. And today, communications effectiveness requires more than traditional advertising, although quality advertising remains an important part of the media mix. Communications also depends on reach—being in the relevant places, online and offline, to influence the right people at the best time. The payback can be enormous.
Brand Purpose plus Innovation plus Communication adds up to Brand Experience. And the accumulation of positive Brand Experience leads to trust. Positive Brand Experience is particularly important in India, where brand trust has eroded for several reasons, including rising skepticism, primarily among young people, but seeping into other parts of society.
Delivering a better online experience is the most critical of several factors that contribute to Brand Experience. The online experience offers an opportunity to meet the needs of a wider market. Standing for something unique can be difficult in a country like India, however, where so much is new and changing.
Ultimately, Love is the outcome. It is enduring, but it needs to be regularly refreshed with Innovation and Communication. This notion applies particularly to some of the multinationals in India that have cultivated consumer love over decades but now, faced with strong competition from local Indian brands, need to refresh that love.
For newer, local brands it is possible for love to happen on first sight. But do not count on it. Enduring Love for a brand happens after the progression of Purpose, Innovation, Communication, and Brand Experience. It is possible for both heritage and newer brands to gain consumer Love. The Top 10 in Love include both Maggie and Colgate, and Ola and Flipkart.
Building a brand in India requires understanding how the BrandZ brand vital signs behave universally and how they apply specifically in India. Purpose and Love are, respectively, the initiator and outcome of the process, and Innovation, Communications, and Brand Experience are the core of the process. These roles are consistent across all country markets, including India. However, these nuances apply:
Because India is changing rapidly, and because the country is so culturally and linguistically diverse, Communication—localized and culturally sensitive—is especially critical.
Innovation is important in all country markets but how to be seen as innovative is different in India. Unlike in some markets where consumers welcome disruption, Indians respond best to creative innovations that add genuine benefits and not just points of distinctiveness. Brands that attempt to simply shake things up will encounter some resistance in a traditional society like India.
Meaningfully Different brands are valued higher…
The most Meaningfully Different brands in the 2018 BrandZ India Top 75 average $131.8 billion in brand value compared with the least Meaningful Different, which average $84.0 billion in value.
Meaningful Difference follows from strong brand health…
Delivering Meaningful Difference depend on delivering strong Brand Purpose, Innovation, Communications, Experience, and love—the components of vQ, a BrandZ measurement of brand health. Over the past five years, the healthiest brands grew value 200 percent, while the least healthy grew in value only 44 percent.
… And the India Top 75 score high in vQ, a BrandZ measurement of brand health
The BrandZ 2018 India Top 75 score 110 in vQ while Indian brands overall score 100, only average. And almost half the Top 75 brands are healthy compared with only 17 percent of brands in India generally.