Expanded India ranking, with more categories, reflects brand landscape
Technology brands contribute most new value
The expansion of the 2018 BrandZ™ India report from 50 to 75 brands intentionally alters the category composition of the ranking to better reflect the Indian market, as it is today compared with five years ago when the ranking launched, in 2014.
Financial services—banks and insurance brands—dominated that first ranking, comprising 37 percent of its value. The other categories, in order of value, were telecoms; automobiles; food, beverages, and dairy; personal care and home care; paints; alcohol; and automobile aftermarket.
In the 2018 ranking, banks and insurance brands still contribute a major share of value, 35 percent. The proportion of value contributed by various other categories changed, however, with the addition of these categories: technology (IT services), technology (online); durables and home appliances, tobacco, and entertainment (TV stations).
These new categories contribute around about a quarter of the ranking’s value. But that quarter is probably the fastest-growing part of the ranking because 58 percent of this new value comes from technology-related brands, including unicorns like the e-commerce retailer Paytm, and B2B brands like Tata Consultancy Services.
Over the past five years, the average brand value of the ranking’s original categories grew at a compounded annual growth rate (CAGR) of 22 percent. Reflecting the dynamics of the rapidly changing Indian market, some categories, led by banks and insurance brands, exceeded this pace, and some lagged behind.
Along with financial institutions, FMCG categories also grew faster than categories overall, with food and dairy rising 24 percent, and personal care and home care up 23 percent. The automobile, alcohol, automobile aftermarket, and telecoms categories grew slower than the overall CAGR, with telecoms growing at the slowest rate, 4 percent.
India’s economic expansion drove the rapid growth of financial services, as consumer disposable income increased, new private banks opened, and government programs attempted to increase wealth and expand banking to more Indians. In both urban and rural areas, consumers bought insurance to protect their increasing assets or as an investment.
The Patanjali brand, and its missionary message around ayurvedic products, explains much of the FMCG growth, both because of Patanjali’s own success and the reaction of multinational brands, which increased innovation and introduced new ayurvedic brands. Multinationals also revived and repositioned some of their existing brands.
Growth of FMCG categories slowed but quickly recovered after demonetization, in November 2016, when the government removed certain currency from the market to reduce the use of cash and accelerate the transition to digital monetary transactions.
The telecoms category average brand value growth slowed as the number of Indians who access the internet with a mobile device continued to rise rapidly, reaching an estimated 478 million in June 2018, according to Kantar IMRB and the Internet and Mobile Association of India. The burgeoning opportunity attracted more competition, driving down prices and precipitating category consolidation.
Because the rate of value growth varied widely by category, the questions become: What can brands learn about value growth from past experience, and what actions should brands take to maximize the pace of future growth? The BrandZ™ analysis of the FMCG brands, compared with brands in other categories, reveals useful findings.
Maximum value growth depends on strong brand equity, which is derived from three BrandZ™ ingredients: being Meaningful (creating affinity with consumers in relevant and distinctive ways); being Different (being distinguished from the competition, even trendsetting); and being Salient (coming to mind easily when the consumer is considering the category).
Both FMCG brands and other brands in the India ranking score high in Meaningful Difference, but the scores have remained flat over the past five years. In contrast, Salience scores increased substantially, especially for FMCG brands, with a Salience score of 135 in 2014 and 154 in 2018. (100 is average)
The results suggest that FMCG brands have raised their Salience to maintain brand recognition as new competitors enter the market, an important objective. Salience is more effective, however, when it is based on Meaningful Difference. BrandZ™ analysis recommends establishing Meaningful Difference first, and then making it Salient with marketing communications.
Meaningful Difference is vital to remaining in the India ranking. FMCG brands that stayed in the ranking over five years scored 131 in Meaningful Difference. New brands that entered the ranking in 2018 scored 138. And brands that dropped from the ranking scored 110, which is a good score—just not good enough.
And most important, FMCG brands that declined in Meaningful Difference over the past five years grew 67 percent in value. In contrast, FMCG brands that increased in Meaningful Difference over the past five years grew 92 percent in value.