India 2015: OVERVIEW | Key Themes: Ownership
Brand Power drives value growth across brand ownership models
Indian and Chinese Brand Power varies by ownership
Robust economic growth, increased consumer confidence, and strong Brand Power lifted brand values across all types of brand ownership models, in the BrandZTM Top 50 Most Valuable Indian Brands 2015.
Each brand ownership model – private, multinational (MNC) and State Owned Enterprise (SOE) – scored relatively high in Brand Power, a BrandZTM brand equity metric that measures a brand’s ability to grow sales volume and market share.
The nine SOEs in the ranking, mostly banks, led in brand value growth, rising 36 percent. Private Indian brands, which totaled 26, including both brands owned by individuals and those owned by Indian conglomerates, rose 33 percent in brand value. And brand value of the 15 MNC brands rose 26 percent.
These results indicate: (1) all types of brands in India, regardless of ownership model, drive brand value growth; and (2) there is a clear correlation between brand value growth and high Brand Power.
Brand Power scores are not only high across ownership models in India, SOEs in the BrandZTM India Top 50 increased 18 percent in Brand Power and MNCs grew 8 percent, while private brands remained flat. Some of the variations in growth rates may be category related. But they’re also an important window that reveals how brands are evolving in India, and the levers to pull for brand building success.
LEVERS OF BRAND SUCCESS
Brand Power scores are derived from these three components that indicate how effectively consumers say brands are connecting with them: Meaningful (meeting consumer needs and being loved), Different (being unique and setting trends) and Salient (top-of-mind awareness). The increase in SOE Brand Power can be attributed to two of these factors. SOEs increased 10 percent in Salient and 2 percent in Meaningful.
The strong growth in Salient signifies that these SOE brands, mostly in financial services, are well known to consumers. It follows efforts by Indian banks to become more inclusive and accessible, making financial services available for the first time to many people. The SOE improvement in the Meaningful score indicates that SOEs are meeting customer needs, adopting more consumer-centric brand-building attitudes. The growth of mobile, in particular, has enabled banks to establish more personal and useful relationships with consumers.
Both MNCs and private brands increased somewhat in Salient but declined in Meaningful. And MNCs, private brands and SOEs all declined in a third component of brand equity, Different.
A decline in Different is not unusual as markets mature and become more crowded with brands that consumers view as similar. Conversely, improvement in Different becomes increasingly important, as customers experience more choice and being Different from the competition in a Meaningful way becomes a determinative factor in purchasing decisions.
INDIAN AND CHINESE BRAND POWER VARIES BY OWNERSHIP
Indian MNCs scored 330 in Brand Power, increasing from 305 a year ago. MNCs in China scored only 101 in Brand Power, not much higher than the average Brand Power score for all brands, which is 100.
The special strength of MNCs in India reflects their long-time presence in India and MNC brand building expertise, which has produced some leading brands in India that most Indians view as indigenous. The Indian government’s success in attracting foreign investment also contributed to the significant MNC presence in India and high Brand Power.
Private brands in India scored 192 in Brand Power, and SOEs scored 166. Private market-driven brands in China scored 205. Chinese Competitive SOEs, those in consumer-facing categories, scored 214 in Brand Power. The Strategic SOEs, financial and energy brands, scored 220.
The strong Brand Power scores for Indian brands, across ownership models, esult in part from India being a relatively open and welcoming market for
brands. Even when the state exclusively dominated the financial services sector, which is now being liberalized, the state left ample room for small entrepreneurs, well-established Indian family conglomerates and MNCs to participate vigorously in the economy.
Both the Indian and Chinese markets are changing, of course. The government of India opened the Indian market over time and in a measured way, incrementally removing protectionist regulations. Current leadership advocates greater openness. And, during the past few years, the Chinese government has advanced policies to increase market competition and encourage the growth of private brands.
As the Indian market becomes even more competitive, growing Brand Power will require brands to continue to be Meaningful and Salient while improving their scores in being Different. Brands that accomplish these goals will drive sales volume and market share, and they’ll also be able to command a premium.
Indian SOEs increase most in Brand Power...
The SOEs increased Brand Power 18 percent, while MNCs grew 8 percent and private brands improved more modestly.
... Indian and Chinese Brand Power varies by ownership
In Brand Power Indian brands scored high in each brand ownership model and highest in MNCs.