In his rather thoughtful article titled “Why you aren’t buying Venezualan chocolates” (HBR January 2011), Professor Rohit Deshpande describes how organizations from developing countries are grappling with the brand image (and the resulting negative connotations) bestowed upon them by their country of origin. He terms the phenomenon as “The Provenance Paradox”, the paradox in question probably referring to how the country of origin determines the authenticity of the product.
It’s a phenomenon so natural; its escapes notice of even the most unbiased customer. As soon as he notices the ubiquitous “Made In ___”, certain pre-conceived notions surface in the consumers mind which hamper his rational decision making based on features and perceived value. Such behavior, though irrational on further analysis, seems at the moment perfectly reasonable from behind the veil of “experience”. And battling this mindset will be the biggest challenge the marketers of tomorrow will face.
A case in point from the Indian context would be that of the Indian IT industry. Indian behemoths like Infosys and TCS, despite employing near 1.5 lakh software engineers each, still don’t attract top dollar billing (or anywhere near it!) when compared to the West’s giants like IBM and Accenture. Deliberately pursuing a low cost strategy is one thing, but the figures point to a bigger challenge. Industry analysts attribute this startling gap to the “BPO” image of India’s software industry.
Another example would be of the Indian healthcare industry. Indian super and multi specialty hospitals have been accredited by various global agencies (NHS of UK and the US based Joint Commission on Accreditation of Healthcare Organisations). Its high success rate and on par competence with global standards is reflected in the following figures:
» Indian specialists have performed over 500,000 major surgeries and over a million other surgical procedures including cardio-thoracic, neurological and cancer surgeries, with success rates at par with international standards.
» The success rate in the 43,000 cardiac surgeries till 2002 was 98.5 per cent
» India's success in 110 bone marrow transplants is 80 per cent.
» The success rate in 6,000 renal transplants is 95 per cent.
DS Brar, CEO and MD, Ranbaxy recalled how a CEO of a global pharma company kept him waiting for over 6 hours before granting an audience. That was largely how global companies treated brands from India those days. And it is only recently that the world discovered that it could get quality service at lower prices. Of course, the healthcare industry still has a long way to go when compared to global Medicare hubs like Singapore. Thus the vicious cycle continues, low prices affirming the low quality belief.
However, there are certain strategies that Indian firms employ to counter this bias. The first of course is flaunting your country of origin; Historically, Indian customers are thought to be very price sensitive. Thus Indian companies were thought to be low on price and thus quality. But slowly this misconception is fading as the globe realizes Indians are notorious value-for-money seekers. This image gives Indian companies the perfect platform to differentiate them as providing good quality at lower prices. An example of this approach can be found in most companies strategies when they move to global markets. Hero Honda, Bajaj and Tata have started gaining acceptance in international markets for their quality products. Indian service sector too has started transforming its work profile from being low quality BPOs to high quality Knowledge Process Outsourcing (KPO) centers. Apollo proudly introduced itself as an Indian tyre maker. The Apollo brand capitalized, rather than downplay, its provenance claiming, ‘We are Indian, we make tyres for the worst roads in the world; if they’re good enough for an Indian taxi, they’ll be more than good enough for German autobahnen’ However the risks of this strategy include a long and tedious payoff period as well as an unwavering focus on brand management. But if companies still go down this route, a focus on intellectual property and innovation will lead to a stronger “Brand India”.
The second strategy employed by Indian firms is that of downplaying your country of origin; A Bose and a Hotmail were products of an Indian mind, but created and grown elsewhere. Tata Ceramics, who make bone china tableware products which are then sold overseas by luxury brands such as Wedgwood, Royal Doulton, Spode, Dunoon, Villeroy & Boch and Richard Ginori, have no plans to develop their own brand abroad. Countless other examples spring to mind of Indian companies being mere unbranded suppliers to global brands in diverse industries such as shoes, food, clothes, chemicals, engineering etc. The obvious risks associated with pursuing this strategy are lack of long term growth and appearing inauthentic.
To conclude, Indian companies looking towards a global growth strategy will definitely face this dilemma: what is the best way to overcome provenance paradox? Unfortunately, there is no set answer. How a firm choose its marketing strategy depends on its strengths, weaknesses, opportunities and threats; moreover, these need to correspond to external changes in the political, economic, social and technological environment. Hence, a SWOT and PEST analysis should identify the best strategy for a given firm in a given situation. But, if I were to choose which strategy I respect the most, Apollo’s strategy of capitalizing and enhancing Brand India will be the one most likely to reap holistic gains in the future.
- Abhimanyu Sahai
IIM Rohtak
No comments:
Post a Comment