How does one brand a commodity and make it a premium product? For one, it needs muscle power in the form of money and infrastructure. Execution of ideas is another important part. But it all begins with identifying an opportunity, said Rajesh VL, Divisional Chief Executive (Foods Business), ITC.
Speaking to students at the Madras Management Association’s student convention on Winning Strategies of Strong Brands, Rajesh recounted how ITC created the Aashirvaad brand of atta (wheat flour).
Part of this exercise was recognising category truths, said Rajesh. The company had to contend with the inconsistent quality of the wheat, the fact that it had to keep the flour as fresh as possible, and cater to regional preferences.
Bolstered by funds
Deep pockets help, and so ITC decided to stockpile the necessary amount of wheat well ahead of production, use its e-choupal — a platform to link farmers and the Internet — to procure the grain directly, thus shrinking lead time in the supply chain and ensuring freshness, and using the company’s large R&D set-up to bolster the venture.
In 2001, when the company conceived of this business, the rivals were the likes of Hindustan Unilever’s Annapurna, Pillsbury, and such. Of 70 million tonnes of wheat produced in India, only 2 lakh tonnes accounted for branded atta. In four years, though, it went on to become No 1 and moved on to value addition in the forms of multigrain atta, Sharbati atta and most recently, atta with methi, which has been launched in the North and the West of the country. ITC Foods’ turnover crossed $1billion last year, Rajesh said.
In an earlier presentation on brand extension, Prabha Narasimhan, Regional Vice-President – Personal Care (South Asia), HUL, pointed to well-entrenched brands that progressed from extending brands in their own space to completely new categories.
She cited Pond’s, which started off as a vanishing cream in the US and went on to include talcum powder and face-washes; Dove, whose portfolio includes bathing bars, body lotions and even hair-care, and Arm & Hammer, a brand of baking soda that leveraged its benefit as a deodoriser to launch detergents and fresheners that removed the smell of cat litter.
Brand extension
The thing to consider when mulling brand extension is whether the brand has enough leverage to confer on the new one. The advantages of stretching a brand are that it’s not as expensive as launching a new one, and that distribution is easier as retailers are risk-averse.
In today’s disruptive world, brands grow in various ways. Signs of success are evident when brands such as Red Bull, which rarely advertise, can get people to pay and attend events it organises. Lego, which makes building blocks for children, made a $60-million movie that grossed $500 million. That is, in reality, a huge piece of advertising for the brand which viewers paid to see, she pointed out.
Introducing the speakers for the session, V Balaraman, Corporate Director, made the point that brand extensions should add value to the umbrella brand and not just take advantage of it.