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When Vodafone India and the Birla group’s Idea Cellular came together last week, there were numerous quips doing the rounds on social media. One message was about how every idea must come to an end, another was how Indian telecom was finally going to the dogs (a reference to the iconic Vodafone pug) and one used a popular tagline from the Idea ads and gave the thumbs up to the merger saying, ‘What an idea, Sirjee?’.
The merger, apart from marking one of the biggest telecom deals in the country has caught the fancy of the people also because of the high decibel advertising that the two brands are known for. The Idea ads with Abhishek Bachchan still have a high recall among viewers and Vodafone’s campaigns have a huge following too – the pug Cheeka and the zoozoo characters are superstars of the ad world. While the merger gives birth to a behemoth in the world of telecom, it also brings together two very different and strong brand personalities. Can they coexist or will we see one dominant brand swallowing the other?
Business Standard took this question to a team of experts who know the brands well, through their work in the telecom sector or as branding and advertising experts. Here is what they had to say.
‘May see the demise of one of the brand names’
Ambi Parameswaran
Brand name changes in service brand marketing happen through a very different dynamic. In the mobile space what we now know as Vodafone has undergone many name changes in the past. But they have always come out stronger largely because the satisfied users of a service brand will not switch out if the brand name changes, as long as service is good. For instance, how many users of Axis bank even remember what it was called ten years ago?
So in the case of service brands you need to manage brand transition very differently from the way you handle the brand name change in the FMCG arena. On the one hand you need to ensure your current customers feel things will be the same or better and appeal to new customers with your new brand promise.
I am not sure Vodafone and Idea will continue to exist the way they do today. We may see the demise of one of the brand names, or may be the creation of a new brand. It is too costly to try and build two brand names in a hyper competitive service market. However, the new brand will have to embody some values derived from the parent brands, while promising a new direction and benefits to new users. It is going to be exciting times in the mobile market and we may see some more disruptive moves and consolidations in the near future.
The author is brand consultant and founder Brand-building.com
‘The two brands complement each other’
KV (Pops) Sridhar
Data driven and sophisticated Vodafone is different from Idea, which appeals to the popular middle class consumer, especially outside the metros. The geographical reach and brand identity of the two are remarkably different and their coming together is more a strategic rather than a brand merger.
The two brands complement each other and to start with, will exist as two separate brands at the front end but once systems and processes come together at the back end, this will change. For how can you fake the front end when the same team manages both brands? Who has the upper hand in the merger is not question, the experience that the consumer wants is more important in deciding which brand will outlive the other. It could well be that
Idea can take on Jio better than Vodafone and… you never know what could happen.
This is different from say the Coke-Thums Up case where interestingly, even though Coke had the upper hand in the deal, Thums Up managed to stay on. The two exist on different identity planks and in different geographies. For Idea and Vodafone, this kind of differentiation does not seem possible.
When it comes to bringing two brands together, it is important to note that force-fitting can be disastrous too. Take the airline deals: Kingfisher with Air Deccan, Jet Airways with Sahara, customers could not accept that luxury and low cost airlines can fly with the same label. They demanded full service at low cost prices and that is impossible.
The author is brand consultant and founder, Hyper Collective
‘A lot depends on who calls the shots’
Sandeep Goyal
It is too early in the merger to figure out who actually is in the driver’s seat. A lot depends on who calls the shots going forward. Inevitably, the choices are fairly simple:
Keep both brands. That sounds a bit improbable and also, unnecessarily doubles the cost of maintaining two brands with nothing substantially to differentiate the two.
Keep one, kill one. The dominant partner will mostly get to retain the brand. If Vodafone runs the show, Vodafone stays, Idea goes. Or vice versa. But if speculation is to be believed that Vodafone wants to ‘exit’ India, then they may not want to continue usage of their global brand name in India and Idea gets to stay.
Keep none, launch new. Which brand to retain is as much a political as it is a marketing decision. Easiest, though not necessarily the wisest, or most cost effective, decision is to launch a new brand.
In the case of Vodafone and Idea millions of dollars have been spent etching and engraving respective brand names into consumer minds. Equally, billions of rupees have gone into creating signages, brand shops, dealer boards, packaging and so on. Chucking it all out of the window for either of the brands will be a huge loss of value. If it is done for both, the value loss will be even more colossal.
Whatever the choice, the positioning of the new entity could be anchored around the following binaries:
1. Global versus local,
2. Premium/Prestigious versus Common/Cheap, 3. Better performing and better value rather than better priced, 4. Tried and tested versus new and 5. Better coverage, better network versus better deals. Please note that this is not an exhaustive list and there will be more as the deal matures.
The author is brand consultant and founder Mogae Media
‘No merit in going with separate brands’
Sanjay Kapoor
The coming together of Vodafone-Idea is an amalgamation premised on a high quantum of synergies. Both companies believe that the synergies will pan out over the next few years. Vodafone has an urban appeal. Idea is more small town and rural in its personality. So the two brands complement each other. This makes the merger of the brands a more complex decision.
Let us examine the possible scenarios: Going with two separate brands will be an expensive proposition. To run two brands the company would have to set up competing institutions, parallel structures, which would kill many advantages of the merger. Now if they don’t set up two structures, you would have the same people servicing two brands and there may not be any noticeable differential.
In a two brand co-existence situation, there must be ample differentiation on customer experience. In an oligopolistic structure that the telecom market is in currently in India, this may be a stretch. It would be doable in a FMCG sector in perfect competition for example where there are many brands competing for different slices of the market. But look at Idea and Vodafone, both want a pan India presence, both operate on a price parity with undifferentiated services and play across 2G/3G/4G. Both want to be in the voice and data play and function within a common regulatory structure. In the end the market structure, low return on investment and lack of innovation has not left much ground for differentiation. The brands cannot even be differentiated on price as India is already a low price market. So I don’t see the merit in going with separate brands.
There is another option, create a third neutral brand. But what will the new brand promise? Let us look at the industry situation: Today data is gaining rapidly over voice and brands have to appeal to the data customer which is primarily the youth. Vodafone has an advantage here with its global, younger personality rather than Idea as it is backed by a deep data experience in multiple markets and hence appeals to the data natives. So why kill it? A neutral brand, it would have to pick up a unique positioning and would need to make itself relevant for the data consuming generation, this is what Vodafone is already positioned as.
How must the brands communicate their new relationship? The market is ripe for brand differentiation around video. The past few years, brands have been commoditised to such an extent that they were all equally poor in their customer focus. If the new entity can promise a superior customer experience around video and live up to it, we have a winning proposition.
The writer is ex-CEO Bharti Airtel and ex-chairman Micromax
