The Strategist looks at the recent experiences of TataDoCoMo and Bajaj Auto to check if the textbook assumptions about umbrella versus multiple branding stand true on the ground.
The standard view of business growth is that growth is always good, bigger is always better and that companies must grow or die. While every company aspires to grow its business, an expanding business brings with it a host of new risks: too many people, too many locations, too many products and at times, too many brands to contend with.
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At least for marketing managers the choice is clear: they have to decide whether they prefer the simplicity of unified or umbrella branding or the frenetic juggling of a multi brand portfolio. The choice appears simple but it is not one that can be settled by the flip of a coin, or the roll of a dice. In The New Strategic Brand Management, author Jean-Noel Kapferer writes that the decision regarding the number of brands to be retained is closely linked to an analysis of the brand’s function in its respective market. “Every market can be segmented, by product, customer expectation or type of clientele. This does not mean, though, that a market divided into six segments, for example, should necessarily call for six brands. This depends on their function (do we need endorsing, umbrella, range or product brands?),” he elaborates.
So how does the marketer resolve this dilemma? Anand Kumar Jaiswal, associate professor of marketing at IIM Ahmedabad, explains the basic rationale that often leads to the choice between umbrella and sub-branding. “With umbrella brands, one is investing in just a single brand and leveraging its equity across various categories. In the long run, one can economise advertising and new launch costs on the back of this investment.” There is, however, the risk of any single failure affecting the overall equity of the brand, given its interlinked nature. To restrict the risk to the parent brand, the marketer might opt for sub-brands. Additionally, it is also to reach out to different segments. “It is not always possible to make the parent brand reach out to every segment or category of consumer. Different sections want different things and one must strategise based on that,” adds Jaiswal.
Take the case of Marriott Hotels. There is the Courtyard Marriott for business travellers and Residence Inn by Marriott, an extended stay option. Both these sub-brands are endorsed by the parent and yet maintain their own distinguished persona and value proposition in the consumer’s mind.
A complete break away from the parent that is the creation of an individual brand would not be possible for Marriott in this case. Primarily because here the consumer is looking for her needs to be met within the universe of Marriott-backed service guarantee. The “endorsement” is necessary. In effect, branding strategies must be guided by, as well as geared towards, achieving a larger goal.
Let us consider the examples of telecommunications player Tata DoCoMo and two-wheeler major Bajaj Auto, two brands that have chosen to take completely opposite routes around the same time to illustrate the dos and don’ts of the branding journey. And yet, each has valuable lessons in store for future managers.
Choosing my style
Tata Group’s telecom interests covers the entire gamut — from GSM to CDMA to internet connectivity businesses. To the layman, this can be translated better by a mention of its brands like Tata DoCoMo (GSM), Tata Indicom (CDMA) and Tata Photon. Yet, two of these three (one completely and one partially) are now defunct. To be sure, the brands, not business interests, are defunct. Mid-2011, the company embarked on an ambitious plan of integrating the three businesses under the flagship of Tata DoCoMo. So out went Tata Indicom and Tata Photon.
The decision to integrate the three businesses was led by various factors, says Gurinder Singh Sandhu, head, marketing, Tata Teleservices. “The business integration helped us increase our consumer reach multifold overnight. We could transfer the strengths of one business to another. For instance, GSM is stronger in prepaid. We could bring this advantage to CDMA as well as cross sell our services,” says Sandhu.
Consider this: Total retailer associates of Tata Teleservices is around 5 lakh. Of these, only 1.5-2 lakh were selling recharges for CDMA. Reason: every retailer holds an electronic voucher denomination (EVD) used to recharge customer SIM cards. Earlier, the retailer had to invest in two separate EVDs to be able to offer GSM and CDMA top-ups. And since prepaid is not very popular with CDMA customers (as it is used mostly for fixed lines), few opted for top-ups for CDMA. Post the business integration, the same EVD can be used by retailers to top up both.
A mid-way shift in branding strategy requires enormous planning though and cannot be sprung upon stakeholders suddenly. Sandhu says, “The company did extensive legwork with distributors and retailers before the branding exercise.” There were presentations to explain the benefits of the shift as well as bring them on board about the changed protocols. At the company end, there was the integration of the back-end customer support operations for which extensive training was required. Changes were made at every footprint to reflect the integration.
While Tata Teleservices chose to leverage its assets by bringing its brands together, Bajaj Auto went on a diametrically opposite path — focusing on its sub-brands, Pulsar and Discover. Bajaj Auto, the makers of the iconic Bajaj Scooter, is a leading two-wheeler maker that had always harped on the mother brand Bajaj to transfuse individual product lines with the same values of trust and Indianness. The philosophy, say insiders, changed when Rajiv Bajaj assumed a more active role at the company.
(Rajiv Bajaj officially took over in 2005 when his father, Rahul Bajaj, stepped down after 35 years at the helm.) He wanted to create a distinct identity for their motorcycle brands, away from the Bajaj name, which was used far too liberally for everything, from bulbs to electrical appliances to financial services.
“He felt the brand’s equity was spreading too thin. The final straw came in the form of the company’s hyped XCD (Exceed) brand failing to cut ice with consumers around 2007,” says an observer. The company suffered its worst setback during this period when its sales dropped 23 per cent (market leader Hero Honda had recorded a growth of 12 per cent that year) in 2008-09. Since then, the company has studiously followed a two-brand approach, focusing on Pulsar and Discover. It has dropped the name Bajaj from all communication and those associated with the brand say that nothing would make Rajiv Bajaj happier than the two brands making their mark without the backing of Bajaj.
Bajaj Auto’s marketing strategy is something of a cross between sub-branding and individual (or multi-) branding. K. Srinivas, president, motorcycles, Bajaj Auto, explains, “The strategy of Bajaj Auto is different than that of other two- wheeler manufacturers in India. For other two-wheeler manufacturers the sub- brands are model names. For example, Hero manufactures the following 100cc bikes — HF, Splendor, Passion. These are model names. It manufactures many such models. At Bajaj Auto, we follow a strategy of creating categories. Hence, for us, Pulsar stands for sports bike. Discover stands for commuter bikes. Under each of these categories there are multiple models (like Pulsar 150, Pulsar 180, Discover 4G, Discover 5G, etc).” Each of these models in turn, targets a different consumer segment. The Pulsar 200NS, for instance, is a state-of-the-art model targeted at the higher end of the consumer spectrum ; whereas the Pulsar 135 is targeted at the fresh college graduate who is price- and image-conscious.
Milind Bade, ex-head, marketing, Bajaj Auto, in a previous interaction with Business Standard had said, “A brand has to have two things — a TG (target group) and a promise. When the sub-brands are so distinct in their promise and have such distinct TGs, the individual strength and positioning of the sub-brands have to be focused on, independent of the larger umbrella under which they fall. We’re going the FMCG way by doing this.”
The two approaches, experts concur, are in line with the theoretical approach to the subject. “Telecom is quite commoditised today. People are looking mainly at tariffs and network quality. There isn’t much variation in this category. So bringing together multiple brands and leveraging the equity across the board works well for the company (Tata DoCoMo),” says Jaiswal.
Indeed, leveraging a strong and established parent’s reputation offers a clear advantage, says Sagar Mahableshwarkar, national creative director, Bates CHI & Partners. He has been associated with various Tata Group brands like myriad products from the Tata Motors stable, Taj Hotels, Tata AIA, the insurance business, previously Tata AIG etc. “Using the group name, Tata, lends an air of quality and trust where required. But it may not always be necessary either. Consider Tanishq. It would always need the assurance of being a Tata product, given the delicate nature of the category. Whereas Fastrack, that’s an everyday kind of product category and caters to a completely different audience. It doesn’t need the weight of Tata behind it,” says Mahableshwarkar.
That said, association with an umbrella brand brings with it a certain amount of limitation in the form of a certain sensitivity to the group DNA. Like, it cannot be flippant or immature, says Mahableshwarkar. It can be tongue-in-cheek for sure but not offensive. “Any advertising for Tatas must carry a sense of responsibility,” he adds, which explains why Fastrack can be irreverent in its communication.
Given its backdrop, Bajaj Auto might be correct in its new approach — of defining the value proposition of its brands and distinguishing them in the minds of the consumer. However, it has not been able to shake off the “Bajaj” association altogether. “The ambition of Mr Bajaj of separating the Bajaj from Pulsar and Discover is lofty and to a certain extent impossible to achieve,” says a marketer previously associated with the brand. “Auto as a category signifies an investment close to the consumer’s heart. He wants a reassurance of quality and trust. And he needs something larger than a Pulsar and Discover for that.” He also points out that automobiles — be they two- or four-wheelers — aren’t exactly a one-time purchase-and-forget-it kind of a product category. “It is not like a shampoo or soap that you buy, use and move on. In automobiles, there are company designated showrooms, sales personnel, service centres—all these touchpoints represent Bajaj Auto and not a sub- brand,” he adds.
Whether they pick the umbrella or sub-brand route, marketers must note that it will never work in isolation, especially for high involvement categories. There will be certain interdependence. Like a Tata DoCoMo may be an umbrella brand from its vantage point. But from a conglomerate point of view, it is a sub- brand itself, drawing on the Tata equity. Similarly, Pulsar and Discover cannot break their umbilical chord with Bajaj completely ever.
