Can a firm be handicapped by the power of its own brand? Sounds paradoxical! In fact, firms strive to build a strong brand. It is a powerful tool in the competitive market to win over the customers. Firms spend much time and money in building the brand. After all, it is the foundation on which all the marketing communications are built on. Yet here is a case for the paradox.
Maruti Suzuki India Ltd., is well known in India. The company produces a wide range of products from hatchbacks, sedans, Multi Utility vehicles and SUVs and is the market leader in India. A company with such enviable record should have been proud and happily placed. The company built the brand ‘Maruti’ very effectively and there would be hardly anybody in India who does not know the brand. Yet this is an anathema to the company.
While the company has a strong hold on the mid and small car segment, it has failed to make it presence felt in the premium segment (Rs.10 lakhs and above). Maruti made several attempts to enter into this segment with its Grand Vitara, Baleno, and Kizashi but could not make any inroads into the segment.
The company is aware of this problem of cracking the premium segment. The company is battling with it for more nearly two decades but without much success. The problem is the power of the brand itself. The brand was built so powerfully around the themes such as “the most affordable car”/ “the common man’s car,” that it is not lending itself to the ‘premium’ segment. The brand perception among the customers is that it stands for ‘affordability’ and not for the ‘premium’ segment. What is adding fuel to the fire is that in addition to its inability to move upwards to the premium segment, other premium brand such as Honda are making inroads into the mid and small car segments.
For those who want to know how brand perception could have such strong impact on marketing of firm’s other products, one may look at Nirma. It became a household name with ‘Nirma’ detergent powder and yet it has not succeeded in other category of products. One example of a company breaking down of the stereotyping of brand image can be ITC. It has succeeded in overcoming its brand perception from ‘Wills’ cigarettes to ‘Wills Life Style’ products and has also penetrated.
In order to enter the premium segment, it tried with new products; it tried with pricing strategy; it also attempted several positioning strategies; all these have not been satisfactory. The other tool of the marketing mix is place – the company is now trying out with this. The firm announced opening of pre-launch bookings for its new model S-Cross.
S-Cross is not a modified version of a hatchback car. The company has developed from the scratch. It will be positioned in the compact SUV segment, which comprise of the recently launched Hyundai Creta, Renault Duster, Nissan Terrano and the Mahindra Scorpio. It is priced around Rs 10 lakhs and is attempting to enter into premium segment. What is different is that it will not be available in the normal distribution channel – Maruti’s car dealers.
Altogether a new channel has been set up – Nexa showrooms – and the S-Cross will be sold and delivered by this distribution channel. Nexa is being set up to handle only the premium products and the company plans to set up 100 such showrooms in 30 cities by the end of the fiscal. The hope behind this strategy is that if it can drop ‘Maruti’ – which the company feels is creating the perception – and use only ‘Suzuki’, it stands a better chance of winning. This new channel strategy will have the advantage of selling S-Cross away from the other cheap brands. Maruti Suzuki calls it a ‘premium crossover’ and this is what sets it apart from all its rivals. Only time will tell if Maruti will succeed in entering the premium segment.
Companies strive to build brands, brand value and brand equity. Yet that may in some case be a disadvantage. It is also very difficult to change the brand perception; changing perception is more difficult than creating a new one. An organisation should give good thought before embarking on building its brand. It would be a good strategy to build a broader brand image than a very focused one. It is good remember that brand is much more than just a logo, name or slogan — it’s the entire experience that one has with the firm and its product or service.
Dr. S. Shyam Prasad has 24 years of industrial and 10 years of teaching experience. He worked for more than two decades in Marketing and Sales and held various positions such as general manager and marketing manager. Shyam has more than 10 paper presentations in the national and international conferences on varied sub ...
