Local brands rising

Ruchi Gunewardene, Managing Director of Brand Finance Lanka and STING Consultants, identifies key trends and opportunities for local brands to outsmart global counterparts 

History has recorded that Ivory soap was the very first brand on which the process of brand management got its start. In 1925, Neil McElroy graduated from Harvard University and having joined Procter & Gamble established a system for allocating different resources to two competing brands within the company’s portfolio. The two brands were Ivory Soap and Camay.

McElroy’s plan was to have one person to be in charge of each brand and the need to have a dedicated team on all aspects of promoting that brand. This was indeed a revolutionary process at that time, as for the very first time there was a team assigned to manage a product in a company. The structure created through this brand-centred approach resulted in decentralised decision-making, almost to the degree that the brand was managed as a discrete business. This practice rapidly spread across other companies and with the expansion of multinationals across the world, so did the function of brand management.

Brand management 

as a key tool

The brand management process has since evolved and is very much a part of the core marketing function across consumer marketing businesses.

Because of the tried and tested processes, along with the disciplines of a multinational, these companies have fined tuned this and refined it into a powerful strategic marketing tool. For example the Unilever Brand Key which is at the heart of their brand management process is one such.

The brand management system worked well for multinationals which were managing multiple brands across the globe. The 1980s and early ’90s were the high points as the brand managers had considerable autonomy in terms of determining strategy and these jobs attracted the cream of the educated and brightest talent. 

The perks of the job at that time involved traversing the world for regional and glitzy global brand conferences, swapping experiences with colleagues across the world. Here, they would be privy to discussions and workshops around successful strategies, global initiatives and new thinking based on the ever-changing consumers. These uber-smart managers came back brimming with ideas and thoughts on adapting these learnings into their own markets. It seemed like the perfect blend of global strategies with local talent and execution.

These were the golden days of global advertising where the head office would roll out campaigns and local brand managers would adapt these to provide local relevance to suit their consumer needs. This phase lasted till just before the turn of the century. Until it all changed.

Business growth slows

Business growth was more difficult to come by and there was a focus on cost consciousness across the world. At this stage the multinationals began to rationalise their brand management process through greater central control. They started to cascade up the responsibilities of brand management to regional offices away from the countries where the market execution was happening. This enabled cost savings through smaller advertising budgets by minimising production to a few key markets, less senior (and less expensive) talent being recruited at the country level to execute a strategy that region determined through a few centrally located individuals. 

More recently, this process of trimming down and minimising the recruitment of local talent has accelerated where a country (such as Sri Lanka) has no strategic role to play but merely feeds channel and consumer data on standard formats to global centres who would analyse that and develop  “strategic playbooks” for implementation. The playbooks would be a combination of consumer need state segmentations based on insights, the maturity of the brand in the market place and the economic standing of the country. 

These parameters would generate several strategic options formulated at the global level and available for individual countries to “pick and play”. The implementation must happen within agreed frameworks with very little flexibility and no local execution.

Change in consumer mindset

Meanwhile, consumer trends rapidly changed in the new millennium, with democratising of information to any individual with a smart phone in his or her hand. This surge of information, access to opinions, ability to express ones individual thoughts and be heard and listened to by many, including family, friends, formal and informal networks, special interests groups etc. dramatically changed consumer trends virtually overnight.

From the previous mind set of global is good, emerged the thinking that local is as good or better in terms of quality, cost, being environmentally friendly and natural/healthy/homegrown which have empathy with the very personal desires of consumers. The need for social upliftment in one’s own areas and national pride is growing, which gives power to local brands. There is an anti-big movement and consumers are increasingly empathising with the small upstart who they find much more trustworthy.

Local brands rising

So, we are now at an inflection point, where multinationals are playing their playbook strategy and local companies are able to be flexible and adapt to the increasingly vocal local consumers who now have global aspirations of their own. Consumers want to be global in outlook in terms of what they wear, eat, drink, own and the education that they have. As long as local brands can meet those aspirations through world class quality, whilst staying close to their roots, there is significant traction and market share to be gained. 

The advantages of being local are many. There are no constraints of having to fall in line with a big global brand strategy, and instead one can invent one’s own which could provide greater local relevance, especially if formulated by an in-depth understanding of consumer nuances. There is flexibility to be creative and to think outside the box. There is the ability to be so much more agile, flexible and rapidly move to take opportunities that maybe nascent or just emerging.   

However, there is a fine line between being entrepreneurial and experimental with no system to guide brand building and having a well thought through structure and process. This is because brands are built over the long term with a five- to 10-year horizon and having that consistency through the play book is key for success. Too much variation and change disrupts what the brand is known for and shakes up consumer confidence. Therefore a proper brand management system is mandatory for success. Companies such as Hemas which have successfully taken on multinationals is a good example of this, as they have invested in structured brand management systems.

As brands build for the future, it needs to have a DNA imprint established right at the outset. This will guide its behaviour and personality and the means of engaging with the new, rising millennial consumer. 

As local brands aspire to reach greater heights, using a few pages from the multinational playbook will serve them well. 

The current gold standard for a brand in Sri Lanka, is to have a billion rupee annual revenue. In the year 2020 which brands will emerge to be winners is the billion rupee question.