January is the month of soothsayers; of crystal gazing about the year ahead; and motley predictions about life, love, career, family and even the end of the world (this one’s for the Mayans, the I Ching and the Bible, interpretations of which reveal that the date for Armageddon has been set down for 2012). But India is another story. Irrespective of the fate of the world, the start of the year has had politicians, bureaucrats, businessmen and even members of Team Anna going batty about what 2012 has in store for them.
For marketers however, the start of the year is traditionally more agonising and full of the unknown than others. The onset of January almost always sends marketing pundits in a tizzy fantasizing about better brand visibility and higher growth as the final quarter sets in. They may have frittered away the rest of the year planning big budget ads, events and contests to improve the bottomline, but January is when the winds get taken off their sail because the sales just don’t add up to the heavy duty marketing chutzpah. It could be because of the rising input costs, the falling margins, slow consumer demand or numerous other reasons that seem to be confounding the Indian economy right now, but it is there.
So this January has only seen the pressure on marketers go up. If bottomlines are down at the end of the third quarter, CEOs are demanding more action for better results before March 31st. And if bottomlines are up, then the bid is to raise the stakes and outperform in the third quarter perhaps for a mouth-watering incentive if you are lucky. Any which way you look at it, the beginning of the New Year will witness some exciting brand battles as marketers attempt to score a one up against rivals. The rest of the year of course will follow suit.
Interestingly, while some of the most eloquent brand wars have traditionally found shelf space in the FMCG market (recall the Coke vs. Pepsi shindig or the Surf versus Ariel standoff), the fast growing durables, electronics, automobile, financial services and media markets in India have spawned close battles in these sectors. What’s more, the brand battles of 2012 are special in the sense that they are unusual in their non-conformity. It’s not Maruti versus Hyundai or LG versus Samsung or Star versus Zee this year. Instead it’s a year where the old has given way to the new, albeit a little hesitatingly. Read on for the proof of the pudding is indeed in the eating...
SUZUKI VS VOLKSWAGEN
They say that the Indian auto market is one of the largest in the world. But clearly not large enough for two partners to stick together and do business. And that is precisely the story of cohabitants turned competitors Suzuki and Volkswagen (VW). Two years ago, VW acquired a 19.89% stake in the Japanese auto giant hoping to benefit from Suzuki’s expertise in the small-car segment and make inroads into emerging markets like India. But before the partnership could celebrate its second anniversary, Suzuki terminated the partnership late last year citing breach of contract.
How the end of this road will play out in global markets is anybody’s guess, but in India at least VW seems intent on having the last laugh. Taking advantage of Suzuki’s domineering presence here, the last couple of years has seen VW make quick gains in India. While Maruti Suzuki was busy resolving labour issues and streamlining production shortfalls, VW walked away with some of their market reach. VW commands only a 4.2% market share in India, which may seem miniscule in front of Maruti’s 41.42%. But experts agree that VW has gained the maximum out of the bad times that Maruti has seen over the past 12 months. VW’s deliveries to customers in India doubled to 111,600 last year even as Maruti Suzuki saw sales decline by 16.5% to 684,892 units between April and December.
VW’s aggression is indicative of the marketing mayhem in the days to come. Take product strategy. Volkswagen Polo competes directly with Suzuki Swift and Ritz while Vento competes with SX4. Going forward, VW is expected to bring its small cars like Golf and UP to the Indian market taking the battle a notch higher. “We currently have a very small market share in India but are hopeful of a 10% market share by 2018,” says Ulrich Hackenberg, Head - Technical Development, VW AG.
Suzuki isn’t sitting quietly either. With seven small cars in its portfolio, the company is now expanding to other segments. The premium Kizashi and soon expected Ertiga are testimony to the Japanese major’s renewed focus. The company is betting on its pan-India network to preserve its dwindling market share.
With Suzuki making every attempt to regain its lost market over the next 12 months, VW may well find it a difficult to lure Maruti loyalists to drive cars with a VW insignia. But then, upwardly mobile consumers may find it equally tough to resist VW’s German technology appeal. Look out for some subtle fireworks ahead.
HERO VS HONDA
It’s always been Hero Honda versus Bajaj and so when suddenly you end up just writing Hero Honda with an ‘and’ in between, nostalgia is bound to strike. Here’s another set of friends turned foes, who after walking hand-in-hand for 27 years, are now standing head to head in the Indian two-wheeler market.
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Source : IIPM Editorial, 2012
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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