Developing cutting-edge brand strategies

Sri Lanka spent Rs. 56 b on above-the-line advertising in 2011
Taking wing to India for meetings is a usual routine for any business leader attached to a multinational in Sri Lanka as most such organisations have their regional offices in India. During a recent visit to India, the hype surrounding IPL – 5th edition really amazed me. The advertising budget for IPL, which includes the team sponsorships, is estimated to exceed Rs. 30 billion, which is colossal given that it is a brand that lives only for a eight weeks.
Sri Lanka on the other hand has invested over Rs. 56 billion only on above-the-line advertising in 2011. Maybe it could have been equal on the below-the-line front as some companies are not allowed to advertise as a policy. This means the bombarding that a typical consumer of Sri Lanka must have exceeded Rs. 100 billion in the given financial year. TV advertising takes the lion’s share of this value with an investment of Rs. 40 billion, up five billion from the 2010 figure, which gives us an idea of the reach of this medium of communication.

Sometimes I wonder if the relationship of Share of Voice (SOV) to Share of Mind (SOM) and market share actually exists. I yet remember the famous words that I have exposed by Lord Lever Hulme who said, “Half the advertising is wasted but which part is the question.” What he meant was, was it on the creative development side or was it in media scheduling. Incidentally, advertising spend on press has declined in 2011 as against the last year value, which is worth understanding the logic.
Sri Lanka
Whilst Sri Lanka boomed in the last two years with a seven per cent plus growth and the private sector making strong gains, today the country is in a catch 22 situation with the dollar depreciation by almost 20 per cent and inflation picking up that can lead to a wage price spiral in the future if not managed.
From a marketing context this can lead to the penetration of brands going down and there by affecting not only the user-ship numbers but also the consumption levels in the future. This means that doing business in 2012 is going to be tough, unless moving into high growth sectors like tourism, which are driven by external forces.
An interesting point to note is that credit to the private sector hit a record 515 billion in 2011, with the latest research done by the World Bank reporting that the biggest obstacle of doing business in Sri Lanka remains the access to finance. This gives us an idea of the potential growth that Sri Lanka can generate by addressing this critical issue of finance.
What is stranger is that on this attribute of access to finance, it is not confined to a specific region but cuts across the country. Given the focused investment on programmes like ‘Divi Neguma’ and the thrust on industrial estate development, it is time Sri Lanka corrects this issue of access to finance especially in the SME sector of Sri Lanka.
In my view it is the collateral that is required that is blocker for driving private sector business. A point to keep in mind is that in the next three years the Indian housing programme will also require 49,000 owner driven recipients to find funding of around 200,000 each for the completion of a permanent home. This will add more pressure to the access to finance issue.
India today
India too is also experiencing a similar economic dilemma with S&P downgrading the country and consumer power pushing the legislator for relief given the global economic downturn. In this backdrop IPL edition 5 has hit the limelight even though it is yet called pyjama cricket. But to me, it’s the only success story in the South Asian region where a new brand conquered the world stage and today it’s valued at $ 4 billion.
Even though the games have lost their leader Modi, as per the Economic Times of India last week, the BCCI has estimated that IPL will bring in approximately $ 1.6 billion revenue in the next five to 10 years, which gives us an idea of the consumer power behind this brand. Let me try to capture some of the lessons from IPL in developing cutting edge brand marketing not only to the private sector but also the public sector and link it to the 2012 big spenders.
Lesson 1 – Cutting-edge decisions
The concept of selling cricket stars for big money auctions can be termed shrewd but to my mind it was the cutting-edge decision that changed the nature of the game. In the 1st edition I remember there was a lot of money in the offing but no one knew if this business of IPL would catch the world. The one man who saw the future was Laith Modi who was the Chief Commissioner of this brand. Today the business is worth $ 4 billion.
If I am to draw a parallel in Sri Lanka, I will pick the brand Harpic. It has clearly understood the needs of an urban consumer household and developed a range of products with impactful communication that has made it win for the third time the ‘Most Popular Household Product’ award at the ‘People’s Awards’ of the Sri Lanka Institute of Marketing.
I guess from a macro end, a parallel could be what Ceylon Tea is up against in today’s market. A particular brand that I do not want to mention started its business with a single origin platform on the theme 100% Ceylon Tea. Over time, it reduced the component of Ceylon Tea and moved to a multi origin combination with cheaper imported teas and has today taken out the Ceylon Tea proposition.
This is one of the reasons cited for the need for a tea hub in Sri Lanka. Whilst this concept is interesting, it requires careful planning given that there can be severe negative ramifications especially from a supply chain perspective since our tea stock is ageing and the yields dropping. A point to note is that this situation of an aged tea stock is not only in the corporate tea sector but also in the small holding sector, which is alarming.
Lesson 2 – Move out of the safety net
Apparently the founder of the Modi empire Gujmal Modi, in 1932 had started the company with only Rs. 400 in his pocket and had to let go of the security of his parents and home. Today the company is within the largest conglomerates in India with joint ventures with some of the top companies like Philip Morris, Estee Lauder, Revlon, Rank Xerox and Walt Disney to name a few. A parallel in Sri Lanka to me is Brandix, which started business as an apparel company and now owns a 1,000 acre industrial estate in India and the latest the aviation venture with John Keells.
From a macro perspective I would single out the sheet rubber latex branded as ‘Lankaprene’. I strongly feel there is opportunity for Sri Lanka to brand its top end rubber as ‘Lankaprene’ and thereby target the surgical gloves and condom industries in the United States. The distribution network is yet intact and what is required is commitment from a policy perspective given that the private sector already has set up a company and from a supply end is ready to go global.
Even though rubber is fetching high prices currently with ‘Lankaprene’ we have the potential to get an extra premium of around 30% with a brand name.
Lesson 3 – Work closely with the Govt.
When IPL season 2 ran into tough terrain due to the Indian Government wanting to give priority to elections from a security allocation perspective, Lalith Modi very clearly made it known to the world that he would cooperate and not get into a ‘turf war’ even though billions of rupees were at stake.
This came from the upbringing from one of his mentors Sri Kumar Modi who personally used to work closely with the Government of India and local state that resulted in the company having the space to venture out to industries like silk mills, nylon and polyester threading, tyre and tube manufacturing and industrial leather to name a few that borders on political power.
The relevance to Sri Lanka is that organisations cannot work in isolation. It has to be closely threaded to Government policy. This might require the organisations of today to recruit a person who has a new skill set. If corporate Sri Lanka does not do that, growth can be stunted.
From a macro end we see the tea industry getting its act together and now the private sector and public sector have raised almost US$ 10 million and are poised to launch a global campaign on the Ceylon Tea proposition that will be the first for the tea industry of Sri Lanka. I guess Sri Lanka Tourism can do the same in the near future.
Lesson 4 – Drive one idea hard
When Lalith Modi decided to commercialise 20/20 cricket by launching the IPL brand, he believed that nothing was as powerful as an idea whose time had come. He passionately drove the idea when a few actually believed it. Today this is a $ 311 million brand. I yet remember the day that it was announced that IPL could not be staged in India due to the Indian election. Modi took the high ground and said: “I am going to export this product to another market.” The event that was staged in South Africa was a masterpiece. It was an Indian-African mix that attracted the President of South Africa to be the Chief Guest at the final, which tells us how hard this one idea was driven.
I feel the implication for corporate Sri Lanka is that things will never be perfect but what is required is to grab the opportunities in the market place as they emerge. We can see how a company like Anchor, when faced with spiralling cost structure due to the depreciating dollar whilst the brand remains under price control, is taking on the position to drive penetration and brand switching from other brands than just resorting focusing on profitability. At least in the short-term this is an interesting strategy that other players can pick up.
From a macro perspective my pick is the Ceylon Sapphire brand that can take on the positioning of ‘ethically mined and polished’ proposition so that we can carve out a niche in the global market place on differentiated platform. May be the Sapphire Council can develop on this idea based on the work done when Kate Middleton wore a Ceylon Sapphire for the recent Royal wedding.
Lesson 5 – Know your eyeballs
It may sound like a warped concept, but the reality is that at IPL just like any other consumer brand is targeting your own brother or sister. They are your consumers. They are your eyeballs. When it came to IPL the competitors were the target consumers spending two hours at the gym working out, a group of friends enjoying an evening drink at a club or watching that favourite TV programme at home. Hence, the only way to lure them was to provide a carnival atmosphere with music, dancers and excitement with ruthless competitiveness that helped attract 40,000 eyeballs.
In Sri Lanka the parallel is People’s Bank that has won a series of awards for brand marketing and advertising excellence that sure indicate that even a public sector entity can beat its string rivals like Commercial Bank and HNB if one is focused to the eyeballs of the consumer.
I guess from a macro end the parallel could be Wild Life Tourism. A recent study has revealed that Sri Lanka boasts the highest propensity to see wildlife in Sri Lanka. What is required is a strong policy to drive this to the key global markets where the eyeball attraction finds this concept interesting. The best example is the positioning of Rwanda as a mountain gorilla viewing experience. Today, this happens to be the number one foreign exchange earner for the country.  Sri Lanka has the same potential to drive up ARR to $ 500 dollars plus from the current $ 97 only in this segment of business. I guess it’s only a matter of time when this new business takes shape.
Lesson 6 – Heavyweights behind you
Lalith Modi got the best talent to back him. Be it Sharukh Khan or Priety Zinta Dhoni at 1.5 million dollars or the best young lifestyle TV presenters to be the voice for IPL even though he is no more in the seat on many corruption charges against him. Apparently the franchisees were told to focus on the 10-12-year-olds as they would be the target consumers of tomorrow and they also have the power to influence the family. The brand will have a revenue turnover of over 1.6 billion dollars in the next 10 years, which is the strength of the demand pull.  The best parallel to me in Sri Lanka is Cargills, which has revolutionised the shopping experience with its ‘Food City’ brand. It now has a set of farmers who are part of the extended community. Maybe the Cargills Agricultural Bank will further innovate the banking industry of Sri Lanka.
From a macro end I would like to focus on the Atchuvely Industrial Zone in Jaffna.
The first post-war industrial estate has been able to attract over 50 industrialists some with BOI concessions that sure demonstrates that if the correct partners are got together, some outstanding work can be done.
Lesson 7 – Performance over reputation
A key success factor at IPL was that big names did not count. All that matters was performance. In fact there were many instances where the top names of cricket were spectators. The winners were those with the right attitude with skill. Age was also not a barrier. Shane Warne proved it by being selected as the most valued player in season 1. In Sri Lanka, my pick from the corporate brands is Venival Soap. The herbal brand took away the consumers of the powerful beauty soaps, which indicates that a Sri Lankan consumer also picks brands that perform and not just on past reputation. From a macro end I admire the performance of a brand like Sensaal that has changed the market dynamics targeting the middle income segment of the market not on in the area of bread and savouries but also for lunch and dining. This has led to the attraction of global brands like BreadTalk into the Sri Lankan market. I guess the pressure is on, on household brands like Perera and Sons, which sure demonstrates that in today’s world it is performance over reputation.
Conclusion
IPL is a case study of modern day marketing where guerrilla techniques of business work. But more importantly it tells us that with focus, even with a two-year toddler, a $ 311 million dollar brand can be built.
The Government of India earned almost 16.2 million dollars as taxes and the BCCI is estimating 1.6 billion dollars in the next 10 years. This proves that brand value indicates the future monies that can be earned by a company. This I guess is why one of my bosses once told me: “Brands are the lifeblood of an organisation.”
Now the challenge is how we make Sri Lanka absorb these concepts from a macro end and thereby stabilise the economy that is currently under shock.
(The author is an award-winning business personality and sits on many public sector policy boards. The above thoughts are strictly his personal views and not the views of the organisations he serves in Sri Lanka or internationally.)