In an emerging market where there are diverse segments associated with the functional usage of a product, there is a huge scope for startups to create brands with absolute value without relying on psychodynamics.

No Logo was a book by Naomi Klein that was critical about corporate branding of products. A decade after this book was published, branded offerings have not only got strengthened (going by brand value rankings published by various sources); they are also getting digitalised.

Exploring unbranded offerings is an interesting area of exploration, especially when there is a strong focus on emerging markets. One McKinsey article mentions that in the next decade or so the total consumption of emerging markets consisting of 92 countries across continents will be about $30 trillion. A book co-authored by the well-known Prof Vijay Mahajan highlights the fact that just about 14 per cent of the world’s population is served by branded offerings. And closer home, the penetration of branded offerings in India (with the exception of a few categories) is quite low across categories. With both per capita consumption and penetration of branded offerings being low compared to developed markets, several MNC brands have entered India as growth in developing markets is stagnating.

Brand differentiation Fundamentally, brand differentiation is a concept that deals with how a brand can position itself as an unique offering in consumer mindset. What had started off during the Fifties as functional differentiation with respect to brands has come a long way to move into areas of psychological and hedonistic differentiation. Pokémon Go is an off-shoot of augmented reality that had resulted in experiential positioning. In this case the offering is in the entertainment domain and is not typically a functional offering that has a tangible solution. While there is nothing incorrect about several kinds of brand positioning, the important aspect to be considered by offerings is whether functionality-oriented positioning is getting eclipsed by other kinds of positioning, especially in the Indian context that offers tremendous scope for utility-based positioning of brands.

Honda Activa, though not a product for consumers in terms of socio-economics, is an example of functional aspect scoring over psychological aspects of branding. Recent secondary information reflects that it was designed as a unisex vehicle with a focus on mileage, pricing and maintenance that also appealed to non-metro markets. The brand was launched at a time when the scooter market was on the decline. As compared to the other brands in the category, the brand’s advertising is much more low-key.

While there are several segments (including premium ones) available for “state-of-the-art positioning, there is adequate scope for brands to position themselves on functionality among consumers who are particular about functionality and who may not be “compelled” by brands to get attracted to the psychodynamic aspects of branding. While the non-functional aspects of a brand (perceived self-esteem arising from using, say, Rin detergent or Fair and Lovely) is also a benefit, the article tries to emphasise that functional differentiation (what the core attributes of a brand promises) is as important as the non-functional aspects of a branding.

Functional brands’ eco-system

These are companies that may not be able to afford exorbitant advertising on digital media besides not wanting to scale up their magnitude of operations. Emerging markets have an eco-system that presents a huge potential for functional offerings that may not have to follow the branding strategies of mega brands. Parle biscuits has a pack for ₹5 containing around 15 biscuits. Observation shows various segments – college students, executives, housewives and travellers – have a pack handy. I have seen beggars outside temples regularly buying it to appease their hunger. It may be a good study to find out if anywhere in the developed countries such an offer of biscuits will be available for a fraction of a dollar.

Chic shampoo during the Eighties sold a sachet of shampoo at 50 paise, moving the category from a luxury platform to masses. Gopal tooth powder and Gokul Sandalwood talc have had a legendary presence in the market with respect to their target segment. Detergent bars that have a regional stranglehold have a loyal base of consumers. Good Night introduced a ₹1 card that is effective and affordable. Hawaii slippers (see Factoid of the Matter on page 4) are almost a part of culture with millions of people. Had they depended on branded offerings, they would be without slippers. Most of these brands in this category have a name (“brand”) but they are not branded in a typical manner. Several brands of watches selling at the pavements of cities provide consumers with such a device.

Changing scenario

Brands, other than providing trust in quality and low perceived risk, have moved into the psychological domain. Of course, there will always be lower priced brands that cater to self-enhancement needs to appeal to a cross-section of consumers. Patanjali has priced its products at prices that are significantly lower than competing MNC brands. It is close to the functionality associated with categories. If the brand can innovate further to offer a product line that is even lower priced, it would almost be a functional brand of masses. Such a brand has perhaps triggered the launch of Cibaca Vedshakthi by Colgate in the toothpaste category.

Interestingly, the Indian context offers opportunity to marketing to create functional brands even at the higher end. Chai Point actually has taken the neighbourhood chai shops (such small tea shops are a part of the Indian context even in small villages) to a higher level with its quality, variety and hygiene aspects. This is different from the café concept of Café Coffee Day (CCD) that has an experiential aspect that includes the ambience at the cafe. Darshini (small outlets in Bangalore) is another example of no-frills “branded” offering. Nimbu pani and fruit juice stalls are waiting to be upgraded into outlets that will be known only for their ingredients and quality.

Ramesh Kumar is Professor of Marketing, IIM, Bangalore

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