International Journal of Research in Management & Social Science Volume 1, Issue 1 ( July – September , 2013 ) BRANDING STRATEGIES OF MNCs: A STUDY OF SELECTED FMCG PRODUCTS IN INDIAN MARKET Sunildro L.S. Akoijam1 and Dr Ch. Ibohal Meitei2 1 2 Research Scholar and Professor , MIMS, Manipur University, Imphal ABSTRACT Branding is an integral part of the business building process. Large corporations spend hundreds of millions of dollars building their brands. Brands have become the most valuable asset within any enterprise, quintessential zing the knowledge, the art, the science, and the work of each person in each work day, making them the ultimate symbol of much that is good and true and beautiful within our global economy. In time, Brands began to penetrate beyond the corporate world. The impact of branding in the business building process of FMCG companies in India was also witnessed two decades back. The Indian FMCG sector is the fourth largest sector in the economy with an estimated size of Rs.1, 300 billion. The sector has shown an average annual growth of about 11% per annum over the last decade. This paper is an attempt to understand the concept and roles of branding strategy in the business building process of FMCG companies. For the better and in-depth understanding, case studies of four MNCs in the FMCG sector in India are studied. The branding strategies of top four MNCs i.e. P&G India, HUL, Colgate-Palmolive India and Amway India, especially in the body care products among FMCG product are analysed in details. The paper concludes that different MNCs in FMCG sector adopt different branding strategies each posing different pros and cons, depending upon their goal and vision. Keywords: Brands, Bodycare products, Branding, FMCG, MNC, Positioning. INTRODUCTION Due to the rapid changes in the global market and the increased competition experienced between firms, “Brand Management” has become more important. Good brand management brings about clear differentiation between products, ensures consumer loyalty and preferences and may lead to a greater market share. Brands are highly regarded as an important source of capital for most business. The term brand has different meaning attached to it; a brand can be defined as a name, logo, symbol and identity or a trademark. A powerful brand will enhance a customer’s attitude strength of the product association of a brand. Attitude strength is developed by experience with the product. Brand name and what a brand stands for are the core values for most fast food moving consumer goods (FMCGs). If properly managed, it will increase the competitive advantage of the fast moving consumer goods. The basic attribute of a fast moving consumer goods are also important for a FMCG brand to excel because the strength of a brand commonly provide the fundamental steps for differentiating between several competitors. Majority of the FMCG brands have distinguishable brand identifiers, for example Lux soap is easily recognized by customers. Conclusively, the best way to build brand value and stop product and service commoditization 50 International Journal of Research in Management & Social Science Volume 1, Issue 1 ( July – September , 2013 ) is through continuous attempt to build brand equity. Strong brands are established by creating an emotional attachment with customers, seeking differentiation in communication and performing the service. Branding makes clear a restaurant’s reason for existence and inspires its employees to get used to the brand thereby building it for customers. Brands are used as shorthand to make trips to the grocery store easier; they are used to re-assure us about purchasing decisions and are even used to define ourselves in the society. A brand is a promise. With a brand, customer expectations are set. When someone buys a product or service, they count on those expectations to be fulfilled. The function and art of branding is a major contributor to the success of a product or service sold by the company that markets it. According to Webster ’s Dictionary, a brand is defined as “a means of identification,” or “an arbitrarily adopted name that is given by a manufacturer or merchant to an article or service to distinguish it as produced or sold by that manufacturer or merchant that may be used and protected as a trademark.” Brand management aims to build into customers’ minds a set of perceptions and attitudes relating to an offering, leading to positive buying behavior. To achieve this goal, managers must know a great deal about their customer base. The power of a brand is measured by its effect on buyers. A powerful brand will cause its customer base to either defer or refuse to purchase if the brand is NOT available. Some brands have reached a level of mass acceptance where they are used as action verbs, such as “ Xeroxing ” a document instead of copying it and “ Fedexing ” a package rather than mailing or posting it. One brand’s identity is so strong that when we hear Aspirin we immediately think of Bayer. INDIAN FMCG SECTOR The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well-established distribution network intense competition between the organized and unorganized segments and low penetration cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The FMCG market value is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin-care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumers ‘upgrading’ in the matured product categories. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. It is expected that the rural income will rise in 2007, boosting purchasing power in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%. However, rural India accounts for more than 40% consumption in major FMCG categories such as personal 203 care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care, household care and feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment, it is estimated that processed foods, bakery, and dairy are long-term growth categories in both rural and urban areas. 51 International Journal of Research in Management & Social Science Volume 1, Issue 1 ( July – September , 2013 ) Indian FMCG industry is expected to grow at a base rate of at least 12% annually to become a Rs 4,000 billion industry in 2020, according to a new report by Booz & Company. The Report titled “FMCG Roadmap to 2020 - The Game Changers” was released at the CII FMCG Forum 2010 in New Delhi Thursday. The Report noted that the positive growth drivers mainly pertain to the robust GDP growth, opening up and increased income in the rural areas of the country, increased urbanization and evolving consumer lifestyle and buying behaviour. The report further revealed that if some of the positive factors – driven mainly by improved and supportive government policy to remove supply constraints – play out favourably, the industry could even see a 17% growth over the next decade, leading to an overall industry size of Rs 6,200 Billion by 2020. The last decade has already seen the sector grow at 12% annually as result of which the sector has tripled in size. Releasing the report, Booz & Company Partner Abhishek Malhotra said, “While on an aggregate basis the industry will continue to show strong growth, we will see huge variations at multiple levels – product category (e.g. processed foods growing faster than basic staples), companies and geographies.” “Many Indian customer segments are reaching the tipping point at which consumption becomes broad based and takes off following the traditional “S shaped” curve seen across many markets.” The sector is poised for rapid growth over the next 10 years and by the year 2020, FMCG industry is expected to be larger, more responsible and more tuned to its customers,” he further added. OBJECTIVES The objectives of the study are: To understand the concept and roles of branding strategy in business building process of MNCs. To examine the branding strategies of the selected MNCs with special reference to body care products of FMCG sector in India. To analyse different pros and cons of each branding strategies adopted by MNCs. To analyse the extent to which different branding strategies are successfully adopted by MNCs in Indian market. REVIEW OF LITERATURE McDonald et al. (2001) assert that an appropriate branding strategy is crucial as it would reinforce the desired positioning and hence influence purchase behavior.