Why Brand Led Startup Companies In India Will Be Successful?

There are enough articles, media attention, sound bites on the importance of brand and why it contributes to business growth but yet as a brand consultant I regularly come across entrepreneurs and professionals who continue to ask these questions of why brand? How will it contribute to my business growth?

“Isn’t it the logo and website? Yes, we are getting an advertising agency on board.”

“Oh yes, we need a PR agency also to build our brand.”

But are businesses and brands linked only by marketing and sales? There is much more to a brand, by the way, it runs its business, connect with customers, manages its employees and so on. A good parallel to understand the idea to think of it as your sense of style (not the kind of clothes you wear) is a reflection of your personality and the brand is a reflection of the way we run a business and connect with our customer.

I have addressed what is a brand and the relevance of it in my other articles so, we will focus on “why” brand-led businesses are/ will be successful.

Brand led businesses are successful as they invest and nurture a brand over a period of time (like raising a kid). In the time period as the business grows, the brand investment creates its value in the market and the brand value grows where the brand equity becomes part of the business valuation.

There are many examples of how brand-led businesses have had a huge success in market value and valuation. We have to assume, though, that these businesses have a solid product/ service and are successful in the market or retaining customers. Apple, Google, Microsoft, Facebook that are technology led are leading global brands but we continue to have product led brands such as Coca-Cola, Toyota, Mc Donald’s that are in top 10. We also have homegrown examples of family businesses such as TATA brands, Bajaj, Godrej, Airtel to cooperative led brands like Amul, Nandini to startup brands such as Flipkart, Myntra, Snapdeal, Ola. The brand value is built over a period of time with the company growth but the brand value can also diminish over that period depending on the company’s growth. The important aspect to note is that brand value is not just dependent on company’s scale of growth but also the depth of its value that gets entrenched within the market and in the customer’s mind even though the company might not scale up.

We can see in our startup ecosystem where there are many startup businesses that are not growing in revenue (not even close to breaking even and continue to raise more funding) yet they have spent substantial resources in marketing which in turn has built a brand value that is now considered as part of the company valuation. An example would be for brands such as Flipkart, Myntra or mid-size brands (in terms of marketing budget) like Housing.com or Zivame which are not profitable but are valuable brands in terms of customer recall and market share.

There are many local Indian brands that have a good product or business model yet have no magic to the brand. They may be successful as a company but the growth in its company might be due to the value it offers, a thriving demand or general growth within the sector (irrespective of the company’s brand value), but cannot be attributed to the real worth of a brand that has to survive when there is a slump in the sector, market recession, better/ new competitor products or more competing businesses in the market.

So let me share the top 5 reasons why brand-led business are the future:

Anyone can duplicate technology or business, not a brand

In the startup world, apart from original ideas we have also seen Indian startups that have replicated business models that have been successful in US or replicating a product or technology from Europe/ US. Even few VC’s have funded or encouraged Indian startups to replicate proven models. So you can replicate business models or technology, hire quality talent but you cannot replicate a brand. The brand is the single biggest differentiator of product A from B in competitive markets. Only a solid brand can help you different your product or service from your competitors as businesses can replicate your features or USP but not the magic you create in your business through branding. Brands like Virgin, IKEA, Lacoste, Twinings, Amul, and Maggi noodles have created the magic.

Brand contributes to customers, to revenue

Brand helps you to connect, engage and retain customers over a period of time. Quality branding, consistent brand management and creative marketing build brand equity that allows you to retain and engage your customers who continue to contribute to your business growth. Customer loyalty has always been recognised towards a “brand” not the business. Why? Because people are intuitive towards spending decisions, they want to “like” or love something, an experience they can remember and connect with it. People might like a product or service and may use it a few times but to retain and engage the customer over a period of time needs more than a good product.

Brand brings premium, 2X value

A charismatic and powerful brand can command a higher price for a similar product from its competitors. Depending on the brand, few businesses command 2X, 3X or more times the product. This can be due to 3 main reasons: a.The design of product or service, how creative, cutting edge or innovative it is to give a competitive edge for the business. b. An experience-driven brand that engages the customers with new experiences through its offering, event, retail or service can command a premium price. c. Staying current with the customer and market as a brand goes a long way to evolve as a brand with the customer. If the brand’s marketing, outreach, new products and current trends can be integrated with the brand experience, the customer feels more relevant and relatable to the brand. I will write a more detailed article on how great brands command premium another time. 🙂

Markets are volatile

After looking at successful businesses with perfect product, dynamic entrepreneurs or innovative products and services, there has been no guarantee of the survival of brands and their businesses. Markets or global trends in the current times are volatile that it can sometimes disrupt a predictable path of growth in a sector. During and after the recession, many businesses don’t survive or the competitors take over, a new product or innovative technology totally disrupts the consumption pattern or consumer behaviour. A business can survive in such volatile markets when it can quickly adapt or pivot its offering and the brand loyalty allows the businesses to buy time for its customers and retain them during the worst time. Customers trusting the brand helps businesses retain its market share and innovative itself to survive the storm.

Customers are experience driven

Successful businesses can engage and retain its customers over a period of time only because customers trust the brand. Customers are willing to trust the brand because the brand promises not only to deliver a quality product/ service consistently but also create memorable experiences for the customer amongst several other competitors. This is going to be for coming years in the hypermarket of India where more and more businesses are going to compete heavily for customer’s mindshare. Advertising can burn your company revenues in the current scenario and the business has to lay a strong foundation for the brand and its management that can explore alternative ways of engaging the customer by creating new and stimulating experiences. Experiential driven brands all over the world have been proven successful.

Brands such as Coca-Cola, Levi’s, Adidas, Nike, Absolute, and Samsung have explored new formats of brand extensions and marketing by creating or sponsoring sports events, music shows, parties/ clubs, experiential retail stores, museums. This has built brand equity and a “legacy” that creates a dominant brand presence in customer’s mind.