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Dec, 07 2010

SPINNING CHALLENGES INTO SUCCESS

India is a global gateway for foreign brands. However, it has its own set of challenges that foreign brands have to overcome. Building a brand despite several roadblocks is not easy. But who said so, anyway. So, how to counter challenges? Adapt, adapt and

WITH India's rising entrepreneurial power, numerous global brands are heading towards India for global expansion. Entering a new market is as complicated as portraying the brand's image to consumers hailing from diverse cultural backgrounds. And this is a major challenge faced by global brands in India. After making inroads into the Indian market through strategic routes, every foreign brand has to deal with multitude of challenges, through different way-outs of course.

What defines a challenge

Rome was not built in one day. This adage is true for brands too. To win consumers' hearts and build a strong brand appeal require lot of meticulous planning and research to understand market demographics. Foreign brands face legal intricacies, have to understand country's Foreign Direct Investment (FDI) preferences, its mixed culture and then have to scout for suitable partners and business routes, have to be aware of shifting consumption patterns, brand consciousness and finally, devise strategies to establish the brand name.

After the entry of brands into the new market, there are another set of challenges pertaining to finding trained workforce, setting up the supply chain, battling lesser sales owing to high price points, tough competition by local and foreign players, scarcity of right space, high cost of operations, sky-scraping real estate costs, logistics, lack of infrastructure, limited distribution network for luxury brands, high tariff because of high import duties, etc.

Karnika Seth, Attorney at Law & Partner, Seth Associates, Advocates and Legal Consultants, says, “For a foreign brand entering into local markets, one of the biggest challenges is the price sensitivity of Indian markets, preconceived notions of the consumers, their consumption patterns and preferences taking into consideration diversity of social and cultural aspects of this country.”

Addressing the sentiments of foreign brands, Abhay Gupta, Executive Director, Blues Clothing Company (BCC), exclusive franchisee of high-end luxury brands, states, “There are a number of challenges that have to be overcome like sky-high rentals, lack of trained staff in luxury, regulatory clearances on luxury goods, fragmented retail environment, aggressive competition and so on. Rentals are something that cannot be compromised on, location is the key to place a brand. We have very strict benchmark for our sales staff and hire only the best in the industry.” Another dilemma is finding and training the faculty. “One of the biggest challenges we are currently facing is finding the right club partners  who understand the fitness industry business and more importantly, how the Group Fitness business can add value to existing member retention and club potential profits,” says Rania Boucher, Managing Director, Les Mills India, world's largest provider of choreographed exercise-to-music group fitness classes distributed to health clubs.

Amidst this, global brands need to devise fresh strategies to craft their well-built grip on the Indian market. Here are some of them.

Think globally, act locally

'When in Rome do as the Romans do' is undoubtedly one of the healthiest approaches to be followed by global marketers in India. With economy growing at a rapid pace, India started pulling worldwide brands across varied sectors. Be it food and beverages, apparel or any other sector, the global brands must learn to customise to suit as per the Indian context. The Indian Master Franchisee should understand the potential customer's preferences: why would they buy your product, their price constraints and what could probably prompt a buying decision.  Vikas Pall, Vice President Operations, Ruby Tuesday, an American casual dining restaurant chain, says, “Firstly, we had to customise 20 per cent of the menu so that it is easy to suggest dishes from the Indian cuisine and get them approved. To get exclusive territorial rights is not easy but as we had struck a deal when India was an emerging market, it wasn't too difficult for us to ask for that.”

Constance Ruiz, President & Founder of Vivafit, Portugal's fitness chain informs, “Foreign brands need to find the right balance of commitment towards the brand as well as flexibility to adapt to the foreign country reality, specifically around price positioning and marketing.”

Market it right

Right pricing is a crucial part of customisation. Indian consumer may not be willing to pay for any foreign product that is tagged at a double or triple price. Hence, in order to create a win-win situation, it becomes imperative for foreign brand to offer products at tailored prices to suit local preferences and average Indian customer's pocket size. For foreign brands, right pricing is a blessing in disguise for ensuring high footfalls and receiving maximum returns.

Franchisors can optimise their positioning and increase sales and margins by promotional gimmicks to educate the customer and establish the brand. After understanding the outlook of the Indian consumers, the Indian partner should suggest to the brand owners sitting abroad to adapt as per the image of the brand, as per the local taste and price points, without damaging the global standards of the brand.

Scouting for a feasible location with the right real estate cost is another main challenge. Be it a highstreet or a mall, it must derive good footfalls that sequentially assures beneficial returns. Being fully aware of the market, Indian partner can assist in selecting and negotiating the right property. Based on the space availability, the foreign brand must learn as how to market, sell and distribute products through a variety of channels and retail formats to strengthen sales.

Assure distinctiveness

Indian franchisors need to assure that global brand's image will not be diluted. To keep an eye on franchisee's performance, the Indian partner must conduct audits to test the brand's performance, average footfall and sales. The franchisors must provide operations manual to operate the franchise outlet. Laying strong emphasis on audits, Manpreet Gulri, Development Agent and Country Head at Subway Systems India Pvt. Ltd, informs, “The development agent or his representative visits every restaurant once every month and conducts a restaurant evaluation that is shared with the franchisee. The evaluation covers all aspects of the business (marketing, operations, etc). There is a process in place whereby the franchisee can rectify shortcomings in the store that are pointed out during the evaluation process.”

Gupta says, “We have a strict monitoring and compliance system. Heavy investments in technology whereby all stores are connected via a private satellite tower-based vpn gives us security of data exchange and constant corporate monitoring from the back-end. Physical audits are carried out systematically by external and internal auditors.”

Pall says, “Audits are a very important part of our system. Mystery shopper audits are surprise audits that are held at every outlet quarterly to understand the brand and services provided from the customer's perspective.”

So, after all this discussion, we can safely conclude that lot of factors determine a brand's success. As says Seth, “The knowledge of typical characteristics of Indian market plays a vital role. The success of any international brand depends on many factors such as its uniqueness, customer preferences and satisfaction, competitive pricing, high quality of goods or services and adaptability.”

Falling, trembling and yet formulating new ways to live up to the end consumer's expectations is all that global marketers in India are aiming at. They are radically studying the market scenario, consumption patterns and thereafter, targeting the perfect business models. How can then success elude them.

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