How Eveready has managed to become a leader in Rs 1,300 cr battery business
Call it Eveready's last stand. It's been a leader in the Rs 1,300-crore battery category which is growing at about 5% every year.
In the early 90s, a tagline made the dullest of categories sexy. Remember 'Give Me Red' the campaign for Eveready? Over the years, it may have lost some of its colour but the brand has recharged its batteries and is ready to go another round.
For a brief time in the early 90s, Eveready managed to make batteries cool. Give Me Red created by Rediffusion had production values that rivalled music videos (which a vast majority of young India hadn't seen at the time), transforming a formerly stolid and functional category. It was perfect for a time when batteries of various sizes were becoming a staple not just for torches but for the portable tape and transistor generation.
But that's flashback. Fast forward to 2013.
With the market for its core business — batteries — stagnating and a steady rise in input cost taking a toll on volumes, Eveready is diversifying. It's trying everything from rechargeable lighting solutions such as LED fans and table lamps to transistor radios and the great grandchild of the batteries of yore: the portable mobile charger. It's betting big on power-starved Bharat and trying to connect with the already electrified India with a new age portfolio.
Call it Eveready's last stand. It's been a leader in the Rs 1,300-crore battery category which is growing at about 5% every year. But over the years, the slogan Give Me Red appears to have transformed into self fulfilling prophecy, what with a net loss of Rs 2.15 crore for the quarter of 2013-14 financial year ended March 31.
The loss in the corresponding period last year was an even more devastating Rs 86.01 crore. But according to the company, the June quarter has begun on positive note. It has posted a 23% rise in standalone net profit at Rs 4.12 crore in the first quarter ended June 30, 2013. Its net sales increased by 9% to Rs 279.56 crore in the quarter under review as against Rs 256.54 crore in the same quarter last year.
The change is being led by Amritanshu Khaitan, executive director, Eveready IndustriesBSE 2.68 %, the third generation in the Brij Mohan Khaitan family who came on board in 2011 after graduating from the London Business School.
"We did an exhaustive study to understand the relationship between Eveready and its consumers," he says. It reinforced internal thinking about Eveready being a power, energy and lighting brand. Hence, the strategic decision to get into products in line with this core portfolio. It led Eveready into areas like portable mobile chargers and rechargeable lighting.
"We had to move with time," Khaitan admits. With marketing spends of Rs 30-Rs 35 crore for this year, Khaitan is betting big on rechargeable lighting solutions, but without losing focus on his core business.
The battery major plans to revive the radio segment by rolling out transistors for Rs 500, mainly for the rural and semi-urban markets for when FM stations hit towns with less than 1 lakh population. Again, a move that's likely to charge up its battery business.
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But can an old brand learn new tricks? Yes, say some marketing experts. It's a classic case of diversification according to Smitha Sarma Ranganathan, a brand communication specialist who teaches marketing management at IBS Bangalore.
It's a smart move for Eveready to get into the portable mobile charger business, says Saurabh Parmar, founder & CEO of brand consultancy firm Brandlogist. "Unlike most traditional companies, it seems to have focused on what today's consumers require and worked backwards." However while Eveready seems to be making a few right moves on the product front, it may fall short when it comes to youth connect.
KK Cariapa, founder of Opsbuds, a Bangalore-based market research firm, is not sure Give Me Red still has legs. "Those were the days of Generation X when advertising was truly the mainstay. and campaigns influenced the consumer all the way to the point of sale."
Generation Y is not influenced by high-pitched calls for action. They are technologically savvy, and driven by needs rather than wants. "This is not the generation that will rally behind a Herculean call," he says.
For a brief time in the early 90s, Eveready managed to make batteries cool. Give Me Red created by Rediffusion had production values that rivalled music videos (which a vast majority of young India hadn't seen at the time), transforming a formerly stolid and functional category. It was perfect for a time when batteries of various sizes were becoming a staple not just for torches but for the portable tape and transistor generation.
But that's flashback. Fast forward to 2013.
With the market for its core business — batteries — stagnating and a steady rise in input cost taking a toll on volumes, Eveready is diversifying. It's trying everything from rechargeable lighting solutions such as LED fans and table lamps to transistor radios and the great grandchild of the batteries of yore: the portable mobile charger. It's betting big on power-starved Bharat and trying to connect with the already electrified India with a new age portfolio.
Call it Eveready's last stand. It's been a leader in the Rs 1,300-crore battery category which is growing at about 5% every year. But over the years, the slogan Give Me Red appears to have transformed into self fulfilling prophecy, what with a net loss of Rs 2.15 crore for the quarter of 2013-14 financial year ended March 31.
The loss in the corresponding period last year was an even more devastating Rs 86.01 crore. But according to the company, the June quarter has begun on positive note. It has posted a 23% rise in standalone net profit at Rs 4.12 crore in the first quarter ended June 30, 2013. Its net sales increased by 9% to Rs 279.56 crore in the quarter under review as against Rs 256.54 crore in the same quarter last year.
The change is being led by Amritanshu Khaitan, executive director, Eveready IndustriesBSE 2.68 %, the third generation in the Brij Mohan Khaitan family who came on board in 2011 after graduating from the London Business School.
"We did an exhaustive study to understand the relationship between Eveready and its consumers," he says. It reinforced internal thinking about Eveready being a power, energy and lighting brand. Hence, the strategic decision to get into products in line with this core portfolio. It led Eveready into areas like portable mobile chargers and rechargeable lighting.
"We had to move with time," Khaitan admits. With marketing spends of Rs 30-Rs 35 crore for this year, Khaitan is betting big on rechargeable lighting solutions, but without losing focus on his core business.
The battery major plans to revive the radio segment by rolling out transistors for Rs 500, mainly for the rural and semi-urban markets for when FM stations hit towns with less than 1 lakh population. Again, a move that's likely to charge up its battery business.
Full Power
But can an old brand learn new tricks? Yes, say some marketing experts. It's a classic case of diversification according to Smitha Sarma Ranganathan, a brand communication specialist who teaches marketing management at IBS Bangalore.
It's a smart move for Eveready to get into the portable mobile charger business, says Saurabh Parmar, founder & CEO of brand consultancy firm Brandlogist. "Unlike most traditional companies, it seems to have focused on what today's consumers require and worked backwards." However while Eveready seems to be making a few right moves on the product front, it may fall short when it comes to youth connect.
KK Cariapa, founder of Opsbuds, a Bangalore-based market research firm, is not sure Give Me Red still has legs. "Those were the days of Generation X when advertising was truly the mainstay. and campaigns influenced the consumer all the way to the point of sale."
Generation Y is not influenced by high-pitched calls for action. They are technologically savvy, and driven by needs rather than wants. "This is not the generation that will rally behind a Herculean call," he says.
None of which is stopping Rediffusion Y&R from coming up with a revitalised avatar ofGive Me Red after getting a brief to contemporise the campaign. The lack of a strong social or even digital presence is also considered a huge shortfall.
Says Parmar, "Considering they are marketing to heavy mobile or internet users, there is hardly anything done on digital except a standalone website." A TV driven approach is perhaps more suited to small town and semi urban India. But to build a brand for the future requires Eveready to relook at everything from their choice of marketing mediums to a brand icon. Eveready should own "red" everywhere in the digital media as well, suggests Cariapa. "That's the touch point for Gen Y and may be Gen Z."
Khaitan takes note of this fact. However, for a brand that draws over 60 % of revenues from rural India, social media will take some time. "Our budgets are not as large as the Cokes and Pepsis of this world," he says, promising a social campaign around the mobile charger, apart from advertising on popular ecommerce sites.
The focus for the rural audience also involves events such as haats and melas. The transition from predominantly batteries to a wider folio is likely to be anything but stress free.
In spite of rock solid distribution and brand equity, the missing factor is a differentiated high-tech product. In the LED space, it has to contend with China and unbranded local players, dynamics that didn't exist in the late '80s and early '90s.
The "LED market in India is in fact the China market and the margins are wafer thin," says an industry analyst, requesting anonymity. Khaitan is aware of this, but not perturbed.
"Indian consumers are quite price and quality conscious," he says. But the China threat is an opportunity for us, he adds confidently. One may buy cheap Chinese products, but that's only once because you won't buy a poor quality product again, he explains.
"That's why Chinese products are building market for us. For when you upgrade, Eveready is there." Perhaps, the next iteration of Give Me Red will have a more rustic avatar. Maybe it's time to reclaim 'Laal Salam'.
Says Parmar, "Considering they are marketing to heavy mobile or internet users, there is hardly anything done on digital except a standalone website." A TV driven approach is perhaps more suited to small town and semi urban India. But to build a brand for the future requires Eveready to relook at everything from their choice of marketing mediums to a brand icon. Eveready should own "red" everywhere in the digital media as well, suggests Cariapa. "That's the touch point for Gen Y and may be Gen Z."
Khaitan takes note of this fact. However, for a brand that draws over 60 % of revenues from rural India, social media will take some time. "Our budgets are not as large as the Cokes and Pepsis of this world," he says, promising a social campaign around the mobile charger, apart from advertising on popular ecommerce sites.
The focus for the rural audience also involves events such as haats and melas. The transition from predominantly batteries to a wider folio is likely to be anything but stress free.
In spite of rock solid distribution and brand equity, the missing factor is a differentiated high-tech product. In the LED space, it has to contend with China and unbranded local players, dynamics that didn't exist in the late '80s and early '90s.
The "LED market in India is in fact the China market and the margins are wafer thin," says an industry analyst, requesting anonymity. Khaitan is aware of this, but not perturbed.
"Indian consumers are quite price and quality conscious," he says. But the China threat is an opportunity for us, he adds confidently. One may buy cheap Chinese products, but that's only once because you won't buy a poor quality product again, he explains.
"That's why Chinese products are building market for us. For when you upgrade, Eveready is there." Perhaps, the next iteration of Give Me Red will have a more rustic avatar. Maybe it's time to reclaim 'Laal Salam'.
Source : By Rajiv Singh, ET Bureau
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