How Private brands pushed PSU brands.

1. PSU brands paves way to private brands.
This was almost 25 years back when all of was familiar with HMT watches. They really ruled the market
and even I remember in their slogan they called them as TIME KEEPER TO THE NATION. And their
advertising message said if you have the inclination we have the time. And when they launched the
quartz brand they said if we you have the inclination we have the exact time. Here they were
emphasizing the exactness to the correct time a quartz watch is supposed to deliver. But in 1987 when
the Tata’s came to the market with Titan they came with lot of planning and a well thought out strategy
to rewrite the watch industry which they ultimately did so. And within a matter of few years they
dislodged HMT and just surged ahead by bringing in variety and innovation in all their marketing efforts.
Be it distribution or product innovation they did it differently to only be the undisputed king in the
watch business. From a watch brand they have moved into to a whole range of brand extensions and
the latest being the launch of perfumes.
By the time we entered the 90’s with liberal policies we saw several categories where private brands
entered and started giving tough time to the PSU brands. Let me recollect a few categories where
private brands have made deep inroads.
1. Lubricants: This category was primarily dominated by the PSU brands due to their strong hold
on distribution. As no private brands were allowed to sell their products through petrol stations.
But that did not stop from private sector to push their products. Castrol was the first to
aggressively market their product. Their strong communication strategy helped them gain good
visibility to get into the consideration set. They used the bazaar trade for distributing their
products and also cleverly opened outlets opposite petrol pumps to make easy availability of the
product which gave the car owners one more choice apart from what the fuel station was
stocking. They kept constantly innovating and improving their product offerings through strong
R&D and became partners to many OEM automobile manufacturers. Today the private sector
must be holding all combined, close to 40% market share in this market. We have several brands
like Gulf, Elf and Tide water that also had their own share in this market.
2. Insurance: Life insurance was synonymous with LIC. In fact the lingo that was used is LIC kar
leya…..Also since this PSU brand was backed by government the credibility scores were very
high which helped them to gain loyalty as against the private brand. But today desk research
say’s that LIC has only 50% share and the combined private insurance brands control the
balance 50%. There are at least 10 brands which are fighting to get their pie in this highly
competitive market which has lot of government norms that one has to adhere to. Most of
these private brands have pumped in huge marketing spends to create awareness but besides
that they also bought in the use of online tool for people to buy polices which is still lagging
behind with the PSU brands. With the rapid penetration of internet and a younger population
that will rule the Indian market these private sectors will have an upper hand to woo this new
generation?

2. 3. Airlines: The Indian skies were ruled by the Indian Airlines (Now Air-India). But over a period of
time starting 90’s we saw the downfall of the Indian Airlines as private operators came in. There
was huge shift towards private airlines and the result being that Air-India only has 20% market
share according to published reports. In the airlines business service matters a lot and that’s
where Air- India dipped very low to surrender their market. Besides the constant staff and pilot
issues also eroded their equity over a period of time. Plus the continuous newness in the service
and the competitive pricing by the private operators never allowed Air- India to regain their
glory which they sat on for many years.
4. Telecom: BSNL and MTNL were the household name in the wired connection when it came to
telephone. One had long waiting period to get a permanent connection. At one point of time
having a telephone was a luxury but starting 90’s with the advent of mobile connections it very
soon became a necessity. While both the PSU brands are also present in the mobile space but
not sure what is their market share. Nearly 85% market share is held by the private brands. Here
again technology and aggressive marketing helped these private sector brands to hold the
market with lot of ease as there is no fight or competition from the PSU brands.
While red- tapism and vested political interest has been by and large the deterrent for PSU brands to
grow. We must also keep in mind that the mindset of Indian consumers have shifted and changed in the
last few years. The new breed of Indian customers seeks value in whatever they buy and hence it is
important for both the PSU brands and private brands to get their value proposition right. With internet
within the reach the narrowing of buying decisions have become easier as price comparison more
product information are being provided by many aggregators. Unless there is huge overhauling done by
PSU the story will not change and private brands will just keep on cashing in.