The World has not pulled out of recession yet and the path will be slow and at times bumpy over the next few years for consumers in the West and secondly, consumers are spending only to the extent that their Governments are pumping money into their pockets. Finally, many of them who traded down to less glamorous brands have discovered the virtues of VFM brands.

For Indian manufacturers and service providers, it is question of moving out of the shadows of being an outsourcer who supplies to unbranded goods/ services at low margins to big brand marketers who own the customer/ consumer. Outsource vendors will face a lot of margin pressure in the coming years as the World reluctantly aligns itself to economic realities. Surely improving productivity will be a weapon for most vendors but for some who have scale, quality and market access on their side, the imperative is to create brands of their own.

The faint hearted will argue that brand building will be difficult and perhaps more expensive than sacrificing margins. Branding is not a solution for all companies but certainly there are many in India for whom the time to act is now. The bad economic times will also pass and along with it the best times for creating VFM brands.

The best brands in the world have been built not merely because they had a stockpile of money but because they were creative in their strategy. Indian companies can move from non-brand status to VFM faster and at a lower cost than if they sought ‘premier’ brand status. Besides that’s where volumes are. As for ‘value for money’ spending on creating VFM brands, don’t ignore the great leveller- Social Media, but that’s a story for the next post.