Synopsis
Regional brands aiming to be pan-India players will need deep pockets and plenty of patience to win over consumers, especially in a cash-starved economy.
National and regional brands are two different branding strategies that companies use to promote their products. National brands are those that are marketed and sold throughout the country, while regional brands are those that are marketed and sold in a specific, limited region.
National brands have the advantage of being well known and recognized by consumers across the country. They often have larger marketing budgets, which allows them to reach a wider audience through advertising campaigns. However, national brands may struggle to connect with consumers on a personal level because they lack the local touch that regional brands offer.
Regional brands, on the other hand, have a strong connection with consumers in their specific area. They often use local ingredients or feature local landmarks in their branding, which helps them build trust with consumers who value authenticity and community involvement. However, regional brands may struggle to expand beyond their local market due to limited resources for marketing and distribution.
One of India’s best-known ice cream brands is Vadilal, which has a vast network of franchise locations, an annual revenue of more than 550 crores, and is aiming to grow to become an Indian multinational in the ice cream industry.
In today’s competitive market, regional brands are giving tough competition to national brands. Regional brands have gained popularity in recent years due to their unique offerings and localized approach. These brands cater to the specific needs of the local population and provide products that resonate with their culture, taste, and preferences.
Regional brands have a deep understanding of the local market and can offer products at a lower price point than national brands. They also have an advantage in terms of distribution, as they have established networks in their respective regions.
Moreover, regional brands are often associated with quality and authenticity, which appeals to consumers who prefer locally sourced products. This has led to increased loyalty among customers towards regional brands.
Regional brands have been giving national companies tough competition in recent years. They are becoming more well-known as a result of their capacity to satisfy the unique requirements and tastes of local consumers.
The Ice Cream Times team reached out to various manufacturers and posed several questions regarding the subject matter. We have compiled their responses for your reading preference.
What do you think about the regional brands? Are they giving tough competition to national brands?
From Chitale Ice Cream, Shashank Joshi, who is the Operations Head, said, “Yes. One thing to understand is that some time back in its life, a national brand was a regional brand. Hence, this process is a continual improvement. Regional brands are giving tough competition; however, there are very few in number that is capable of disturbing the national brands from their position and getting the benefit of being regional Brands.”
Understanding regional culture and consumer behaviour is one of the key benefits regional brands have over national brands. They have an advantage over national businesses that might not be able to achieve this since they can develop products that appeal to the local market.
Hasan Akbar Ali from Frosty Ice Cream, Cuttack also agrees: “Yes, in my opinion, regional ice cream industries are giving the national brand tough competition. They can fill the gap between demand and supply as well as sell at competitive prices. This can be seen in Gujarat, where most national brands are, and we find regional players flourishing.”
The success of regional brands is also attributed to their emphasis on quality rather than quantity. As they attempt to appeal to a larger audience, they place more emphasis on producing high-quality items that satisfy the needs of their clients.
Hailing from Madhya Pradesh, Vikas Jain, Managing Partner of Sawariya Ice Cream, says, “It depends on factors such as localization, margin, availability, and flavour.
Localization: This is a result of the lower degree of overhead expenses they incur, such as distribution and advertising. Their cost of sales is far lower than that of national brands, giving them enough room to produce goods of higher quality. Regional brands’ costs for raw materials and packaging materials are not significantly greater than those of any major brands.
Margin: Due to reduced sales costs, regional brands offer retailers and distributors higher margins when selling their products.
Availability: All national brands do not cover all of the rural areas since it is difficult for any national brand distributor to provide quick delivery to retailers or dealers. This is a major weakness of national brands, but local manufacturing is strong in this area.
Flavours: Local brands are frequently regarded as having superior flavours to national brands. More than 75% of their products can be sold within 7 days of production, and the customer gets fresh goods.
Taste: Regional products are frequently thought to have superior taste due to their freshness. Within a week, the regional manufacturers sell 75% of their products due to the quality of their freshness.
By providing distinctive items that are tailored exclusively to local consumers, regional brands are generally demonstrating that they are formidable competitors in the market. National businesses will need to innovate and adapt if they want to keep up with this escalating trend.
Binoy Joseph, Partner, Meriiboy Ice Cream, Kochi, offered an excited answer. He said, “Of course, we are giving tough competition to national players. Regional players often have certain advantages such as strong local presence, a loyal customer base, and the ability to cater to specific regional preferences and tastes”.
Hashim Basheer, Dairy Marketing Specialist and Head Consultant, Wide Verticals LLP, Kochi, reasons out, “Yes! The regional players are concentrating on the flavours and inclusions that are popular among regional consumers. To survive in the local competition, they also invest in R&D, technology, and consumer awareness. This is creating turbulence in the regional markets, and that’s why many national brands are finding it difficult to grab market share in regional markets”.
National brands need to adapt their strategies to compete with regional players. They need to understand the local market dynamics and tailor their offerings accordingly. They should also focus on building relationships with local distributors and retailers.
Neeraj Tahlani, director of Golden Ice Cream Patna, articulated that “In the last decade or so, regional players have taken on the more experienced national brands. Small and regional brands score better because they are often close to the market, respond faster to changes, and are willing to learn from their mistakes.
Various factors have contributed to the rapid emergence of challengers in the past decade. In many product categories, technology is easily available. It is no longer the exclusive preserve of established national players. Moreover, many entrepreneurs today are qualified tech-savvy people if not technologists themselves. They understand the importance of technology.”
Neeraj announced that earlier, resources were a constraint. So, established brands created high barriers to entry, but today, even if the entrepreneurs don’t have money to back their plans, investors and venture capitalists are around to fund them. The smaller brands have also started delivering on the quality front. No longer can national brands pose as the sole guardians of quality. Probably the biggest strength the smaller brands bring to the table is that they are often close to the market and respond to changes faster. They are typically managed by more entrepreneurial teams that are flexible and willing to learn from mistakes.”
Siddharth Karnany, from SM Ice Cream Mart, voiced his words: “National brands continue to maintain a strong foothold and demonstrate their dominance in the ice cream industry. While regional brands may pose some competition, national brands have several advantages that make them stronger players. National brands often have established distribution networks, allowing their products to reach a wider audience and be readily available in various markets.
Their extensive marketing budgets enable them to engage in nationwide advertising campaigns, creating brand awareness on a larger scale. Moreover, national brands have the resources and capacity for extensive research and development, enabling them to innovate and introduce new flavours and product lines more frequently, catering to evolving consumer preferences. These factors collectively contribute to the robust position of national brands in the ice cream industry”.
According to Sudhir Chavan, CEO of Cream Bell Ice Cream, there are a few national brand players in India. “Both regional and national brands have a scope if properly differentiated, positioned, and communicated. However, national brands can have an advantage by leveraging scale to drive cost, efficiency, and marketing spending to create brand awareness and preference.”
In today’s competitive market, selling a product requires more than just having a great product. It requires the right technique to convince potential customers to buy it. The first step in selling a product is to understand the target audience and their needs. This will help in creating a marketing strategy that resonates with them.
Our Ice Cream Times Team checked with the industry players on another query:
What techniques may be used to help regional firms achieve recognition alongside national brands in the ice cream industry as a whole?
To this convenience, Shashank Joshi stated that “the sales techniques that give an edge to regional brands are product quality and affordability. It should have some innovative idea or content, such as natural or no artificial flavours, etc., and the final one is scalability to large scale”.
In a congested market, regional businesses frequently struggle to stand out. To help these businesses receive the recognition they deserve, several strategies that can be implemented. Local businesses should use social media platforms to expand their visibility and clientele. Regional businesses can develop a devoted fan base that will help spread the word about their brand by producing interesting content and connecting with their fans.
Regional players can set a price war by pricing their products at very competitive rates as well as by packing and design. Hasan Akbar Ali suggests, “Lowering prices can be an effective strategy to attract customers and gain market share. By undercutting the prices of established competitors, regional players can create a strong incentive for consumers to switch to their products.
“In addition to competitive pricing, packaging, and design can also play a crucial role in setting a price war. Eye-catching packaging and appealing design can make products more attractive to consumers, even if they are priced lower than their competitors. Effective packaging and design can help regional players differentiate themselves from their competitors and create a perception of value, potentially leading to increased sales and market share”.
However, it’s important to note that engaging in a price war is a strategy with both advantages and risks. While it may help regional players gain a foothold in the market and attract customers initially, it can also lead to a decrease in profit margins and potentially harm the overall industry. Price wars can be financially draining for all involved parties and may not be sustainable in the long term. Therefore, careful consideration of the potential consequences is necessary before initiating a price war strategy.
Building strong relationships with customers is made possible by providing top-notch customer service and running tailored marketing initiatives. Regional businesses can adjust their products and services to match the demands of their clients by recognizing their needs and preferences. Similar thoughts resonate with the regional manufacturers.
Vikas Jain suggests a few techniques that, according to him, should be used to stay ahead in the ever-challenging market.
Microlevel Costing: We have observed over the past ten years that regional brand industries are seeing a decline due to the fact that they have incurred losses despite enjoying a strong brand and local market share. They are unaware of the micro-cost control module in their company. They compute costs in accordance with recipes, but they don’t promptly verify what the workers actually use. Most regional business owners lack trained office management personnel who are familiar with microlevel costing and can promptly reconcile inventory. Most importantly, if they install a recipe-based inventory control module, they will be able to frequently monitor their profit and loss.
Concentrate on quality: Regional brands should concentrate on making premium ice cream using fresh, local ingredients. They will be able to set themselves apart from national brands, which frequently employ less expensive imported ingredients.
Put the customer first: Providing excellent customer service is crucial for any business. From the moment they enter your store until they finish their final bite of ice cream, make sure your consumers are satisfied with their experience.
Use social media: social media is a fantastic tool for local brands to engage with customers and increase brand recognition. They can publish their recipes, pictures of their products, and videos on social media.
Work with retailers as a partner: Regional brands can work with retailers as a partner to get their products into stores. They will be able to contact more people thanks to this.
Invest in marketing: To increase consumer awareness of their products, regional brands must invest in marketing. They can achieve this through local events, public relations, and advertising.
By focusing on customer relationships, social media presence, and community partnerships, regional firms can successfully achieve recognition in today’s competitive market.
Neeraj Tahlani explains, “Regional companies are leveraging their intuitive knowledge about local tastes and preferences and catering to local needs more effectively. Their stronger relationships with local vendors, understanding of the local distribution landscape, and know-how of the regulatory environment put them in an advantageous position to compete with established national companies.”
“Interestingly, regional companies are more prominent in tier two and three cities, and as these cities become lucrative pockets for further growth, regional companies are becoming a natural competitor to the national companies. Besides, regional companies are starting to expand their nationwide presence after securing a presence in local regions and are going to threaten the expansion of established national companies, especially in tier two and three cities,” added Neeraj.
Hashim Basheer states, “By investing in modern automation, product development, and branding can help them create larger impressions. Simultaneously, they should take advantage of their regional availability by focusing more on the last-mile supply chain.”
Binoy Joseph emphasizes that localized flavours, better service, low operating costs, and a supply chain are a few methods that should be adopted by regional Manufacturers.
Siddharth said, “To help regional firms achieve recognition alongside national brands in the ice cream industry, various techniques can be employed. First and foremost, regional brands should focus on creating a strong brand identity that reflects their unique story and values. They can leverage social media and digital marketing to increase visibility and engage with a wider audience. Collaborations with local influencers, food bloggers, and community events can also help generate buzz and create awareness. Additionally, strategic partnerships with local businesses, such as restaurants and grocery stores, can enhance distribution channels and reach new customers”.
“The Per Capita consumption of ice cream in India is 500 ml compared to other countries; it’s quite low. Do you think it’s the national brand’s responsibility to penetrate more into the market? Sudhir Chavan stated, “Regarding per capita consumption being 500 ml, both national and regional brands could improve penetration,” Sudhir was prompt to reply.
Finally, it’s important to continually analyze and adapt your sales techniques based on customer feedback and market trends. By doing so, you can stay ahead of the competition and continue to sell your product successfully. It is fair enough that mastering these techniques is crucial for anyone looking to sell a product in today’s market.
Younger generations, for instance, frequently choose healthier food options that support their philosophies of sustainability and ethical sourcing. This has increased interest in regional organic food companies that use ingredients from the area.
How do consumer preferences influence the competition between regional and national brands?
Taste, flavour, and regional preferences like a specific fruit or flavour are key preferences influencing competition, says Shashank Joshi.
Binoy Joseph remarks that “National players have a common policy for their products across the country, but regional players can adopt local tastes, flavours, and products to compete with national players and also give better services to the market as and when required.”
Consumers who appreciate authenticity and originality are drawn to regional businesses since they are frequently associated with local culture, customs, and flavours. National brands, on the other hand, provide stability, quality assurance, and bigger distribution channels that attract customers looking for dependability and ease. Our team finds the echo of these thoughts in the manufacturers too.
Hasan Akbar Ali postulates that “the regional players can set a price war by pricing their products at very competitive rates as well as by varying packing and designs.”
Hashim Basheer mentions that “Wide availability, connected retail visibility, and compulsive communication with regionally popular brand personalities, artists, and influencers are the major parameters that can influence conscious customers. For price-sensitive consumers, SKUs and competitive pricing are the parameters.”
Vikas Jain says that, “on similar lines, the ways that regional brands can appeal to consumer preferences are:
Develop flavours that appeal to the tastes of consumers in their region.
Offer their products at a lower price than national brands.
Build a strong brand presence in their region.
Create a positive customer experience.
By following these tips, regional brands can compete effectively against national brands and win over consumers. Regional brands that have a strong brand presence in their region will be more successful than national brands that do not. This is because consumers are more likely to choose a brand that they are familiar with and that they trust,” says Vikas Jain.
Neeraj Tahlani also agrees with the fact that “Consumers’ intention to purchase a regional product is influenced by their attitude towards the regional product relative to competing alternatives, which in turn is based on their beliefs and expectations about the functional, social, and emotional performance of the regional product.”
“When a company loses its market share to a competitor, there are a few ways that they can try to gain it back. These include lowering their prices, promoting their brand, and updating their product offering. All of these strategies have their pros and cons, and none are guaranteed to work, but they will start a company on the right path to becoming more competitive again.”
Siddharth contemplated, “Consumer preferences play a significant role in influencing the competition between regional and national brands in the ice cream industry. While national brands offer a wide range of standardized flavours and familiar options, regional brands tap into consumers’ desire for locally sourced ingredients, artisanal craftsmanship, and unique flavours that reflect regional traditions and cultures.
Consumers are increasingly seeking personalized experiences and are willing to support local businesses. This preference for authenticity and local connection gives regional brands a competitive advantage over national brands. However, national brands still hold a strong presence due to their widespread availability, established reputation, and economies of scale, appealing to consumers who prioritize convenience and familiarity.”
Sudhir said, “Yes, there will be consolidation due to high competition, thereby putting pressure on profitability.”
When regional and national brands compete, consumer preferences are a key factor. Customers’ purchasing decisions are influenced by a variety of tastes, preferences, and shopping behaviours.”
Consumer preferences that are influenced by a variety of reasons, including demographics, lifestyle changes, health concerns, and social media trends, are changing, which increases rivalry between regional and national companies.
In conclusion, a regional brand’s success is a testament to the power of localization in marketing strategy. National Brands must recognize this trend and adapt accordingly if they want to remain relevant in today’s competitive marketplace. Consumer preferences are a significant factor in determining the success of regional versus national brands.
To sum up, both national and regional branding strategies have their advantages and disadvantages. Companies must carefully consider their target audience and resources before deciding which strategy is best for their product. Understanding consumer behaviour is critical for companies seeking to gain a competitive edge over their rivals.
Remember, success in the ice cream industry, or any industry for that matter, requires constant innovation, adaptation to changing trends, and an unwavering focus on customer satisfaction. By leveraging your regional strengths and implementing effective strategies, you can continue to give tough competition to national players.