Low Cost Is Not A Good Way to Build Your Brand

Image: Gireesh GV for Forbes India

W.S. Mukund
Age: 56  
Designation: Managing Director, Acer India
Education: BE (Electrical) from BMS College of Engineering, Bangalore; PGDM from IIM-Ahmedabad
Career: Spent over 33 years in sales and operations of consumer products and the PC market; 13 years at Acer (3 in Acer Middle East and 10 at Acer India)  
Interests: Gardening, farming, reading, and music

When Acer entered the Indian market, it faced a lot of hurdles. What were some of the initial challenges you faced and how did you address them?
When we came in into this country, people did not even pronounce Acer properly. Some confused it with Essar, some called it ‘occur’. These were some of the challenges we had when the brand was completely unknown.

Initially, we chose the route of going through the enterprise segment [where we sold only to business houses] as it gave us time to build our resources in India. When our plant in Pondicherry was ready to meet with consumer demand, we went the retail route. Also, somewhere in 2007 we had a brand ambassador route (by roping in actor Hrithik Roshan). This helped us quite a lot in establishing our brand.

We started out from there and last quarter we were the number two vendor in India.

Acer positioned itself as a low cost brand, but somewhere along the line the consumer branding strategy changed. What happened along the way?
See, low cost is a good way to enter the consumer market, but low cost is not a good way to build or sustain your brand. We would like to be known as technology leaders rather than low cost providers. So we have always been trying to position ourselves as a company that sells affordable high technology products.

What were the key moments during your role as MD of Acer?
When we took our first big order for education [in 2004], it prepared us for a boom in demand in the future. This was a Rs. 25 crore order for the Rajiv Gandhi Shiksha Mission and it was spread in the villages of Madhya Pradesh. We had never done an order where we supplied to villages that would require service support as well. This meant we would need to be ready to service a PC in remote locations, where the state service bus runs only once a day. [This] takes some kind of infrastructure so when we started off with Madhya Pradesh, we built it up gradually. Today, one of the core competencies of Acer India is it can go to any pocket in the country, whether Jammu and Kashmir, Andaman and Nicobar or an island in the middle of Brahmaputra river in the North East. We actually have an installation which is run on a kerosene generator in the North East. This kind of reach exists with only one other company in India and that is HCL.

Another milestone was a programme which we call the Outreach Programme 2009-2010, where we are focussed on building our reach into 4,000 towns in India. More and more people are buying locally, and so we would like to be present where there is a significant customer base. Manufacturers' Association of Information Technology (MAIT) commissioned a study based on which it came out that there are 4,000 towns in India which have a population of one lakh and above. The top 76 towns in this pool have a population anywhere upwards of 5-10 lakh, and they contribute 65 percent of the [buying] market [of the 4,000 towns] in 2008. By 2011 that 65 percent was down to 55 percent, and we project that by 2014 the situation will be the opposite, where smaller towns will contribute to a much larger part of the [buying] market.

Another thing was in 2006-2007, we had a chance to launch LCD TVs in the market, but we said no. I think that is a good decision we made at the time because it required too many resources in marketing that product and we may not make money on that product for many years.

What has been your thought process to building your team at Acer India?
Building a company, I think you have to be like a 10-year-old boy in your mind. A 10-year-old boy is number one, uncorrupted and he has a purity of purpose, he believes he can break Sachin Tendulkar’s record or he can play better hockey than Dhyanchand or he can go to the moon. So you need to have that faith or hope in you. But that boy does not know too much. He will fail, he will fall down, he will get up, he has to get inspiration of others, from the environment, learn, pick up and progress and then one day he will be a fine man who has made his mark.
 
What do you think your successor should keep in mind as he comes on board?
I think we have built a company with a lot of trust and faith with each other and that is what has sustained people to work in this organisation for such long periods. [A large part of the founding team is still with Acer.] My first advice is that this culture should continue. Second, in terms of strengthening the organisation, the finance department should be run conservatively, and the marketing department should be run aggressively. Third, in the Indian market, depth of reach into the Indian market place is important. You have more than 25 different markets and each market is unique and has to be catered to uniquely. Sitting in Bangalore, we cannot say this is the product, this is the pricing and it applies to a pan-India network. It does not work. Along with the Outreach Programme, we started out with a decentralised marketing plan so that each market gets its own local flavour of marketing, local advertising, local promotion schemes, headcount, etc. All this is slowly localised and I think this needs to continue as our strategy.