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These brands have demonstrated the power of continuous improvement, Ajay Bijli tells Abhilasha Ojha
What is the sine qua non of building a corporate brand? What is the best way to stretch a brand or go for a successful diversification?
A brand is the way a brand behaves — some brands can extend themselves to include other verticals; when they become successful, people salute them. Look at Virgin, for instance. The brand has a diverse portfolio with airlines, hotels, even islands. The brand didn't look for any other names, unlike Tata, which has Westside, Star Bucks (in a joint venture), Tesco, the Taj Group of Hotels; basically underlined each baby with a separate name.
There's no correct answer to check how and what to do but diversification is always interesting for brands. Of course, in the case of Kingfisher for instance, the overall branding of the company has gone into disrepute because of the current crisis that the company is facing.
I think all brands need to do great test-marketing to understand if it can be a success story or not, if they can pull off diversification. For instance, PVR Pictures, which aims to be a complete lifestyle entertainment company, has gone into verticals including film production, having bowling spaces, besides multiplexes and other such. However, I was not happy with the production arm of the business and I realised the scale in the “core” business — creating more cinema screens — was very important. One realised that we have to first scale our core business and then build an eco-system around it.
You talk about test-marketing being critical for companies looking to stretch the brands or diversify. What sort of time-frame should they give a new plan and decide if the plan is working or not?
I wear blinkers as far as other businesses go, but I can tell you about PVR and how it struck us that we needed to scale up. I realised that we were just one of the players among the listed companies. I didn't want to be just another boutique player.
Companies should have something distinct, something that sets them apart from the rest. In our case, even though our revenue per screen was the highest, in my heart I knew that quantitatively we were not quite there. In fact, revenue-wise we were even behind some companies. So, it was important for PVR to go back to the core and to grow organically very fast. The recent acquisition of Cinemax has been a vital step in the direction.
What you are saying is that companies need to strengthen the ‘core' business before branching out, right?
Absolutely. It's important to grow organically, and of course it should be ‘profitably organic growth'. We started out nearly 15 years ago, growing gradually, converting single screens to multiplexes. Later, when the malls were coming up, we realised there was space to grow within the malls. It's important for brands to grow in the core business, enhance the offerings in the core business before they can diversify properly. Enhancing offerings, having continuous growth and incremental improvement is always essential for companies and brands to grow.
Look at brands like Samsung and Apple. They just keep doing something new with the same offerings. They may be rivals but personally speaking, I take inspiration from both the brands. They keep improving their products — that one product that they offer keeps evolving over and over again.
McDonald's is another brand that fascinates me with its simplicity and efficiency. Four Seasons hotel, Oberoi, Disney, Indigo, these are some brands that handle customers well, give you a comfortable experience and we take inspiration from all of them.
How do you keep on improving? What is the crux of continuous improvement? Once, yes, twice, yes, but all the time?
You will be surprised. We have always managed to better our original offerings. Say, in some of our properties, we have swivel tables. Think about it, when you watch a film, a chair can keep getting plusher, the table lamp can work well for audiences to read the menu, a swivel table can provide more comfort.
Any business today requires reinvention. Incremental improvements have to be there every time. In our business, the consumer is discerning, so we have to give an enhanced cinema experience; seating, carpeting, technology, sound, auditoria, ticketing, even popcorn — we have to keep improving. Typically, we test the market in some catchments before moving our experience on a pan India basis.
What are the challenges in scaling up in the sector you operate in?
The biggest challenge is that in this business things are quite difficult to turn around. If you don't get the location right, if the rent is not right, if the catchment area is not right, things can go quite wrong. At the end of the day, the return on investment is critical. We have realised that consumers are not always price-led, it's the experience that counts. But that's tricky too.
For instance, in Indore, we introduced one of our premium properties, which gave a fabulous experience to customers. While it had worked in other markets successfully, in Indore it flopped. We saw the results quickly and immediately made alterations and then priced it lower. It was a mistake but we didn't let it become a very huge mistake. Such things happen.
We are not in a simple business; one leg of the business is in real estate and obviously the overall economy, the prices, have a direct impact on us. Then, if the content (read films) is not good, it impacts us too. Above all, there's the regulatory environment to deal with. We have to look at all these aspects to be able to run our business profitably.
What tools or skills should companies employ and acquire to succeed continuously in an unstable economic environment?
Integration plans always need to be in place. In PVR Cinemas, we know that it's important to consolidate and integrate our work now. I always have my A4 sheets around on which I keep scribbling stuff. (I'm not too comfortable with laptop). One plus one should always be 11 not two, or three… Companies should take stock of their situation, in crisis or otherwise. When an entrepreneur runs a company there's no other choice but to be on a treadmill; you can celebrate and acknowledge achievements but everyone needs to know the next move.
Entrepreneurs should not be self-deprecating; they should feel happy about their achievements but remember, one can't afford to hang one's boots. Be driven by growth, nurture your company, understand the market. Take one step at a time; at every juncture the signals will come automatically. Long back, I realised my family's trucking business was not for me; I could, given my interest in cinema, grow another, even if small, part of the business (my family owned one cinema screen in Delhi).
Above all, be prepared for lots of conflict and self-doubt, but also remember that confidence in self will also grow. We first upgraded our own cinema screen, then gradually started adding more screens, then we started multiplexes, then we began our chain. There was divine intervention too but basically things just happened.Major stories over the last 30 days