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Thursday, November 29, 2001

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Who's smiling now? TVS or Suzuki?


Ramanujam Sridhar

The die is cast. The separation is final. TVS and Suzuki have parted ways and TVS Motor Company Ltd is the new entity that has been formed. And the relationship of 19 years, which was at best uneasy, has come to its predictable end. A number of analysts have had many things to say on the subject. It is believed that Mr Venu Srinivasan has pulled off a major coup in buying Suzukis stake at Rs15 per share given the fact that the current market price is in the region of Rs140 (at the time of writing).

Some others view the break as a desperate pull-out on the part of Suzuki Motor Company which may want to enter the Indian market, although it will be allowed to do so only in 2004. Some others have highlighted the risks (and if one may add, the heartburn) associated with joint ventures. But to me, as an Indian and as a well-wisher of the TVS group, the more important questions are as follows - will the stand-alone TVS brand survive? More importantly, will it thrive and be the dominant player that it so desperately wishes to be? And what learnings are there for other Indian companies which are probably chafing a little at the bit as a result of their own, less than hunky-dory relationships with foreign partners.

Name change or change the rules of the game?

Shakespeare might well have asked, "Whats in a name" but savvy marketers know the value of a brand name and its power in the market place. (The brand name Coca-Cola, for instance, was valued at $ 72.5-m in 2000). Ideally you look for constancy and consistency in your branding. Our motorcycle brand, however, has been through its own share of chopping and changing. The brand was initially launched as Ind-Suzuki in 1984. The brand name was changed to TVS-Suzuki in 1987, which continued a trifle uneasily for 14 years. There was also the exclusive use of the Suzuki brand name for motorcycles like Fiero, Samurai etc. Hereafter, it will be referred to and promoted as TVS.

TVS is no stranger to this country, least of all to South Indians who apparently used to set their watches by the transport companys prompt bus service, which began way back in 1911. Will TVS, which is a household name in the South, manage to hold its own with the Hondas, the Kawasakis and, if one may add, the Suzukis of the world? Will it substantially build equity for TVS in the northern and western markets in the absence of Suzuki? This is possibly a concern for the cynic. And yet, TVS has bought itself time till 2004 before Suzuki too enters the market. What are 30 months in the life of a brand? Quite a lot, if used intelligently and strategically. Clearly if this separation is any indication, TVS has not been found wanting in strategic intent and execution of the strategy. TVS has created its own logo and new look and feel for its brand, over two years ago. While it is apparent that it has been in the air for some time, what is not so apparent is the fact that a great deal of thought seems to have gone into this entire process of parting of ways. While this is a decision that will have far reaching implications, it was patently a decision that wasnt taken a moment too soon. As Anthony Robbins said, "It is in your moment of decision that your destiny is shaped." Clearly the intention now seems to be focused on shaping the TVS brand as a victor in more ways than one. And TVS has to look ahead to the future and create its own destiny and not be unduly worried by the past.

Designing the future

You are only as good as your latest design might well be the current mantra of the automotive industry, as consumers want new shapes, sizes and engine capacities. And this is where an international partner calls the shots. Honda, one hears has 400 designs, which can be unleashed on the Indian market while some others have over 150 waiting to be tested on Indian roads. The TVS strategy of having a design capability of its own should stand it in good stead in the years ahead. Though the earlier versions of TVS mopeds may well have been an adaptation of a moped model called Go-go VA of Batavus of Holland, the Indian company has been no slouch in the design department. The Scooty, XL Super, Spectra and the recently launched Victor have all been developed by TVS. The indigenously developed Victor might have been the writing on the wall for the companys relationship with Suzuki. If market reports are to believed the initial response to the Victor has been quite encouraging. The learning for other companies with nebulous relationships is to prepare for the eventuality of a parting.

TVS did two significant things to foster its design capability. One was a conscious decision to never outsource the design in its entirety, but to develop it in-house, use consultants to validate, test and critique the design and suitably modify it. In fact, the company uses consultants extensively (someone says they come out of the woodwork). The company has used universities and specialist agencies as well. The strategy of getting the collective wisdom of specialists is interesting (if you can manage the relationship). The second is the recruitment of a few key designers from the Indian navy and organisations like Hindustan Aeronautics Ltd. Steve Jobs might well have said that its better to be a pirate than join the navy but its also a fact that the Indian navy has traditionally been known for its design capability. Though TVS may feel quite upbeat about its new-found liberation, a lot of its future success will depend on its ability to produce new products rapidly.

Think long-term

I have been observing the vicissitudes that TVS has been going through over the years and have always admired the companys long-range vision. A vision, which enabled it to invest in a modern plant and an excellent test track and the wisdom to continue investing in R&D for rapid prototyping, emission requirements and accelerated testing, even when the company was reeling under losses. The strategy of transforming (at one time) dowdy dealerships to state-of-the-art retail outlets that are quickly becoming landmarks and the heritage of quality which comes from Sundaram Clayton, another company headed by Venu Srinivasan, which won the prestigious Deming award in 1998.

Yet, no company can afford to sit back on its past. The greatest challenge for the future will be building recognition for the TVS brand. The three key rules of marketing are: brand recognition, brand recognition and brand recognition. Clearly the three letters TVS must be more than merely recognised particularly in the more complex and demanding markets of the North and the focus on the future has to be brand building. For only a strong brand can withstand the onslaught of global majors with deep pockets.

Get married but take care

Its perhaps important to remember that corporate life is full of joint ventures that have failed. Examples like LML, Sony Orson and Mercedes readily come to mind and I suspect a few more current relationships are on the rocks too. Here are a few questions with reference to joint ventures, that companies might wish to seek answers:

Can you use the association to your advantage? Are you prepared for the eventuality? What are you bringing to the table? Is your foreign partner having a stranglehold on you and the relationship? Or are you like TVS ensuring that the foreign partner does not have too much of a say in running the company so that you dont feel the pinch when he eventually decides to follow his own path? And finally, how strong is your own brand?

Yet, there can be value in joint ventures as in marriage. Get married in any case, if you happen to get a good mate you will be happy, if a bad one, you will become philosophical, which is a fine thing in itself, said Socrates. Mr. Venu Srinivasan has to be more than merely philosophical. He must act and enhance the TVS brands equity if he is to bring "more smiles per hour" not only to his investors but also to diehard supporters of Indian brands like me.

Pic.: Mr Venu Srinivasan, Managing Director, TVS Suzuki: Will the brand emerge a victor?

Picture by G.R.N.Somashekar

(The author is CEO, brand.comm. Feedback can be e-mailed to bleditor@thehindu.co.in)

 
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