The MD of KSDL, an IAS officer, said in the bid briefing meetings, “These FMCG majors keep coming to us with offers for the brand. While we have no wish to sell, I would certainly like to know what the right price is, since there seems to be such a range of offers. And while you are at it, tell us what would make the brand even more valuable in the future. What should we do, and with which products? You know, will people completely stop buying soap and switch to body wash and other fancy personal care products?”

 

The marketing strategy for a legacy brand such as this is something any brand manager would love to sink her teeth into. So we sank our teeth into household purchase panel data, TGI, as well as retail audit data for each state in the South and the rest of the country. We saw retail metrics by subcategory of soaps, by store type, and town class. We compared consumer metrics from TGI versus the HH panel and actually got a consistent picture across both, which was a relief and a delight.

 

The new triers-versus-lapsers analyses within the HH panel, by category of soap, showed us the powerful insights data can reveal. What kind of consumer stays with the brand, and who moves out? From which competing brand are we managing to lure consumers?

 

We were able to define marketing objectives for each state individually and target consumer segments. With this clarity, we were able to focus our qualitative consumer immersions on well-defined profiles. The 45-year-old housewife in Jayanagar versus the young woman entering the workforce in Chennai versus men in Hyderabad. Brand managers are well aware of the power of such consumer immersions. It was gratifying to see the new understanding it brought to people who had been with the brand for decades. We pored over Brand World collages and product groupings to distill learnings that we could use in decision-making.

 

I also remember this project for one of the best Brand Visioning workshops that I have run. Colleagues looked at us with scepticism, wondering how it would go in a roomful of PSU managers who had never participated in such an exercise. I realised the meaning of the phrase “Trust the Process.” All the credit goes to the 20-strong KSDL team who came in with no preconceived notions, followed our instructions to the T, and filled out exercise formats painstakingly without overthinking. The result was a brand positioning statement I still look back on with pride. Even 15 years since, it is one of the best we crafted, right down to the brand personality, which brands don’t focus enough on.

 

We then looked at Brand Architecture to identify which SKUs should be used for the valuation exercise. Aided by the commercial team’s costing sheets, we calculated the brand value using three standard methods:

1. Replacement Cost / Category Spend Benchmark Method:
   The MS brand generated revenue with very low marketing investment. If we had to support it at category-average levels, what would it cost?

2. Earnings Split / Price Premium Benchmark Method:
   MS, at the time, operated at a price premium within the segment of the toilet soaps category in which it operated. Hence, the incremental margin it made versus if it operated at the prevailing price of a similar product.

3. New Product Launch Benchmark:
   This was the forward-looking view, where we also looked at the potential to generate new revenues under the same brand name, increasing topline, while at the same time adding to brand equity. Alternate scenarios were modeled, assuming extensions into relevant segments and categories.

 

The final value range that we arrived at for Mysore Sandal was one that we would have been comfortable paying if we ourselves wanted to acquire the brand, and we could see how money could be made from it. I was certainly more confident about it than I would be about some recent valuations I have seen quoted in public media for D2C FMCG brands. Of course, clearly, there is something my colleagues and I are missing, probably because we are not familiar with those brand metrics and consumer equity. We are, however, not surprised when we come across news of 3,000+ startup brands that have closed shop in recent years.