 Namaskar, I'm Professor Devati Purkayastha from IIT, Bombay, and welcome to my course, Business Fundamentals for Entrepreneurs Part 2, External Operations. This is week two, fourth module, and the topic is about marketing communications. But before I get into the module for today, let me just remind you of the discussion flow for the entire course. So this is a four-week course, and we started last week, in the first week, talking about how you can research markets, competitors, trends, technology, players and products in the market. And then we talked about how you can look at your customers, customer segments, customer value proposition, etc. This week, the second week, in the first module, I talked about value-based marketing. How do you create value for your customers? How do you capture some of it for yourselves and build a long-term, sustainable, profitable business? And today's module is about marketing communication. It's not enough to have a great value proposition. You have to be able to communicate it to your customers. And today we talk about how do you do that. In the next two weeks, I will talk to you about selling, sales channels, direct selling, B2B and B2C selling. And in the last week, we'll talk again about customers, how do you build loyalty, how do you build advocacy, how do you make sure that you provide them with great service, and then about the supply chain and logistics of your business. So that's the course flow. So with that, let's get into today's module. So I'll start with the essence of marketing communication. And then we'll talk about two or three very important concepts, branding, marketing, positioning and advertising. And what are some of the skills you need to develop if you want to choose a career in advertising. If you want to become a brand manager or an advertising manager in a top-notch company like a Procter & Gamble, you need either Nestle, Samson or Tatars or Goodridge. So let's start with what is marketing communication. Remember I talked about value-based marketing, which has three pillars. Creating value for the customers and for yourselves because you create value for the customer and you capture some of it through your pricing mechanism. You have been able to create a long-term sustainable, profitable, growing business. And this week we're talking about how do you communicating value to your customers. And next week we'll talk about how do you deliver value to your customers. And diving deeper into the three pillars, last module I talked about how to create value, which is the value proposition for your customers and the price that you charge the customer. What's the mechanism of pricing so that you remain profitable and growing. In creating value there are two parts, customer branding, we'll start with that today and customer advertising. So what's a brand? All of you are familiar with brands. The biscuit that you're eating will probably be a brand from a Britannia or ITC or Nestle. It will be called Parle G or Oreo or any of those other biscuit brands. The soap that you use will have a brand name. The detergent that you use, the shampoo that you use, the car that you ride, the scooter that you ride, the t-shirt that you wear, they'll all have a brand. So what's a brand? A brand is a name or a logo or a symbol that identifies one company's product from other company's products or non-branded, commoditized product. So if you wear a pantaloon brand versus a shirt or a pant which is just made by a small of small cottage industry, you will know that that's a pantaloon brand or Adidas brand or Nike brand or Levi's brand and then the other product doesn't have a brand. Or if you buy Ata flower, you can buy a branded Ata or flower and that will have a name and a logo and a symbol versus an unbranded where you'll get it into a loose packet. So why is a brand important? Because a brand builds trust and you'll see that companies go to a lot of effort to build the trust which is then communicated with the brand, the logo or the symbol. We'll see some examples later. And the brand value is the premium that a company can charge because of the brand versus an unbranded or any other brands. So branded Ata or flower will typically be a bit more expensive than an unbranded Ata or flower which comes in a loose packet. So that's the brand value and we'll see some examples soon. And therefore brands are very, very important because for the consumer it means there's a trust. When you see a branded product, you can trust that product. And for the company, it gets the extra profits and sales and it differentiates them in the market. So let's look at some examples of great brands which you will be familiar with. So this is a ranking and an analysis done by a global company. You can see the name below. It's called Brand Finance Global and the list is for last year, 2022. And we'll see the world's most valuable brands which means the premium that the brand gives to the company. And we'll see and not a surprise that one of the most valuable brands is the Apple brand. And we'll see a number there which means that the Apple brand because the phones are branded Apple or iPhone or iPad or MacBook are branded with that Apple sign. The Apple company can get 355 billion US dollars, which is about maybe 240,000 crores extra valuation because of the brand. But without getting too much into the numbers, look at the other big brands. Second is Amazon. Many of you must be using Amazon because when you go to Amazon, it's convenient and you get a wide range of products. And Amazon is quite well known across the world versus other smaller e-commerce company. Google, all of you must be using Google, Microsoft. Anybody who's using a PC or a laptop will be using MS Office or MS Outlook. Walmart, which is a large supermarket in many parts of the world, especially in the United States. It's a US company. And then Samsung, many of you will have a Samsung phone. Most of you will be using Facebook. ICBC is a Chinese company as is why and Verizon is like Geo or a Vodafone or Airtel. It's a telecom company in US. And these are the brand values. But there are also brands in different categories or industries. So let's look at some of them. If you look at India, for example, the most valuable brands, of course, are not a surprise Tata's, Infosys. And why is Tata the most valuable brand? Because if there's a Tata product, instinctly, most Indians will trust the brand and say, oh, it's a Tata product. Must be good. Infosys, if you say Infosys software, most companies will say, oh, it's Infosys solution. Must be good. LIC for life insurance. Reliance, whole bunch of products from reliance, including Geo, Airtel. And then if you go down the list, SBI, many of you will be banking with state bank or HDFC bank. Vipro is a B2B brand. Companies who buy Vipro solution trust Vipro. Mahindra is a SUV brand, passenger vehicle brand and tractors brand. So farmers trust Mahindra tractors. And that's why they can command a premium. And then we've got HCL. So these are valuable Indian brands. Moving on, let's look at some soft drink brands from across the world. Many of you will be having some soft drink or the other. Obviously Coca-Cola and Pepsi are the most valuable brands, but then I've got Red Bull, which is an energy brand. And then if you go down the list, some of them are available in India. Nescafe. Many of you will be drinking Nescafe coffee. And if you go down the list, Bright, Lipton, Lipton Tea, and they've got Mountain Dew. And these are the brands which are valuable because if you say a non Coca-Cola, non Pepsi-Cola or Cola drink, you may not trust it and you may not pay as much as you'd pay for a Coca-Cola or Pepsi-Cola. And that's the value of the brand. Let's move on. Let's look at cars. So which are the most valuable brands? The most valuable brand in the world now is Tesla, and Tesla is electric vehicles. And it's a new category, but it's leading the world in electric vehicles. And then you look at Mercedes because a Mercedes brand is supposed to be highest quality. And then we've got Toyota. And we've got BMW. And then if you go down, you have Porsche. You've got Volkswagen, Honda, Ford, Hyundai, and Audi. And please see here that the Porsche may be a better car in terms of high quality, a racing car, an expensive car. But the brand itself may not be as valuable as a Toyota brand. Because Toyota cars in general are more affordable than a Porsche car. But Toyota sells much more. It's a much bigger car company and a car brand, and therefore it's more valuable than a Porsche. Here let's look at luxury brands. Porsche is the most valuable luxury brand. It's not the most valuable car brand, but it's the most valuable luxury brand. And they've got Louis Vuitton, Gucci, Chanel, Hermes. And if you go down the list, you've got several other brands, which are luxury brands selling luxury products. It could be an April or it could be a perfume or it could be a car like Porsche. And why are they so valuable? Because when you wear a Chanel perfume or a Louis Vuitton dress or a Gucci polo or t-shirt or dress, it comes across as a much better, much more esteemed brand than maybe something else like a pantalon or a west side brand. Let's move now to another important concept called brand positioning. So the brand valuation were more the science of branding. Brand positioning is more the art of branding because it's in the human mind. So brand position is in position in the mind of customer about how he or she perceives the brand. It's got nothing to do with numbers. It's a psychological impression that companies create in the minds of the customers. And we'll see some examples soon. And therefore it does not involve too much of number crunch, but brand position involves more of psychological like emotions and associations and value judgment. And the big thing about brand positioning is it's not a long sentence. It's not a complex calculation. It's a tagline, which means it's three or four words, which are very powerful and it sticks into the user's mind. But those three or four words must be able to communicate to the customer what the brand stands for. So let's look at some examples. The most famous or at least one of the most famous campaigns was Apple Think Different. And there is a Steve Jobs video of when he launched the Think Different campaign. You can find it on YouTube. You can search for Steve Jobs brand values or Think Different. And in that Steve Jobs explains how he wants the Apple brand to be very different from what else exists out there. And it is used by people who are also very different. The person who wants to be a very different kind of a photographer and therefore wants an Apple iPhone with a great camera or someone who wants to be an artist and therefore wants to hear the best music of an Apple iPhone. So he talks about people who want to be different, think different and therefore they use something which is Apple and because they want to be different and they get it from Apple, Apple can charge a huge premium. Nike. There are many shoes in the world. But Nike shoes are very special because Nike as a brand celebrates the spirit of just do it. The spirit of athleticism. So when you wear a Nike shoe, Nike wants you to feel, oh, today I can run a lot. I have not been running but if I am wearing a Nike shoe, let's run. Let's swim. If I am wearing a Nike apparel. So the spirit of Nike is let's just do it. Mercedes is the highest quality. So they say the best or nothing. If you want the best, you buy Mercedes. If you look at state bank, the value proposition of state bank is whichever corner you go to in India, every village, every city, every town, there are state bank branches. And it's a bank for 150 crore Indians, 1.5 billion Indians. So the tagline is banker to every Indian. It's everywhere. Pantaloons. In love with life. In love with passion and fashion. But of course it appeals to affordable segment. People who don't want a luxury segment but still want fashion and want to enjoy life. They can wear pantaloons. So that's the brand positioning of pantaloons. Many of you would have seen Mahindra cars or SUVs. And many of you would have seen on the roads a Mahindra thar. Some of you may be owning it. Mahindra thar is like an SUV, an off-roader, which can go to the mountains and the jungles and cross the rivers and so on. So the positioning for Mahindra thar, that SUV there, is explore the impossible. You can go anywhere to explore anything. So again two or three words conveying the position that Mahindra thar wants the consumer's mind to capture. So it's all about the mind. Levi's. It's all about quality. Now it's not enough for brands just to have a fancy tagline. Everything that the brand does has to support that positioning and the tagline. So then let's look at how Levi's supports its tagline of quality never goes out of style. Remember Levi's is a very, very old brand. It's one of the oldest brand and it basically sells branded jeans. So how does it convey the position and how does it support the position of quality never going out of style? So let's look at how the brand or the company supports the positioning. First of all you see the tagline, Levi's. The brand is there everywhere. It's on the back pocket typically and for a t-shirt or a shirt or a jacket is probably on the pocket. And if you enter the store the brand is right up there. And then if you look at the tag, the Levi's tag, you will see quality clothing original riveted because when Levi's first created those jeans it actually put metal rivets in the stress points of the pockets so that the pockets will never tear because earlier pockets used to tear up and because they put the rivets, the pockets are much more durable. And if you look at the picture of two horses trying to pull apart a Levi's, there are stories about how horses cannot tear up a Levi's jeans because the fabric is so strong, the yarn is so strong, the rivets are so strong and so on. And then you'll see the same thing in any of the Levi's advertisement and you see on the screen on the bottom right, you can see the Facebook advertisement. But let's look at an Indian example, DMART. And DMART talks about daily discounts, daily savings, which means if you go to a DMART store, whenever you walk in daily, you get a discount which means you save money, you can buy more and you can live a better life because you're saving money on every purchase. How does DMART support that position? So if you walk into the store, you'll find the discounts are displayed right up front, buy one, get one, buy one, get one, or you get 12% discount or 10% discount. So it's there right up front. So the pricing that you are getting daily savings is in every aisle, every corner of the store when you walk in. That's how brands create a whole experience to support the brand positioning. And if you have a great brand position, you can command a premium pricing and you can grow maybe a bit faster than others and make much more money and therefore your brand valuation goes up. And I give you some examples of great brands with great value. So with that now, let's pause and I urge you to reflect on what's written on the screen. Remember, in this course in every module, we'll have the reflection breaks of three minutes where I encourage you to write down in your course journal whatever you remember from what I've said and then think about what I'm asking you to think about on the screen and write it down and at the end of the course you can look back on your course journal and refresh your mind about everything that you've learned in the course. So the next three minutes, think of a brand that you use. It could be a food brand, it could be a quick service restaurant, a chain restaurant, it could be a t-shirt, it could be a shoe, it could be an institute, an IT or NIT or whichever college you are in, these are all brands. And of that brand that you use, think about what is the logo. Even if you're in a college or a school, your school or college will have a logo because that explains to the outside world which school or college it is or the logo on your shirt or the shoe or the logo on the restaurant. And see if there's a tagline. Look for the tagline of the brand. And then think about how is that brand positioned in your own mind. So when you think of that brand, that biscuit, that coffee, that restaurant, that airline, Indigo or Air India, all that corporate brand, Tata's or Godrej or Billa's or Mahindra's, all that car, Maruti or Hyundai, what comes to your mind? Emotionally, what do you think about it? And then think about how the brand supports this positioning. So if Tata's is all about trust, I trust the Tata brand. Think about how all the Tata companies and the Tata products support the position of Tata trust, the trust that Indians have on the Tata brand. So reflect.