Branding - Stock Broking Companies - up to 2006

1. Branding in a bull run by Stock Broking Companies


December 2003

At ShareKhan they are using different tactics to attract investors. The financial site will soon be kicking off a broking contest. Yes, there are prizes to be won. But the entire effort is part of a giant marketing exercise by ShareKhan, the retail broking arm of SSKI Investor Services Ltd.

And very soon, Kotak Securities will have fine-tuned its positioning with a "You are safe" tagline. And road shows have become big game at Infrastructure Leasing & Financial Services Investsmart Ltd to lure customers. So what's up? Broking houses of all hues have embarked on an aggressive marketing exercise. They are all espousing the FMCG (fast moving consumer goods) mantra to make the most of the current bull run. From extending their branches, strengthening sales force, direct marketing and hiring training consultants, to changing their advertising and even expanding their call centre operations, they are going all out to woo retail investors.

Is all this new? Sure, broking firms jumped on the branding bandwagon when Net trading was introduced about three years ago. So while emerging as national players, a handful tried to create brands. But with the markets wilting, their efforts at branding came in fits and starts.

Now, with a full-blown revival after a three-year hiatus, money is once again being poured in to beef up their marketing, and the new buzzwords include "customer focus, consolidation, positioning, reach and upgrading service standards". Says Narayan S A, managing director, Kotak Securities, "When consumers are looking for market solutions and you are looking for market penetration, you use this opportunity to build your client base." Adds Manish Shah, head retail sales & broking at Motilal Oswal Securities, "You have to be aggressive to differentiate your product for recall. With as many as 500 big, small and tiny brokers, how are you going to create your own identity?"

So from offering an assortment of services including portfolio management to vanilla broking, business is booming for broking houses. At ICICI Direct, daily orders have zoomed to 70,000. Six months ago, it was barely touching 30,000. According to IL&FS' Investsmart's managing director Hemang Raja, it has added 4,800 new registered users to its existing base of 20,000 in six months. Last year, both online and offline daily volumes at SSKI's ShareKhan were around 30,000. Today, Jaideep Arora, director ShareKhan, says that the trades touch a lakh and revenue has shot up more than 100 per cent. And at Kotak, Narayan claims that even as the retail business has grown three-fold in a year, the customer base is up 50 per cent. "When there is demand, you have to talk about what's on offer," he says. Adds Anup Bagchi, chief operating officer of ICICI Web Trade, "If you have to move up the value chain, there has to be differentiation." Whatever the differentiation, the end game is customer acquisition.

In April this year, Investsmart launched a sub-brand Investsaathi. In the new print and television ad campaign devised by ad agency MAA Bozell, it is positioned as the "wealth management solution provider". "This will boost our original positioning of being the best to make your money work," says Investsmart's Raja. The group's tagline has always been 'We will make your money work for you'. In keeping with the positioning change, Investsmart, launched four years ago, is now aggressively targeting the group's customer base. Over the years, IL&FS, which was set up in 1988 by HDFC and Unit Trust of India, primarily for infrastructure leasing and financial services has amassed a diverse client roster. "Now, more than wooing new customers, we will dip into this very pool to expand our brokerage business," adds Raja. To create further awareness about Investsmart, in which the Japanese financial institution Orix Corporation has a 22.5 per cent stake, the company's management team has been holding citywise roadshows. Raja claims that so far, they have already held about a dozen such jamborees. Setting up information desks is another strategy to reach out to new customers. Investsmart first opened a help desk in the sprawling Bangalore campus of the software giant Infosys. The objective? "To help Infosys employees manage their funds better. Our efforts are to tap both high networth individuals and middle networth individuals," says Raja. Since then, it has opened ten more counters in offices including Digital and BSL Software and wants to increase its national presence. This is something that everybody is doing.

In two years, Motilal Oswal doubled its presence to touch 110 towns and cities. It wants to open 25 more branches by April. Says Shah, "Four years ago, our Mumbai business was 80 per cent of our turnover. Now it is half." Today, their terminals have sprung up even in Jharkhand, Bihar and Kerala. And ShareKhan has a presence in 80 cities and wants to expand it substantially by this fiscal end. An expanding infrastructure has meant beefing up the sales force as well. So ShareKhan will double its 100-strong sales force by this fiscal end. The last six months saw Kotak double its sales force to 100. The company expects the team to go up by another 20 per cent by March.

Also, outfits like ShareKhan and Motilal have hired consultants to train their personnel. Some like Motilal even send their managers to the Indian Institutes of Management to keep them abreast of the latest technological developments.

Seminars too have become a big hit with broking houses. To touch base with new customers, they are holding talks on subjects like derivatives. Says a dealer, "The one-on-ones help to build instant trust and only enhance our positioning in the market." With its "The guide to the financial jungle" positioning, ShareKhan's Arora says that it is tying up with online financial and general sites for advertising and co-branding exercises. "You have to do all of this if you want a national presence and increase customer base," says Arora. He claims that now ShareKhan's marketing spend, which had dipped to Rs 1 crore (Rs 10 million) last year, will go up to Rs 4 crore (Rs 40 million) in the current fiscal. "Our marketing outlay is 6 per cent to 7 per cent of our revenue," he adds. Or look at how Kotak Securities has changed its positioning. For what began as Zindagi ka hisaab kitaab created by Grey Advertising, it shifted to the more high profile agency Ogilvy & Mather when it became a bank early this year. Narayan says that with clients asking for products and going by the current market boom, the new positioning harps on safety.

Even making appearances on business channel CNBC is something that broking firms are strongly encouraging their people to do. "In a competitive scenario, our analyst's recommendation and perceptions on the market helps build our brand equity. That's why, we have shed our initial reluctance to appear on television," says a broker. Such gimmicks are nothing new, claim other established players like HDFC Securities and ICICI Direct. With a formidable brand name, officials at both places claim there is no extra effort to put in to garner business in this bull run. They say that their group's corporate campaigns have a substantial rub off on their brokerage businesses.

"Our business plan and branding exercise is not a function of a bull run or a bear run. It is an ongoing process," says ICICI's Bagchi. But for the market in general, it is a case of making hay while the sun shines. As a marketing consultant put it: "Brand building is a continuous process. But in the stock market, it only happens during a bull run."








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