The recent announcement by Indian IT firm Satyam that it is to become the fourth global sponsor of the 2010 and 2014 FIFA World Cups may have come as a surprise to those unfamiliar with the company. But brand experts predict that its relative anonymity will be short-lived as a result of the deal.
'While tier-one companies, such as Coca-Cola, use sponsorship to reward their customers' loyalty, sponsorship can also be an effective strategy for tier-two companies to raise awareness and advocacy levels at the start of the purchase funnel,' says Iain Ellwood, head of strategy at Interbrand.
He adds that partnering with high-profile events such as the Olympic Games, Formula One and the football World Cup can greatly improve a brand's public profile, pointing to South Korean companies Hyundai and Samsung as having raised their status through effective sponsorship.
However, he also believes that while more Indian brands will begin to associate themselves with big events to raise awareness internationally, because its economy's growth rate of 30% is based largely on sales to its home market, there will not be a stampede.
'There is still huge potential in that domestic market, making the desire for international dominance less acute than it is in smaller countries such as South Korea,' he explains. 'But we are likely to see the likes of Satyam, Tata and Mittal [acquiring] power brands that the West can no longer support.'
Simon Anholt, an adviser on nation branding to various governments, says that although opinion formers recognise the rise of corporate India, consumers have an outdated perception of the country.
Anholt's quarterly Nation Brands Index, which ranks countries according to public perception, suggests that UK consumers' positive view of British corner shops and curry houses - and, by extension, brands such as Cobra beer and Patak's spices - is being tainted by their perception of India as an employer of low-cost labour, as well as unsatisfactory experiences of offshore call centres based there.
'If Indian brands want to make headway in the UK market, the best way to do it is through business-to-business activity, as business customers are the lowest-hanging fruit,' says Anholt.
This is the approach taken by Satyam, which works with 167 of the Fortune 500 companies. 'We have development centres in 27 countries and customers in 57 countries, but we now want to build our profile in the area of IT-enabled sports coverage, which is a nascent market,' says Hari Thalapalli, head of global marketing and communications at the company.
Satyam has aimed some advertising at business audiences, but the FIFA deal is the first stage of an awareness-raising consumer campaign. 'As we grow we will need to be able to recruit in each of our target markets, so we need to explain to people who we are,' adds Thalapalli.
When Indian group Tata bought Tetley in 2000, it was careful to promote the tea brand itself, rather than its own involvement. However, Tata's sponsorship of Formula One team Williams last year, and the recent appointment of PR firm Financial Dynamics, suggests that it is now trying to subtly raise its profile among UK consumers.
Tata, which also bought struggling Anglo-Dutch steelmaker Corus earlier this year, is now poised to acquire Jaguar and Land Rover from Ford. Whether it will promote itself as the owner of the car marques remains to be seen, but Ellwood says demonstrating it can successfully run operations that have struggled under UK and US ownership will do its image no harm.
Anholt believes that such 'symbolic actions' are far more effective than sponsorship for a low-profile brand. 'Brands can't just wrap themselves in the cloak of a big event and expect to be taken seriously without preparing the market to believe in them first,' he says.
Nevertheless, he argues that Indian companies stand a far greater chance of acceptance in Western markets than those from China, where the recent spate of product recalls, and media coverage of its pollution and human rights record, have sullied the 'Made in China' tag.
By comparison, Anholt points out that firms based in Japan and Germany, both of which score highly in the Nation Brands Index, have reversed negative perceptions since World War II by producing quality products in global markets. But, he adds: 'India has a wider choice of ambassadors than just its products, particularly given the absence of the kind of social, cultural and political negatives that once hampered Japan and Germany and now dog China.'
There are other factors that could benefit Indian brands, including the rising popularity in the UK of Bollywood, and the continued attraction of India as a tourist destination, both of which have helped strengthen the bond between the countries. It is a closeness that Ellwood describes as 'welcoming an old family friend back into the fold'. If Indian brands can instil a similar feeling in UK consumers, they will surely prosper.
This article was first published on Marketing