Miraco Gensets

Meera and Company Ltd. had been the leading distributor of Kirloskar diesel engines for over four decades and DG set (Diesel-engined generating set) assemblers for the last twenty years, when it first began discussions with Embrand in 1996.

The problem, as Meera & Co. Saw it: The market was growing at a slow rate, margins were down and Kirloskar, in a bid to increase its hold on what would soon become a market for global competitors, was appointing a large number of distributors and retailers, thus reducing the size of Meera’s pie.

Embrand’s initial investigations revealed another dimension to the problem:

• Customers of DG sets in India had been accustomed to seeing the DG set business as being an informal, custom-assembly type run by “blue-collar” types – electricians and mechanics- who offered a mix and match range of engines and alternators- the two key elements of a generating set.

• The diesel engine was the most expensive component of a DG set and required most consideration, and bore the names of reputed and giant industrial manufacturing companies such as Tata, Cummins, Volvo, Kirloskar etc. Names of other components were less well known.

• Most gen-sets were ‘naked’, and the engine and its brand name were the most visible identifiers.

• Word-of-mouth amongst consumers was the key medium of communication, and pride of ownership hinged obviously on the brand of engine in the gen set.

• The assembly of the gensets (marriage of the engine to the alternator) was typically done in sheds in low-rent areas. This was much like another essential item in Indian middle-class households those days – the ubiquitous “Desert Cooler” that was a low-priced substitute for an air-conditioner.

Summary of problem:

• Meera & Company ran a professional, large-scale assembly operation manned by engineers, but unfortunately, it was in a business that customers perceived to be “garage-shed, blue-collar”, and therefore could not match the respect that customers had for the engine manufacturing brands.

• Therefore, for customers, the engine brand justified the investment in a gen-set, and the brand of the gen-set, too, by default, was the engine brand.

• So, while gen-set assemblers delivered a solution to the customer, every gen-set only served to enhance the equity of the engine brand.

Emerging trend:

Small (<5HP) , petrol-engined, portable, off-the shelf gensets for domestic use, manufactured by respectable brands such as Honda and Yamaha were becoming increasingly popular in India because of frequent power outages. While these were incapable for powering air-conditioners, they met all other electrical power needs of an Indian household.

Solution adopted by Meera & Company in 1996:

• To use a brand name coined then by Embrand – Miraco – to use as the identifier of its DG set products in the gen-set business, and thus help customers distinguish the product from the company. (The use of the term ‘product’ here, rather than ”brand, is deliberate and germane to this case and Embrand’s philosophy.)

• To use the name when selling and advertising its gen-sets

August 2000:

Meera & Co. came to Embrand with another problem –all other DG set assemblers were undercutting and outselling Miraco.

Embrand studied Miraco’s business processes and discovered the following facts, among others:

• Miraco had assumed that the name of its products would become a brand for its customers and prospects.

• Miraco’s customer profile and marketing processes were not perceived to be significantly different from those of Miraco’s key competitors who were also large-scale assemblers.

• Miraco’s sales force was leveraging the decades old presence and equity of the parent company (Meera & Co.) in selling its products at a premium price over assemblers – thus undoing the process of distinguishing the DG assembly business from the engine trading business.

• To justify the cost of their DG sets, the Miraco sales-force spent more time naming the brand names of the components, than on talking about the Miraco brand.

Embrand’s considered opinion was that Miraco needed to redefine its business as a more serious one – that of a DG set manufacturer- rather than an assembler or a seller/dealer. Miraco had little in the eyes of its consumers to offer for the premium price it was charging - neither a reputation as a manufacturer, nor a demonstrably superior product. It sold largely to existing customers and therefore was not building a larger customer base and, therefore, awareness and positive word-of-mouth.

As a solution, MIRACO factored in 3 aspects of the product that could play a major role in the marketing process of MIRACO products in spite of having a virtually non-existent brand. These aspects were feature list, aesthetics, and performance in areas that more educated and, more importantly, more high-profile and respected businesses in urban areas, needed, but which local DG sets did not offer – e.g. lower noise, lower vibration, lower exhaust emissions, higher levels of user-friendliness and aesthetics that matched or exceeded that of products offered by low-HP brands such as Honda and Yamaha.

Working with a team of skilled industrial design professionals, and valuable guidance from the design department of the Indian Institute of Technology in Delhi, Embrand developed new product concepts aimed at emerging segments such as the IT sector, HORECA and upper-income urban households. Such a user profile, apart from creating a new revenue stream, was less price sensitive and would also endow the Miraco brand with a perception of being built to their (user’s) higher standards – thereby justifying a higher price.

While comprehensive design details of these products are too lengthy to discuss here, initial CAD renderings of these products are featured.

Embrand also felt that good service quality was more important than advertising for such hi-investment products. As a communication tool to provide reassurance to prospective buyers in this area, for instance, Miraco set up and operated a co-op power generating facility in Sainik Farms, an affluent residential area in New Delhi.

On its part, Miraco responded with a new plant to manufacture noise-proof canopies at its Ludhiana facility and worked with the Govt. Of India’s design labs in Chandigarh, Punjab to operate remote digital control systems that were a design feature of these new DG sets.