Cyrus Mistry ouster: It looks Machiavellian but major impact on Tata brand unlikely
The consumers would not be unduly bothered about the rumblings at Tata Sons as the trust factor associated with the brand is deeply ingrained in their mind
The news of the removal of Cyrus P Mistry as chairman of Tata Sons has left many confused and bewildered because the manner in which it was done is very unusual and unexpected of a group of the Tatas' stature.
Will the sudden sacking without giving any reason affect the group's brand? It is to be remembered that it has a highly respected image both locally and internationally. Or will it be seen as a minor aberration of the mostly transparent, honest and trustworthy image the group has cultivated painstakingly over a century?
Would a consumer worry about the image or go by the trust factor attached to the group before buying its products?
Harish Bijoor, chief executive officer of brand and business strategy firm Harish Bijoor Consults Inc, says that the consumer would not be unduly bothered about the rumblings at the Tata Sons board as the trust factor has been deeply associated and ingrained in his or her mind. “You would still buy the Titan watch or check into a Tata group hotel because of the trust factor. That won’t change,” he says.
However, ranking of the trust factor of the Tata Group has been steadily going down over the last few years. A report by brands insights company TRA Research, formerly Trust Research Advisory, found that the trust factor of the group stood at the second position among top 5 brands in the country in the year Mistry was offered the chairmanship of Tata Sons. It held on to that position in 2011, too. After Mistry took over, the ranking slipped to fifth position.
The ranking is done on 61 parameters of trust and includes 425 questions.
TRA CEO N Chandramouli says, “The brand had a tumultuous ranking on account of the fact that Ratan Tata had left. He had taken the group to a new level from the time he took over till he retired. Mistry was seen as benign and not doing anything similar to what Tata did. Also, it was strange not to have any communication from the chair of India’s largest business conglomerate for a year and a half.”
The group’s ranking went up a notch at 3rd position in 2014 but slipped to 4th in 2015 and is at 5th position in 2016. Incidentally, it still remains the only Indian company in the top five rankings.
The current situation where the group is in the news for the sacking of Mistry will erode the brand image, says Chandramouli.
“Each one of us feel a sense of ownership about the brand. We associate truth and honesty and transparency with the Tata image and brand. Trust is a dynamic entity and unless you cajole and take care of it well, it will slip out," he says.
According to him, the group does great things operationally. However, if there is one count on which it slips drastically it is in the area of communication.
"Whenever something major happens at the group – the Radia tapes, deaths and suicides of its key employees – the group’s communication on these fronts are poorly done and this is what causes apathy. People's trust in the brand erodes when its communication is poor," he says.
In the case of Mistry sacking too, there is speculation that it is orchestrated simply by Tata Sons only because the group is keeping quiet about the reason, he says.
"There might be very good reasons for taking that decision, but since communication is poor, the act of letting Mistry go seems Machiavellian at one point,” says Chandramouli. He feels the brand has been tarnished to some extent by the recent happenings at Bombay house.
However, there are other experts with differing views on the issue.
Alpana Parida, managing director, DY Works, a Mumbai-based brand strategy and brand design firm, feels that the current storm that is brewing at the Bombay House will go away without causing any damage to the brand.
She reasons that the Tata brand is too strong to be impacted. “It is like Raghuram Rajan and his not being given an extension as the head of the RBI. It has died down. Similarly, this too will die down," she says.
The Tata brand image is one of solidity and honesty. It cannot be jolted by incidents like the change of guard, says Harish Bijoor.
“Brand Tata is very old and is respected not only in the country but also internationally. It is an image that has consumer trust vested in it. Tatas have always been seen doing the right thing by its employees, the Taj attack or the Singur incident, for instance. The feeling is when you are a Tata, you cannot do wrong. It is a company that is blessed with a benign brand umbrella which no other brand in India has. That is what insulates the brand from any negative impact about what happened on Monday when the management took a decision to bring back Ratan Tata.”
Chandramouli and Parida aver that the new incumbent at Tata Sons will be watched. “How that move pans out will be watched carefully and that can send out a strong message about the group,” says Parida.