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Rediff.com  » Business » Should the Satyam name be retained?

Should the Satyam name be retained?

April 20, 2009 11:35 IST

Harish Bijoor, brand-strategy specialist and CEO of Harish Bijoor Consultants, says brand Satyam should be phased out gradually as the name has lost all credibility. "A brand is a function of visibility and credibility and the Satyam name has lost all of it," Bijoor says.

Strong words indeed for a brand that was considered one of India Inc's jewels till four months back.

But not everyone agrees with Bijoor. Many feel Satyam is still a strong brand and the scam has affected Ramalinga Raju's reputation, and not the company's brand image.

"It would be unwise to throw the baby out with the bath water," says Shiv Sethuraman, chief executive officer, TBWA/ India. Sethuraman believes the "damage is not irreversible. Satyam still has many clients, competence and equity. The brand should be nurtured," he says.

So the jury is still out on whether the brand should be retained.

The problem is compounded by the fact that Satyam is still a bigger brand than that of its new owner, Tech Mahindra.

Consultants believe the branding of any company is decided by two factors --visibility and reliability. Satyam as a brand is much more visible than that of Tech Mahindra. But when it comes to `reliability', the latter is better placed owing to the company's clean image and professional management.

So it makes much more sense to use the JND (Just Noticeable Difference) branding tool to systematically phase out the old (Satyam brand) over a period of time with minimal distraction for clients.

Bijoor says Satyam's brand value has slumped to Rs 1,280 crore (Rs 12.8 billion) -- a fall of 87 per cent -- compared to Rs 9,873 crore (Rs 98.73 billion) estimated by Satyam in its FY08 annual report.

"The acquisition by Tech M will have only a sentimental impact and won't change the brand valuation much," Bijoor says.

He has used the discounted cash-flow method and other parameters to arrive at the figure.

Bijoor has a recipe for the new owners: give equal importance to both Satyam and Tech M brand initially. Six months down the line, the Tech M brand should have 70 per cent visibility and Satyam the other 30 per cent. Within one year, the ratio should rise to 90 per cent in favour of Tech M brand.

Sethuraman, however, is against such short-cuts and says rebuilding the Satyam brand isn't that difficult. The rebuilding process should first happen internally with clients and employees, as the brand is under a lot of scrutiny and is being observed closely. The internal confidence and perception change will automatically be reflected in the outside world too, he says.

Many big names have successfully changed their brand profile. Sethuraman gives examples of Apple, which faced a management confidence crisis, or, IBM, which made a spectacular comeback in the early 1990s as it restructured from an old world-mainframes company to an open system, hardware and software giant.

Srinivasan Swamy, chairman and managing director of R K Swamy BBDO, agrees. "Brand Satyam took a beating for only one reason -- accounting irregularities by its erstwhile chairman. The employees were not even aware of the fraud. The company's core values and foundation have not been impacted."

The task for the new management, he believes, is to retain its clients and people and the brand image would get resurrected. However, he sees no problem even if Tech M decides to rebrand it. "People would quickly forget the past and move on," he says.

Additional reporting: Sapna Agarwal.

Leslie D'monte and Bibhu Ranjan Mishra in New Delhi, Bangalore
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