Best Practices in Market Intelligence for India by GIA

www.globalintelligence.com

Best Practices in Market Intelligence for India

Webinar presentation November 2, 2010


Presenters

•  Ms. Stephanie Tan, Global Intelligence Alliance !  Marketing Manager, Asia-Pacific !  Webinar conferencier

•  Mr. Vishwanath Desai , Global Intelligence Alliance !  Senior Consultant, Hong Kong !  Webinar presenter


GIA is a strategic market intelligence and advisory group

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Global Intelligence Alliance (GIA) was formed in 1995 when a team of market intelligence specialists, management consultants, industry analysts and technology experts came together to build a powerful suite of customized solutions ranging from outsourced market monitoring services and software, to strategic analysis and advisory.

Today, we are the preferred partner for organizations seeking to understand, compete and grow in international markets. Our industry expertise and coverage of over 100 countries enables our customers to make better informed decisions worldwide.


Access local knowledge in over 100 countries

GIA Group has 13 offices on 4 continents. Together with affiliated GIA Member companies, certified GIA Research Partners and consultants, GIA provides access to local knowledge in over 100 countries.

All GIA Network companies adhere to GIA’s Research and Analysis Quality System as well as the SCIP Code of Ethics.

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Webinar content outline

•  India – Country overview •  Growth themes •  Challenges of conducting MI in India •  Recommended solutions •  Case studies


India overview


India fast facts

!  Became a trillion dollar economy in 2007. !  World’s second most populous country after China with a population base

of 1.16 billion as of July 2010. !  Supports 16% of the world’s population, on 2.5% of world’s land area. !  World’s largest democracy with 29 states and 6 union territories under one

central parliamentary government. !  Internal consumption adds to more than 50% of India’s GDP. !  GDP growth projected at 9.4% for 2010-11 and 8.4% for 2011-12. !  Remains a preferred destination for foreign capital: FDI inflows have

jumped 4 times since FY05.


Country overview India is often divided into 4 overall zones

India Fact File

Population growth 1.4% p.a

Land Area 3.29 mn sq km

Population density 324 persons per sq km

Form of government Constitutional Republic and a representative democracy

Number of states 29 states & 6 union territories

Capital New Delhi

Per capita income Nominal: USD1,124.4 p.a.

Religion 6 main religions

Languages Hindi (national language), English (business language), 22 (official languages)

Key festivals 8

Currency unit Rupees (INR)

Rural-urban mix 70% people reside in rural areas

Households 240 mn

Literacy rate 65%


Western India is one of the most developed regions in the country and is highly industrialized. Proactive government policies and relatively better infrastructure (social, physical and industrial) have helped in attracting investments (foreign and domestic) over the years into the region.

Western India

Gujarat Gujarat is one of the fastest growing states and most

industrially advanced states of India. Gandhinagar is the state capital. The state ranks amongst the top five with regards to per capita income.

•  Tertiary sector contributed almost 50% to the state’s income in 2008.

•  The state contributed, 21% to India’s exports and 15% to its industrial production in 2009.

•  The state boasts of 83 product clusters, 202 industrial estates, 60 SEZs.

While the entire region boasts of high foreign tourist intake, Goa in particular has a flourishing tourism industry.

Maharashtra Maharashtra is the third-largest state in India in terms of

area and the second-largest in terms of population. Mumbai, the financial, trade and commerce capital of India is the state’s capital city.

•  Per capital NSDP of the state is higher than the country average.

•  Tertiary sector contributed more than 60% to the state’s income in 2008.

•  There are 58 SEZs in the Maharashtra.

Maharashtra Industrial Development Corporation (MIDC) is primarily responsible for the development of industrial infrastructure in the state. The government of Maharashtra is also promoting the development of several Special Economic Zones (SEZs) across the state


Northern India is pre-dominantly agrarian but the rapid GDP growth is changing the economic landscape. The region is progressively moving towards manufacturing and services sector driven economy. Despite the recent uptake in investments in the region, economies of Jammu & Kashmir, Himachal Pradesh and Uttarakhand are primarily agrarian and are driven by tourism.

Northern India

Rajasthan Rajasthan is the largest state (land area wise) in India.

Jaipur is the state capital.

•  Tertiary sector contributed nearly 60% to its income in 2009.

•  The state has 5 operational SEZs and has in-principle approval for developing another 6 such industrial clusters.

Bureau of Investment Promotion (BIP) and Rajasthan Industrial Development and Investment Corporation (RIICO) are responsible for promoting investments and developing industrial infrastructure in the state.

Uttar Pradesh Uttar Pradesh is the highest earning state of the region.

Despite growing its per capita NSDP at CAGR of 10% during 2001-09, the state ranks low in per capita NSDP on account of high population density.

•  Uttar Pradesh ranks among the top states in India in terms of agricultural production.

•  Tertiary services - IT, electronic services, printing and publishing contribute more than 50% to the state’s income in FY09.

•  The state has a robust industrial infrastructure, including 15 industrial areas, 12 specialized parks, three growth centers and four industrial infrastructure development centers (IIDC).

•  The state has 18 notified and functional special economic zones (SEZ). The state has proposed 40 IT/ITeS parks (apart from IT SEZs), two biotech zones and a knowledge park.


Southern India is well developed in both manufacturing and services sectors. All the southern states also rank high as tourism destinations. Southern states are considered as India’s outsourcing hub. All the IT firms, BPO service providers and captive offshoring units have operations in all or either of the capital cities of these states. State governments of these states have been able to attract significant investments into the knowledge sector through proactive policies and incentives.

Southern India

Tamil Nadu Tamil Nadu is amongst the most industrialized states

in the country and has the highest level of urbanization.

•  The tertiary sector registered a high growth of 11.9% and contributed 55.3% to the state’s income.

•  The state has a total number of 53 SEZs and has a high concentration of automobiles and auto components, chemicals and rubber manufactures.

Karnataka Karnataka is the fifth most populous state in India

economy and its economy is primarily driven by technology and energy sectors. Bangalore is the capital city and it is regarded as the silicon valley of India due to the significant presence of IT companies.

•  The tertiary sector witnessed the highest growth and contributed 55% to the state income in 2009 followed by the secondary sector (29%).

•  The State has 15 operational SEZs and 97 PPP (Public Private Partnership) projects.


Southern India – Cont’d

Andhra Pradesh Andhra Pradesh is the fourth largest state in the

country in terms of land area. Hyderabad is the state capital. The state has emerged as a knowledge based state with key industries such as IT / ITeS, engineering, pharmaceuticals, biotechnology etc.

•  The state’s tertiary sector contributed 61% to the state’s income in 2008 followed by the primary sector contributing 35%.

•  The state is well developed in terms of infrastructure. It has 37 public private partnership projects for the roads sector. It is also the first state in the country to initiate a PPP Metro Rail project.

Kerala Kerala is heavily dependent on tourism and is also a

leading agricultural state.

•  The tertiary sector is the largest contributor to the state’s economy, and grew at 12.5% in 2008

•  The State has 24 SEZs and has the highest literacy rate in the country.


The eastern region has the highest number of states and is the least developed region in the country. Most of the states in the region rank below the per capita income benchmark. Eastern states are primarily agrarian with key focus on sectors such as tea, food processing / agro processing, bamboo, handloom and handicrafts, mines and minerals, and iron and steel. These states are also heavily dependent on tourism. However, due to inadequate infrastructure development and difficult terrain, tourism industry has not picked up to its true potential in these areas. This is especially true for the North-eastern states.

Eastern India

West Bengal West Bengal provides an entry point in Southeast Asian markets and shares its international borders with countries like

Bangladesh and Nepal. Kolkata (the capital city) is the fourth largest city in India and provides lower cost of operations for a business as compared to other metropolitan cities in the country.

•  The State’s tertiary sector contributed 61.2% to the GSDP followed by the primary sector at 26.8%. •  In terms of infrastructure, West Bengal is well connected to the rest of the country. The state also serves as a

gateway to the seven North-eastern states. •  It is a leading agricultural state with suitable climatic conditions for fisheries, horticulture etc. It also has abundant

natural resources of minerals.

While growth and development have varied across states/regions, the overall themes underpinning the India growth story are unequivocally domestic consumption, infrastructure investments and outsourcing. We have profiled these growth themes and the various sectors that are influenced by these underlying drivers


Growth themes

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Driving India’s overall growth

Domestic consumption

Some sectors that will be directly impacted by the growing consumer base:

• Education • Healthcare • Telecommunication • Banking • Insurance • Organized retail • Tourism and hospitality • Automobiles & auto components

Other industries/sectors that are directly beneficiary of the growing domestic demand include financial services (capital markets, asset management, NBFCs), media and entertainment, consumer durables and food processing.

Internal consumption adds to more than 50% of India’s GDP.


Government paving way for private sector involvement

Infrastructure

Growth opportunities in key infrastructure sub-sectors:

•  Ports •  Roads •  Railways •  Air •  Power •  Urban Infrastructure

.

Industries / sectors that will be beneficiary of the massive infrastructure spending in India include:

•  Logistics and warehousing services •  Construction and construction equipment •  Travel and hospitality •  Infrastructure financing

Drivers • India’s strong economic growth is putting tremendous pressure on its core infrastructure in all major cities and rural centres in India > urgent need for infrastructure improvement

• Sensing that significant funding is required to sustain economic growth, the Planning Commission had envisaged a planned outlay of USD 500bn into the infrastructure sector between 2007 and 2012. It has further raised the estimated investment outlay at USD 1.5tr in the next plan period (2013-2018).

• Government is actively encouraging private sector involvement in infrastructure sectors incl. roads, telecommunications networks and power generation. Regulatory frameworks that are conducive to foreign direct investment (FDI) have been developed in an effort to encourage private participation in infrastructure investments


India’s service growth engine

Outsourcing

The outsourcing industry can be broadly categorised into Information technology services (IT), business process outsourcing (BPO) and Knowledge process outsourcing (KPO), which is a sub set of the BPO industry. The major outsourcing export component is IT services and solutions, one of the first areas to be offshored to India.

The key service areas for IT, BPO and KPO

Source: Valuenotes research

The outsourcing industry now contributes 26% to total Indian exports (merchandise plus services), employing an estimated 2.3 mn people directly in FY10. - NASSCOM

Segment Key service areas

IT Traditional services include application development and maintenance (ADM), testing services and infrastructure solutions. Key players have evolved over time to now offer remote infrastructure, consulting and system integration services. More recently, in line with global demand, providers are increasingly offering Service Oriented Architecture (SOA) and cloud computing solutions to client organisations.

BPO Human resources, finance and accounting, technical/customer support, sourcing and procurement, etc. High value/complex services offered by the largest BPOs today include business transformation and platform based solutions.

KPO Service areas include legal, publishing, research and analytics and certain ITeS services (such as e-learning), among others.


Challenges of conducting MI in India & Recommended solutions


Major challenges encountered while conducting MI

•  Presence of large unorganized and grey markets •  Complicated legal environment and multiple jurisdictions •  The rural urban divide •  Regional diversity •  Inadequate data collection •  Lack of secondary information •  Ethical issues


Recommended solutions

•  Significance of local partners (with strong industry network) •  Primary research and due diligence •  Innovative estimation techniques and alternate sources of data •  Importance of strategic recommendations


Case Studies


Business Case (1) - Market sizing, Channel & communication strategy for power tools in India

Industry: Industrial products - Power tools Geographic scope: India nationwide

Strategic objective/issue •  A leading manufacturer of portable electric power tools wanted to understand details of market demand,

which customer industries posed highest demand, customer needs and drivers for purchase of products in various customer industries in India (e.g. construction, fabrication, woodworking, manufacturing, automotive, government services, etc.). The client was an existing player in the market and wanted to leverage insights to develop a stronger product portfolio, marketing communication and sales strategy

Approach •  GIA suggested a two-phase approach Phase 1: •  GIA used local consultants to conduct >75 interviews on-the-ground with suppliers/manufacturers, local and

international manufacturers (competitors), distributors, and other value chain players to size the demand for portable electric power tools by highest opportunity product and customers segments. Data was cross-checked and analyzed in-house to form the basis of reporting.

Phase 2 •  Through local consultants, GIA conducted 400+ interviews with power tool users, purchase decision makers

and influencers across the nation covering key customer industries. •  Research covered:

•  9 key products in the client’s portfolio •  15 key customer industries (top 3-5 industries for each products) •  About 10 local and foreign competitors

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Business Case (1) - cont’d

Determination of key professional user groups by product

Market sizing by professional user groups and key products

Summary and analysis

Recommendations on  Product and user group focus  Marketing message and channels

Insights per user group and per product

 Trigger of purchase  Channels used for purchase  Product information sources  Purchase decision criteria  Motivators to switch brand   Influence of advertisement   Influencers at point-of-sale  Purchase decision making

process   Importance of after-sales

services

 Product features requirements & preferences

 Product application  Cases of malfunction/ breakdown

leading to purchase of new tool

End user purchase behavior analysis

End user product requirement analysis

End user market positioning analysis

 Top brands users are aware of in the market

 Perception of brands by attribute  Most recently purchased brand

for each product  User satisfaction by brand

Phase 1 Secondary research and >75 interviews with power tool producers, suppliers, distributors, and value chain players

Phase 2 >400 interviews with power tool users, in over 15 customer industries

Analysis and recommendation formation

Approach

Consultative workshop with client for project setup


Business Case (1) – cont’d Solution •  For total product market GIA established current demand (volume and value) by customer segments and analyzed

key market trends and drivers/inhibitors •  Demand for each product was segmented by key customer industries and competitor share •  Demand by each top customer industries was segmented by product types and competitor share •  For top customer groups, GIA conducted in-depth customer intelligence to understand in details key purchase

drivers, communication channel, purchase process and decision makers

Customer intelligence Recommendations

Market sizing and segmentation

Competitive landscape


Business Case (1) – cont’d Key Benefits •  Quantitatively identified key product segments and customer industries with highest growth potential in

next few years, and most effective channels as well as communication messages to reach end customers and improve brand awareness

•  Client also gained an understanding of their market positioning and areas for improvement •  Strengthened local business expansion strategy

Customer industry prioritization

Product prioritization

Marketing communication strategy

Marketing & sales strategy at Point-of-Sale


Business Case (2) – Market opportunity assessment for mobile based wealth management solutions for HNWI in India

Industry: Media and Information technology Geographic scope: India nationwide

Strategic objective/issue •  A leading global provider of information services wanted to assess opportunities to develop

and commercialize a new mobile based wealth management solutions and information services for High Net Worth Individual (HNWI) investors in India.

•  Client also wanted to understand behavior of potential HNWI customers, their information needs and the value they would put on a mobile solution

Approach •  GIA conducted in-depth interviews with 15 HNWI to develop understanding of investment

behaviors of HNWI, their wealth management information, transaction and other needs, unmet needs/pain points, usage/perception around mobile and the value/cost associated with such a proposition

•  Further GIA suggested a deep-dive study to formulate product development strategy including identification of the core functions, contents and proposition attributes that the HNWI’s need on the mobile platform as well as developing a business case and proposition

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Business Case (2) – cont’d Solution •  GIA developed in-depth understanding of investment objectives, attitude towards risk and information needs of

potential customers through in-depth interviews with HNWI across various cities in local language

•  Identified current gaps in information needs, investment channels, willingness to pay, purchase drivers and inhibitors for mobile based solutions

•  Analyzed the information, formed conclusions and verified key conclusions with selected HNWI interviewees

Conclusion and recommendations Investment attitude of HNWI customers

Investment objectives & research needs of HNWI customers

Willingness to pay for investment information


Business Case (2) – cont’d Key Benefits •  Client gained a comprehensive understanding of needs and preferences of HNWI investors in India as well

as market opportunities for new mobile based solutions

•  Clear picture of opportunities and challenges supported by facts and opinions of potential target customers

•  Client benefitted from a series of recommendations pertaining to product development roadmap, channel strategy for the business

Challenges and opportunities

Critical success factors and road-map

Commercial strategy

Product development considerations & road-map


Thank You for Your Attention

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