Paradigmatic Challenges in India’s Consumer Market: A Report

Era Business School, New Delhi

AJ/ Ajay K Raina,; PGDM 2012-14

Era Business School, New Delhi AJ/ Ajay K Raina,; PGDM 2012-14



Paradigmatic Challenges in India’s Consumer Market



Renu, Aishwarya, Navdeep, Manoj, Akhilesh & Ajay



• Our gratitude to our faculty, Dr xxx who gave us an exposure to formulation of a report based on available secondary data.

• We also acknowledge the fact that but for Professor’s push, most of us would have probably never come across such a useful and interesting blog as HBR.

Acknowledgements



Table of Contents

Heading

• Executive Summary

• Introduction

• Purpose and Scope of Study

• Analysis

• Conclusions

• Recommendations

• Bibliography

• Bibliography

Slide No

7 - 8

9 - 10

11 – 16

17 - 24

25 – 27

28

29

51



• One of the fastest growing economies in the world, India is seen as a big business opportunity, courtesy an extra-ordinary size of her middle class and an unmatched proportion of youth below 30.

• Post liberalisation, an on-going process of reforms in power, retail and infrastructure has made India a natural choice for many big international and global players.

• India, despite all such realities and opportunities, needs to be understood and handled differently lest many big plans hit some unseen walls.

Executive Summary….



• Geographical proximity to China, India’s much hyped unity in diversity and such like hard realities, however, tend to mislead the outsiders to treat her in a manner in which other nations, including China, have been treated by such experienced players.

• An orthodox approach towards India’s consumer markets is likely to meet more failure than success.

• There is a justifiable need for the global players to understand paradigmatic challenges involved in the process and be ready to live up to such challenges if they really want to create Indian success stories.

…..Executive Summary



• Business expansion, at international levels, involves thorough understanding of the new markets, the peculiarities associated with such markets and the challenges therein.

• Globalisation has made this world smaller. As the decades pass by, world tends to get smaller and smaller while individual/regional tastes and preferences tend to converge towards a common point.

• While it is true that many templates that had been created for specific demographic or geographic segments in the past, can now be applied interchangeably because of the ever expanding acceptance levels in general, the fact remains that world is far from the stage where distinctions would simply cease to exist.

Introduction….



.… Introduction • This report focuses on some of such paradigmatic

challenges.

• When it comes to a country like India, the orthodox paradigm of treating her as one single market, as applicable in numerous other markets, gets challenged because of some real reasons.

• It is, therefore, important for outsiders to understand such issues if pitfalls, created because of application of an orthodox template, are to be negotiated and if success stories need to be written.



Purpose and

Scope of Study



Objective

To understand the paradigmatic challenges related to India’s consumer markets and possible ways to overcome such challenges.



• The project report is based on secondary data.

• The scope includes identifying or pin-pointing certain subtle and yet potent variations that throw up challenges to any outsider who intends targeting India’s consumer market.

• The scope also covers some very brief guidelines about tackling such challenges through a shift in the paradigm.

• Some real-life examples have been used to highlight the points being made.

Scope



SOURCES AND METHODS OF COLLECTING DATA



• The research was based on a published work in Harvard Business Review Blog in October 2012.

• The authors, ie Dr Vijay Govindrajan who is a renowned professor and Gunjan Bagla who is running a reputed consultancy firm, are well known names in the field of Strategy and Innovation.

Sources



• The start point was a thorough reading and study of the paper that was to serve as our source of secondary data.

• Analysis.

• Deductions.

– Conclusions.

– Recommendations.

Steps : Methodology





Figures Speak • The Hard Facts for India’s Consumer Market 2012:-

0

5

10

15

20

25

P&G Amway Unilever PLC

% Growth YoY

% Growth YoY



Inference From Facts • Whereas world economies are

struggling to survive on going recession and whereas the best growth (in terms of GDP) has been just about 8%, these figures indicate a very healthy trend.

• When viewed in light of the fact that a series of on-going reforms in retail, airlines, broadcast, and power sectors is already underway, such figures spell a magnetic pull for global players, especially those who have been ignoring India for various reasons.



The Catch • Such figures create a honey-trap for anyone who

follows the paradigm that treats India as:-

– Monolith.

– Where Chinese success

template can be applied.

– Where single point

contact will work.

– Where expatriates only

will succeed.

• The challenge lies in

identifying it and modifying the paradigm.



Isn’t India a Monolithic Country How it may appear

• An example of unity in diversity, India is one huge market. mnmnm

• National preferences and tastes must be unique but similar.

• One market would need one strategy and if the product is well positioned, we are the winners.

• Literate middle class would understand the merits of a good product

The reality

• Constitutional strength is OK but India is a huge market with numerous segments.

• National preferences are irrelevant; India is a continent in itself.

• Recipe for disaster.

• Any product will have to clear ‘Social Prism Test.’



Aren't India and China भाई-भाई ?

Myths

• India can be managed through same offices that deal with its neighbour.

• Both are developing nations.

• Chinese success templates can be applied to its neighbour too.

Realities

• India needs to be managed from India only.

• True; but models are different and so are the timelines.

• We are so different; our democracy has nothing common with their communistic governance; better treat us differently.



Isn’t Single Point Contact Reasonable? • India is not Brazil or Mexico.

• Even JVs need multiple partners in India; merely adding ‘Aloo-Tikki’ to its range of burgers did not help a giant like McD.

• ‘1’ will be OK if it has few ‘0’s after it; ask Unilever. It has a ‘7’ instead of a ‘1’ and three zeros to back it up. And Unilever can not be wrong.

• Vibrant democracy has dynamic tax structure as one exits a state and enters another.

• Selection of right number of partners holds the key.



Don’t PIOs/Expats understand the Indian Markets?

• Capability rather than origin or present nationality is the key factor.

• Many expats have failed in India while many foreigners have made their marks.

• India has exported leaders and managers to the world but that does not mean that PIOs only can succeed in India.

• Managers who have deep understanding, genuine compassion and who treat India with respect, would succeed – nationality being irrelevant.



Conclusions &

Recommendations



Conclusions……

• Paradigms need to be adaptable and open to change, latter being the only constant.

• While India offers a huge market, she deserves a degree of respect in that policies and models that might have worked elsewhere MUST not be lumped on her.

• It is important to look at its federal structure, its century old cultural and ethnic diversity, its wealth holding as some of the separate segments. The list does not end here.

• What can be enforced in China, can not be ensured in India.



…..Conclusions

• A big country does not think small; serve it the right size. It is important to choose good and adequate channel partners.

• While a country may love her expats, when it comes to business, only right attitudes and capabilities matter. Days of colonisation are long over.



Recommendations • Success in India comes through market

segmentation.

• Forget what you learnt in China .

• Find more than one partner in India, but do so carefully.

• Don't limit yourself to leadership with Indian roots.



• “Watch Out For India's Consumer Market Pitfalls”, an article by Vijay Govindarajan and Gunjan Bagla.

• The following web sites also had the above article and discussions therein:- – http://blogs.hbr.org/cs/2012/10/watch_out_for_indias_cons

umer.html

– http://thevalley.net/sites/default/files/businesses/vita/newsletters/November%20VITA%20Newsletter%20-%202012.pdf

– http://app.businessweek.com/ParametricSearch/Columnists?selectedAuthor=Vijay+Govindarajan

(While only info provided in the article was used, the above mentioned web addresses were used for better understanding of the issue at hand)

Bibliography

http://blogs.hbr.org/cs/2012/10/watch_out_for_indias_consumer.html



http://thevalley.net/sites/default/files/businesses/vita/newsletters/November VITA Newsletter - 2012.pdf





http://app.businessweek.com/ParametricSearch/Columnists?selectedAuthor=Vijay+Govindarajan





