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Managing in 21st century india
- 1. Business in 21 st century India Yet Another Point Of View
- 2. India…a unique ,very complex story In India today, an Italian lady born a Catholic (Sonia Gandhi) steps aside so a Sikh (Manmohan Singh) could be sworn in as Prime Minister by a Muslim President (Abdul Kalam) to lead a nation that’s 82% Hindu Can you cite another country with such diversity and tolerance??
- 14. Consumer India: The Good News 12 16 10 5 4 2 14 15 13 15 High UM M LM L Mn HH Mn HH 1996-97 2005-6 NCAER From a pyramid to a cylinder - The Richer are getting richer and the poor are getting richer. Finally - the ability will match aspiration.
- 16. Growth in rural income NCAER Mn HH Mn HH 63 38 11 4 3 34 64 25 8 8 High UM M LM L 1996-97 2005-6 The rural poor will become less poorer, but the rural rich not much richer. Aspiration will grow, but perhaps not ability.
- 21. So what’s happening in India now? Some case stories
- 23. Success in India …what made it happen? Multi-pronged strategy to tackle diversity of customer base Leverage world R&D capability for “Value right” products Provided solutions for a highly aspiring low income market Manage the logistics to address market spread Made for India Strategy And “Made in India’
- 25. Failures in India… why ? Unified global Strategy replicated in India Tastes for India – Not kept in mind Indian Values and Attitudes ‘ Non- value right’ products Replicating Global Strategy
- 28. INCOME ASPIRATION IDEOLOGY Fertile Ground for Market Development THE INDIA SOLUTION
Notas do Editor
- - why yet another STORY -this story begins in 1947 – the brits leave -my 28 year story and the changes in india -india through my eyes -we’ve proven that god exists
- This is not about secularism INDIA IS COMPLEX CONFOUNDING INTRIGUING ENGAGING FASCINATING
- UNDERSTANDING INDIA-NO MEAN TASK CASE STUDIES WILL SHOW SOME LIGHT
- More facts from sheet #### India – a political unit of loosely co-ordinated federation of states. But definitely not One Market.
- Politicos like everywhere else Overturned the laws of scale
- WHY 1991 AND THE SINS OF 45 YEARS WERE COMING HOME TO ROOST WAS THE POLITICAL STRUCYURE ALL WRONG Steeped in Deprivation POLITICOS KEPT IT SO Ideology – Anti Consumption Aspirations - Low Income - Low Acceptance syndrome Indian Economy in 1990-91 Huge Fiscal Deficits Large External Debt Low Forex Reserves Led to massive reform process And then onto a national upheaval in most sectors
- It took an earthquake to loosen up the bricks. THAT WAS WHEN THE GUN WAS AT THE HEAD SHOCK TREATMENT
- Politics gave way to pragmatism As nat inc grew , muscle got exposed The india china story gained ground Aspirations grew Can we do it..finally
- The three key features in the previous slide are in the context of Changes in World order And specifically in the Indian Economy Managing or Coping
- The traditional pyramid changeth and the opportunity presents itself
- Wealth in India Increases so does the PROPENSITY to spend The High income group shall be 15 Mn in 2005-06 that is 75 Mn people (that is more than the population of 60 Mn of UK) The marketeers dream is to capture this rupee The ‘ Economist’ has suggested that India and China shall be the ‘powerhouse of world economy in the 21 st century’ – not surprising that’s where the consumption is.
- EVERYONE ATTACKING THE TOP OF THE PYRAMID—AND WHY NOT FIRST ---------------------------------------------------------- LOT OF PENT UP DEMAND ------------------------------------------------- STRATEGIES NEEDED FOR THE BOTTOM OF THE PYRAMID –MULTIPLY VAST VOLUMES WITH SMALLER MARGINS=A NEAT PROFIT --------------------------------------------------------------------- FIX THE CONSUMER PRICE AND WORK BACK TO A CHALLENGE COST UNILEVER-NIRMA-CITIBANK-ICICI/AKAIBARON/SECOND HAND PC MARKET ----------------------------------------------------------------------- SERVING LO INCOME CONSUMER NEEDS FAR HIGHER LEVELS OF KNOWLEDGE THINK OF IT AS A DISTINCT MARKET NOT ANOTHER SEGMENT-EG SPELL LENGTH OF LO INCOME MAY BE POOR BUT HIGH ON ASPIRATION
- The propensity to spend is still lower however increasing and increasing rapidly. Is there an opportunity here ??? This situation represents a huge opportunity for companies to change their mind-sets and their business models (e.g., “the poor can’t afford or have no use for consumer products,” or “we can’t make money in this market”). In 1995, Unilever PLC’s subsidiary in India, Hindustan Lever Ltd. (HLL): Drastically altered the management of its value chain so it could sell a detergent, called Wheel, to the poor. HLL decentralized its production, marketing, and distribution and quickly established sales channels through thousands of small storefronts. HLL adjusted the cost structure of its detergent business so it could sell Wheel at a very low price point and still make money. Today, Wheel has gross margins and a return on capital as good as, or better than, HLL’s higher-end cleaning products, Unilever has used this business model to create a new detergent market in Brazil.
- There is an opportunity there Second hand Markets for White Goods Sachet Story/the pco story/the cigarette stock story RADO in Urban, Timex in Rurals This situation represents a huge opportunity for companies to change their mind-sets and their business models (e.g., “the poor can’t afford or have no use for consumer products,” or “we can’t make money in this market”). In 1995, Unilever PLC’s subsidiary in India, Hindustan Lever Ltd. (HLL): Drastically altered the management of its value chain so it could sell a detergent, called Wheel, to the poor. HLL decentralized its production, marketing, and distribution and quickly established sales channels through thousands of small storefronts. HLL adjusted the cost structure of its detergent business so it could sell Wheel at a very low price point and still make money. Today, Wheel has gross margins and a return on capital as good as, or better than, HLL’s higher-end cleaning products, Unilever has used this business model to create a new detergent market in Brazil. Itc’s e-chaupal
- Compare this with the size of UK – 60 Million USA – 270 Million Germany – 85 Million France – 60 Million BUT SHOULD THIS HAVE BEEN THE ONLY FACTOR IN DECISION MAKING THE KELLOGG FORMULATION THE GENERAL MOTORS FORMULATION
- CHALLENGE – FINDING THE CELL WHERE CELL REVENUE AND COSTS MAKE ECONOMIC SENSE Titan & Timex Surf & Nirma Dove & 501 M800 and the Merc And everything in between 1:10 prices
- HOPE TO SHOW YOU SOME LESSONS EXPERENTIALLY
- THEY DID NOT BRING SOLUTIONS BUT BASIC QUESTIONS AND LEARNT KNEELING DOWN
- KEY TO SUCCESS – INDIAN MANAGEMENT Multi Pronged Strategy Dove to Selling washing soaps to bathing soaps Leverage R&D capability State of the art cars to capture the A Segment High Aspirations Low Income Market Shampoo Sachet/CIGGIE STICK/PCO Logistics HLL Rural thrust-DRILLING THRU ROCK SUZUKI OWN TRUCK FLEET /SERVICE STATIONS ITC chaupal-rural microcredit LOCAL SOLUTIONS AIRTEL-DEFYING THE CAPITAL MYTH
- GM and Ford – Never recognized the fact that the 2-box cars are the ‘big market’ Pepsi, Coca-Cola, thirst quencher at 10 bucks kellogs – Taste of India ENRON –DIDN’T READ REGULATORY MINEFIELD “ Staying power is meaningless if staying on has no meaning”
- ASSUMPTION-INDIA IS LIKE WE ARE-THE ARROGANCE OF CORPORATIONS Unified global Strategy replicated in India Kellogs Coke Advertising – Initial days- international Ads---NOW THANDA Hertz Car Rental DishWashers --------------------------------------------------------- Tastes for India – Not kept in mind KFC –FELL FLAT Kellogs – Parantha advt. --------------------------------------------------------- Indian Values and Attitudes Whirlpool– Grahini takes pride in her work So convenience can’t be pitched. Finally Mummy ka Magic DishWashers=WATER/SOAP/GRIME/SERVANTS ------------------------------------------------------------- ‘ Non- value right’ products Lacoste PierRe Cardin GM and Ford did not launch a 2 Box product ----------------------------------------------------
- STAYING POWER IS MEANINGLESS IF STAYING HAS NO MEANING
- Its all about consumer Insights Come with an open mind Learn Learn Learn / Unlearn Unlearn Unlearn/ Sachet Story of HLL Cigarette Retailing