A Never before World

Rama Bijapurkar

This is Ramas fourth

book, this book has a
foreword by P
Chidambaram, Finance
Minister

Emerging markets are

new, and never before
worlds, the likes of
which developed market
businesses have never
encountered or served
before.- P Chidambaram

The direction is clear,

the pace is uncertain,
the goalpost is
somewhat clouded, and
the implications for
policy making and
product marketing
challenging-P
Chidambaram

Consumption will grow

but I think there will be a
clamor for more and
better public goods-P
Chidambaram

As the nature of
demand changes, the
nature of supply also
must change. The author
puts it succinctly when
she says that the dharma
of business is to add
value and extract value
from consumers-P
Chidambaram

This school of
forecasting how future
increases in per capita
income will be spent
totally bypasses the idea
that markets are made
up of people and
spending choices, which
maybe different across
countries and contexts.

While 4 wheeler
penetration is a mere 5
% and two wheeler a
mere 21 % of all
households in India, Audi
reported a tripling of
sales in the last two
years, making it a
strategic market for
Audi.

Globalizations results
are not uniform. While
social scientists
understand this in the
context of countries and
peoples, businesses
ironically dont make the
connection to the
context in which markets
exist and consumers
live.

On the face of it , the

popular American model
of low price-high variety
factory outlets or mega
hyper markets is the
thing needed for a
modest income country
like India.

The central nervous

system for America
around which life is
organized is the
automobile, in India it is
the cell phone.

The great Indian number

trick is that a small
percentage of a large
base is still very big. Just
10 pc of Indias GDP is
over 1.5 times that of
Vietnam GDP!

The only thing never to

forget is that the head,
the heart and the purse
must be in alignment.
Expectations and
investments in the
market must be based
on the fraction of the
GDP that the global
strategy is capable of
addressing for a MNC.

Emerging markets are a

great leveler. Accepting
this is usually hard for a
global 'head office'. The
Indian business either
gets sidelined or gets
pushed for higher
results.

Most companies
interpret think global,
act local to mean a
singular global strategy
implemented in a local
way.

Global companies,
especially western ones
ask the question, what is
the market for my
existing strategy, when
they should ask, what is
my strategy for this
market.?

I also want to reiterate

the need to reflect on
the automatic and
implicit assumption that
the end state of
emerging markets is to
become like one of the
developed markets.

Nokia has taught India

that design,
miniaturization, style
and functionality need
not be compromised for
even low end phones.

Indian consumption has

a lot to do with the old
entrenched food culture.
Beliefs about hot and
cold and hence suitable
or otherwise.

The demand structure of

emerging markets is a
lot of people buying a
little or spending a little,
that adds up to a lot.

Most analysts and

commentators on the
India opportunity are
caught up with trying to
provide a single point,
sound bite friendly dollar
figure of the so called
India prize.

The much touted middles

class that is supposed to
be driving consumption
is actually the top 20 %
of Indian households by
income.

A popular supply sided market

structure leads to a broad
premium-popular-discount
model. But more performance
for same price changes this
and we get to mild premium,
high end popular etc.
Consumers downgrade and
upgrade at will, and hence you
compete across the spectrum.

Half of rich India lives in

rural India and most of
poor India lives in rural
India.

Consumer durable
ownership is a surrogate
measure for quality of
living, which in turn is a
surrogate for spending
power.

Necessity categories like

biscuits, detergents,
soaps, mosquito coils
target households from
SEC A to SEC E, else mot
others limit themselves
to SECA and B.

Companies which say class

first mass later run the
risk of missing out on
growth and also risk losing
consumers to something
else, like the PC
manufacturers have lost to
tablet manufacturers and
smartphones.

Chinas top 20 pc has a

per cap income of
$14,446, while that of
Indias top 20 is $4000.

Banerjee and Duflo in

2011 propose the middle
class definition at
between $ 2 and $ 10 per
day per person. The $2 per
day is the mean poverty
line of seventy countries
and the USA poverty line
is at $13 per day.

If we target the top 10 % of

Indian household spend,
then we capture 20 % of
India, if we target the top 20
%, we capture 40 % of India.
The India consumption
journey will last at least two
decades more with current
play.

The India opportunity

must come with a health
warning, the warning is
about the heterogeneous
and schizophrenic nature
of the market.

Our mental model of the

Indian middle class is a
homogeneous bunch. In
truth, it is a combination
of electricians, doctors,
plumbers, IT types,
bureaucrats, shop
keepers, farmers,
teachers, social activists.

The mental model of

India is not one big
society with fringe sub
cultures but many
societies with many
similar and dissimilar
traits.

Consumers do not think

in terms of national and
regional brands, they
choose from the
portfolio depending on
their needs.

The most noticeable

Indian trait in the last
two decades is the
ceaseless striving of men
and women to improve
their quality of life and
that of their children.

JK Galbraith, US envoy to
India said that Indians
have a personality of
enormous adaptability.

We have gone from a

contended society to a
restless one, grabbing
every opportunity to
improve our lives, and
willing to work hard for
it.

In the absence of formal

educational avenues, you
need to be a self starter
and in a high gear
learning mode to succeed
in India. However,
ambition or more greed is
making them stretch
beyond their capacity.

Women's assertiveness
and social progress is
another common trait to
all societies.

The need to pay EMI and

the need for a second
household income has
got many women into
the workforce.

Santosh desai of Future

brands said Life is a
product to be
experienced, not a
condition to be endured

Companies must learn to

handle the complexity of
satisfying India in a multiple
number of ways.
Businesses often
underestimate the
leapfrogging that
disadvantaged people in India
can make if their products
were tailored for them.

Rural India is fairly

insulated from the global
economy, it doesnt
export much, it is
insulated from the stock
markets, hence
supported the GDP post
the financial crisis.

In the first decade after

liberalization, India
added 200 billion $ s to
its GDP, in the second
decade it added 1.2
trillion $, in the third
decade it will comfortably
add another trillion.

Infrastructure is a real
spoiler in India. Analysis
show that a unit of
infrastructure
improvement will fuel
consumption more than
a unit of increase in
income.

How well to do you are in

India depends on how
independent you
become of the
government to provide
you living infrastructure.

This decade, we will see a

slow down in income
growth, an increase in
cost of living, costlier
consumer credit,
consumers fed up with
public services and
decreasing subsidies on
fuel, cooking gas etc.

In 2000, the sum of

imports and exports , a
crude measure of how
globally connected India
is was about 25 % of
GDP. In 2010, it is nearly
half of GDP.

In the third trillion

journey, India is a
consumer economy
growing on account of
people who have
livelihoods but not
regular jobs.

The mindset has changed

from this is the way it is
to there are solutions if
you pay the money. The
biggest necessitated by
the failure of public
goods are education and
health care.

The big opportunities of this

decade will be healthcare,
education,travel,communica
tion,transportaion,
durables, entertainment
services, good quality
affordable food, child
centric everything, do good
products.

The blurring of the urbanrural divide is one of the

biggest and most important
themes that will shape the
Indian consumption story.
In a never before way, India
is urbanizing around its
small towns and villages.

Another facet of
urbanization of rural
India is the commuter,
about 120 million
workers commute.

Rural mindsets are open,

not closed, people in
Rural India see
information as power
and seek knowledge.

More and more relevant

and value right supply
will drive urban
consumption, but
marketers need to really
understand what value
right is.

Urban India is not

homogenizing and
modernizing in the
developed market way, it
is atomizing through
8000 towns.

Women in India have

changed the most as a
result of both social and
economic changes of the
past decade. They have
changed more than men
and society as a whole.

Rena Bartos, an American

consumer behavior expert
has segmented women into
those who are doing a job
and those who want a
career, and shown that they
have different mindsets
even though they appear to
be doing the same kind of
work.

Education, empowering
laws, self help groups
have helped women.
However there is
considerable confusion in
society about the role of
women and gender
equality, and marketers
are confused too.

Nielsen's women of
tomorrow survey says
that women in India are
self indulgent, family
focused and child
focused. The big change
is self indulgent , in the
past they were in self
denial mode.

Indian youth shows high

optimism, high aspiration, high
anxiety, concern over
unemployment.
Young India is largely poor and
unskilled, searching for jobs
and struggling for contacts and
sipharish, seeing corruption
and weak leadership and lots
of inequality.

Consumer India rarely

displays mega trends
and discontinuities. It
has creeping trends and
detecting them is not
always easy.

There is a new level of

DQ-Digital Quotient in
India, thanks to the cell
phone.
Indian Railways sold 116
million tickets online in
2012, that was 80 % of
all tickets they sold!

The Aadhar card has

taken Indias DQ to a
new level since even an
illiterate understands
that biometrics cannot
be copied.

There are four major

shapers of value
consciousness in India the
first is liberalization, the
second is Nokia and the
operators,. It is unbelievable
how Nokia shaped an entire
country on expectations in
design, interface and
affordability

The third is made in

china versus now made
in china but made for
India and the fourth is
the small supplier who
manages innovation,
customization better
than large firms.

In the developed world

hi tech replaced hi
touch, in India hi tech
added to hi touch.

India has 67 million

people above the age of
65 and 81 million people
between 55 and 65.
India has the beginnings
of a luxury market now.

Luxury in China is about

status, in Japan is about
limited editions and
exclusivity, in India it is
about customized,
bespoke products.
Weddings in India must
be viewed as part of the
luxury market!

If we pull back and look at

Indian society, it is a large
negotiating table with
everyone negotiating with
everyone else , but at a
group level.
Indians have always felt very
comfortable with ambiguity
and dont stress on ways to
avoid uncertainty.

The three N s of the

Made for India story that
have redefined India and
business thinking are
Nirma, Nokia and Nano.
They were market
creators breaking the
market paradigm.

The three N s, Nirma,

Nokia and Nano also
realized that if price
drops while income goes
up, the number of people
who can come into the
category is immense.

Businesses in India need

to think through :
a.Price and Volume
b.Performance specs and
cost of delivering
performance and
c.Cost of market access