Indian Market – Exciting Big Challenging Unpredictable – Navigation strategies

When you work in a number of sectors ranging from Dairy to Defence over a 28 year career divided between European and American companies in India I think one does learn enough to be able to help guide global  companies to navigate the Indian market successfully. So my attempt is to give the reader a birds eye view since just as a lifetime isn’t sufficient to understand India, a blog isn’t going to  give you ready to implement solutions.

Preamble :

The first thing anybody attempting to enter India or for that matter any new market must get a flavour of its history & culture to better understand  its  people who would be your customers. India has been conquered and  ruled for prolonged periods in its history by Europeans, Mughals & finally the British.  India is thus a melting pot where the diversity is stark and widespread that language, food, lifestyles differ considerably but yet is like a closely interwoven  colourful fabric.  So be prepared to get confused all the time with contrasting experiences since India is not one but a sum of many parts.

The first pitfall:

Many including big corporations make the first mistake when analysing the statistics. 1.2 Billion people, 350 Million consuming middle class – India is every marketers dream till he jumps in and then quickly can become a nightmare.  While statistics don’t lie and indeed a substantial market is there the markets can be  disparate and there is no one size fits all solution. So a new entrant must tread carefully whatever the statistics look like.

System & Policy issues :

Another common pitfall is the rigidity of the western parent company in addressing product design/features issues because either the system or policy does not permit it. Pizza Hut is a classic example where initially there was reluctance to change the recipe. After losing money they changed the recipe for Indian tastes and today its a popular food. Another example is the reluctance of Renault to reduce the length of their car by a few millimetres to take advantage of a lower tax bracket. Mahindra’s managed to do this change in a short time and the car sold in large numbers. So be prepared to change your rigid systems.

Its the cash flow stupid :

Often statistics and consumption habits indicate big markets for a product and the invariable demand is the lowest price which often frustrates the seller since price expectations are so low that customers almost want it free.  A popular advertisement for a car shows the Indian consumer asking  what is the fuel efficiency of the space shuttle & the battle tank.  The reality however is that while the average consumer does expect low price in reality he is looking for minimum cash flow. He wants to spread his cash across as many items as possible. So he would pay 1 $ and buy a 25 ml pack than pay 3 $ and buy a 100 ml pack. So rather than complain about low profits sellers must focus on low price which meets consumer expectations even if it does not have all the bells and whistles that a mature western  market may demand. Remember often a product designed for a western market has a number of bells and whistles from an Indian market point of view.

  

Knowledgeable consumer :

The Indian is a very curious animal. He tends to read and know about a whole lot of  stuff  and then he leverages it to negotiate/question the seller. Western TV serials, channels, movies make even the average man on the streets very knowledgeable. So when a seller tries to sell an older model or an outdated technology he fails miserably. The consumer feels insulted when a company does this based on the maturity of the market. To illustrate with an example – If the market wants a car without seat belts to save costs, don’t offer your outdated model manufactured without seat belts. The consumer wants your  new model but without seat belts. Get the point ?

Innovative Consumer :

In his attempt to get the biggest bang for his  buck a customer will give you ideas that don’t fit into most western systems of analysis and working. You can knock those ideas but left to him the customer will actually do it and prove that it can be done.  The attitude is that everything is simple and can be done. Companies that ignore this do so at their peril since often the objections are more due to mindset &  being system driven  than practical.

Leap of faith :

The Indian market loves anyone who manufactures a product locally and especially when a sizeable market exists. However what often happens is that a company prefers to wait till the market grows before local manufacturing is taken up. In this situation someone else locally sensing the opportunity builds upon your work in the market, takes a leap of faith and invests. Once invested the government, the systems, the customer give him the support and overseas company that invested in creating the market gets shown the door. Sounds unfair but then  India wants you to commit to the market by showing it your leap of faith. The intrepid Indian bizman often takes an investment decision over a cup of tea while the global company is analysing the ROI, risk assessment  etc.

Patience :

The Indian market is a test of patience.  There are cases where this can even run into years, but the beauty is that once there is acceptance, the growth, speed of change is rapid.

Relationships :

Unlike in western markets the Indian customer wants to meet you, gossip with you, have endless cups of tea and invest time in building, strengthening and  building trust in  the relationship. So be prepared to take a 2 hour plane ride for a 15 minute face to face discussion often enough till the bond is built. So the effort to reward ratio in India is pretty low till you are accepted. But once accepted most people will shower you with much affection and trust.  Also people help and support you  based on trust and relationship without putting a monetary value on the time spent.

Entry strategy :

So, any company seeking to work in India must always find someone locally who is knowledgeable about the country, the culture of working of the west and India and who can hand hold you to navigate the country. This need not always be a big consulting firm but even experienced individuals/ small consultancies where the cost is low and you get better personalised service. Remember big is not always beautiful and small can be and is beautiful.