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.
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