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Webinar: Navigating India's complex market using actionable intelligence

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ValueNotes webinar on gathering actionable intelligence in India's undocumented, fragmented and unorganised markets.

ValueNotes webinar on gathering actionable intelligence in India's undocumented, fragmented and unorganised markets.

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  • 1. Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Navigating Indiascomplex market usingactionable intelligenceMay 2013
  • 2. Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.INDEXAbout ValueNotesStructure of Indian marketsCI strategies for IndiaCase studies
  • 3. Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.About ValueNotes• Background• Experience• Recognition
  • 4. 4Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.From data to decisions…BackgroundLevel of education QualificationIndia’s premier research & consulting firmCorporate office in Pune, IndiaAdherence to strong ethical frameworkEstablished in 2000Global partnerships
  • 5. 5Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.~ Over 100 CI projects in the India geography in the last 5 yearsExperience in serving highly specific needs Market potential in India for state-of-the-art power conditioning solutions and electric power distribution equipment of a US-basedmanufacturerOpportunity assessment Profiles of major chemical manufacturers inIndia, including information about theirproducts, product strategies, pricing,revenues, organization charts, future plans,etc.Competitor profiles Pharma: competitive landscape for a psycho-active substance - assessed its therapeutic potential in India and China; and establishedthe stage of development by competitorsProduct launch intelligence Comparison of competitors of an MRO services company, on service focus, senior management experience, global deliverycapabilities, ability to scale, BCP infrastructure, and implementation capabilities, etc. Due diligence on hedge fund companies based in India Niche non-dairy segment: investigated how competitors were able to price their products more competitivelyCompetitor practices / benchmarking / evaluation Global market monitoring for over 20 companiesNews monitoring
  • 6. 6Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.…ValueNotes’ research is highly regardedRecognitionOur research has been quoted in the international media…Awards• Black Book of Outsourcing: Nominated to the top-10 ranking three years in a row (2007 to 2009)• Nasscom Emerge 50: Nominated to the 50 emerging companies list in 2009Nominated to present at several SCIP conferences2011 Orlando, USA • Competitor profiling2010 Sao Paulo, Brazil • Social media for CI2009 Chicago, USA• The deep web unfolded: effective use of theinvisible web tools for CI2009 Chicago, USA• Competitive intelligence offshoring: howmuch is too much?2008 Rome, Italy• CI in India - perspectives of a localpractitioner
  • 7. Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Structure of Indian markets• Structural characteristics of Indian markets• Organized vs. un-organized sectors• Small scale industries (SSI) sector• Grey market• Diversity• Under documentation• Decentralized statistical machinery• Problems with Government statistics
  • 8. 8Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.…pose challenges for performing CIStructural characteristics of Indian marketsLargeunorganizedsectorHigh level offragmentationLarge greymarket Unorganized - unregistered and/or unregulated Very large number of small enterprises Goods/services bought or sold, without paying taxesLow level ofdocumentation Data/statistics on large chunks of economic activityis not collected and/or collated
  • 9. 9Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.… the unorganised sector is critical to the Indian economyOrganised vs unorganised sector% GDP% of Workforce% GDP% of Enterprises
  • 10. 10Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.…mainly comprises of proprietary firmsMicro Small and Medium Enterprise sectors 45% of industrial employment 50% of manufacturing output 40% of exports 8% of GDP% of MSME Sector % of Registered MSME Sector
  • 11. 11Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.…make it more difficult to do CIGrey market Large grey markets, particularly in electronics,pharmaceuticals, branded clothing, etc Grey market distribution is thought of as a viablesolution for overstocking and over production Difficult to size grey marketsIndia has a huge grey market for electronicswhere goods are sold at 20-25% discount rates60-90% of iPods in India are sold in the greymarket
  • 12. 12Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.AndhraPradeshArunachalPradeshAssamBiharChhattisgarhGoaGujaratHaryanaHimachalPradeshJammuandKashmirJharkhandKarnatakaKeralaMadhyaPradeshMaharashtraManipurMeghalayaMizoramNagalandOrissaPunjabRajasthanSikkimTamilNaduTripuraUttar PradeshUttaranchalWestBengalWestNorthSouthEastDiversity 28 States and 7 Union Territories 22 officially recognized languages Different taxation / regulatorynorms across states Regional cultural nuances High differentials in income,education Rural urban diversity Different states have differentlevels of development and growthIt’s like doing business in > 30 countries!The Indian curry
  • 13. 13Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.…key hurdle for effective CIUnder documentationFragmentationFragmentationInadequate statisticalmachineryInadequate statisticalmachineryWeak or no industryassociationsWeak or no industryassociationsUnder documentationUnder documentation Immature marketImmature marketDiversityDiversityLarge unorganised sectorLarge unorganised sector
  • 14. 14Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Divergence in depth and breadth across statesDecentralised statistical machineryCSOCoordination, standardsetting & trainingCSOCoordination, standardsetting & trainingNSSOLarge scale statisticalsurveysNSSOLarge scale statisticalsurveysCensus of IndiaCensus of IndiaMinistries/DepartmentsGovernment of IndiaMinistries/DepartmentsGovernment of IndiaDES - Directorate ofEconomics andStatisticsDES - Directorate ofEconomics andStatisticsNational Statistical OfficeNational Statistical Office 66 state subjects – including health, police, agriculture, libraries, museums, education, mining, gas, manytypes of taxes, etc 97 central subjects 47 joint domain subjectsCo-ordination &AdviceMinistry of StatisticsandProgram ImplementationHome Ministry
  • 15. 15Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Government statistics may also need to be validated…Problems with Government statistics Existence of gaps in information Delays in publication of results Available data not easy to find Large and frequent revisions of published results Discrepancies in official statistics from different sources Lack of transparency in statistical operationsWater pipelines is a key infrastructure area.There is no data on length of water pipelines inIndia, their age, materials used, etc.- How can the government plan its investment?As much as 40% discrepancy in the importfigures of an engineering company as recordedby DGCIS- How reliable are the import figures?
  • 16. Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.CI strategies for India• CI strategies in India• Getting to Government data• Heavy reliance on primary research• Identifying external touch points• Primary research• Approaches and methodologies• Question of ethics
  • 17. 17Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.CI strategies…jugaad and innovationCI strategies in IndiaHigh reliance on primaryresearchInnovative methodologies –proxies, extrapolation,triangulation, validationLow reliance ondesk researchCI Strategies
  • 18. 18Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Published macro-economic data is quite goodSecondary information sourcesAs much as 40% discrepancy in the import figures of an engineeringcompany as recorded by DGCIS- How reliable are the import figures?Category Source Data AvailableData available (Rating 1-4)Comprehensiveness Quality RecencyEconomyRBI, Economic Survey,CMIE EconomicIntelligence Service,InvestmentCommission, IBEFMacro dataMicro dataRPTradeMinistry of Industry &Commerce, RBI,Economic Survey, FICCI,IBEFMacro dataMicro dataResearch & AnalysisCompanydataCMIE Prowess, Ministryof Corporate Affairs,CRISILMacro dataMicro dataResearch & AnalysisPaid databases
  • 19. 19Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Some industries are reasonably well coveredInformation sourcesCategory Source Data AvailableData available (Rating 1-4)Comprehensiveness Quality RecencyTelecomCOAI, TRAI, Ministry ofInformation Broadcast,Industry magazines,published researchMacro dataMicro dataRPAutoACMA, SIAM, ARAI,WIAA, industrymagazines, publishedresearchMacro dataMicro dataResearch & AnalysisPaid databasesFMCGCIFTI, Ministry of FoodProcessing Industries,IMRB, AC Nielsen,published researchMacro dataMicro dataResearch & AnalysisPaid databases
  • 20. 20Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Category Source Data AvailableData available (Rating 1-4)Comprehensiveness Quality RecencyBanking &FinancialServicesRBI, IBA, AMFIMacro dataMicro dataResearch & AnalysisPaid databasesReal Estate BAI, CREDAI, ACRI,published researchMacro dataMicro dataResearch & AnalysisPaid databasesMacro dataMicro dataResearch & AnalysisPaid databasesMacro dataMicro dataResearch & AnalysisPaid databases… but most industries suffer from a lack of quality micro dataInformation sources
  • 21. 21Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Look in the right place…Getting to government data Identify which government departments are the touch-points for the activity to be researched Contact the government department/ explore their websites Right to information can yield unpublished data that is available with the authorities
  • 22. 22Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.…so you can get (virtually) any info you wantHeavy reliance on primary research…CompetitorsBankers CustomersSourcesSuppliersIndustryassociationsDealers/RetailersDistributorsIndustry expertsEx employeesRecruitmentconsultantsGovernment agenciesSocial networkingassociationsand others
  • 23. 23Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.…..gave us a validated information on the plansIdentifying external touch pointsConstructioncontractorsDistributors andsuppliers of rawmaterialNeighboring unitsand local grapevineLocal HR consultantsfor blue collarhiringLogistics serviceproviderExpansion plansof a pharmacompany in ruralUPEvery transaction leaves a trail….
  • 24. 24Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.…need appropriate approachesPrimary research References and connections important Cultural diversity & sensitivity• Language• Background of respondent• Interpreting responses• Gift giving versus money giving
  • 25. 25Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.…multiple approaches to obtain reliable intelligenceApproaches and methodologies Validation & triangulation Use of proxies & multipliers ExtrapolationValidationValidate each assumption, data point and also triangulate the total market size Multiple sources for one data point Industry experts Market intermediaries (distributors, traders, dealers, retailers, etc) Upstream and down stream estimates for intermediate goods Proxy indicators
  • 26. 26Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Ethical CI is the only sustainable approach…The question of ethics Unethical ways of gathering information areprevalent in India ‘Under the table dealing’ required with publicauthorities like the police, judiciary andbureaucrats Misrepresentation is commonEthical CIHonestrecommendationsNomisrepresentationNo conflict ofinterestLaws of the land
  • 27. Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Case studies• Indian consumer finance market• Food ingredient manufacturer losing market share
  • 28. 28Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Understand borrowing patterns in lower & middle income groups Purpose Lenders Market Dynamics Growth ProfitabilityUndocumented, unorganised, fragmented….Indian consumer finance marketMarket Segmentation By type of loan By type of lender By income of borrowerFuture EstimatesGrowth DriversProduct innovationIncreased penetrationInterest RatesDemographicsCompetitive Analysis Product comparison Profitability Strategies to target LMCustomer Decision Making Product comparison Availability/ Servicelevels Customer perceptionsMarket sizingUrban LowerMiddle Class
  • 29. 29Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Fragmentation, unorganised sectors and no documentation…ChallengesChallenges SolutionsDefinition of target groups Secondary researchOn the demand side: No literature on lending/ borrowingpatterns for low income groupsIntensive primary research - 300 odd interviews across 4citiesHigh degree of difficulty in conducting interviews:suspicion among respondentsUse of appropriate approaches for different respondenttypes – language/ wording of questions, mode of interview,etc.Working out costs and loan yields of unorganized lendersMultiple measurements allowed validation andtriangulationSupply side: multiple informal lenders & lack of lenderdataValidation and triangulation of every data point
  • 30. 30Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.High reliance on primary researchMethodologyBanksMoneyLendersPawnBrokersCreditCo-opsLENDERS OccupationLocationMarket size By Lender By PurposeMarket SegmentationGrowthTotal MarketGrowth ProjectionsProducts & EconomicsBORROWERSNBFCsOthersChitFundsIncomeSecondary Research Demographic data, data on some organized players, potential contacts, definition of target segments, etcPrimary research Primary research
  • 31. 31Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Marry field data with demographic and secondary dataAnalysis and validationField Data – 300 interviews in metro, tier 1, tier 2 and tier 3 cities Average borrowing per year per household for salaried individuals in each city Average borrowing per year per household for self employed individuals ineach city Average borrowing by purpose Average borrowing by type of lenderDemographic data Number of households in the appropriate income group in each cityDemand sideestimatesSupply sideestimatesField data + secondary data – over 60 interviews with lenders to low incomeborrowers Average lending and terms of lending Estimated number of lenders per cityValidate
  • 32. 32Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Market size estimated in the range of $4.8 – 6.1 bn in 2003FindingsValue of borrowing by lender Value of borrowing by purpose
  • 33. 33Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.CI in undocumented, unorganized, fragmented marketsFood ingredient manufacturer losing market shareMNC food ingredient manufacturer losing market share to very small regional competitors How is their product of high quality? How are they selling at a low price? How have they built up their distribution chain?Company background Sourcing andcost structureDistribution
  • 34. 34Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.For challenging data requirements, primaries and more primaries…ChallengesChallenges SolutionsCompetitors small private companies with complexcompany structuresRelied on ROC documents and a LOT of primary research (over70 respondents in all)No literature on the product or industryInterviews with industry experts, food technology institutes andlarge number of distributors and customersImport data not reliableAugmented import statistics with calls to suppliers in China,Malaysia, etc.Customers and distributors spread all IndiaLarge number of interviews with distributors and customers ofall sizes across cities of all sizesMany diverse sources of informationBuilt up the picture like a jigsaw with bits from multiple places.Lot of validation involved.
  • 35. 35Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.High reliance on primary researchMethodologyField visits to offices andmanufacturing locations ofcompetitorsSecondary DataLists of distributors across citiescustomers across citiesFood technology institutes andexpertssuppliers of raw materialsequipment manufacturersImport data for key ingredientsPrimary dataCustomersCompetitors (multiple levels)DistributorsImportersFood technology expertsRaw material suppliersEquipment manufacturersEx- employees of competitorsJigsawPieced together to obtain actionable intelligence
  • 36. 36Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.Creativity in sourcing information ensured success…FindingsProfiled activities of 3 keycompetitors and analyzed theirstrengths and weaknessesIdentified competitors’ sourcesof raw materials and hence thesource of their cost advantageIntelligence on competitors’distribution strategyIdentified opportunities and threats for the clientsIdentified multiple areas for cost reduction, identifiedalternate sources for equipment, raw materials & packagingRecommended restructuring of terms with distributors -Need for greater flexibility in terms and level of paperworkAnalyzed future plans of thecompetitors and theirimplications for the clientUnearthed a plan by a competitor to set up a largemanufacturing unit using technology support from aChinese equipment supplier
  • 37. Copyright © 2013 ValueNotes Database Pvt Ltd. All rights reserved.CompetitorprofilesCompetitivebenchmarkingCI processconsultingCI learninganddevelopmentMarketintelligenceRumourconfirmationM&AintelligencePartneridentificationDue diligenceOpportunityassessmentThank youDownload Webinar Recording Herewww.valuenotes.comIndian Marketswww.sourcingnotes.comOutsourcing Intelligencewww.valuenotes.bizResearch & ConsultingValueNotes | Pune, India | T: +91 20 6623 1700 | E: research@valuenotes.co.in

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