6 Aspects To Examine Before Entering the Indian Market

1. atulvaid.com
Look Before You Leap
6 Aspects To Examine Before Entering the Indian Market
Atul Vaid

2. atulvaid.com
Hello…
I’ve been in consulting a long time, and I’ve run across a
lot of folks who want to explore a business opportunity
in India.
The number seems to be larger now, given the economic
conditions in North America and Europe.
If they haven't worked in Asia before, or aren't from a
large multinational corporation, then its almost certain
they have a number of inaccurate ideas about India.
This is a short white paper which is a summary of some
of the key (mis)conceptions I keep hearing, and the
things which I think ‘newbies’ need to do to fix them.

3. 1 Its NOT a homogeneous country. Think of a atulvaid.com
collection of countries ‘European Union’ style
Different states have very different social, religious
and economic characteristics. Sometimes even
different taxation systems.
A mistake made by almost all new entrants, especially by those from mature markets, is
to consider India a single country with a homogenous response to the features, styles
and value propositions on offer. Instead consumers in different parts of India react very
Talking
differently, making commercial success uncertain and uneven. Point!
VARIETY IS THE SPICE OF LIFE !
Visiting one (or four) cities isn’t enough. • Secular republic, but with largest Hindu
and Muslim populations in the world.
Understand the differences in consumer behaviors • Huge pockets of majority Muslim and
Christian poluation clusters.
in each region and state, and if need be, at the city • 7500+ kilometers of coastline, large
deserts, highest mountains
• 22 official languages (incl English),
level. 1600+ recognized languages
• Eating habits vary – wheat-based
North, rice-based South.
• Different economic patterns – West
and South are manufacturing-driven;
North and East are trading.
• Conservative south India, professional
West India, flashy North India
• Literacy variations – 100% in Kerala, to
just 40%+ in its neighboring state of
Andhra Pradesh.

4. 2 It’s a BIG Market! Scale will be Critical. atulvaid.com
If you have ambitions to be a national
brand, start thinking in terms of MILLIONS
of customers. Or be sidelined as a ‘niche’
player.
Talking
Some of the states are large enough to overshadow all but the largest
countries. Point!
India’s population in 2010 was
New entrants sometimes under-estimate the scale and spread of 1.2Billion, equal to the combined
demand, wasting opportunities to build volumes and letting consumers population of the USA, Japan,
Indonesia, Brazil, Pakistan and
develop perceptions of the company not being committed to the Indian Bangladesh.
market.
With states having similar populations
as Brazil (5th most populous), Mexico
(11th), and the Philippines (12th), India
Set up a quickly scalable operating model. easily be thought of as its own world.

5. 3 A “400 Million Strong Middle Class”. Really? atulvaid.com
This figure has been thrown around for some
time. Seems that there’s a huge ‘middle class’
out there itching to buy all kinds of things.
Yes, consumerism is alive and well and growing strongly. But the ‘core’ Indian
market is fragmented, scattered and nowhere near 400-million strong. This
fallacy has arisen since there’s a real shortage of accurate information on Talking
Indian consumers – most reports are out of date or badly flawed if they’re
based on Government of India figures or on analyst reports.
Point!
The National Council of Applied Economic
Research (NCAER) has an interesting
Segment, get real numbers, don’t assume segmentation scheme. It identifies only
33 million households (“Consumers” and
“The Rich”) as being relevant for most
easy adoption. That means running surveys of marketers.
customers to estimate segment sizes and Yup, still a large number. But nowhere
near 400 Million!
adoption rates. Don’t rely on ready-made
estimates.

6. 4 Indian’s have Indian tastes and needs. Cater to them.atulvaid.com
Very few products can travel into India,
and across India, without needing changes Talking
Point!
to cater to local tastes and needs.
Nokia realized large numbers of the
rural population do not have
Brands sold in India need to adapt to local expectations to survive and electricity. Having a torch built into
grow. Across categories, products have been modified – from steel a phone is a distinct and tangible
drums in Korean washing machines, to heavy duty air conditioning in benefit. The Nokia 1100, the first
French automobiles, to uniquely Indian flavors on menus of American made-for-India phone, was a
runaway success. Manufactured
fast food brands.
locally, the 1100 incorporated a
torch, an alarm clock and a radio.
There may also be a need to provide marketing and support services in
ways never before proffered. For example, McDonalds has had to
provide home-delivery services to cater to the stay at home family
segment – a global first, with each outlet needing to hire a fleet of
McDonalds has had to modify
motorcycle-riding deliverymen. almost all elements of its service
offering- from menus to home
delivery.
‘Indianize’ products. And accept that you • Products: Indian Tastes on Menu
may need to support customers in ways – Sharper, No Beef Products, High
Dependence on Vegetarian Items
that are new to you. • High investment in building scale
in local suppliers
• Home Delivery System

7. 5 It’s a Young Country. And Getting Younger. atulvaid.com
Consumers are young, ever more
Talking
numerous, and entering the workforce. Point!
They increasingly have the purchasing Most people are young. Only 7.4
power to make it worthwhile to chase percent of the population is aged
60 or more. The median age is
them. only 24.7.
In the next three years, up to 25% of the world's new workers will be
Indian. Between 1996-2016, population in the age group 15-59 will
increase by 281 million (from 519 to 800 million).
Get ready to cater to the younger consumer in terms of product features,
as well as attitudes and preferences regarding styles, point of sale
choices, media channels.
Cater to young customers. That’s where
the market is, and will be in the future.

8. 6 It takes a whole lot of effort and time to define an atulvaid.com
operating model to suit and use local conditions.
Infrastructure is uneven. Even the “best” Talking
locations will likely be below the expectations Point!
of players from mature markets. It’ll take time Genpact – India’s largest BPO –
runs a transport system involving
and energy to get going. 500+ vehicles to ensure its
employees reach their offices in
time for each shift.
Investing in India doesn’t only mean financial investments – expect to put in a
lot of sweat addressing what might be considered basic requirements ‘back In 2008 the total installed
home’. For example, almost all large facility owners possesses significant capacity of captive plants in
India, (only of plants greater than
power generation facilities to overcome erratic and poor power. BPO managers
1MW), was about 25 GW; this
end up running fleets of cabs so that poor transport doesn’t lead to employees was about 17 per cent of the
reaching work late. Some companies overcome managerial talent shortage by total installed capacity in India.
supporting ‘captive’ educational institutions.
Infosys has launched a program
called 'Campus Connect' to align
Local competitors know all the pitfalls. And routinely overcome them. Have the education being given at
you heard of ‘jugaad’? Look it up here. various engineering colleges,
with the requirements of the
industry. Wipro has also started
a program called the Wipro
Academy of Software Excellence,
See the on-ground realities for yourself. And in association with BITS (Pilani)
to prepare fresh graduates for
get local talent to implement – expatriates careers in software programming
and provide them with the
cant cut it, even if they’re of Indian origin. necessary skills.

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