There’s Business Across the Pyramid
Monday, October 27, 2008
If India Inc has to enhance its presence in the world market, it must start to learn some lessons of marketing quickly. The basics: Segmenting, Targeting, Positioning. The basics (4Ps): Product, price, place and promotion.
Gain in market share does not make a great marketing company. India over the past 5-7 years has seen tremendous growth. This growth has brought purchasing power to millions across the pyramid. Companies have targeted these new consumers. Mr Jack Trout was in India sometime ago. An apt time to talk of differentiation. The Indian market is so fascinated by value at the bottom of the pyramid, that it is neglecting value everywhere else in the pyramid. I hope Trout will be able to motivate an improvement.
Trout will realise that Indian companies have no concept of segmenting and that Indian companies misunderstand marketing and accept promotions and film star endorsements as marketing.
If India Inc has to enhance its presence in the world market, it must start to learn some lessons of marketing quickly. The basics: Segmenting, Targeting, Positioning. The basics (4Ps): Product, price, place and promotion.
Gain in market share does not make a great marketing company. India over the past 5-7 years has seen tremendous growth. This growth has brought purchasing power to millions across the pyramid. Companies have targeted these new consumers.
Indeed, new categories have taken off based on these emerging consumers. Why is there such a lack of involvement in product categories that we are exposed to every day? Firstly, it is easier to set sell. Setting up distribution network to make products available produces faster results. Especially in a market where products have not been available, and purchasing power is increasing. This is the case in India now.
Develop a product. Price is ?for the masses? . Bring in a filmstar to legitimise the product and the brand. Make it available. From time to time raise the prices based on ?raw material prices? . Servicing a ?scarcity? situation makes quick money.
However, marketing becomes important in a competitive market place where many brands fight for the same consumer pocket. This is not the case in India.
Companies are looking to deliver products to gain volume market share. Hence their entire segmenting approach is usurped by the ?bottom of the pyramid? which determines the entire 4Ps. For this segment, price being the most important , each company focuses on gaining volume market share at the lowest cost.
The value in the middle and top of the pyramid is being neglected in the hunt for market share which seems to drive, in the eyes of financial analysts, the overall firm value. The consumer at the bottom of the pyramid drives service and product value definitions.
My bet is that in servicing the bottom of the pyramid, most Indian companies are exposing themselves to share loss at the top of the pyramid. Experience gained by satisfying the bottom of the pyramid will be useful in other developing economies, but not in developed countries where consumers want products that are ?made for them?.
Once product penetrations increase, growth slows and you are faced with maximising value per customer and enhancing consumer loyalty. This is where marketing develops. In this situation, producing and delivering goods is not sufficient. A ?reason to buy? is key.
And that comes from understanding that there are multiple consumer segments demanding many solutions. Companies have to realise that the value at the bottom of the pyramid is not to be gained at the cost of the top of the pyramid.
