Mr. A.P. Jayanthram, Ex MD,
The top is unbelievably thin and that explains the minuscule high end market.
Indian customers who operate in an atmosphere of shortages and compromises, almost always expect 70% value at 50% cost. This is particularly true for Machinery and measuring/ testing equipment.
So, what is the way out?
You need an India specific strategy and this does not mean slashing prices.
When John Deere came to India, they had tractors too heavy for India’s fragmented land ownerships. They developed 35 HP tractors exclusively for India. Hyundai and Suzuki are successful in India, because they made India a global hub for small cars.
A lot of successful European companies take India as a necessary compulsory addition in their coverage map, without a mindset to invest in this future market. They are used to an affluent client base that buy on impulse, reputation and comfort level.
Many are reluctant about the very idea of customising markets.
When an Indian customer imports a Machine, he is looking at a Swiss Army knife which can do everything under the sun. Matching his needs with the options and budgets is a highly technical, professional job that needs dedicated sales talent.
Offering him a lot of expensive unwanted features by a feature sales specialist is of no use.
India can be a fantastic laboratory for testing new business models provided there is enough analysis and dialogue.
Smart global companies start here by selling global products at global prices to the top 1%. That is easy. But the eventual success depends on whether they can crack the middle market, because every global competitor with a philosophy of token competition is targeting the same 1%!
Most MNCs are happy here as they put a low bar. Most fully owned subsidiaries contribute just 1% of global revenues.
Can a Mercedes really crack the Indian commercial vehicle market, 95% of which is shared by Tata, Ashok Leyland and now Volvo? A fascinating Marketing project, it would make.
Though buying up the market by slashing prices is never a winner, there has to be some flexibility with the Indian MDs of MNCs who must not be going out of the country for a 3% discount.
‘Skimming the top’ model has huge limitations when it comes to marketing technology in a poor but potentially big country.
Finding money for capital investment is a huge challenge for entrepreneurs in a high interest economy. Is the MNC willing to create his own global financing networks here?
Can they practise real value selling by specially trained manpower that can effectively convince a buyer on what value he gets by spending a bit more initially and how it adds to his eventual profits?
Can they invest in excellent hand holding support system in advance?
Can they offer things like a 36 month warrantee as a standard confident statement of reliability?
India is a sleeping giant and only those who are patient and willing to customise market inputs with deep study and interactive conversations can succeed here.
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