The primary source of information on a boring Sunday evening came when a friend of mine actually called me up to help him with some of his college work. Guess what he had to prepare for his college debate the very next day!!!The topic was “FDI in India”.I quickly glanced through the ever so dependent Wikipedia article on FDI and began my information search quest through the fascinating world of the internet. I chanced upon one video on youtube where the language of the same content coming from a financial broadcast drifts drastically to optimism in hopes to play the bull and the bear game. The broadcast had roped in some top management gurus to tarot card the future. “India is an idea that will take off this year”. In this thirty minutes program, the gentleman devoted twenty-eight minutes to ideate an optimistic view for the leap year while the ad agencies squeezed out two minutes to sell a million things possible. Two topics that strongly emerged from this discussion were the introduction of FDI in India and the impact of new products on the growth rate in these recessionary times. Following are my views on these issues.
I have been reading many articles on the impact of FDI in India. I am happy for giants like Starbucks and IKEA entering the Indian market. I hope Starbucks does influence the Indian political system in some way but IKEA is going to be a game changer in the interior industry. Apart from this, how does FDI revolutionize everyday buying?
The first thing I recall reading FDI is the famous retail chain- More. More was the first place where my father learnt about the discounts being offered on the MRP. What he thought was a fascinating concept is actually a headache to the local ‘Mudir Dokan’ stores. A few months later when the local More store started winding up, the local ‘Mudir Dokan’ stores saw every Tom, Dick and Harry ask for a bargain. But if More was such a fascinating place, why did the retail chain shut down? Let me take you on a demographic ride around my residential area
Let’s fix the ‘zero mile’ at the entrance of my residence. Travel some miles and you see an Infosys like campus called ‘Big Bazaar’, take the second right and a sober looking ‘Bazaar Kolkata’ welcomes you. A few blocks down the road you see a place crowded with everyday vegetables and everyday people; that’s Reliance fresh. After all the hustle and bustle when you finally return home, keep an eye to the left; you will probably stop at the wine selling ‘Godrej Natura’. I am not sure what exactly will FDI do in the retail sector. There may be some kind of revolution in everyday buying but I am sure my father will not dump his local ration card for some loyalty cards program.
Another subject interesting about this century is the rise of Africa. Slowly and steadily, the ‘first world’ has realized the direct connection of the population with customers. Now what do I mean by the rise of Africa? Let’s take an Indian example. I was born in 1992 and by mid 2012 I had a simple idea to be a millionaire. Thanks to engineering text books, crazy ideas came to me effortlessly. So what was the idea? To collect one rupee from every Indian that would make me rich by a million dollars. Now what seems like a simple plan is actually a complicated business with competition coming from places as far as America. One billion plus population with nearly 700 million customers ready to buy an affordable, feature rich product, and that’s a market twice as large as U.S.
Bottom of the pyramid is a term long used in business and currently being reinforced with design thinking for the BRICs (Brazil, Russia, India and China). We have seen giant companies like GE and Philips come up with affordable products sold with low margins and a strategy relying heavily on the foundations of scalability. These products are designed for the emerging markets and compete with similar products launched by the ‘local entrepreneurs’ that specialize in catching up with the competition. The only way a product can survive and/or maintain its market share is by incorporation the right ‘looks’ and the ‘desired’ features. This is when Design Research powered by Product Design will slowly make way into the boardroom.
Way back in 2009, I was shopping at an Electronic outlet and found myself staring at a brightly lit glass cube with some four-grand, two-inch gizmo inside. This was a Sony USM 2 (GB) SE pen drive that sounded more like an American sergeant on mission. Three years down the line, prices for a pen drive have reduced by a factor of eight and are usually stacked in plastic buckets and sold around the cash counter. Growth can either be achieved by improving your products and services or by introducing new products and services. Now some ‘curve’ in the management theory will stop you from launching new products under such volatile conditions and respecting this theory, the only option remains is refinement. So how much growth do you expect by selling the same old products with new brochure? In years from now, targeting the mass market with refined products will not define growth. Growth will be achieved by platform based innovations that would make a feature rich product affordable in the mass market.
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