01 November 2006

Selling to the Indian consumer

Ever wondered how local companies and foreign multinationals sell to the Indian consumer. Except of raising middle class which accounts for 200 million or so people, the great majority of Indians still earn basic salaries. Many of them are daily workers meaning that every morning they do not know what will be the catch at the end of the day. As a result they will buy only at the end of the day and only what they need for that day. Additionally, only about 5% of the trade in India is organized meaning the country is sprawling with small retail shops and street vendors.
How Coca cola or Procter & Gamble can adopt their global strategies to sell in a vast yet often poor market in the country which will host the biggest world population b y 2020? One obvious answer is to produce locally. It is correct but it not enough. The true answer is small packages and intensive distribution. While Europe markets “get more for less” economy packs Indian trade sells cigarettes individually even if package of 10 is available. I fell sick and visited a doctor who prescribed me a medicine to be taken for 3 days only. Guess what I got from the pharmacist? Exactly the amount of tables I needed for 3 days. They even cut a strip of 8 for me.
Apparently this requires quite different business thinking. Whoever is interested to explore a topic more should read a book “Fortune at the Bottom of the Pyramid, Eradicating Poverty Though Profits” by CK. Prahalad. I also attach the link to the particular book’s chapter talking about the needs and approaches to these markets.


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