and discussions on whether it was unfair dumping or fair competitive advantage, I finally made a

trip to Manish market, the bazaar in Bombay that sells all manner of imported goods. What I

saw blew my mind. Attractive watches for Rs 150. I took one home for my snooty upper class

teenager and it passed muster. Wonderful toy cars at one-third the price. I took one for a little boy

whose mother works in the building as a maid, and his eyes lit up. It was large sized, looked great

and, what’s more, it was new – not a battered cast-off that had seen better days.

There were all kinds of powerful torch lights which could illuminate a whole room, and at those

prices, it was a sensible investment to buy one per room, rather than hunt whenever the lights

went off for the single one we owned! And the textiles were very desirable, both in terms of price

and quality (for those who like glitzy high shine stuff). I had bought imported cordless headphones

for my TV set for Rs 1750 four years ago; they were now available at Rs 450. The low income but

upwardly mobile peon from my office said that the first bits of crockery his household acquired

were from here, and he knew where to get his first tape recorder when he could afford it.

I came home and, with wonder in my eyes, recounted my shopping tales to my friend who said,

‘Surely you know that Chinese products don’t last beyond six months.’ I chewed over this piece of

information. If he were right, then the paranoia that all of us felt was quite needless. No

consumer, especially the value conscious Indian consumer, would fall for any of this. After all, we

are not a disposable culture and as a frustrated marketer once commented, ‘The last thing that the

Indians threw out was the British.’ But if the product does last, then why should the consumer

not choose that which is better and cheaper? If there is a fan available with a built-in inverter at

almost the same price, why ‘be Indian, buy Indian’ and suffer when the power goes off on a

midsummer afternoon?

A recent India Today article on the subject (‘Enter the Dragon’), got to the crux of the matter. It

said that the difficult choice before the government was whom to protect – the Indian

manufacturer or the Indian consumer. My position on this is absolutely unambiguous. He who

pays the piper must be allowed to call the tune. The consumer is shelling out his hard-earned,

scarce money and must be allowed to get the best bang for his buck. The conceptual construct of

‘bang for the buck’ is ‘customer perceived value’ from any goods or service, where value is defined

as benefit minus cost (V = B-C), where cost is not just the price but the total cost of usage.

So, can Indian brands survive? Only if they deliver a value advantage over the new brands

entering the country, either in terms of superior benefit (from the product features or services

added on), or better costs or some combination of better or worse benefit and/or cost that makes

the arithmetic work in their favour. Is this a likely scenario? My guess is that only a handful of

Indian brands will win the customer value battle. In the rest of this article, I want to address

two issues – how Indian consumers process value, and what it takes for Indian brands to have a

value advantage and, therefore, survive in the future.

How do customers choose what they want? The broad framework of customer value processing is

that customers view any product or service as a composite of two kinds of variables – benefits

that add value and costs that diminish value, cost being not just the price tag but all the

economic, rational and emotional costs that have to be paid to acquire these benefits. The total

value that they perceive from any offer is the net of the value gained from each of these benefits

and the value lost as a result of each cost. They examine all the options available to them and

process the value they derive from each, and then choose the one that offers the maximum value,

i.e. where the ‘benefit minus cost’ is the highest.

The magnitude of value gained or lost from each benefit/cost depends on the ‘value system’ that

customers have, i.e. how much importance they attach to each benefit/cost. Different consumers

have different ‘value systems’, i.e. what they attach a greater or lesser value to is different for the

rich and poor, young and old, city and small town. Having come to a value judgment for all

available options, they then choose the one that delivers the maximum net value.

Can an illiterate, poor consumer base really process value? I have trouble dealing with the notion

that some ideologues have that poor illiterate consumers cannot process value and are beguiled into

buying products that do not deliver value. All consumers, no matter how illiterate, consistently

demonstrate that they are capable of processing value. You just need to listen to them do so – they

do it in every facet of their lives. Girls are less valuable than boys (lifetime benefit minus lifetime

cost), paying off the local goonda has more value than running after the police, and so on. Surely

the same consumer base which threw out Indira Gandhi in 1977, when her benefit-cost arithmetic

worked out worse than other options, is capable of evaluating bicycles and detergents!

I also have trouble dealing with arguments that say that poor consumers must have a

consumption value system that attaches less value to the good things of life – aesthetics,

convenience and so on. Television has been blamed for changing ‘solid Indian’ consumption

values. My first response to this is that surely the consumer has the right to decide how he wants

to spend his own money – what constitutes consumption prudence and what doesn’t.

The fact is that in the previous era of no options, several things that people valued were not

available. Consequently, it was easy for manufacturers to believe that the consumer did not want

them. For example, a lack of aesthetics and finish perfection, be it in watches or tractors or two

wheelers, has always bothered consumers. But in an economy where suppliers did not have the

word ‘customer value’ in their business lexicon, the aesthetically nice option always came with a

higher price tag or a trade-off in durability, and the customer decided he didn’t want it.

But he will jump at any option that does not require him to make such trade-offs. And that is

precisely the nature of the threat from overseas. Not only does it have additional functionality to

make it work better, it looks and feels better and what’s more, it doesn’t cost more. In some cases

it even costs less! What would any half intelligent consumer say? ‘Hey, is this what I was being

cheated of earlier? Let’s switch, and raise our expectations to what they should have been.’

Look at the ‘value maturity’ the Indian consumer base demonstrated which brought seasoned

multinationals to their knees. When the first wave of big name multinational brands came into

the country, post 1991, they were value arrogant. They did not believe that their offering would

not be received joyfully by an ‘underdeveloped, starved for international quality’ marketplace.

They were proved wrong (leading to the debate about whether the middle class actually exists or

not!).

The ‘starved for goodies’ Indian consumer has been less than enthusiastic about international

brands of Scotch, luxury cars, breakfast cereals, American colas, jeans, cosmetics and sun glasses.

Top of the line Japanese television brands did not get the same response as did the Korean. The

Korean refrigerators, television and cars are winning against Indian brands. Why? Better quality

products at comparable prices. The benefit-cost equation gives them a value advantage.

Star TV did not have much success to begin with. Its irrelevance to most of the market with its

English bouquet of programmes was a problem. Zee understood the pulse of the consumer better.

Its benefit minus cost equation was far better than Doordarshan, wherever consumers had a

choice. Today, Zee’s value delivered is perceived by consumers to be less than that of a revamped

Star Plus. Consumers have gravitated to where they see better value.

Why didn’t breakfast cereals take the Indian market by storm, even though they were launched by

an international blue blooded brand, were truly world class in quality, and provided all the

nutrition and health benefits along with convenience added to boot? Because the nutrition and

health benefits were not demonstrably more than a fat free, cereal based, steamed idli, and the

cost per family for a full stomach was a lot more. And to pay that much more for convenience

alone didn’t gel with consumers.

When Kinetic Honda, the first new generation scooter, was introduced into the Indian market

several years ago, it was given a cold reception by customers despite having obviously superior

features to good old Bajaj. Research showed that it would not be the first choice of customers

even if it were priced at par with Bajaj. Consumers perceived the modern features of Kinetic

Honda, not as benefits but potential problems. For example, even the electric start instead of the

kick start was seen to be a mixed blessing – consumers believed, based on their dismal experience

thus far, that anything electric was usually unreliable, and for such a vital application as

starting the scooter, safe was better than sorry.

However, times have changed, consumers have got more experienced, and have rejected the scooter

product itself in favour of the motorcycle. Hero Honda looks better, is a motorcycle, works better

on rural roads, gives great mileage and is, benefit minus cost equation wise, clearly offering a

value advantage. Kinetic Honda, on the other hand, has found its niche as an urban,

woman-friendly vehicle, easy to manoeuvre and drive, and to this set of consumers, is clearly at a

value advantage compared to the motorcycle

Who is the arbiter of value? For those who protest that Indian brands and options are not as

value negative as they are made out to be, I would like to say: But have you asked the customer?

It is his money after all and he should be the judge. I was recently at a conference organised by a

premier industry association where the issue of 100% FDI in retailing was being discussed.

Nowhere in any of the impassioned speeches did I hear the word ‘customer’. When I did dare to

speak and suggest that after having had shoddy service from retailers for a long time, the consumer

deserved better value for his money, there was a huge outcry of denial. Nobody in the audience had

seen a customer satisfaction survey nor attended a focus group.

Some consumer feedback: ‘If you go into XYZ (name of a large Indian department store) and ask

to read the manuals of four different brands of washing machines in order to understand your

choices better, he tells you that the manuals come in the packed boxes and you cannot do that.’ ‘I

got a defective brand new refrigerator and it took two weeks and a lot of begging before anyone

from the company or dealer came to look at it and another two weeks before they repaired it. They

refused to replace it with a new piece.’ I am sure every one of us has our own share of ‘war

stories’ to contribute.

Let’s now look at Indian brands that are blockbuster successes. All of them are clearly winners in

the value sweepstakes, arising from a superior understanding of what drives consumer value.

Nirma is the epitome of this, and the pioneer of what is now acknowledged as the best way to

win in the Indian market – the ‘low cost business model’. It created a detergent market 10 times

larger than that of the most marketing savvy multinational in India – Hindustan Lever. It

provided adequate quality at affordable prices, the genius being in innovatively creating an entire

business system that was low cost. Nirma is clearly the pioneer of the high volume, low margin,

low cost business system which is perfect for unlocking the potential of the Indian market,

profitably – a formula most MNCs just don’t ‘get’.

The fact is that the bulk of India’s consumer base is poor, and the market is defined by a whole

lot of people consuming a little bit at low prices rather than a few people consuming a lot at high

prices. Will Nirma survive? I’d place my bets on the brand. Understanding how rising incomes

and exposure of their traditional consumers changes their value systems, the promoters are

proactively upgrading their offer. The low cost business system which was earlier low cost-low

sophistication-low tech, is now being given more muscle with backward integration rather than

cheap labour driven cost advantages.

Over 70% of the Indian consumer base has remained unpenetrated thus far in most categories.

Poor consumers want their children to have toys, their huts to be neatly painted, they long for a

telephone and a TV, some form of personal transport and so on. If you have the stomach for it,

there is a high pain, high gain opportunity to unlock the potential of the huge base of low income

consumers, who have the exposure and aspirations to consume but low purchasing power.

The answer lies in using innovation in product and business systems to deliver price-performance

that both sells and makes a profit. Quite simply, we know that there is a Nirma in every market

waiting to be created, whether in video players or e-mail, household painting or farm

mechanisation or personal transportation. Successful companies in India have already done this;

Hindustan Lever calls it the ‘popular’ business model, designed to serve the ‘belly of the market’.

Citibank is testing Suvidha, a low price, high service, low cost model with success. The Subhiksha

model, the innovative ‘popular segment’ retail offering in the South, is gaining steadily despite

being contrary to western retailing formats.

Indian brands that understand and adopt this way of doing business are well protected because

of their real cost and capability advantages. This is the true source of delivering value advantage,

on a large scale, and profitably. Unfortunately the Chinese have a far better inherent cost

structure to play this game. So one more ‘essential’ for survival needs to be better distribution and

retailer service, and an inherently better understanding of Indian consumer needs. Surely

understanding Indian consumer needs is something that the Chinese cannot be better at than

Indian brand owners?

The small scale sector still has a large share of many consumer markets – biscuits, tea, oil,

confectionery – to name just a few. Unfortunately, while they are low cost players, they are also

low customer value players. Every poor man needs to be able to give his child clean and

hygienically produced, wrapped and hence fly-free biscuits and sweets, without having to pay

more for them. Small regional Indian brands have a stronger chance of survival since they are

focused on catering to the specific needs of an ethnic group – hard to beat by anyone with more

national aspirations.

Indian brands which believe in the ‘premium’ business model, i.e. that only those consumers who

can pay high prices deserve to be counted as consumers, are very vulnerable today because the fact

is that a lot of so called premium Indian brands do not deliver benefits that are ‘premium’ enough

for the prices they charge. Even if they do, their consumers have the ‘money for value’ mindset,

and would rather pay more for more rather than pay less for less.

It’s the V= B-C arithmetic again. A greater B and a greater C can still give a greater V than a

smaller B and a smaller C! They have got away with it thus far, in the absence of competition.

But where there is competition, especially hardened battle-scarred competition from overseas, they

have started collapsing, as has been the experience in the consumer durable sector.

Service brands have the best hope of survival – as C.K. Prahalad pointed out in a recent speech, it

takes a genius to be able to replicate the dabbawalla system of Bombay – world-class and more

quality delivered with a modestly educated workforce and cost to consumer of just Rs 250 per

month! As he says, if you marry the dabbawalla and the angadia with the Internet, you can

create a strong rival to Fedex!

In conclusion, size of brands or heritage or history is no protection for Indian brands. Even huge

brands can collapse overnight if better value products enter the Indian market (nine million

bicycles certainly at risk here, as will be makers of small household durables), especially if the

brands have been value ill-treating consumers.

There is a short time window for Indian brands to revamp their entire consumer value equation

and work at a business system to profitably deliver that value. In the meanwhile, in many sectors,

perhaps hugely raising the bar on consumer service will keep invaders from gaining quick inroads

into the market. How many Indian companies are ready to make a big financial investment to do

this? I would bet carefully on this one!

Can you please send me a invitation of G-Mail at rishiraj@linuxmail.org or at rishiraj@adlandpro.com

Your fan,
RISHI

For religion, again India is so diverse.. in “”my immediate religious surrounding”" I will find world’s almost all major religions.. Religion is a personal choice.. It is a matter of faith and some blindly believe what is said in their religion while some thinkers question things before accepting them.. in all, as long as it does not affect the society religion should be left as a person’s right to his way of living..
For me swadeshi is practised nationalism to make India the best economical and cultural society. I agree with points 2,3 and 4. But as I said earlier, I dont think point 1 holds in the current global context.

I am presenting four Gandhi’s doctrine about Swadeshi

1. Swadeshi is that spirit in us which restricts us to the use and service of our immediate surroundings to the exclusion of the more remote.
It does not talk about discrimination as it is misinterpreted by millions.

2. Thus, as for religion, in order to satisfy the requirements of the definition, I must restrict myself to my ancestral religion. That is, the use of my immediate religious surrounding. If I find it defective, I should serve it by purging (To free from impurities; purify. ) it of its defects.
In other words acheiving the quality, if i could relate this to IT, its Quality Assurance & Constant Improvements based upon the Metrics.

3. In the domain of politics, I should make use of the indigenous institutions and sere them by curing them of their proved defects.
It talks about elimination of defects.

In that of economics I should use only things that are produced by my immediate neighbours and serve those industries by making them efficient and complete where they might be found wanting..
Need not to say anything it clearly tells why a ABC product is given more preference than IJK.

4. It is suggested that such Swadeshi, if reduced to practice, will lead to the millennium.. . .

If above ideas are understood wisdomly (Not Politically or Geographically) we have answer for
1. Affordability
2. Standard Of Living
3. Making products Of Highest Standards & Quality
4. Serving Society
5. And much more..

And Last but not the least acheiving your Dream, and answers to all the of your blogs..

This is all about Swadeshi not anything else……..