A friend of mine asked me today looking at my Nokia handset, You talk so much about India and Indian, why are you having a handset manufactured by a foreign company?
I replied to him, Not only my mobile handset, there are many other things in my house starting from TV, Refrigerator, Washing Machine etc which are manufactured by foreign companies.
The concept of swadeshi is being entirely misinterpreted. I bought a Nokia handset for the simple reason because no handset manufactured by an Indian company matched the number of features or quality the Nokia handset had. I dont want to buy an Indian handset even if it is of a low quality just because it is of an Indian company and thereby end up giving false statistics to that Indian company that their handsets are of good quality and so the sales are high Let them face the competition and manufacture quality handsets, I will buy one then. Else the result will be only swadeshis will have those products and internationally nobody will buy them and in that case our exports will come down, we cant compete with china, market will be restricted only to India and what not.
By wrongly interpreting swadeshi, please dont end up buying all Indian things just because they are Indian without testing the quality. But if there are equal qualitative Indian products as well, then in that case PLEASE BE SWADESHI AND BUY INDIAN PRODUCTS ONLY.
For me the definition of being swadeshi is buying India products when I have a choice of both Indian and foreign products with same quality. In fact I will be more happier if the Indian product is far superior in quality compared to the foreign one. But if the Indian products are less superior in quality than the foreign ones, then I WILL BUY FOREIGN PRODUCTS.
What my friend didn’t ask me when he asked about my handset, was my mobile subscriber. I have been subscribed to Airtel (an Indian company) for the past three years even when there were cheaper offers by Hutch (a foreign company) for the simple reason that quality of Airtel was superior than that of Hutch. Airtel had signals even on highways away from city and places in western ghats where Hutch didnt have signals.
BE INDIAN, BUY INDIAN – BUT QUALITY DOES MATTER
Please ensure that Indian companies are able to compete internationally and offer quality products and services. To ensure this buy only quality Indian products and services. Never try to sustain an Indian industry with false growth and feedback. WE DONT NEED SYMPATHY, A DAY SHOULD COME WHEN JAPANESE BUY INDIAN MICROELECTRONICS PRODUCTS. FOR THOSE WHO DONNO, READ HOW AKIO MORITA MADE SONY AND MADE IN JAPAN SYNONYMS TO THE WORD QUALITY!!
AFTER having read several press reports and articles about the second Chinese invasion of India,
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!
Hi GuruDev
I liked your articles and your both blogs and hitXP.com
I like your ideas and your intelligence.
Can you please send me a invitation of G-Mail at [email protected] or at [email protected]
Your fan,
RISHI
With great respect to Gandhiji, but this is not the era of British India.
Take the first definition. “”service of our immediate surroundings to the exclusion of the more remote””.. in this era of globalization american multinations and local industries both are in our immediate surroundings.. Indians are working in MNCs and companies with Indian investments are being headed by American CEOs.. the border that separates has become very thin..
Swadeshi products have become simply those products whose profit stays back in India.. Companies with majority/full stake being those of Indians.. Due to tie-ups between companies, Indian and Foreign, I am using the word majority stake..
This is about the economics of it.. Make Indian companies more competetive and buy Indian products where quality is good. In other words be a selective consumer like any american with the difference being go for a Indian brand when quality is equal in both Indian and foreign brands..
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.
Lets Refresh ourselfs with the actual meaning and notion of Swadeshi.
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……..