The Growing India I

Apr 05, 2013

The Growing India I

Back in 2009, the movie “Slumdog Millionaire” swept the Oscars and wowed audiences of millions worldwide. Even though slums can still be found in India, the economy of the world’s second largest nation has been rocketing, and a large number of multinational corporations, finding their current market too niche to move forward, have been seeking success in this giant country for some time. Some of them have been successful and continue to grow. But many of them have already jumped ship. So how did the successful ones make it?

One Size Doesn’t Fit All

This sub-heading probably best describes the reason for market-entry failure. With a long and renowned history of development, India takes great pride in its culture, language, ethic and geographic diversity. Something made purely for the West is usually not welcomed by the Indians, and thus tapping into this market with an estimated annual GDP growth rate of at least 6% will require inside-out localization.

Global food-provider Nestlé demonstrated their market savvy and determination to enter the Indian market by setting up a research and development center there to study the eating habits and culinary practices of Indians. By sending staff to interview over 1,500 Indian families to further understand local tastes, Nestlé formulated tailored products, including instant noodles in malasa and curry flavors in the early 1980s, and these became big hits in India. In the course of their research, Nestlé discovered the fondness Indians have for dairy products, so they raised the quality of their own milk products by educating cattle farmers and improving the refrigeration chains.

Nestlé reaped the rewards of their hard work – the Nestlé instant-noodle brand Maggi has already become the generic term for instant noodles – with an 88% market share, bringing in 27% of Nestlé’s revenue for India, far outclassing the performance of all their competitors in this segment.

Eating habits are perhaps the most important facet of any culture, so food providers and caterers need to pay extra attention and work hard to capture the hearts and taste buds of their Indian customers. Six years before opening its first outlet in India in 1996, McDonald’s started working with local suppliers on something unique among all the outlets in this fast-food kingdom – a vegetarian menu to cater to the vast amount of vegetarians in the market. By ‘vegetarian’ McDonald’s means everything, from ingredients and food processing to staffing and serving. Suppliers were selected carefully to ensure that they respect and follow instructions laid down by McDonald’s. No egg (also considered non-vegetarian food) is used throughout the entire production process and only vegetable oil is used for cooking. Separate equipment and utensils were reserved for vegetarian-menu preparation and, in some cases, a dedicated workforce was in place. The physical separation of vegetarian and non-vegetarian menus allowed McDonald’s to gain a foothold in India, which expanded from one outlet to some 235 branches across 45 cities within 16 years.

Other aspects of daily life are to be treated in a similar way. Finnish mobile manufacturer Nokia gave beautiful twists to its mobile devices after an in-depth study of the needs of its target customers in India. The company launched the Nokia 1100, a very subtle model compared with  mobile devices in other markets, as a total response to its findings: user-friendly interface and functional simplicity, affordable pricing with basic functions such as alarm clock and text messaging, durability against India’s heat, humidity and dust, and a long-lasting battery to cope  with an unstable electricity supply throughout the country. The Nokia 1100 ended up being the most popular mobile device in the world, not just in India! Before it was discontinued, the Nokia 1100 racked up sales of 200 million units worldwide.

Nokia sustained its success by incorporating more local elements into its devices, including adding Indian patriotic and Bollywood ring tones, user interfaces in local languages, and text messaging in Hindi.

Other players also did the same for the India market: there were cricket-based games in some models by LG and AM radio capabilities by Sony Ericsson, for example.

In adapting to domestic needs in this market, Tupperware India changed its product portfolio and design, and its signature spice box is a perfect example illustrating such modifications. As opposed to the traditional round metal spice container, Tupperware wowed its Indian customers with a neat, space-saving design and the use of plastic with custom-made serving spoons. The product was so well received by the market that Tupperware extended its collection to lunch containers, dinner sets, and so on.

To be continued...


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