I was in Delhi yesterday co-hosting with Microsoft a CMO Roundtable on Omni-channel Strategy for Digital. We had a lovely group of participants from organizations as diverse as Kaff, Indraprastha, Jaypore.com and there was a lot of debate on how it works for B2B where there is an existing dealer setup. Another interesting point raised was that while there is a lot of emphasis on real-time data collection, in many scenarios the purchase context does not require speed. It is possible to glean a lot of data on the customer using automation, and even possible to track a cohort of users on social media and track sentiment. Knowing the customer as an individual is now a reality. The challenge is to rebuild our legacy systems to benefit from this new paradigm. You can see the photos here.
During networking one of the exciting topics was Patanjali and will it succeed with jeans. Why has Patanjali been so successful with the other product lines? How has it been able to displace incumbents like HUL and P&G? My theory is that for the incumbents the “bottom of the pyramid” was an add-on, not their core business. They addressed it by Lower Unit Packs and sachets but didn’t really design for this audience. Their margins in this space would also be relatively lower than what they get in the higher-end areas. Patanjali on the other hand sees HUL’s bottom of the pyramid as a primary market and designs and communicates towards this. And with Baba Ramdev and the Ayurvedic platform they also have a very consistent brand image. Are they the first to do this? Not really. Nirma and Chik did something very similar and were successful till the incumbents beat them back. But they had only the one product line. And though I do recollect them spending tons of money, they did not have a consistent brand ambassador on the scale of Baba Ramdev. It is a classic management strategy covered by Clayton Christensen years ago – as incumbents exit the lower-margin lines (to improve their overall margins) they create the opportunity for new players to occupy these spaces. Or newer players have a good chance of success if they attack the lower-margin lines of an incumbent player as they are unlikely to invest much in defending these businesses. Over time the new player will also move up the value chain, and then the cycle repeats.
Perhaps this is possible in the ecommerce context too? Rajan Anandan recently said at an IDG Ventures anniversary party, no less – that ecommerce can’t take off till per capita income hits $4000 because till then there isn’t sufficient money around for people to spend and make the sites viable. Sure, we can either wait 10 years for India to get “rich” OR we can figure out a business model that works for the bottom of the pyramid. In that context, Flipkart’s rumoured partnership with price warrior Walmart may be a step in the right direction. On the other hand, Walmart’s success comes from a country where the poverty threshold for a family of four is $24,000 and per capita income is over $50,000! The rich in every country are increasingly similar, even as the poor in each country are very different.