Kazira

I’m finally back into a rhythm, after a well-deserved (at least in my opinion) India break, and ready to share some more insights from my experiences there. One thing was very apparent to me in India - people are sitting on a lot of money, especially in the metros (Delhi, Mumbai, Bangalore, etc.). The booming Indian economy is nicely carrying along with it people’s bank balances.  

Disposable incomes are on the rise and consumers are sitting on a good chunk of cash, trying to figure out where next to spend their money. I went to malls, markets, restaurants, hospitals, airports, train stations, salons, car dealership, and movie theaters – the one thing that was very obvious to me is that Indian consumers are desperate to improve their lifestyles and day-to-day experiences. They are constantly scrounging for the next gadget or service that will help improve their quality of life, social status, and/or personal productivity. Whereas on one hand, the global consumer goods giants and MNCs have managed to flood the Indian market with lots of products (clothes, phones, cars, shoes, etc.), on the other hand they have been very slow in understanding and identifying the service needs and opportunities of the same consumer base.  

With the global economy going bust, companies are looking at the two 1B+ consumer markets of China and India to gain market share, boost waning demand, and add revenue new streams. There used to be a time when product introductions between the developed and the developing markets lagged by 4-5 years. That is not the case anymore with the lag shrinking down to maybe a year. And that makes sense because it allows the company to better manage their launch related activities and risks. Moreover, it takes time to understand and tailor the product to a different market; you start with the most promising ones and then graduate to other, more risky terrains. However, as firms continue to mature in their understanding of the Indian consumer’s product needs, they show remarkably slow progress on the services end.  

Traditionally, it has been relatively easier to understand consumer’s product related needs and facilitate the product launches than to understand consumer’s service related needs. Products are typically made of what we all fondly call “matter” and hence can be held and felt, compared to services that are things that need to be experienced and take time to immerse within the target market segment(s). Moreover, the Indian consumer is about the finickiest one that you could come across anywhere in the world. It’s rather challenging to pin them down on their needs, desires, and aspirations. Let’s say you’ve successfully done that, how do you distribute and deliver the service (remember the inadequate Indian infrastructure)? Better yet, how do you price it? I guess I could attribute a combination of these factors and more as the factors delaying the growth of the services sector in the Indian market. 

Don’t get me wrong – there are sectors where consumer services have been able to make decent inroads. Examples that come to mind our finance/banking, air travel, telecom, fast food, retail, education, and to some extent, media. But then there are significant opportunities and potential in sectors like insurance, legal, healthcare, hospitality, security, transportation, and personal wellbeing (gyms, spas, rejuvenation centers, etc.). Let me try and give you some specific examples. Today, in Delhi, if you get into an accident and need to be ferried to a hospital, there is no reliable ambulatory service provider that you can call upon. You will literally be at the mercy of the traffic around you for getting you safely to a nearby healthcare facility. Further, if the other person is at fault and your car gets totaled, odds are that they may not have auto insurance to reimburse you for your damages. The car repair shop would take your car but probably would not be able to give you a loaner since that concept is non-existent.

All of the above are examples of consumer services, things that make our lives safer, better, and your daily experiences, richer. This is what is lacking and what the Indian consumers are craving for. They have the money but there are few value-added and quality services to subscribe to. I guess I should be patient, which is what I’ve said in some of my earlier postings. Figuring out a 1B+ consumer base is not that easy and navigating the Indian system is even more difficult. But the opportunities are knocking …..