Oct 13 2013
It’s easy to take a product from market X and sell it as in market . However, it’s much more difficult to make it a grand slam hit without knowing the local market conditions of market Y. I’ve seen it many times before where companies just dump their products into India thinking they will sell because there are 1.3 billion people and some percentage will buy their product.
The one company I always laugh at is Bulthaup they sell high end kitchens that can easily exceed USD $200,000. They are a German company with aspirations to own the high-end kitchen market which unfortunately is virtually non-existent in India. If you have been to the home of anyone in India that can afford USD $200,000 for a kitchen then you know they typically have an army of hired help (read servants) who are in the kitchen making some cholesterol busting dish for their owners. It literally makes zero sense to spend that kind of money for a kitchen when the owners will NEVER even step foot into the kitchen. Bulthaup is not the first to misgauge the market nor the last.
However, one company that seems to have figured out how to crack the emerging markets nut is Gillette. If you have any desire to sell physical products in India I would highly recommend reading the article about Gillette Guard’s entry into India. It’s a fascinating read about how the super-conglomerate Proctor & Gamble which owns Gillette flubbed it’s initial entry into India with the Guard. So many missteps, but my favorite is having the Boston based Gillette use a bunch of Indians study at nearby MIT to test the product…in retrospect that was just pure stupidity.
The article talks about how in 2008 Gillette sent a team of 20 people to India, to see how people REALLY use razor blades. It was an eye-opening experience for most of them and many had been selling blades for 20+ years but probably never in third world countries or emerging markets. Designing a product in AutoCAD in Boston for people living in Bhopal, India is the quickest way to create a disconnect between you and your target consumer. The case study of the Gillette Guard is a perfect example of designing a specific product for a specific consumer market. More and more companies are going the additional step of stepping up R&D facilities in India, such as Nissan with its launch of the low-end Datsun brand – design your product where you sell your product.
Of course, the bigger fear is that the Guard which sells for 25 cents might cannibalize sales of higher priced Gillette products which are priced at USD $2-3 in India. I didn’t even realize the Guard was available till I read the article and did a quick Google search and saw an article from 2010 in the Wall Street Journal about it’s launch. I went to the Gillette India website and their is no mention of the product, I’m pretty sure this is by design. This is a great example of market segmentation, in the Tier 1 metros like Bombay and Delhi they focus on their high priced products and in the villages of India they promote the Gillette Guard.
Sidenote: Is there money to be made in selling razor blades? Look no further then the Malhotra family which owns the Super-Max brand and their various properties in Bel-Air, California.