India is one of those markets where you have to gain size and volume in order to profitably cater to the high-priced/premium segment. Sounds a bit odd.
Not really. Unless , of course you are part of a business which is allowed to make losses/not make money for its owners.
Take an example of premium cars in India. Or telecom. Or whatever.
In order to sell , say, 2000 premium cars , there is a need to provide service and sales support across smaller towns such as Coimbatore , Nagpur , Kochi et al. The market for the cars is spread across a large number of these geographies and the brand needs to build necessary competitive advantage by having the network. The investments that are required are so high that the need for greater volumes to make it work starts impinging. The move to the 'popular' segment starts in order to build volumes to get contribution and recover fixed costs.
Similar with telecom , you need the VAS to build profitability but need network to deliver it which in turns needs 'basic voice' volumes to sustain costs.
The story repeats in category after category. Whichever end you start from , the end is still the same -paradigm shift.
Tuesday, July 7, 2009
Subscribe to:
Posts (Atom)