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.
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Do you apply the same kind of thinking to human resources, i.e. Do you lose money hiring a CEO and pay a big fat multinational salary who everyone dislikes?
ReplyDeleteOr what about Gold - India is the largest consumer of Gold in the world, in spite of its expensive investment, something about what it stands for makes India a great market.
Dear Sir, Does this "gain size and volume in order to profitably cater to the high-priced/premium segment" hold when you are dealing with FMCG and when you are selling Versace..
ReplyDeleteWhat you mentioned applies to most fields - including our own MR. The market for the so called Value Added Research even in the most developed market has never exceeded about 20%. So in order to afford the people who can indeed value add, agencies need the "popular" low and mid-end research to sustain themselves. Ram Mohan Rao
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