innovating for emerging markets
Post on 21-Oct-2014
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Emerging markets (popularly known as BRIC countries) will play more significant role, going forward. However the context for innovation is way different from developed economies. Innovating for emerging markets is been one of my favorite topics, made quite some study in this area. Most of my findings are available in the presentation below.TRANSCRIPT
Innovating for Emerging Markets
Economics, Framework and examples
Jayakumar Balasubramanian[[email protected]]
April 7, 2023 2
Introducing Suppandi! Suppandi is a nice guy He is my good friend Will keep disturbing us in between the
presentation Very curious, likes to ask questions Sometimes gives out answers also Sometimes get philosophical Without answering him we can’t go forward
April 7, 2023 3
Emerging Markets defined Emerging Markets are countries that are
restructuring their economies along market-oriented lines and offer a wealth of opportunities in trade, technology transfers, and foreign direct investment
The term “Emerging Markets" was coined by Antoine van Agtmael and dates back to 1981
Emerging market economies - "BRIC" economies or the economies of Brazil, Russia, India, and China
April 7, 2023 4
Let us understand some terms GDP: Gross Domestic Product
Equal to the sum of the income generated by production in the country in the period
PPP: Purchasing Power Parity Long-term equilibrium exchange rate of two
currencies to equalize their purchasing power
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Why there is so much of buzz ?
There is money honey!
April 7, 2023 6
Here are the stats…According to Goldman Sachs:
By 2050, the combined economies of the BRIC could eclipse the combined economies of the current richest countries of the world
These countries encompass over 25% of the world's land coverage, 40% of the world's population and hold a combined GDP (PPP) of 15.435 trillion dollars
These 4 countries are among the biggest and fastest growing Emerging Markets
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The world economic pyramid
BRICBRICLow Per Capita
Low Per Capita High VolumeHigh Volume
April 7, 2023 8
Why economics? Very key to understand nature of consumers,
markets and spending patterns Understand the importance of this market Can’t afford to ignore anymore Radically different compared with developed
countries Low Volume Vs High Cost (Developed economies) High Volume Vs Low Cost (Emerging economies)
Innovation has a different “context” Market dynamics are unique
April 7, 2023 9
Emerging Markets Research• “The Fortune at the Bottom of the Pyramid” by C.K.Prahalad in the year 2004
• Ruth McCracken Distinguished University Professor of Corporate Strategy at the University of Michigan Ross School of Business
• Case studies and research for a decade in countries like India, Brazil, Peru, Mexico and Venezuela
• Results have shown that there is a significant market opportunity, which demands MNCs to radically re-think about Innovation
• Framework for Innovating in Emerging Markets
• Difference between Emerging Markets and Bottom of the Pyramid (BOP)
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Myths and nature of BOP There is money at the BOP
The dominant assumption is that the BOP market have no purchasing power
Breaking into new markets by “creating” them
Access to BOP markets Dumped as “media dark” for years together HLL is one of the early entrants in FMCG industry
The BOP markets are Brand-Conscious Value (Brand) conscious Building trust is the key
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Contd.. The BOP Market is connected
Mobility
Word-of-mouth and relationship oriented
BOP Consumers Accept Advanced Technology Readily Provided they see a value
“Nothing-to-forget”
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Innovation – Aravind Eye care Volume (2600 Vs 400 operations/year/doctor) Pricing (50$ for operation) Creating a P-P community (Paying Vs Non
paying) Systematic approach (Process) Technology (Intraocular lenses at 5$) Training and recruiting (No attrition worries) Go-to-market (Eye camps, Awareness, WOM)
April 7, 2023 13
Adaptation (=Innovation) Vegetarian selections to suit
Indians (40% Veg) Maharaja Mac replaced Big
Mac No beef or pork items
(respect for local culture) Bring more “connectedness”
by introducing McAloo, McMasala
Garlic free sauces etc..
Localization of menu items (Adaptation):
•75% in India
•33% in Asia
•< 5% in rest of the world
April 7, 2023 14
Adaptation contd.. “Listening” to what customer wants and
adapting to it would result in innovation. Innovation need not be end-to-end; Can be
applied to any phase, across businesses
April 7, 2023 15
Context (=Innovation) Understanding the “context” is key for
innovation, It is all the more true for “Value conscious”
BOP customers When businesses fail to understand the
context it takes a nosedive Nine out of Ten startups/entrepreneurial
ventures fail because of this Let us learn from some failures
April 7, 2023 16
iPhone : Not India Phone
• Great innovation success story in developed countries
• Hardly sold 1500 handsets in India as of Dec 2008
• Cost, Cost and Cost (31,000 INR, Not affordable)
• No 3G infrastructure (Apps are of no use)
• Mobile ecosystem in India
• More than 85% of customers use pre-paid
• ~8$ ARPU (India) Vs ~50$ ARPU (France)
• Too much of hype around pricing (8000 INR)
April 7, 2023 17
Suppandi again..
What is this? I have seen it somewhere
*&^!@~@
April 7, 2023 18
The S (ad) imputer story
• Great technology innovation− Text-to-speech software
− GNU/Linux
− Gesture based
− Handwriting recognition
• Priced about 12,500 INR (Amida)
• Hardly sold 4000 units, Very few deployments
• Failed to understand Mobile, PDA ecosystem
April 7, 2023 19
Suppandi’s philosophy about Innovation
Doing Innovation is much easier than understanding “Cosmic energy coupled
with atomic energy in evolution of mankind with the program of Java”
April 7, 2023 20
Framework for BOP Innovation Price Performance : Value conscious Innovation : Hybrids Scale of Operations : For a business value proposition Sustainable Development : Eco-Friendly Identifying Functionally : Is the BOP Different from Developed
Markets? Process Innovation : Cannot think of ignoring it Deskilling of Work Education of Customers Designing for Hostile Infrastructure Interfaces Distribution : Accessing the Customer BOP Markets Essentially Allow Us to Challenge the Conventional
Wisdom in Delivery of Products and Services.
April 7, 2023 21
The Long Tail Coined by Chris Anderson in the year 2004 Niche strategy in business To sell large number of unique items in small quantities Freedom of choice Applies to all successful online businesses
Amazon, Google, iTunes
The concept of Micro-producer
Micro-consumer
Micro-payment
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The ‘Emerging’ Long Tail
Literally no end to the tail (Emerging Markets)
Developed Markets
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Concluding examples
• Supply Chain
• Entrepreneurship
• Co-operative society
• Milk power
• Process
• Product portfolio
• Kiosks
• “White revolution”
• Microfinance
• The Long Tail
• Biz-model
• 99% loan recovery
• Mobile booths
• Sustainable revenue
• “Nobel price”
• ERP for SMBs
• Training
• No-piracy
• Innovative GTM
• Simple solution
• Multi lingual
• “Products for emerging markets”
April 7, 2023 24
Examples contd..
• Paid platform
• Third largest
• Integrated platform
• Scalability
• “Mall” concept
• Customer centric innovation
• Tier – II cities
• Total solution
• Biz-model
• Billing device
• Backbone infra
• Connecting people
• Robustness
• Scalability
• Integrated platform
• Most number of marriages
• Trust platform
• Innovative pricing
• Scalable
• Y! invested
• “Top 50 companies in India”
April 7, 2023 25
References (Blogs/Websites) Emergic blog
Author : Rajesh Jain
URL: http://www.emergic.org
About: Emerging Markets, Mobility, Internet, Innovation, Business models
How to change the world? Author : Guy Kawasaki
URL: http://blog.guykawasaki.com/ About: Web 2.0, Innovation, Tech trends, Loads of cool stuff
April 7, 2023 26
References (Books) Fortune at the bottom of the pyramid
Author: C.K.Prahalad
About: Bottom of the pyramid Innovation
Click here for Amazon link
New Age of Innovation Author: C.K.Prahalad and M.S.Krishnan
About: Co-creating Innovation with customers (N = 1, R = G)
Click here for Amazon link
The Long Tail Author: Chris Anderson
About: Why the Future of Business is Selling Less of More
Click here for Amazon link
April 7, 2023 27
Thank you!
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