Foreign CPG Company in India: Success Factors
I was recently asked to provide inputs and share my views on the success factors for doing business in India. The company is in the food and drink sector that is thinking about entering the market. I have tried to address this question based on my experience working in India with a major consumer durable corporation and the largest automobile company in the Indian sub-continent. While the list can go endless, it is an honest attempt to highlight critical success factors for entering the Indian CPG market.
1. Understand the target segment: Foreign companies tend to lose focus as they enter India and either become too narrow in their target segment or too broad. The trick is to understand your target segment and stick to it.
2. Go Rural: If the company is not operating in a niche, then going rural will always help. As such majority of our consumers are still in the rural markets. Undermining the strength of rural India can cost a fortune.
3. Focus on small SKU's: While companies particularly in the food and drink industry feel that SKU's do not matter, but in India they do. Traditionally India is a very fragmented market with a variety of tiers available, unlike the supermarket concept here in the US. Also, considering the difference in the needs of customers, it is very important for companies to realize the importance of volume based approach. So the concept that works in India is to sell more of less for less.
4. Be local: While Indians do have an affinity for foreign products, advertising locally and catering to the local people helps. If the advertising and communication approach is not in line with the culture / needs / wants of people, it is bound to fail.
5. Launch in phases: While some products may be launched at a national level. However, it is always good to conduct a phased launch and develop that market pull for instant market development.
6. Focus on quality: Gone are the days when Indians were able to accept poor quality products for lack of choice. Today's Indian consumer is much more conscious about his/her surroundings and products available.
Again, there could be a zillion factors contributing to the success and/or failure of a foreign enterprise in India and this just provides a framework.
1. Understand the target segment: Foreign companies tend to lose focus as they enter India and either become too narrow in their target segment or too broad. The trick is to understand your target segment and stick to it.
2. Go Rural: If the company is not operating in a niche, then going rural will always help. As such majority of our consumers are still in the rural markets. Undermining the strength of rural India can cost a fortune.
3. Focus on small SKU's: While companies particularly in the food and drink industry feel that SKU's do not matter, but in India they do. Traditionally India is a very fragmented market with a variety of tiers available, unlike the supermarket concept here in the US. Also, considering the difference in the needs of customers, it is very important for companies to realize the importance of volume based approach. So the concept that works in India is to sell more of less for less.
4. Be local: While Indians do have an affinity for foreign products, advertising locally and catering to the local people helps. If the advertising and communication approach is not in line with the culture / needs / wants of people, it is bound to fail.
5. Launch in phases: While some products may be launched at a national level. However, it is always good to conduct a phased launch and develop that market pull for instant market development.
6. Focus on quality: Gone are the days when Indians were able to accept poor quality products for lack of choice. Today's Indian consumer is much more conscious about his/her surroundings and products available.
Again, there could be a zillion factors contributing to the success and/or failure of a foreign enterprise in India and this just provides a framework.
posted by AG & HDG at 3:50 PM
1 Comments:
Great work.
Post a Comment
<< Home