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Madhukar Sabnavis: From 'volumes' to 'value'

Madhukar Sabnavis  |  New Delhi 

Brands and marketers should start tapping the opportunity at the top of the pyramid.
India is a continent in a country. It's a melting pot of social, cultural and economic diversities. What holds this diverse nation together, as Amartya Sen says in his book The Argumentative Indian, is the political unity of democracy and a historical cultural ability of the society to live with heterodoxy and pluralism.
While the crumbling physical infrastructure, the large below-poverty-line population and the continuing red tape and bureaucracy would label India a developing or underdeveloped economy, the dichotomy of the country is that the rich in India live a lifestyle similar to the richest in any developed economy. Since economic liberalisation in the 90s, two economic streams have and continue to co-exist in India""capitalism encouraging "individual entrepreneurship and wealth accumulation", and socialism which attempts to bring "social equality". So within the country exists a "developed" economy that could be treated by marketers like any of the western world. The proportion of this rich may be small, but given the overall Indian population of 1 billion, in absolute numbers this group is perhaps larger than many European countries. In short, India is a 2-in-1 economy""developed and developing.
CK Prahlad has, in his book The Fortune at the Bottom of the Pyramid institutionalised the 4 billion seemingly poor people in the underdeveloped world that have little purchasing power of their own, but collectively present a big opportunity to prospective marketers for growth and expansion. He has identified the 3 As""affordability, accessibility and availability""as the key to tap this fortune. However, much of this quest for numbers is a product of a "production" mindset and not "brand" thinking. The "production economy" spawned by the development of mass production technology made marketers look for volume opportunity all the time. This led to globalisation and has been the driver of most Indian marketers in the last decade. "Volume, more volume" has been the motto of old and new companies resulting in price and distribution wars in marketer's quest for market share. There is nothing wrong in this. However, if the meaning of brand building is to create value that makes consumers pay premium for your product and go an extra mile for it, it means creating desire. Price wars and cuts go against this principle. And so the quest for volumes subliminally means satisfying needs rather than creating desire. While business realities and market opportunities do signal marketers to look at the bottom of the pyramid, there is perhaps another opportunity lying at the top of the pyramid waiting to be tapped.
This could be a lower hanging fruit because here are a bunch of consumers with proven pre-disposition to brands, living lifestyles driven by "desire" and having the capacity of paying rich premium for superior "brand offerings". The rich and super rich could seem to be numerically small as compared to the large numbers that the belly of the Indian market offers, but the "value" that this segment offers may be more than what any individual "belly" consumer offers. Further, this class would be the benchmark and trendsetters for the already accepted as big, Indian middle class as they move up in both purchasing power and lifestyle. The need is for marketers to move from a "volume" mindset to "value" mindset""from seeing brands satisfy needs and wants to actually creating and satisfying desires.
Man has a fundamental desire to feel superior and stand out. And this does not disappear as he moves up the economic and lifestyle hierarchy. In fact, it gets accentuated and this is the fortune at the top. There is enough indication that the need for more is already prevalent in Indian society. A few indicators:
  • Coffee has evolved to Cafes. And the consumer is willing to pay a hefty premium for the same cup. Skincare products have evolved to Beauty Parlours;
  • The bigger cars""sedans""are growing faster than the hatchbacks;
  • Marriage and kid birthday ceremonies have become a business""with enough people willing to pay hefty premiums to celebrate these function""a subliminal collective indulgence;
  • Garments have evolved from tailor to readywear to designer wear where fashion designers custom-design garments for specific occasions;
  • As consumers buy new homes, there is an increasing need for more and better facilities within the complex;
  • New foreign travel destinations are emerging as the average top-end traveller has already covered the staples of Europe and the US. And individual independent travel is on the increase.
  • All these are subtle yet real indicators of consumer demand for better things in life and a subliminal assertion of doing things few people can afford to do. Clearly, the challenge is to understand the needs of the top end segment, create quality that can get this group to see the difference and deliver consistently to it. It is true that "perfection and quality" is an un-Indian trait. In a society where "kaam chalaav" (mediocrity) and "chalta hai" (anything goes) are prevailing attitudes, this task is steep. But if one recognises the value of the opportunity, then there is a need for change in mindset to make this happen. Just as businessmen through the 90s set their sights on reaching 1 billion Indians and are making it happen; there is an opportunity to do the same but setting sight on quality delivery.
    Consider the following:
    In a lose-lose industry like airline, why is the focus only on getting everyone to fly""the South west airline model""and not on creating an all "first class" airline?
    In the fickle fashion industry, where today's in thing is tomorrow's stale news""why is there not a corporate brand that focuses only on top-of-line wear that is meant only for the rich and famous?
    In a commodity market like a bank where convenience drives selection, why is a brand not focusing on high net worth customers and giving extraordinary service that makes them plough more and more of their investments into that entity?
    There is perhaps an opportunity in every industry to stretch the "value" boundary and charge more.
    As brands proliferate and categories commoditise, in the long run, brands will exist only at the top end of the market. The need is to focus on creating "desire" and remember products that are today's desire becomes tomorrow's want and day after tomorrow's need. Products may die but human desire will never die. Brands and marketers should start thinking "desires" just as they think "needs" today.
    Something worth thinking about.
    Madhukar Sabnavis is Board Partner- Ogilvy and Mather, India. He can be contacted at
    madhukar.sabnavis@ogilvy.com

    First Published: Fri, June 02 2006. 00:00 IST
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