Product Policy in India: What connects American breakfast cereal brands to European appliance manufacturers? Both are having an extremely difficult time in the Indian market! A statement from WB market solutions®:
Their inherently excellent products hardly satisfy the customer needs of the Indian middle class. As a result, some of the most successful companies in the West are only known in an absolutely small market niche in India at the beginning of their market development or, in fact, do not sell anything at all.
A brand like “Kellogg's” is probably even known to less than two percent of urban households in India, namely only those who have lived in the USA for years and eaten corn flakes with cold milk for breakfast. But in India? The general public is disgusted by the idea of eating cereal with cold milk. Cold milk… Yuck, yuck!
European household appliance manufacturers are facing a similar situation. Why should an Indian middle-class household invest in an ergonomic vacuum cleaner, an economical washing machine or special kitchen appliances when all household chores such as cooking, washing and cleaning are usually carried out by maids and servants for virtually nothing? And anyway, as a millionaire or the head of a middle-class family, I have better things to do than worry about household issues! And my wife would rather support the local charity club than lift a finger around the house.
Insufficient product-market fit?
It is understandable that international corporations do not want to simply ignore the Indian market. Nevertheless, it is remarkable how difficult many international industry leaders initially find it to adapt their product portfolios for the Indian market. “Ultimately, it often remains a case of half-hearted activities by foreign companies in India coupled with the hope that Indian consumers will live and consume like Europeans in the foreseeable future.” said Mike D. Batra, Managing Director of Dr. Wamser + Batra GmbH and head of the WB market solutions ® department.
However, Indian consumers have different needs due to their culture, religion and traditions. Particularly in the B2C sector, it is particularly obvious that European companies can hardly offer suitable (and affordable) products and services to potential Indian customers.
“To reach a wider audience and therefore market relevance in India, you need to develop products specifically for the Indian market or at least adapt your products to Indian customer needs”said Batra. It's not enough to offer mango-flavored corn flakes or your cheapest (outdated) vacuum cleaner!
Products for India require different features than products for developed markets. Customization alone is usually not enough to satisfy the needs and desires of Indian customers, who are not necessarily known for changing their behavior - even if there are objective reasons for it. Just because a vacuum cleaner cleans more effectively than a broom, you are unlikely to convince anyone in India to switch to an electric vacuum cleaner - especially if your potential customer is not the user but their maid. And since they often can't read, operating instructions and manuals don't help either. Shoemaker, you'd better stick to your lasts and clean like your grandmother did...
“It doesn’t matter whether the cat is white or black, the main thing is that it catches mice”
(Deng Xiaoping)
Forget what you learned in other markets and how you were successful there. Different laws apply in India. Be flexible and use your core competencies and existing resources for a dose of indovation (innovation for India), like McDonald's. About 50 years ago, the former McDonald's president Harry Sonneborn is said to have said: “We are actually a real estate company. The only reason we sell hamburgers is because they make the most profit from which our restaurant owners can pay us rent.”
Since it is not hamburgers that bring the best return in India, but rather vegetarian dishes like the “McAloo Tikki”, the American company has no pain in completely reinventing itself in India and offering a completely new product portfolio. Ultimately, the worm has to taste good to the fish and not to the fisherman!
WB market solutions ®
Dr. Wamser + Batra assesses your individual market potential in India and checks whether the market is already ready for your products or whether product adjustments would be necessary. Customer surveys, expert interviews and market analyzes help to determine market segments and respective consumer preferences and to plan and implement your market access accurately. Save unnecessary “learning money” and avoid wasting time and resources due to incorrect information. Trust our experience. [more]
