In Search of Nirvana

Since economic liberalization in the 1990s, India has opened up its shores for many international brands which were previously driven out by nationalistic tendencies. In the last decade, this inflow has only increased. There is a deluge of international brands freely available in the country which were previously available only through the black or the grey market. This is not in itself a bad thing. It has increased the consumerist attitude in the Indian mind. People who were previously happy with buying an Onida or a Videocon TV now want the latest Sony 3D LED TV. People who used to enjoy their music on a Philips boombox are not happy with any thing less than the Bose Home Theatre system. Now this post is not about a rant on the brands coming into the country but a study of three brands which have successfully modified their pricing points to get into the mind set of the value-seeking Indian consumer.

Any brand which wants to make its presence known in India needs to first understand that Indians will never buy anything before trying to reduce its price from the quoted price. We are not embarrassed to bargain for any of the products mentioned above. Heck, even I ask the shop keeper about a possible discount or add-ons on any product I buy. The second reason why pricing is very important in the Indian mindset is that India is a population of over 1 billion. And not all of them are well off. Even in the urban areas, the majority of the population is middle class – who would be getting exposed to these brands for the first time. Not the upper class who would any way have had these brands through the black or grey markets I talked about earlier. And this class would be less sensitive to product pricing. So the most important sections of the population for brands in India to be targeted are the middle and lower class. That is the second reason why it is very important to get the pricing just right.

To my mind, three brands come to my mind who have got this pricing correct, if not perfect. McDonalds, and recently Blackberry and Oreo.

McDonalds – When McDonalds came to India in 1996, it was a proper foreign brand. Something which the elite population from the upscale neighbourhoods would visit. The rest had their local burger joints where they could get an Indianized version which was tastier. In 1997, McDonalds had around 9 outlets in the country. By 2002, this number rose to 46 [link]. Currently this number stands somewhere above 100 [link]. More than the number of stores which have increased, the change which McDonalds has managed to pull off is that Indian consumers do not see McDonalds as a foreign brand now. With its low pricing points and a menu that is decidedly Indian, it has been embraced by the middle class population. 20Rs can get you a burger or a puff which was unheard of when McDonalds opened its stores. Where else in the world would you get a menu item with paneer and only with the tandoori flavour in its chicken burgers, has McDonalds managed to push itself in the Indian menu. College kids can afford a party at McDonalds, so can a guy going on his first date impress his potential girlfriend by treating her to an international food joint with a fun ambiance with privacy thrown in. Other brands have tried – Dominos and Pizza Hut with its mini pizzas, Subway with its 3-inch sandwiches, but none have come close to what McDonalds has achieved through proper pricing and an Indianized menu.

Blackberry – Blackberry is the epitome of what a smartphone should be and do. When Blackberry was introduced into the market, it was a revolutionary change of how a mobile phone can be used to stay in touch with your emails. At that time, GPRS was also not widespread and through its push mail service, it increased the convenience and mobility of a laptop to a hand held device. Blackberry was introduced in India in 2004-05. At that time, it was totally aimed at the board-level managers – purely business usage. Having a Blackberry was akin to having a Ferrari, or at least a Mercedes. But today, RIM has changed its positioning from a business user to a wider spread of users. The trump card it has is still its pushmail service and the Blackberry Messenger (BBM) which allows any user having a blackberry (and a valid service plan) to message any other blackberry user anywhere in the world for free. I have heard that Nokia and others have come up with pushmail and similar free messaging services. But nothing compares to the ease which Blackberry provides. Coming to the pricing points, just two years ago, a decent Blackberry model was available for around 25000Rs. There were cheaper models but none in the price range affordable to the casual user. But today, Blackberry has a model which caters to the college crowd – the 8520 touch which comes at a price of around Rs9500 in Mumbai. By positioning the Blackberry as a cool and convenient way to stay in touch with your friends, and keeping an affordable price point, Blackberry has again tapped into the Indian psyche successfully. Interestingly this was something which Nokia had done much before Blackberry. But now Nokia seems to be in its death throes by not being able to match up to its competition, particularly with the Android-enabled phones eating up a lot of its market share.

Oreo – This brand was one of those which were available only through imports. One of those shops which sells imported chocolates and gadgets would probably stock these. Else, the only place you would see these is in the movies. This was introduced in India very recently – possibly as an effect of Cadbury buying over Kraft (who owned the brand). The pricing point was Oreo cookies is Rs10 for a small pack, and Rs20 for a bigger pack. The price of an imported pack of Oreo biscuit was Rs50, way beyond the reach of the middle class consumer. Oreo is aimed against the Britannia Treat series or the Pure Magic ones and is now in a comparable price range. It is very early to say about the change in sales as a result of this pricing point, but having tasted these biscuits, I would definitely find them addicting and attractive at this price point. A similar product which comes to my mind are Pringles. Unfortunately, they haven’t decreased their prices. A big pack of Pringles still costs over 100Rs – a luxury I can afford only one every quarter.

There are many other brands which may have got the pricing right in the Indian market – once they do that, there is a whole lot of market share to be captured. Share such brands which you have come across in the comments below.

When a female employee comes back from onsite,

10:00am. Female crowd gathers around the employee.
Heyyyyyyyyyy, hiiiiiiiii, how are you?
How was your trip?
When did you come back?
Was the flight on time?
So, how was the weather?
Heyy, you have gained weight.
Heyy, you have lost weight.
Oooohh, new shoes? Nice.
1:30pm. Back to work.

When a male employee comes back from onsite,

10:00am. Male crowd gathers around the employee.
Hey, how were the chicks there? Pretty hot, huh?
10:10am. Back to work.