New American Dimensions and Asian-American advertising agency interTrend Communications has just put out a report titled “Asian Indians in the US”.

It is amusing to come across the term “Asian Indians”…only in the USA!   :-))

That aside, the executive summary has some interesting insights including:

• Though relatively new to the U.S., first-generation Indians show many signs of advanced acculturation. However, they often go through an intense retro-acculturation later on life as they begin to realize the uniqueness of their culture. 
• This group champions American individualism. They respect this value, as it allows them a greater freedom to succeed. Females appreciate this land of opportunity as it creates more possibilities for them to get ahead in life. 
• Although highly acculturated and proficient in English, most express the desire to preserve their native culture through food, music, entertainment and language, and to pass it along to the next generation. 
• Though they use a lot of media in English with American content, they still consume a considerable amount of Indian media both in-language and in-content. The younger segment (18-34 yr.) consumes the most Indian media, including television, radio and internet; while the 44-54 group reads the most Indian newspapers.

Retailers in the US might draw a leaf out of British retailers that have significantly tailored their product mix to suit specific immigrant populations. Sure, the UK has a higher proportion of Indians (and other South Asians), but there are enough areas in the US where the South Asian population is high enough to warrant more specific merchandising and marketing. 

When I think of the “Indian stores” owned by someone of Indian or South Asian origin in concentrated catchments of high-income South Asians (LA, Houston, Boston etc.), I can’t help thinking of the opportunities missed by the chain stores.

On a separate note, the study says that some respondents “felt that the Asian classification was negative, an attempt to lump Asian Indians in with the rest of Asia when they have a distinct, rich culture that should stand by itself.” 

I’m sure other communities would also take exception to such “lumping”. 

It is indeed interesting that marketers tend to use the term “Asian”, throwing together diverse cultural and linguistic backgrounds from Turkey in the West all the way East to Japan, and throwing segmentation disciplines out of the window.

(The executive summary is available here.)

The Third Eyesight Knowledge Series© comprises of workshops designed and developed to help functional heads, line managers and executives refresh and upgrade functional and product expertise.  

Third Eyesight’s next workshop in this series is focussed on Creating & Managing Lifestyle and Fashion Brands.

IS THIS FOR YOU?

This workshop will be useful to you, if you are 

• a brand owner wanting to look at growing your scale
• a manufacturer wanting to add value to your products and to gain additional margins
• a retailer wanting to invest in your own brands / private label
• a brand manager looking to expand the footprint of your brand over more products
• an entrepreneur wanting to launch a new brand
• an investor who wants to understand how brands create value 
• an exporter or buying office professional wanting to understand your customers and markets better
• a brand owner and believe that your business is undervalued
• a designer wanting to scale the business beyond yourself
• a marketing or sales professional looking to add value to your skill-base
• a service provider working with the lifestyle and fashion sector
• a teacher or researcher looking at understanding the process of brand development

THE WORKSHOP CONTENT

This workshop will help participants in understanding:

• the basics of lifestyle brands and their positioning in the lifestyle consumer goods industry
• the development of the brand ethos
• how to translate the brand intangibles into reality,
• how to attract and retain new customers in the competitive environment, and
• how to sustain and nurture the brand value over a period of time

REGISTRATIONS

Click Here or Call +91 (124) 4293478 or 4030162

A few days back I met a friend, a mother of a six year old and a primary school teacher by choice (so that she can be “gainfully occupied”!). We exchanged the woes of being a working woman, and she exclaimed that she was planning to begin getting her lunch and dinner organized through a “dabbawala”. This would free up the time spent on “non productive” chores of buying monthly grocery, the weekly veggies and stocking up to spend on “more important” activities in life.

No, she is not necessarily representative of a particular consumer segment, nor can one say at this stage that there is a significant number of such women in our society that “dabbawalas” should sit up and take notice of, who would want to give up the pleasures of browsing, shopping and bargaining and then let go of the appreciation that follows conjuring up the delicious cuisines.

But it is does make one think about how our changing lifestyle and attitudes are changing our needs and wants (and hence the desired products and services).

It makes one want to gaze into the crystal ball and see what promise does the changing social fabric of India hold for the market of products like pre-cut vegetables, or ready to-eat food, what about products like sanitized wipes. What does it mean for the potential of services like that of a qualified nanny or a temporary baby-sitter, or house cleaning services, or professional laundry services or dial-a-cab?

What would you (as a consumer or a marketer) like to add to the wish-list?

BOOK REVIEW: HIDDEN IN PLAIN SIGHT: Erich Joachimsthaler

In the midst of extensive or frequent civil works, fluorescent high-visibility clothing contributes to the invisibility of the individual, and can serve as a superb disguise. Similarly, in the midst of extensive research and in-depth analyses, basic insights can go unnoticed.

Erich Joachimsthaler has plenty of examples in his book Hidden in Plain Sight to drive home the point that attention to stuff that is not so obvious to competition can lead to brilliant success such as Sony’s growth through innovative products (the WalkmanT, for one) that met unexpressed consumer needs. Conversely, an inability to spot this can bring even the leaders down, illustrated once again by Sony’s loss of leadership in mobile personal entertainment to Apple’s iPod.

The challenge for companies is to uncover the hidden opportunities by looking into their business from the outside rather than the usual inside-outwards view, and by accurately defining the ecosystem of demand. For most management professionals, this will be harder than it seems.

The exercise begins with the question, “Why didn’t we think of that?” This is intended to remind the reader of how the obvious escapes attention as we sink deeper and deeper into complex analysis and in developing ever more complicated scenarios. And Joachimsthaler sets out a framework that he believes can help larger companies to innovate in a structured way.

Of course, the reader may feel differently, and quote George Bernard Shaw who divided the world into two kinds of people, the reasonable and the unreasonable, and credited innovation to the latter. Or one may agree with Henry Ford who, apparently, felt that customers did not really know what they wanted. He is reported to have quipped: “If I had asked my customers what they wanted, they would have said, ‘A faster horse'”

Yes, at the cutting edge, innovation may seem to be more about the innovator’s creative desire to do something different, and less about “meeting customer needs”. Yet, it is the unmet and, more importantly, unexpressed customer needs, that offer the greatest source of competitive advantage.

This is why innovation seems to spring more from small companies, or companies that are started up around a specific idea that is unique or new. In such a small company or a start-up, typically the founder/innovator/inventor is drawn from the same pool as the target customer. Therefore, while they may be addressing a need they feel acutely, the innovators are unconsciously plugged into their customer’s unmet/unexpressed needs. There are seldom any silos; the whole team is generally focussed on the one problem to be solved.

However, as companies grow larger, functional specialisation emerges — division of labour based on skill-set is deemed to be a more efficient way of doing things. The design folk design based on “trends”, the marketing folk market as they know best, and the manufacturing folk produce to specification and the “demand” generated.

With this speciality of skills taking over, there is a growing disconnect between their efforts to dig for insight and the gold that is “hidden in plain sight”. While data is available in abundance, real knowledge is scarce, and insight just gets buried in well-structured processes and hand-offs between functional silos.

This trend has only accelerated in the past 15-20 years with pervasive information technology that enables the mundane operational process to the most strategic. Never before have management teams been so focussed on information and analyses. As businesses grow, data warehousing and data mining are defined as the competitive cutting edge, pushed along by interested parties (including IT solution providers, but that is another book!).

However, in reality, excessive information is increasingly passed off as knowledge. An inward focus on the management team”s own objectives is often disguised as insight gained on the customer or the market. Functional specialists analyse the market, the latent needs and the gaps in their own way, and if the company is lucky to have some generalists, some of those dots get joined to form a more complete picture.

It is in reminding management of this reality that Joachimsthaler’s book provides a tremendous service. It presents a well thought out model named, curiously enough, DIG – short for Demand-First Innovation and Growth. The three elements laid out sequentially begin with a framework for defining the demand landscape, identifying the opportunity space within it, and then creating a strategic blueprint for action.

Joachimsthaler’s process to define the demand landscape requires managers to put themselves in the customer’ shoes – a process demonstrated with examples from Proctor and Gamble and Pepsi”s Frito Lay. Using the customer’s goals, actions, priorities (there’s the “GAP”), needs and frustrations, demand clusters can be developed and filled out with additional research. The strategic fit between these demand clusters and the brand can then feed into the next steps of identifying the opportunity space.

The filters, or lenses, as the author calls them, are the “eye of the customer”, the “eye of the market”; and the “eye of the industry”. At every step, assumptions and presumptions need to be challenged. Using these lenses, the sweet spot or spots and the growth platforms can be identified, and extrapolated into the strategy. On the downside, the book is clearly about a framework, which may have been best detailed in an article, rather than being stretched over a book.

The author does stress at one point that it is not about “brainstorming”, but about structured thinking. However, he seems to do this in a tone that suggests brainstorming as something vaguely distasteful due to the lack of directional structure.

While examples from the companies studied keep the text alive, yet in places one struggles to correlate the examples with the framework. Indeed, there may well be too much structure to this book, and not enough examples of how inter-disciplinary thinking and functioning can actually produce sustained innovation.

Understanding the model itself can be a fairly involved process. The best way to tackle it may be to approach it as a project, and use the DIG framework as a how-to guide for a real problem. If you are a structured, methodical, sequential kind of manager and possibly work in a large company, the book could provide tools to put that thinking to work for innovation in a team. On the other hand, if you are more of a “people person”, you may want to leave this book alone. [For more, here’s the book on Amazon.]

When I am at the receiving end of expectations, business plans and such like, of companies that are looking to ride the current retail boom in India, one thing stands out, and scares me the most: the opening slides, paragraphs or pages that are devoted to the “opportunity presented by India’s booming middle class and its rising income”.

In the previous part to this column (“The Case of the Missing Millions“, 27 April 2006), we concluded that for most international companies looking at India, the potential target market was in the region of 18-19 million people, or over 3 million households. When international companies look at the “middle class” they may be looking at annual household incomes adjusted for PPP in the region of US$ 40,000 (Rs. 5 Lakhs, in absolute terms, not adjusted for PPP), and this population number is what appears on the radar.

Clearly, this less than a tenth of the figures around which many new businesses are being launched in the hottest retail market globally (as global comparative studies are stating). 200 million, 300 million – take your pick – they’re all in the mythical range!

So is it time to put out a missing persons alert for the hundreds of millions of so-called “middle class consumers”, on whose back the current retail boom is to be built?

Hang on – the trick is in changing the frame of reference. Let’s first define what the characteristics of the middle class should be.

In my opinion a good starting point is a simple one – look for a segment that is on the middle of the income scale.

Most marketers and their reference guides live in a high-income urban India paradigm (read, Mumbai, Delhi, Bangalore). Passing out of even a second-tier business school today, starting salaries can easily be over Rs. 20,000 a month. When you get into the middle-management segment, metropolitan salaries in the private sector can easily be Rs. 35,000 – 50,000 a month. This may not sound like much money when you live life from the Delhi-Mumbai-Bangalore paradigm, but trust me, it is still a very large sum of money as you go further down the list of cities and towns in India. In those towns and in semi-urban and rural India, the rupee goes a much longer way.

However, the income scale can be defined subjectively by different people.

So, to this evaluation I would add one other important attribute – this middle segment should be a substantial proportion of the total population. Clearly, a population that is only 2 to 3 per cent of the total is still very much at the narrow tip of the pyramid. We definitely need to move further down the income scale to find the real middle class.

The next annual household income range defined by NCAER is Rs. 2 Lakhs to Rs. 5 Lakhs. Now it starts to get interesting. In this income segment we are talking about approximately 9 million households or a little under 50 million people. An income of Rs. 2 Lakhs (US$ 4,500 in absolute terms) is equivalent to a little over US$ 16,000 by PPP, which is well below middle-class standards in developed economies. However, in India an income of Rs. 16,700 per month brings a number of aspirational and discretionary purchases within reach. This size of population is about the same, or larger, than many countries in Europe and will grow to 70-80 million by the end of the decade.

However, as far as my criterion of significant proportion is concerned, this still doesn’t cut it – we’re still only in the range of 6 per cent of the total population. We need to move further down the income scale, to the Rs. 90,000-200,000 annual household income range.

Bingo!

NCAER identifies this segment as having over 41 million households – that is over 225 million people – about 22 per cent of the total population. Large towns (population of over 500,000) have about 30 per cent of this population, while rural India has about half of this income group.

Earning between Rs. 7,500 a month to over Rs. 16,000 a month, this is the population that, in my opinion, is the real growth engine for the great Indian retail dream. This population has discretionary income, and yet it spends with discretion, if you will pardon the pun. It is a population that is only just beginning to be touched by cashless spending, a population that is beginning to appreciate the comforts and conveniences of modern retail, and its power as a driver of markets. It is possibly more firmly rooted in Indian traditions than aspiring to move to western standards. It is a population that is probably discovering the benefits of investing as much as it is the joys of spending thus reducing the free cash available.

Many brands are ending up planning for the 150-200 million real middle class population, while offering products and prices that are more appropriate for the ersatz “middle-class” of 15-20 million.

Consumer markets are structured around obsolescence, replacement and repeat purchases. If your product fits well within the price-value equation for repeat purchases, you have a winner. If you don’t, then what you get is a bunch of occasional purchases from most of your consumers, with long replacement cycles (or even, no repurchase).

The end result is the sales plateau that is the characteristic of so many brands in India.

If you want to volumes, prepare a product and price offer that makes sense to the real Indian middle class. The small shampoo packs make sense, the “chhota recharge” on the mobile phones makes sense. Does your product?

The missing millions aren’t really missing – they’re just invisible through our Delhi-Mumbai-Bangalore upper income blinkers. It’s time to take off the blinkers.