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| Vijay Mahajan, John P Harbin Centennial Chair in Business Marketing at the McCombs School of Business, The University of Texas at Austin |
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| This article is based on a talk delivered by Professor Vijay Mahajan to the ISB students in July 2007. Mahajan is John P Harbin Centennial Chair in Business Marketing, in the McCombs School of Business, the University of Texas at Austin, and Former Dean of the ISB. The talk was based on the book, ‘The 86% Solution – How to Succeed in the Biggest Market Opportunity of the 21st Century,’authored by Vijay Mahajan and Kamini Banga, and published by Wharton School Publishing, 2006. |
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India is changing the face of marketing by producing solutions that cater to the needs of consumers in developing countries, where 86 percent of the world population live. Indian IT companies such as Tata Consultancy Services (TCS), Wipro, Infosys, and Satyam have found rich opportunities by focussing the resources of the developing world (86 percent) on the needs of the developed world (14 percent). Indian ITES-BPO exports are growing at a rate of 33.5 percent annually. Over the last decade, India has fortified its leadership position as an offshore destination with an estimated share of 65% of global offshore IT and 46% of global BPO. Most of India’s software and IT-enabled services is exported to the developed world. These companies are helping raise their employees’ standard of living – in a sector employing over a million people in India – and improve their regions. Indian companies and Indian entrepreneurs, who had earlier offered solutions to 14 percent of the world, are now focussing on 86 percent of the world. Welcome to India, the destination for the 86 percent solutions! Indian enterprise is alive and thriving.
Let us first examine the 2x2 matrix as shown in figure 1. Firms face four paths - A, B, C, and D. Some companies from the 86 percent markets, eg. Infosys, focus on serving developed markets (D). Others such as two-wheeler maker Hero, in India, founded and led by Brijmohan Lall Munjal, is focussing on opportunities close at home or in other 86 percent markets (B). Many companies from the developed world – from car |
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companies such as Ford to FMCG
companies such as Unilever – are moving into the developing world to seize the 86 percent opportunities (A). Other firms in developed countries, in the bottom-left corner (C), focus on 14 percent markets, where the field is crowded, growth is slow, and competition is intense.
These strategies have some public policy implications, because different regulations encourage different approaches. If developing countries have incentives that encourage exporting their goods and services to developed markets, companies tend to overlook opportunities closer to home. Regulations and trade policies need to be designed in a way that balances the pursuit of the 14 percent markets of the developed world with focussing entrepreneurial attention on the needs of markets at home. Although, there is no one path to prosperity and growth, companies need to recognise that bulk of the world’s population is in developing countries. Managers, particularly in developing markets, should look carefully at the opportunities that might be before them.
Strategies For Developing With The Market
How can companies recognise shifts and transformations in developing markets and take advantage of them? How can they export their successes from one culture to another?
Strategy#1: Develop Solutions with Government, NGOs and Other Players
As emerging markets develop, governments, foundations, and non-governmental |
