The Hindu Business Line : Leveraging the small

The speech by the Hindustan Lever chairman at the company's annual general meeting continues a 45-year tradition. It strikes some significant chords on a chosen theme — the importance to the global corporations of the developing and emerging (D&E) markets of Asia and Africa. The bottom of the world's sociological and demographic pyramid is a metaphor that has already caught the imagination of corporate leaders and thinkers across the globe. How to make money out of selling to the poor, in the high growth but low price market segments of the D&E region is a challenge that appeals to the global corporations. That low-cost solutions and single-serve or pay-per-use product packs can generate enormous growth is now well accepted. Equally the less developed and more demanding economies are turning out to be laboratories for innovations — in process, product and strategy — so that successful intellectual property solutions can be profitably re-deployed elsewhere. So much has almost become old hat by now, at any rate conventional wisdom.

What is new in Mr Harish Manwani's speech is the emphasis on the need to straddle the pyramid as he calls it, simultaneously producing both high-end products for the growing numbers of the affluent even while meeting the needs of the much larger majority; with high efficiency, low unit price products and models, indeed a number of parallel products and ways of selling them. This must for the first time defy an ancient managerial dogma: That first-rate quality, style, convenience and contemporary design cannot go with low-cost manufacture; something has to give. The crucial consumer insight behind this must be obvious to any thoughtful and impartial observer. The less advantaged do not want to be reminded that they are different. Rather, they want it all, and they want it now. The revolution of rising aspirations and ambitions, fed by the demonstration effects of a consumerist society, will ensure that this push for more for less continues relentlessly. The challenge is to design to a seemingly impossible combination of performance and cost, one that breaks a hitherto unassailable compromise.

Many industries, far removed from that of household packaged goods, will soon see the reality of this task. The list of enabling factors that Lever can claim is, however, not to be taken lightly. Indeed they can be daunting to an essentially home-based Indian company dreaming of making an impact against external competition and spreading its wings to other markets. Assets such as original research and innovation, product development capability built on years of continuous research into consumer behaviour, a large and assiduously cultivated talent base, exceptional logistics and distribution skills, innovative positioning of a portfolio of brands — all these don't come cheap or overnight. Here are lessons which all Indian companies wanting a worldwide presence can ponder over with benefit.

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