The Hindu Business Line : Home sweet home

Carmen, the home market is and should always be more important than the export market for any commodity be it coffee, tea, copper or iron-ore for that matter.

Home-markets are markets that are closest to the point of growing or the point of production. These are markets well-understood by the grower and the manufacturer alike. They are markets into which growers and manufacturers are well-contexted. There is no groping in the dark here, as is the case with markets overseas.

Home markets also offer better prices. Take coffee, for instance. Home markets offer anything from 15-65 per cent more for various grades of coffee, depending on the value-chain format that a particular grade is consumed into.

Home-markets are also insulated markets. Once the demand for a particular grade is established, it ensures a degree of continuous demand in that format.

Growers will do well to invest in seeking out home markets, developing their potential, and nurturing their future potential. Growers themselves must play a big role in developing markets. The home market offers them the best opportunity. To date, in India, we have been besotted with the overseas markets. The dollar and the yen are more interesting than the rupee. This needs to change. Dramatically. It is a commodity-trap paradigm that has to be broken.

Consumers are making a clarion call for customisation of products and services. Where does this lead?

_ Mallika Bolar, Mumbai

Mallika, this means that consumers are growing up. We are becoming an advanced marketing economy as well. Markets world-wide are changing. There are new realities that brands need to bite into while making their offerings relevant, original and innovative. And all these need to be custom-made to the consumer. Consumers themselves are changing, but not quite in the clone-like manner many big brands imagine them to be. This is one of the reasons that big and otherwise clone-like brands with ration-shop offerings nation-wide, need to customise.

Customisation is a clarion call. There are over 126 types of Sambar made in South India alone. The MNC which offers just one standard sambar masala offers only the lowest common denominator offering that has poor appeal. Though customised powders for all 126 areas may be difficult to achieve, one could, for a start, aspire to have a separate blend for each State in South India.

Customisation is about reading the wants and needs and tastes of local populaces and offering them exactly that. There is business sense in this movement. Ahmedabad and vegetarianism is a given fact. South India and idli-sambar is a known fact. Fast-food chains cannot fight against the reality of local tastes. That is the basis for this movement. When businesses see revenue jumps in such customisation, the movement gains and gallops.

I am told that tough times make consumers tough. Is this true? If so, how has the Indian consumer changed in the wake of the recent tough times we have been through?

_ Rohit S. S., New Delhi

Rohit, the consumer sure has gotten tougher. We have just been through the throes of a cautionary urban recession in India.

The consumer is downgrading on brands. At times, this is a brand-to-brand downgrade and at others it is a pack-to-pack downgrade within the same brand. From larger packs to smaller.

In addition to this, consumer demand is getting stretched out over lower-cost variants. For example, in the automotive category we have consumers who have had two-box cars for all of eight years and are looking to change. When they re-enter the market, they would typically aspire to upgrade to a three-box version (sedans). However, during this slowdown, we have had customers going in for a two-box car replacement yet again, which means that they want to lay out lesser in the tough times.

What this does is that it does not only kill the sale of a three-box car which would have otherwise happened in the short-term, but in the medium to long-term, it postpones this family’s entry into the three-box car market for a cycle time which might be as short as six years in India or up to 10 years in a strong value-delivery seeking family. This is a hit not for one quarter but for successive streams of quarters!

The consumer is still brand-conscious, but this brand-consciousness operates within a price format that is value-defining.

In terms of consumption behaviour too, the consumer is much more careful today. There is no surplus usage. There is less squandering and more real usage. The toothpaste is used with care and the tube is squeezed till the last bit is taken out with a ‘chimta’, just as the cake of soap is used down to the very last bits. Hotel soaps and shampoos picked up on travels by the man or woman of the house are also being used to optimal levels. Value is in. Wastage is out.

The celebration economy is also down. People are spending less on outings and eating-out. Bill-sizes have fallen in food and beverage retail in the metros. A lot has happened.

(Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc. askharishbijoor@thehindu.co.in)

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