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Leapfrog Strategy Consulting’s Blog on India Entry Strategy: US based SME’s planning an India Entry: Top 3 watch-outs

India remains a prime business destination and companies big and small want to have a piece of the pie. It is well known that entering the India market is not easy. Most US based companies would know that an India entry necessitates “ doing things differently “ but what must be done differently and would it give them a fair shot at getting it right ?

Given that business is dynamic, there is no sure fire success formula. However, from our experience, here are three typical traps that US based SME’s often fall into when planning their India entry. These missteps can prove costly, so aspirants would do well to heed these simple pointers.

1)      Be aware of the data gap

Usually the first step towards an India market entry is to assess the market opportunity and potential. This exercise requires reliable market and category data, basis which the opportunity can be accurately assessed and a business plan drawn up. The US is a very information rich market, with robust secondary reports available across different category and business related data points such as market size, growth, competitive performance, etc. Historical trends and future projections for the market and category are also available. The data is usually based on reasonable assumptions and provides the necessary breadth and depth of information required for initial business decision making. It would thus be quite possible to get to a fairly accurate market opportunity assessment on the basis of available secondary information for the US market.

The same is not true at all for the Indian market –   well researched , robust and comprehensive secondary data is hard to come by, and impossible to rely on for this crucial first step.  Most US based firms are used to getting required data off the shelf, therefore assume the same will be true in India too. That is a mistake. For India market assessment, companies would need to supplement available secondary data with some primary consumer (qualitative / quantitative) work too, without which the exercise would not only be incomplete, but also misleading. Primary work does not have to be elaborate and expensive. It can be designed for efficiency and can be done fairly inexpensively and quickly.

2)      Be prepared for significant product adaptation

Much has been said about the need to “localize products “for the Indian markets -a point that cannot be over emphasized. A walk through the crowded malls in Mumbai or New Delhi and a first time American visitor could wrongly conclude that “Urban Indian consumers could well be like American consumers.” They dress like people do in New York, they consume pretty much the same kind of things – fast food from McDonalds, apparel and accessories from Levi’s, Tommy Hilfiger , speak fluent English etc. So, the products we sell in the US, could, with some tweaking, work in India too.   This is a common mistake, which could create false consumption assumptions and set the stage for in-market failure.   Cultural conditioning and consumption contexts vary greatly between the US and India and this needs to be factored into product development in order for it to be perceived as relevant and suitable for the Indian consumer. Adaptation to Indian needs, tastes and preferences is an absolute necessity.   The only global companies who have succeeded in India are those who have adapted.

3)      Deliver  “value “ for the Indian consumer

It is a well known fact that Indian consumers are among the most value conscious consumers in the world. Value to the Indian consumer does not mean “cheap”; it does not mean compromising and settling for less.  It means getting the maximum return on money spent. Misunderstanding ‘value” in the Indian context often trips the US based marketer.   What is important and valued by the American consumer may not be so for Indians.  For e.g. given the fact that the US is such a developed market, consumers look for and will pay for products with frills; whereas the Indian consumer will not. They want straightforward and simple. Simple does not mean rudimentary, basic or unsophisticated – it is about being uncomplicated and effective. Products will need to be designed to deliver “value”.

Succeeding in India needs a committed and concerted effort, cognizant of the significant differences in country culture and consumer orientation. Invest in the learning upfront and get your India entry initiative off to a good start!