In order to fight for global market leadership, a more recent example is the attempt by Bajaj Auto to re-define the 100 cc motorcycle market, the largest segment in India, with its EXD model offering similar fuel efficiency, higher power of 125cc at a similar price as 100 cc bikes in the market. Natura Cosmetics is the leader in the Brazilian cosmetics industry the third largest in the world. They understood the Brazilian obsession with beauty and also the Brazilian customers psyche better than their global competitors and redefined their industry.
Founded in 1969, Natura positioned itself as a company that promotes well being and harmonious, pleasant relationship of a person with oneself, with ones body and with nature. It uses a special type of palm oil and plant and vegetable ingredients harvested in Amazon rain forest in its products. It grew its market share from 12% in 2002 to 23% in 2006 with profitability above that of its peers, despite catering to customers in the mid-market.
Fast developing economies offer not just opportunities to redefine the market and create new categories but also implement completely new business models. Amul has been a pioneer in bringing new product categories into the organized market products like Shrikhand or Mishti Doi the sweet curd which has been part of Indian regional home cuisines but had never been branded as packaged food.
They lead and others follow. Zhu Xin Li, a former government official in China created the market for fruit juice in China where none existed, through his company Huiyuan. Like many stories in China, this is remarkable. In 1980s, Zhu, not being able to meet the government dictate to plant rice in all available land in his responsibility, planted apple trees due to the topography and soil conditions.
Not knowing what to do with all the apples he harvested, he bought a second hand juice making machine . Not knowing how to sell real juice in a country that drank mostly tea, water or beer, or a juice drink which was a sugary pulpless blend that was 90% water, positioned his 100% pulp based juice as nectar which was healthy for both adult and children. By 1997, Huiyuan had become not just the industry leader in a category they created, but a household name in China with their tag line, “Let 100 percent Chinese people enjoy 100 percent juice”. .
Economies present another kind of challenge and thus a very large untapped opportunity that of the Next Billion Consumers (NB). If we take only the BRIC countries, there are 1.2 billion consumers, the size of the Indian population, who together spend nearly $1 trillion and who are not served by normal channels of distribution or have products which meet their requirements. These consumers are sandwiched between the well known mass consumers on one end and the truly poor on the other.
They have the means over a third of their household income is spent on non-essentials but not the access. They have fluctuating incomes, they often live in difficult to access places in cramped homes but they have the same need for respect and desire for good things in life and are willing to buy products and services if only they could access them at the right price. These NB consumers are tomorrow’s mass consumers. .
The leaders know that if they can find a way to serve these customers today, they can not only make money but build a relationship that will endure as these NB consumers become mass consumers. ICICI Bank’s self-help group initiative or Hindustan Unilever’s Shakti program are examples of innovative business models which serve both social and business objectives for the firms.