Cos forge lean biz models to tap villages

Sep 17 2011, 09:51 IST
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SummaryCarrying two worn bags full of toothbrushes and toothpaste, Raj Verma rides his battered bicycle around villages in Uttar Pradesh, leaving fresh supplies of Colgate products at the small shops he visits.

Carrying two worn bags full of toothbrushes and toothpaste, Raj Verma rides his battered bicycle around villages in Uttar Pradesh, leaving fresh supplies of Colgate products at the small shops he visits. While most urban Indians have long used toothpaste, many of the 700 million rural Indians brush with a Neem twig, which is known for its antiseptic properties. While that represents an obvious opportunity for toothpaste brands, the marketing and distribution methods to reach those remote customers are not clear.

Enter blue-sky thinking Indian style. India has pioneered the science of breaking up complex products or business models into most basic forms and then rebuilding them in the most economic manner possible to tap the bottom of a market. They call it frugal engineering. The term was coined by Carlos Ghosn, the CEO of Renault and Nissan, to describe the automotive engineering that went into Tata Motors’ Nano. Tata itself sometimes refers to its low-cost innovations as “Gandhian engineering” in honour of Mahatma Gandhi.

India has gained a reputation for creating a wide range of products sturdy enough to handle its demanding environment, easy enough for a wide range of people to use — and most importantly, affordable — from solar-powered ATM bank machines to detergent requiring little water. But getting these lean products to consumers is not as easy as distributing them in the developed world.

Anil Gupta should know. He started the Honey Bee Network to support India’s grassroots innovators and is an advisor to the National Innovation Council. He can rattle off a list of fantastic bricolage inventions, from an amphibious bicycle to a washing-cum-exercise-machine, that had no chance in the market. “Innovators are not necessarily good entrepreneurs,” he noted. This is where big corporations have the advantage. Domestic and multinational companies based in India are taking that frugally motivated mindset and applying it to their business models.

One of the earliest and most simple business process innovations was started by a south Indian health and beauty company, Velvette, in the 1980s.

Keen to reach Indians who aspired to use shampoo but could not afford to buy a bottle, Velvette began putting small quantities, enough for one or two washes, into plastic sachets.

The idea spread. Multinationals such as Unilever and Procter & Gamble adopted it. Now in small shops throughout India you can find streams of sachets dangling from crowded shelves and filled with anything from detergent and cough syrup

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