How often do we pause and ponder about industry issues that have a bearing beyond just our rigmaroles? Share insights that can further the common understanding? Or, at the very least, point at things that need to be set right. View Point - an exchange4media platform, will fill this void and become a source of understanding, action and perhaps some inspiration.
The ‘Nano’ Challenge
Sourabh Mishra, Chief Strategy Officer, TBWA\India Group
Consumer expectations have been reset. Yet again. The question “What can I expect to get for my rupee?” has been answered once more in a way that promises to redefine the quality of life for the middle and lower-middle class Indians.
And though a very big jump, the Nano actually carries forward a series of offerings that have positively disrupted what we can hope to get today for our hard earned money. Let’s look at some examples – Reliance in telecom, Air Deccan in aviation, now Tata Nano in automobiles. What have these offerings done? Created a quantum jump in the consumption experience for a consumer who would never have considered these categories earlier, but for the disruptive new price proposition.
The Rs 16.80 a minute cost of the mobile phone call was disrupted by the vision of ‘phone call at the cost of a postcard’. That changed the mobile phone from being a status symbol for the well-heeled to an empowerment device for everyone. The 'reserved, 3-Tier sleeper' train traveller aspired to travel in the comfort of 'AC 2-Tier’. Putting an airfare within shouting distance from this 'AC Train' travel cost disrupted air travel to an extent that our airports are being overhauled everywhere to cope with the demand. And suddenly, the ‘common man’ is buying and experiencing a lifestyle that had not so long ago seemed out of his reach.
In the entire noise generated by the Auto Expo 2008, the impact of the Nano has been looked at mainly in the context of the automobile industry. What has been overlooked is the impact that the Nano, and other such disruptive offerings before it, will have on other categories. The consumer has tasted blood, yet again. This time in a category that was, despite the Maruti 800, a very big symbol of social ascendancy. A car meant surrounding oneself in a private space in a crowded public domain, effectively marking one out as being a social superior who, therefore, did not have to rub shoulders with the masses. With ‘Nano’, many among those masses will now be looking at the world from the other side in their new cocoon of upward mobility. And as they drive to the crowded airports, speaking on their mobile phones, they will be wondering, “What next now?”
And that opens up a whole host of new opportunities. What could be next? Let us look at some of the possibilities.
Is the housing construction industry getting ready to offer a Rs 8-10 lakh decent dwelling unit in a city like Mumbai (and at an indexed price in other cities)? How many of the Rs 15,000-20,000 a month income households will then look at creating a demand explosion there? Don’t know if the builders will be able to provide free parking for the Nanos, though!
Quality private medical care at an affordable price is another need that waits to be exploited. Will someone standardise medical services, or as they say, ‘McDonaldise’ medical care with its Rs 20 burger equivalent? The same goes for commonly available, good quality ‘English medium’ education for this new aspiring class’ offspring. And what about easily affordable professional money managers to take care of the extra money that rising income levels will generate? (Mutual funds, for one, have very quietly, however, brought down the requirement to get into a systematic investment plan to Rs 50 a month! That’s another Nano that needs to be touted some more.)
Entertainment and leisure options, travel and tourism products… the list can go on. Consumer desire has been stoked and the floodgates of demand are poised for unlocking – symbolised by a car set to roll out at a price that everyone said was just not possible. The big question is: Are other businesses ready to disrupt their conventional beliefs and meet the Nano challenge?
(Sourabh Mishra heads strategic planning at TBWA India. However the views expressed in this article are his own and may not necessarily reflect those of his organisation. He welcomes feedback at firstname.lastname@example.org)