How to transfer power from suppliers to Customers - the Indian scenario
In our country, there have been a number of businesses where the middlemen have made money and the customers had to pay more for services rendered or products purchased. Today, the middleman is gone in many businesses in India. This article is an attempt to discuss some of these changes in line with concepts from the book "Marketing Genius" by Peter Fisk.
Introduction Visitors to Coimbatore city can easily see this outlet "Kovai Pazhamudicholai" at many locations that are extremely famous for the fresh vegetables and fruits sold there. Since everything is so fresh, the customers do not bargain at all. They simply lap it up, even if the prices are a little more than those in the wholesale market. This is one instance of the customer being given a good value for his money, without any middlemen being involved. The owners of Pazhamudhircholai reportedly have a turnover in excess of three hundred crores of rupees per annum. They are present in Chennai as well.
This is just one example. There are many that can be explained from recent experiences in India. In this connection, a conceptual framework of this transition from the book "Marketing Genious" by Peter Fisk, (page 50) can be useful. For reasons of space, the explanation is limited to the bare minimum to explain the ten transitions that have occurred in India. The following is the conceptual framework as given in the book.
We will now examine each of the transfers of power from the supplier to the customer, in some detail.
Brands define supplier or product to Brands reflect buyer aspirations Nobroker.com is the best example. The advertisement talks about how one can even buy new houses directly without any brokerage. There is no brokerage at all.
Communicate in mass campaigns to get in touch when want to know There is one Chennai-based service called Sai Sankara Matrimonial Services, and this is an online service for the Brahmin community. The representatives are always there to help at any time and even suggest good matches for any boy or a girl and this is another sister organization that is open to all communities. The services are similar.
Products standard and discrete to solutions assembled by buyer In services provided by Asian Paints through professional experts enlisted with the organization, the customer is the king. He can decide what to do with the various shades and he decides how his house should be painted. Of course, professional guidance and advice are always provided.
Distributed through defined channels to Agents help buyers solve problems Take the numerous tour organizers. Thanks to perfect competitions, the agents, the organizers, take care of even particular types of cuisine and food to the served to the customers. Cooks are taken from the starting point and travel with an entire lot of customers throughout. This is particularly true of all tours for senior citizens to religious places of worship such as Kasi, Gaya, Badrinath and so on, organized by agents from South India.
Price based on competitors and costs to pricing based on perceived worth Customers who travel by buses booked through Redbus, give feedback to the organization. This is duly published. Customers talk among themselves and the word of publicity helps to determine prices. Customers are choosy and prefer the best operators and shun those who do not provide good services but charge high.
Relationships sought by suppliers to buyers loyal to people like them This is particularly true of one big retailer, Saravana Stores in Chennai, who is able to satisfy any customer. There are groceries sold for discounts that match those of Big Bazaar. Since the air-conditioning is good, and the savings are good, even upper-middle-class people flock to this outlet. There are several sections where the lower middle-classes find products that satisfy them. No wonder, the buyers are loyal to this outlet, as they feel that this is one place "like them".
Innovation drives product derivatives to innovation redefine contexts Take the seminar and conference industry. Corporate organizations always want their executives to think, plan and then execute ideas in cozy environments. In particular, the IIM and ISB products are always given any number of opportunities to interact with world-class consultants that include the likes of Ram Charan, Michael Porter and so on. The food, the ambiance and the comforts are all designed through innovations and there is no "no size fits all" approach at all.
Strategy based on current capabilities to Strategy based on best opportunities Take any big conglomerate. The major difference is that these major conglomerates, that are successful in at least two different industries, but with core competencies in each of them, with a big pipeline of leaders, are the best conglomerates. ITC is into the biscuits industry as much as it in the stationery business. The Tatas are into the five-star hotels' industry. They are very successful. But they are also into steel and cars and special utility vehicles. They have core competencies everywhere. TCS, the IT organization of Tatas is the largest IT exporter from India.
This is exactly what is meant by strategy based on the best opportunities. When there is a gap in the market, someone comes along with a bang and gets that gap totally covered up. It represents the best opportunity to be exploited by a particular organization. For example, Sundram Fasteners, an organization of the TVS group, had an order for radiator caps from General Motors. It converted this opportunity to a global business opportunity, by becoming the sole supplier of the highest quality of radiator caps to all plants of GM anywhere in the world.
Measured on financial-based metrics to Measured on customer-based metrics Take the State Bank of India. It is firmly lodged in the minds of billions of Indian customers that SBI is the safest bank to have a savings account. The customers may not find the quickest or best of service. Yet, they will be happy to wait. Safety and security are the metrics that the customer has bestowed on the banking decision. It should be noted that most Indians have an account with SBI, even if they have accounts with other banks.
Take the best in class trains like the Tejas expresses and the Shatabdi expresses. Once people identify that the trains are good value for money, the financial part is taken care of. To travel to Coimbatore during the day, the upper-middle-class customers do not mind the high cost of the Shatabdi express that is just a little faster than the prestigious Kovai express. However, the former is totally air-conditioned and one never has the problem of the unreserved passengers disturbing the regular reserved passengers in the second class sitting compartments as in the case of the latter. Hence, the metrics of comfort and convenience are given more importance. It reportedly has over ninety percent occupancy now.
Overall supplier calls the shots to overall, buyer calls the shots Take booking of tickets. The travel agents would charge extra from the customer. Their business has dwindled in the past decade in particular. The IRCTC website has facilitated online booking and has effectively reduced the crowd in the railway reservation counters, everywhere in India.
Customers call the shots at any point in time. Those who book through online agencies like makemytrip.com and stay at hotels can literally write the worst of reviews and make the new business to the hotel so difficult if the service standards are poor. To this extent, the customer is the king. Makemytrip.com does publish all the reviews and the brickbats are there too. It reportedly is very harsh with the hotels that do not deliver on promises.
Each of the aforesaid transfer of power from the suppliers to the customers marks a big change. In the years ahead, the scope of the online services will continue and the likes of Flipkart and Amazon will continue to literally envelop the collective consciousness of the millions of customers who prefer to buy online. The customer will be king and any brand that does not satisfy the customer will be gone with the wind. For example, the Flair brand of pens is making deep inroads into the market share of cello, which is a famous brand. However, the latter is yet to come out with good or better quality pens that match the smooth writing of Flair.
Examples like the aforesaid ones will dominate the Indian scene like never before. There is always perfect competition and the market leaders can never sit and relax. Someone will keep on knocking at the door and the existing slots will be under threat as well. This is seen in each segment and the customers have become very choosy indeed. In the branded biscuit segment, for example, Goodday is a famous brand from Brittannia and this has been able to occupy a big mind space in millions of customers. This is indeed a big tea time brand and there is not much competition. Yet, Brittannia cannot rest on its laurels.
ConclusionWe have discussed certain Indian examples, pertaining to the transfer of power from the supplier to the customer in India. The conceptual framework from the book, "Marketing Genius" is the base on which the Indian examples have been anchored. It should be noted that the transfer of power from suppliers to the customers is always a big work in progress.