Monday, July 23, 2007

Market share or Profitability?

Along the way, I came across a lot of jargons. In all I can say my mind and soul has been "JARGONIZED". But one obsession for me has always been to know what a company is striving for – Is it Market Share or Profitability?

In the quest for this hallowed truth, my journey has taken me to almost to the depths of the insurmountable business model paradigms.

In the end of it all, I can justify by saying that Indian business model and International business model are two diverse ones. In the Indian context, customers vary in the buying behavior on local, regional, countrywide basis (god knows how many different reasons affect customer behavior) which makes the modern marketers task of classifying customers more complicated. One more irrefutable truth about Indian customer is that “They Think Emotionally but they buy Rationally”. This cannot be said about so called Western customers as their buying pattern are quite logical and with complete congruence with their rationality.

Now delving deep into the emotion & rational part of Indian customer, it can be very well understood that Indian companies are always on dichotomous position where they are hard pressed to go for either market share or profitability.

For example, Surf Excel’s catchy advertisement where two kids while coming back from school makes a scene in the road by jumping on the dirt. In this case mother should have shouted on them but she didn’t. She says that “Stains are good”. So we can very well see that “children have mothers to take care of them and mothers have Surf Excel to take care”— that is what HLL (now HUL) wanted to convey to the customers. Instantly the Ad puts across an emotional attachment with the customers. Now on the other side P&G comes with a product with well to do ad campaign but with less price (supposedly better quality). How many of us will go for Surf Excel? I doubt, not many! (Except for some for those who thinks ads are a waste of time) That’s the point of contention, that Indian customers are very less brand loyal than western counterparts. So with this example (of course there are lots of more examples like this), it can be easily understood that Indian companies are in a vicious circle of either market share or profitability.

P.S. - I am primarily taking companies where product aspect is more tangible than service.

5 comments:

Anonymous said...

Neither the indian nor their western counterparts are looking for market share or profitability.All the companies worldwide only strives to build on their competitive advantages, which is the prime goal.The companies running succesfully by the virtue of profitability or market share will have its downturn , only the ones to survive are the ones who have promoted the unexpected.They are the ones who have initiated the changes, met with the initial resistances and ultimately forced upon the perception of the customer to agreeable terms.These companies are the ones who believe in sacrificing short term profitability, the myth of "market share" for longer wholesome objectives. Innovation is the ultimate tool in the hands of the marketeer to enhance the longibility of the company.It is only the decision of the ozone level bigshots to do a trade off and decide which one to prioritize-short term success or the hard way of long term vision fulfillment.

skandy said...

gud work dude!

ravikiran said...

well its difficult to say...but i didnt get ur example of HUL n P&G

u mentioned about ads n products lowly priced...

in my opinion at the end of the day, companies r looking for profits they ve accumulated rather than mkt share....
now i ve one question creeping in my mind..r they not inter-related??

some say thrz a direct relation b/w them....

ravikiran said...

just a sec...wat deceides ur mkt share????

Anonymous said...

Answer to the question:

The ads shows how in Indian context "emotional" and "irrational" customers make a dent in the pockets of the business.

Secondly u r rite that companies are looking for profits at the end of the day.But the question is how much is the trade-off for MS/P the companies are making in the Indian context...

what i feel is that in Indian context profitability and market share are inversely related. it is easily understood by the N.B. part of the article.

Monday, July 23, 2007

Market share or Profitability?

Along the way, I came across a lot of jargons. In all I can say my mind and soul has been "JARGONIZED". But one obsession for me has always been to know what a company is striving for – Is it Market Share or Profitability?

In the quest for this hallowed truth, my journey has taken me to almost to the depths of the insurmountable business model paradigms.

In the end of it all, I can justify by saying that Indian business model and International business model are two diverse ones. In the Indian context, customers vary in the buying behavior on local, regional, countrywide basis (god knows how many different reasons affect customer behavior) which makes the modern marketers task of classifying customers more complicated. One more irrefutable truth about Indian customer is that “They Think Emotionally but they buy Rationally”. This cannot be said about so called Western customers as their buying pattern are quite logical and with complete congruence with their rationality.

Now delving deep into the emotion & rational part of Indian customer, it can be very well understood that Indian companies are always on dichotomous position where they are hard pressed to go for either market share or profitability.

For example, Surf Excel’s catchy advertisement where two kids while coming back from school makes a scene in the road by jumping on the dirt. In this case mother should have shouted on them but she didn’t. She says that “Stains are good”. So we can very well see that “children have mothers to take care of them and mothers have Surf Excel to take care”— that is what HLL (now HUL) wanted to convey to the customers. Instantly the Ad puts across an emotional attachment with the customers. Now on the other side P&G comes with a product with well to do ad campaign but with less price (supposedly better quality). How many of us will go for Surf Excel? I doubt, not many! (Except for some for those who thinks ads are a waste of time) That’s the point of contention, that Indian customers are very less brand loyal than western counterparts. So with this example (of course there are lots of more examples like this), it can be easily understood that Indian companies are in a vicious circle of either market share or profitability.

P.S. - I am primarily taking companies where product aspect is more tangible than service.

5 comments:

Anonymous said...

Neither the indian nor their western counterparts are looking for market share or profitability.All the companies worldwide only strives to build on their competitive advantages, which is the prime goal.The companies running succesfully by the virtue of profitability or market share will have its downturn , only the ones to survive are the ones who have promoted the unexpected.They are the ones who have initiated the changes, met with the initial resistances and ultimately forced upon the perception of the customer to agreeable terms.These companies are the ones who believe in sacrificing short term profitability, the myth of "market share" for longer wholesome objectives. Innovation is the ultimate tool in the hands of the marketeer to enhance the longibility of the company.It is only the decision of the ozone level bigshots to do a trade off and decide which one to prioritize-short term success or the hard way of long term vision fulfillment.

skandy said...

gud work dude!

ravikiran said...

well its difficult to say...but i didnt get ur example of HUL n P&G

u mentioned about ads n products lowly priced...

in my opinion at the end of the day, companies r looking for profits they ve accumulated rather than mkt share....
now i ve one question creeping in my mind..r they not inter-related??

some say thrz a direct relation b/w them....

ravikiran said...

just a sec...wat deceides ur mkt share????

Anonymous said...

Answer to the question:

The ads shows how in Indian context "emotional" and "irrational" customers make a dent in the pockets of the business.

Secondly u r rite that companies are looking for profits at the end of the day.But the question is how much is the trade-off for MS/P the companies are making in the Indian context...

what i feel is that in Indian context profitability and market share are inversely related. it is easily understood by the N.B. part of the article.

Monday, July 23, 2007

Market share or Profitability?

Along the way, I came across a lot of jargons. In all I can say my mind and soul has been "JARGONIZED". But one obsession for me has always been to know what a company is striving for – Is it Market Share or Profitability?

In the quest for this hallowed truth, my journey has taken me to almost to the depths of the insurmountable business model paradigms.

In the end of it all, I can justify by saying that Indian business model and International business model are two diverse ones. In the Indian context, customers vary in the buying behavior on local, regional, countrywide basis (god knows how many different reasons affect customer behavior) which makes the modern marketers task of classifying customers more complicated. One more irrefutable truth about Indian customer is that “They Think Emotionally but they buy Rationally”. This cannot be said about so called Western customers as their buying pattern are quite logical and with complete congruence with their rationality.

Now delving deep into the emotion & rational part of Indian customer, it can be very well understood that Indian companies are always on dichotomous position where they are hard pressed to go for either market share or profitability.

For example, Surf Excel’s catchy advertisement where two kids while coming back from school makes a scene in the road by jumping on the dirt. In this case mother should have shouted on them but she didn’t. She says that “Stains are good”. So we can very well see that “children have mothers to take care of them and mothers have Surf Excel to take care”— that is what HLL (now HUL) wanted to convey to the customers. Instantly the Ad puts across an emotional attachment with the customers. Now on the other side P&G comes with a product with well to do ad campaign but with less price (supposedly better quality). How many of us will go for Surf Excel? I doubt, not many! (Except for some for those who thinks ads are a waste of time) That’s the point of contention, that Indian customers are very less brand loyal than western counterparts. So with this example (of course there are lots of more examples like this), it can be easily understood that Indian companies are in a vicious circle of either market share or profitability.

P.S. - I am primarily taking companies where product aspect is more tangible than service.

5 comments:

Anonymous said...

Neither the indian nor their western counterparts are looking for market share or profitability.All the companies worldwide only strives to build on their competitive advantages, which is the prime goal.The companies running succesfully by the virtue of profitability or market share will have its downturn , only the ones to survive are the ones who have promoted the unexpected.They are the ones who have initiated the changes, met with the initial resistances and ultimately forced upon the perception of the customer to agreeable terms.These companies are the ones who believe in sacrificing short term profitability, the myth of "market share" for longer wholesome objectives. Innovation is the ultimate tool in the hands of the marketeer to enhance the longibility of the company.It is only the decision of the ozone level bigshots to do a trade off and decide which one to prioritize-short term success or the hard way of long term vision fulfillment.

skandy said...

gud work dude!

ravikiran said...

well its difficult to say...but i didnt get ur example of HUL n P&G

u mentioned about ads n products lowly priced...

in my opinion at the end of the day, companies r looking for profits they ve accumulated rather than mkt share....
now i ve one question creeping in my mind..r they not inter-related??

some say thrz a direct relation b/w them....

ravikiran said...

just a sec...wat deceides ur mkt share????

Anonymous said...

Answer to the question:

The ads shows how in Indian context "emotional" and "irrational" customers make a dent in the pockets of the business.

Secondly u r rite that companies are looking for profits at the end of the day.But the question is how much is the trade-off for MS/P the companies are making in the Indian context...

what i feel is that in Indian context profitability and market share are inversely related. it is easily understood by the N.B. part of the article.