A new marketing equation

GUEST COLUMN

Indian consumers are now demanding 'aqcurate gain' from the goods and services they buy.

What's the price?" Until 2000, this was a deciding factor for the Indian consumer in buying a product. Although the Indian economy was liberalised in 1991, and international brands entered the Indian market soon after, Indian consumers didn't change overnight: their mindset of saving continued and meant little difference in their buying behaviour.

But by a decade later, the new generation of teenagers and deprived-of-choice Indian consumers had been exposed to high quality international products in Indian markets.

Leading up to 2005, when Parliament formally agreed to the trade-related intellectual property rights of the World Trade Organisation, the markets were flooded with foreign goods.

Aspiration and quality started gaining ground, while the cost of products was going down. This helped make the consumer a true beneficiary of what I call "AQCurate gain", where A stands for "aspiration", Q for "quality" and C for "cost".

An organisation acquires "aqcurate gain" when it spotlights aspiration as the fulcrum of its deliverable followed by quality and cost. This dense, consumer micro-sensitive quality is driven by external demands and not by following introverted quality systems.

Aqcurate gain means market sustainability, leadership, profitability and high shareholder value. To be sensitive to consumers of different behavioural clusters and in different economic layers, aspiration and quality must go hand-in-hand in all products and services and in any price segmentation.

Aqcurate gain can make price a hygiene factor
With the Indian consumer spoilt for choice, the attention is now on quality. Quality consciousness is now equated to achieving a global reputation and delivering that same quality locally. And since quality goods can be bought at the right price point everywhere, the emphasis has further shifted to aspiration.

Since 2005, the country has reversed its purchase cycle of first seeking price, then quality. The priority today is aspiration, followed by quality, while price has become a hygiene factor.

Consumers no longer look for price-sensitive products and services where aspiration and quality are missing. If an organisation still looks at cost as a segment of the market, a type of category in any industry, the focus should be more on aspiration and quality to fit inside a price band.

Also, organisations cannot consider quality to be an introverted, formatted generic policy of traditional quality management programmes. The consumer's perception of quality from every touch point should become the industry's benchmark. When high quality becomes the market standard by virtue of technology advancement, the differentiating character that defines customer involvement in quality becomes microtone.

Microtone is a term in Western music where multiple instruments play different chords with different tones to arrive at a harmonious melody. If there is a mistake in these different chords or tones, the melody output will be corrupted. In the same way, the microtone of a consumer or customer can be incorporated in the quality programme and make it more aspirational.

Aqcurate gain can optimise volumes to bring the cost down
The advantage in a country like India is volume. Look at any market domain through the lens of aspiration and quality and you see that volume decreases the cost factor. Developed countries such as Europe did not factor in volume when they concentrated on aspiration and quality.

Consequently, products of aspiration and quality become aligned with high cost. Which is why European luxury products are in the premium range where American, Japanese or Korean products don't fit.

The Americans introduced the concept of mass scale consumption of products. The Japanese and Koreans adopted the scale for mass consumption, but injected it with aspiration as priority, in-built with quality. Price was used for segmentation of the product category into different consumer and customer targets.

The global market is waiting for India, a representative of billions, to show how the billion population scale can bring down cost while delivering high aspiration and quality in everyday consuming products.

Aqcurate Gain in Toyota's oobeya
In 1998, Toyota's chief engineer Takeshi Yoshida took on the big task of redesigning the Corolla at under $15,000 while reinvigorating the design and adding high-tech options that would win over young drivers.

Yoshida adopted oobeya, a new approach to planning and engineering that promotes more innovation, lower costs, higher quality and fewer last-minute changes.

Oobeya is Japanese for a big, open office and is about the power of open minds. It allowed Toyota to think differently, cut costs and boost quality.

Cross-functional teams from design, engineering, manufacturing, logistics and sales came together, tore down silos in engineering and manufacturing, and created more communication among people. "We had never looked at a car that way," said Yoshida.

"In the past, each of us had a budget, and we were fine if we stayed under that." Subsequently, savings in all areas, big and small, came into being.

In North America, Toyota was making Corollas with sunroofs, mostly in Canada, while a California plant was not outfitted to make them.

When the logistics department told those in manufacturing that transporting sunroof-equipped vehicles south from Canada cost $300 a car, executives revised the assembly process at $600,000.

An Oobeya set-up in Torrance, California on expensive four-color brochures that was too expensive for dealers was included in the Toyota website for dealers or customers to download. This saved $2 million. But oobeya-based insights also added costs by adding features like sleek wheel covers, and a 60-40 split backseat to help sell Corollas to younger people.

In March 2002, the under-$15,000 Corolla was ready and Toyota did not have to make a single change to the car from the final design "" something unheard of in the automobile industry.

Explains Yoshida: "There are no taboos in oobeya. Everyone in that room is an expert. They all have a part to play in building the car. With everyone being equally important to the process, we don't confine ourselves to just one way of thinking our way out of a problem."

Aqcurate gain in Reliance Fresh Retail
Visit the 11 Reliance Fresh shops in Hyderabad and you will find lower-middle class people shopping for everyday vegetables and food together with upper-class consumers.

The extremely affordable shopping experience is in a pleasurable, tastefully arranged, air-conditioned environment.

This is an example of delivery for the billion population consumption where equal status is maintained for both low and high income groups. This will be the direction for any consumer-centric business in India: affordable prices that do not sacrifice quality and aspiration.

(Shombit Sengupta is an international management consultant on corporate transformation, branding, retail design and product design. email: shombit@shininguniverse.com)