The invisible global market

Most marketing efforts concentrate on selling products and services to the inhabitants of rich nations. But only about 14 per cent of the world population lives in countries with per capita gross national product (GNP) of $10,000 or more. And in their race to grab ever-larger shares of wallet of this small slice, most companies have virtually forgotten about the 86 per cent that lives below the $10,000 cut-off line.

It's this 86 per cent that really matters, say Vijay Mahajan and Kamini Banga. The former dean of Indian School of Business (ISB), Hyderabad, and the marketing consultant are so convinced of the latent potential of emerging markets, they've written a book on it: The 86% Solution.

Numbers fly fast and furious in this book, which has its roots in research Mahajan conducted around 2000-01 on the invisible global market. By 2004, more than 75 per cent of homes in South Korea had broadband Internet connections, compared to just 20 per cent homes in the US. The Indian FMCGs market is estimated at $10 billion and will double in the next decade. Retail sales in China reached $628 billion in 2004, growing at 15 per cent a year. Those growth figures are now a distant memory for most "developed" countries, where GNP is plodding along at about 3 per cent a year""compare that with India's 8 per cent last year.

And these numbers aren't on the backs of poverty-stricken people, even if C K Prahalad's The Fortune at the Bottom of the Pyramid left you with that impression. Incidentally, be prepared for mental comparisons with that seminal work almost from the time you first pick up The 86% Solution, especially since both books were written about the same time and contain many overlapping examples.

But there are critical differences. Prahalad's work was an exhortation to stop ignoring the poor as consumers. Mahajan and Banga don't restrict themselves to lower-income consumers. Their book examines the potential of the entire universe of consumers in these markets, accepting the coexistence of extreme poverty and extreme affluence as just one more defining characteristic. Yes, the majority of the citizens of these countries will never step into a mall or buy a car; but these are also places where realty is more expensive than in Manhattan, where Louis Vuitton bags are ordered in advance and Maybach cars, at $330,000 a pop, have ready buyers.

The trouble is, in spite of such capability and willingness to spend, consumers in most of the "developing" world aren't even blips on the radars of most companies. For decades the dirt and flies made such good copy that few people in the West are willing even today to look beyond; the US may be shouting itself hoarse about jobs getting Bangalored, but American companies still haven't woken up to the buying power of the young Indian holders of those jobs. It still isn't too late, promise Mahajan and Banga, to rejig strategy.

Be prepared for a strong sense of dejà vu when you read The 86% Solution. Everybody, but everybody these days tomtoms emerging markets, ending with a Frank Sinatra-esque ode: if you can make it there, you can make it anywhere (the authors refer to the same song, so I guess I'm not alone in thinking that this has become the marketing insight du jour). Besides, most of the examples Mahajan and Banga cite in the book have already been written about: dabbawallas, sachets and Project Shakti, to mention some.

But although it may seem that way at first glance, this book also has creative marketing strategies from other emerging economies. Taking note of Shariat strictures on usury, Citibank inititated Islamic banking products in Malaysia; La Curacao, an electronics and furniture retail chain, sells products to consumers in Los Angeles that are delivered to their families in Mexico City; Chinese appliance maker Haier has a refrigerator model in which the freezer can be detached so that it can be moved easily into narrow apartments.

It is examples such as these that make this book an insightful, entertaining read. It's well-written and well-researched""but has a larger share of howlers than an Indian reader would find acceptable (fancy investing in Andhra Prashad?).

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THE 86% SOLUTION
HOW TO SUCCEED IN THE BIGGEST MARKET OPPORTUNITY OF THE 21ST CENTURY

Vijay Mahajan and Kamini Banga
Pearson Power
Price: Rs 499; Pages: xxvii+224