Newswise — When President Bush visits India this week he will see a nation that represents a potential $20 billion market for western manufacturers, according to a University of Texas at Austin marketing professor.
Vijay Mahajan, former dean of ISB, and currently a marketing professor at The University of Texas at Austin's McCombs School of Business, sees the India economy as an open field for U.S. manufacturers and retailers, if they are savvy enough to adjust their business models to the realities of an emerging economy. It's an adjustment that many companies such as GE and Ford have already made, with growing success.
Mahajan is available for interview on the economic potential behind improved trade with India.
Most global businesses focus on selling to the wealthiest 14% of the world's population. But these markets are oversaturated, over competitive and declining. Mahajan, co-author of "The 86% Solution, How to Succeed in the Biggest Market Opportunity of the Next 50 Years" , is at the forefront of a new perspective on how to reach the valuable Indian consumer base. He believes western businesses can succeed in India by adjusting their strategies for product design, pricing, packaging, distribution and advertising to better fit the country's culture.
Why are western manufacturers suddenly interested in expanding to developing countries such as India? According to Mahajan, the $10 billion Indian market for "fast-moving" consumer goods is expected to double in the next decade. Even if this revenue comes in a rupee at a time (about two cents U.S.)—the price of a sachet of detergent—the market cannot be ignored. Such sachets account for more than $1 billion in annual sales for Hindustan Lever Limited, India's largest consumer products company, alone.
Mahajan has worked on a study of "the invisible global market" and consulted with executives and government officials in several developing countries to highlight the key factors for driving growth and profits in emerging markets.
"For generations, the developed world has been seen as the land of opportunity," says Mahajan. "To be sure, developed markets have high incomes and well-developed infrastructures, so it is no wonder companies have devoted the lion's share of their attention to these countries. Yet even though development will be slow, the sheer size of developing markets demands some attention. There may soon be more rich people in emerging markets than in the 14% of the world that is considered developed."
Mahajan's new perspective is gaining attention among executives eager to stake their companies' future on the developing world. As President Bush meets with Prime Minister Singh on a variety of topics, the economic relationship between the U.S. and India is an obvious focus. After the president's visit this week, discussions on trade with India are sure to become more prevalent in board rooms across the country.
Vijay Mahajan holds the John P. Harbin Centennial Chair in Business at McCombs School of Business, The University of Texas at Austin. He is former dean of the Indian School of Business. He has received numerous awards including the American Marketing Association's Charles Coolidge Parlin Award for visionary leadership in scientific marketing. He is the co-author of "The 86% Solution," with Kamini Banga, published by Wharton School Publishing.
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