Indian Market Diversity

An Assignment Submitted in Partial Fulfillment of award of MBA Degree

Submitted to: Mr. Bipin Valera

Submitted by Manthan Shukla (106) Mayur Solanki (107)

Nathusang Solanki (108)

S. K. PATEL INSTITUTE OF MANAGEMENT & COMPUTER STUDIES Gandhinagar, India

5th Sep. 2012

Story
Diversity of Indian market presents a challenge to online music players
Indiantelevision.com Team MUMBAI: After a long time Google has finally got into the online music business by launching a service. However if it is to make a mark in Indian then it will have to adapt to a market that offers diversity. There is a fragmentation of music content ownership here. There is a long tail of content owners. At the same time search, social and curated functions have to be combined for any online music service to succeed. This was point that came out during a session at Nokia Music Connects Summit called Internet/Mobile Radio and Streaming Services. The moderator was Tag Strategic managing partner Ted Cohen. The panelists were The Orchard VP, GM Prashant Bahadur, EMI Music India MD T Suresh, music composer Raju Singh, Spice Digital head - business development and alliances ShehzadAzad, Hungama Digital Media Entertainment COO - Consumer Business and Allied Services Siddhartha Roy, Shemaroo Entertainment director Jai Maroo and Aircel head Vas Pradeep Rao. Maroo noted the diversity challenge for overseas players looking to enter the music space here. At the same time it is easier to experiment now than it was four years ago. Today content owners with a large library would look at online services in an open way and try to figure out where it might be two to four years down the road.

ShehzadAzad noted the fact that India is a price sensitive market. According to him it took Android five years to reach critical mass here. The iPhone has not impacted India due to the price. Bahadur noted that the challenge for international online music services looking at India is not licensing. It is about consumer experience. iTunes experience is similar in most markets apart from maybe Japan. If it wants to make an impact in India then it will have to change its approach from the point of view of genre, language perspective. Orchard is a digital distributor of music and he says that transparency is one of the things he looks at in doing deals and looking at business models. Transparency makes it easier to license ones catalogue. His aim is not to capture a percentage of the revenue pie but to grow it. He also noted that searchability in streaming helps niche music. If you are subscribing for five bucks then it doesn't cost much to experiment. The problem is that search engine functionality is poor in many online music streaming services. That is because they are not as data driven as Google. The social nature of a service can also help drive revenue and business. Recommendation is another critical part of the business.

ShehzadAzad noted that his company has been running a music streaming service for five years now. With even a basic mobile phone one can access the service even if he/she is in a remoter area. The challenges are how to communicate to the last mile as well as falling Arpus. At the moment the restrictions in GSM means that the quality of a song is at time limited. His company has enabled search through SMS. 10 songs are sent to a customer who is searching for something. One just has to hit the access code. This enables ease of use which is important. It was noted pull is the sustainable model. Streaming services will make content discovery easy. They can find the long tail content that they are looking for. Roy noted that while smartphones are not there in India in the future an ecosystem will be there for smartphones at an entry level. Also as broadband penetration and levels grow for the PCA and tablet increased selection and depth of content is coming into play. Singh noted that music streaming allows him to reach areas where his albums are not available. Services can also be used as a demo pad. ShehzadAzad added that for somebody like Singh a streaming service can be used as promotional tool at a regional level. His service offers interactivity which allows the composer to get feedback from consumers. At the session it also emerged that while non film music is not as big as Bollywood, it has a sticky fan base. For non film music to succeed one needs a large repository of music in one place. This would allow for recommendations. It was noted that consumption is happening in tier two, three, four towns. There is network seeding happening but the infrastructure is not there to give enough bandwith. The situation is expected to change by 2014. The important thing is that when a consumer goes to a buy a mobile phone he/she expects to be able to consumer video and audio content. That was not the case a few years back. Maroo noted that video consumption is going up on the mobile. That is significant given the fact that music gets there first in terms of benefitting from the mobile.

Case Study
Managing Diversity The Challenges for India Inc.
Diversity at the Marketplace The Challenges for Indian Companies Diversity can be understood in terms of three key market interactions. These interactions are between: A company and its owners, a company and its partners and a company and its customers. The first has assumed a great deal of significance in the wake of many changes in the corporate world. The second is the one that we in India are most familiar with. The third is probably the most significant, in terms of both the extent of diversity and the challenges involved. Managing Diversity in Ownership In the Indian context, two things are happening today. Firstly, many foreign companies are investing or setting up shop in India. Secondly, many Indian companies have started setting up units in other countries. Some have even ventured to take over foreign companies. Four Case studies from India Inc, and our findings

In order to understand challenges connected to ownership diversity, we talked to employees from four companies experiencing ownership diversity. The people we talked to were in some way involved in or affected by the Company-Owner interaction. The companies included: 1. An Indian R&D unit of a large Japanese technology company 2. An Indian engineering firm which has acquired a South-East Asian manufacturing firm 3. A Indian Pharmaceutical company which has taken over a Japanese drug maker 4. The Indian subsidiary of an American Electronic Component manufacturer. The following points came out from our study: 1. There was a feeling that the larger goals of the parent organization were not being transmitted to the daughter company. 2. Many people felt that their units were seen largely as low-cost outsourcing center rather than an integral part of the bigger business. 3. A foreigner usually heads the daughter company. This often leads to misunderstanding and mistrust. Our recommendations to better manage the diversity involved: 1. The parent company should ensure that the adopted company very quickly feels a part of the

larger organization by communicating the larger goals of the organization along with the short term objectives 2. The owners should not try to make drastic cultural changes quickly but try to gradually incorporate the essential elements of its work-culture, while at the same time maintaining as far as possible the identity of the adopted company. Managing Diversity in Partnerships Partners for a company may include among others, Vendors, dealers, distributors, Technology licensees & licensors. We have looked at some of the interactions that Indian companies have had with their partners and have realized that one of the most critical elements for managing diversity in partnerships is improving communication between the partners. Effective Communication - The Key to a fruitful relationship We suggest two broad areas where communication can be improved: 1. Language & Form of communication: Many partnerships encounter difficulties with the form of language used for communication. We encountered cases where use of certain expressions during semi-formal communication, particularly while using email were misunderstood by partners and strained the company-partner relationship. 2. Media of communication: This includes the development of systems; including IT applications that enable partners to quickly access relevant information. Managing Customer Diversity Diversity rears its head in many forms in a companys interaction with existing or potential customers. Sometimes the diversity is so overwhelming that a company can lose focus and fail to understand actual market requirements. We have identified two imperatives for Indian companies with regard to managing Customer Diversity in a diverse marketplace. These are Understanding cross-cultural sensitivities and Building Customer Relationships. Understanding Cross-cultural sensitivities Understanding cultural sensitivities is the first lesson that an Indian company has to take when expanding into diverse global markets. The cultural sensitivity my be with respect to Product & Service Quality or with respect to Marketing Strategy. Product & Service Quality for a Diverse Market The elements of quality includes among other things functional quality, aesthetics and after sales support. A company venturing into a diverse market place should ensure that it has what it takes to provide what the market requires in terms of quality of products and services. For most products there is a trade-off between product quality and price. One of the key advantages that an Indian company has in the global market is the ability to provide products and services at a lower price. But in quality sensitive markets like Western Europe and North America, low prices may
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just not be enough. Indian companies sometimes find that they have to provide products or services of drastically improved quality if they have to survive. Marketing Strategy The following things should be kept in mind when marketing a product in a diverse Marketplace. Indian companies can learn much from the mistakes made by global Companies in this regard. 1. Product names acceptable in certain countries may have negative connotations in others. 2. Slogans when translated sometimes have completely different meanings. 3. Certain methods of advertising products may be considered offensive in certain countries. 4. The primary way of advertisements may be different in different places. In some places, personal marketing may be far more effective than using the media. Building Customer Relationships in Diverse Markets Though customer relationship management is of fundamental importance in any kind of market, it assumes fresh significance in a diverse market place. We have identified two steps to building strong Customer Relationships. These are: 1. Potential Account Management 2. Developing Customer Loyalty The first deals with building relationships with potential customers and the other with existing customers. Potential Account Management (PAM) The concept of Key Account Management (KAM) is well known. Through KAM organizations give added importance to building relationships with its most important clients, also called Key Accounts. We have developed a concept called Potential Account Management or PAM, which can be used to build relationships with potential customers. Indian companies trying to make a foray into new markets often find it difficult to break in because they do not have an existing relationship with potential clients in the market. In PAM, a business organization first decides who its potential key customers will be in the long term. For example, a firm, whose clients are largely in India at present but is planning to expand abroad, will select two or three prospective international customers, or group of customers as its Potential Accounts. A Potential Account Manger will be assigned to one or more of these Potential Accounts. The objectives of the PA Manager include the following: 1. Analyze requirements of the new market 2. Understand cultural sensitivities with respect to quality, service, price and marketing strategy. 3. Build personal/market relationships with decision makers. 4. Identify opportunities for leveraging comparative advantages existing in that market.

Developing customer Loyalty The most difficult thing in a diverse market place is keeping existing customers loyal. This is applicable both in the global as well as the Indian market. One way of doing this is by trying to achieve Customer Delight. A satisfied customer is not always a loyal customer particularly in a diverse global market place where barriers to entry may be low. A company, which is willing to go the extra mile to achieve customer delight, is often rewarded with a loyal customer. Another effective method to achieve customer loyalty is the use of Loyalty schemes like Air miles, where regular customers are rewarded for being loyal to the company. Such a scheme benefits both the buyer as well as the seller. Conclusion Weve looked at the challenges that Indian companies face because of diversity, both at the workplace and the marketplace. Weve also seen the ways companies can use, to not only manage existing diversity but also to promote it and gain a competitive advantage in the market. Probably, the most important aspect that comes out from the study is that diversity is finally all about human beings, and how they differ from each other. Any company that understands its key stakeholders well its employees, its shareholders, its partners and most importantly, its customers, can thrive in the most diverse of environments.