1.

What are the opportunities and challenges of building brands in large, fragmented and value-
conscious emerging markets such as India?
Ans. Indian economy is considered to be one of the fastest growing economy in the world.
After liberalisation there has been abundance of opportunities for MNC’s to enter the Indian
market. Along with it there were several challenges that restricted the entry of foreign brands,
unless they changed their products according to the customer’s requirement. India is moving
towards the world’s most dynamic consumption environments, and it is expected to maintain
a consistent economic growth. Consumers are themselves very dynamic in responding to the
global trends that are impacting them.
Opportunities
 Government Policies – Indian Government has approved 100 per cent Foreign Direct
Investment (FDI) specifically under the cash and carry segment. Also, in the single-
brand retail along with 51 per cent FDI in multi-brand retail. Goods and Services Tax
has been introduced, it is beneficial for the FMCG sector. Rates on food products as
well as hygiene products have been reduced drastically, to 0-5 percent and 12-18
percent.
 Market Size – it is believed that the retail market in India is expected to reach US$ 1.1
trillion by 2020 as forecasted in the year 2017, though the recent growth may result in
some decrease. As the living standards are increasing and drastic change in the lifestyle
of consumers, there is an optimistic growth of Indian market.
 Availability of resources – India has an abundance of resource in form of infrastructure,
finance, natural resource and skilled human resources. These resources can be utilized
to their full potential in order to develop products according to the customers.
 Young Demographics – Major chunk of population are the youngsters, and they
demand a new set of products and services. There has been plenty of earning
opportunities for the younger consumers which have enabled them to earn from
younger age. They are more enthusiastic, smart and confidence towards their spending
and investments. They prefer to have a better life backed by increased spending power.
 The Aspirational Consumer – Consumers have become more sophisticated and demand
a similar standard of living as compared to any developed country. They prefer to
acquire more aspirational products, which are better-designed, well suited and carry
excellent value. This is the reason for firms to focus more on designing marketing
campaigns for their products.
 Networked Consumer – In the current economy, consumers are well connected with
one another than ever before. They are connected offline as well as online. Recent
changes in the telecom sector have helped in providing internet facilities to the remotest
area. Such opportunity will help in reaching to a larger customer base.
 Brand Conscious – Indian consumers are also becoming more brand conscious. Though
there are hundreds of brands in all kind of products, people trust very few of them and
tend to choose among them. It’s just a matter of thorough research and development in
order to understand the India consumer and segment accordingly.
Challenges
 Bureaucratic hassles & Corruption – The Ease of Doing Business Index of India is very
less. MNC’s find it difficult to invest here. India has elaborate legal system, various
licenses and approvals are required to set up a business. There is always difficulty in
navigating the bureaucratic hurdles and red tapism. According to the World Bank, it
takes about 214 hours per year for preparation and payment of taxes in India. Such is
the complexity of India’s tax structure. The Corporate Income Tax (CIT) charged on
foreign companies is a massive 40% plus surcharge. This make it very difficult to enter
the Indian Market.
 Unorganised Market –The market in India is highly unorganised. Customers are not
hesitant to change their brands, if some other brand is available at a cheaper rate. There
are many local brands which are present. One can always find fake or copied products
easily in the local market sold freely without any restrictions.
 Fragmented customer base – Before entering into the Indian market, it very much
necessary to follow a rigorous research, in order to understand the customer.
Localisation is a must in order to compete with the India brands. Segmentation needs
to be done carefully one the bases of the target customer.
 Diverse Cultural aspects – India is considered to follow unity in diversity. There are
variations in cultural aspect of each region, such as language, eating habits, living
standards, etc. It becomes very difficult to connect with the customers through similar
kinds of products and market strategy. Companies are expected to practice the
philosophy of diversity and market their products, which might be an extra burden over
the finance.
 Price Centric Customers – India is considered to be a price centric nation, which does
not witness as much of a brand loyalty, as customers mostly considers the price. Hence,
not only do the companies need to provide quality products, they also need to charge a
 competitive price for that. People would compare features without going into the
premium depth, and hence choose a cheaper version. The fall of the telecom sector is a
perfect example for the price centric mentality of the people.
 Value Consciousness – Though consumers have started spending more, still they buy
products that add value. Such kind of products are preferred by the middle class who
comprises to be more than half of the India’s population. Even when people buy luxury
items they look for value in their purchases.
Apart from various challenges, Indian market has proved to be an outstanding opportunity
for experimenting and introducing new brands. Companies need to understand the
customers well, before introducing any product or services. Selling similar products which
may be successful in other countries can lead to a downfall of brand.