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Your Customer Segment is constantly changing: Are you prepared for it?

Your Customer Segment is constantly changing: Are you prepared for it?

Global trends are changing customer behavior at an increasingly high rate, here is what your business needs to do.

Gone are the days of mass marketing campaigns and bulk production aimed at winning over a large pool of so-called ‘average customers’.  For a growing number of consumers today, the products they consume are not just meant to satisfy their needs but also serve as a channel to express their individuality. Numerous submarkets and niches exist in the current market that demand exclusive strategies.  This has forced companies across the world to take another look at their customer segment, understand their needs and create products that cater to their unique needs.

The following trends in the technology and business landscape have influenced  this change:

    •  With the internet introducing new technologies and products to the world every day, it has become increasingly difficult to maintain a strong market share and loyal customers. 
    • The nature and demands of the consumer in every industry are constantly diversifying and shifting.
    •  Social media has emerged as a savior for small businesses that are not capable of investing immensely in marketing activities. A powerful ad on an Instagram page can lead to thousands of followers flooding in with product inquiries and purchases from any part of the world, in a matter of days. 
    • Third-party logistics companies and cheap tech-based solutions are making delivery and customer service easier, helping smaller customer-centric brands perform better than some big established companies. 

Could these trends pull your business down? Probably yes. 

Should you be worried about it now? Absolutely yes.

It is clearly time to re-evaluate customer segments and recalibrate product offerings.

Practical guide to customer segmentation

What is Customer Segmentation?

Customer segmentation refers to dividing markets into groups based on shared characteristics. Most commonly uses customer segmentation models for B2C businesses are: 

Customer Segmentation Models.Most commonly uses characteristics in customer segmentation models for B2C businesses are:Demographic characteristics such as gender, age, income, educational background, etc. Geographical limits can be based on countries, regions, states or cities. Behavioural patterns such as purchase frequency, brand loyalty, engagement, occasion etc. Interests and personality traits of the customer such as lifestyles, skills, interests, beliefs, values etc. Most companies use a combination of these factors to select profitable target customer segments.

Demographic segmentation: It is the most commonly used model of segmentation. Customers are divided into groups based on demographic characters such as gender, age, income, educational background, ethnicity or religion. 

Psychographic segmentation :This model is based on the interests and personality traits of the customer such as lifestyles, skills, beliefs, values, etc. It is becoming more popular among companies and leading companies have invested heavily in data analytics to explore psychographic factors of customer behavior. 

Geographical segmentation: This model uses the physical location of the customers to group them. The geographical limits can be based on countries, regions, states or even cities. It is suitable for small businesses with smaller marketing budgets to better judge their customers. It is also used by multinational companies to tackle cultural differences in different countries.

 Behavioral segmentation: Customers are grouped on the basis of their behavioral patterns such as purchase frequency, brand loyalty, engagement, purchase occasion etc. This model has been extensively used by e-commerce platforms to create customer profiles and group them.

Though these models provide a basis of classification, customer segmentation can be more complex. Most companies employ a combination of these models to select profitable customer segments.

Why segment your customers ?

Better focus on customer

Focusing on delivering value to a particular customer segment can help in designing and delivering products that meet customer’s specific needs. This customer centric approach would result in higher customer satisfaction and product adoption rate.

Increased competitive advantage

It is rather simple. More focused you are on delivering customer- centric products, the more value you create for the customer. The more value you create , the more attractive you are to them. Providing products that cater to specific needs of a customer segment would help accumulate more market share as compared to subpar competitors.

Better utilization of resources

Identifying the most and least profitable customers can save so much money and effort while conducting marketing campaigns. Prioritizing a high value customer segment can help in maintaining brand loyalty by constantly improving products and services. It can ensure higher profits and lower costs.

Handle saturation of the market

While concentrating on a new customer segment you may even discover areas with significant scope of growth. This could be an opportunity for your business to acquire market share in a niche market. In a market that has been saturated , creating a niche and serving customers in that particular segment can be a differentiating factor for any business.

Capture new markets

Companies often target new customer segments by introduction of new products designed for that particular segment. However, it must lead to dilution of brand image. Many companies overcome this by introducing new brands designated for different segments of customers. Examples include Unilever which uses different brands to reach different markets or FedEx which uses different brands to provide different services.

Embrace market changes

Product life cycles are getting shorter. Once popular products are becoming obsolete quicker with faster technological advancement. For companies that are exploring new market possibilities to stay in the game, embracing a new customer segment can be the way to go. An interesting example is PepsiCo. Upon seeing that the market is shifting to healthier options, the multinational snack and beverage giant acquired health friendly brands like Quaker Oats and Tropicana.

Do customer segments remain the same over time ?

No, the nature of customer segments are always changing. For example, the product consumption patterns or product preferences of a middle-class family today is very different from that of the previous decade. With exposure to global trends and increased availability of a wide range of products, the needs and wants of each customer segment is continuously changing. New niches markets may develop that would require highly customized products.

How to identify and target your customer segment?

Different businesses have followed different methods to segment their market, some pretty complicated while others simpler alternatives. Given below are steps involved in identifying and targeting customer segments for SMEs.

Practical steps to identify and target your customer segment..Step 1 : Conduct a detailed market study. Step 2: Choose a suitable segmentation model.Step 3: Gain a clear understanding of customer expectations in the chosen segment.Step 4: Product design, development, launch, and marketing to attract customers within the segment.Step 5: Collect regular feedback and improve product offering

Step 1 : Conduct a detailed market study

A detailed market study is the most essential step to understanding your customers. It gives a clear picture of the market size, key competencies required, existing competitors, risks, and customer behavior. The data for the study can be collected from online resources or through field research. Expertise provided by business consultants and market research experts can also be valuable.

Step 2: Choose a suitable segmentation model.

Based on the insights from the market study, a business needs to split its customers into segments. This could be demographic, behavioral, psychographic, geographical, or a combination of these. The segmentation needs to be clear and practical. A niche market can also be identified in this step.

Step 3: Gain a clear understanding of customer expectations in the chosen segment.

In this step, the business needs to study the customer segment in detail by understanding the market size, recent trends, and expectations of service quality and value delivered. A clear idea of the competitor dynamics and expectations of the customer segment would help in developing an effective strategy and a successful business model.

Step 4: Product design, development, launch, and marketing to attract customers within the segment.

All aspects of the product must be created to meet the specific needs of the consumer. Marketing campaigns must be carried out through appropriate channels to targeted customers.

Step 5: Collect regular feedback and improve product offering

Feedback must be collected regularly to track customer satisfaction and to assess their changing needs. Analyzing sales patterns, customer behavior, and feedback can help in identifying product shortcomings and introducing improvements in the product offering.

Conclusion

Staying relevant in the market and maintaining a competitive advantage can be challenging in a rapidly changing business environment. A customer-centric approach and targeted marketing activities would be essential in differentiating you from your competitors. 

Every business, irrespective of how big or small it is, needs to be in tune with the expectations of the market to survive the implications of today’s rapidly changing business environment. Therefore, a customer-centric approach and targeted marketing strategy need to be developed to exploit the opportunities presented by the market.

With an extensive experience of serving over 100 clients across numerous industries, we continue to help businesses transform into successful ventures.

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How Should A Director Board Operate?

Situation of Directors and Board of Directors

Many small and medium businesses that are registered as a Private Limited Company or Public Limited Company have Directors who are not functioning effectively or productively in Kerala.

Many companies see it as a statutory formality and hence do not take it seriously from a management point of view. Many give directorship positions to shareholders who invested a specific amount in the company, without considering what “value” they can add to the business. These directors may or may not be involved in the management or leading the firm. Some even give directorship to all its shareholders!

So when the very purpose of the Board is neglected or misunderstood, it is obvious that the Board of Directors won’t be adding a good value to the business. 

AASC can play a key role in professionalizing boards of companies

aascglobal.com

The real role of a Director Board

Ideally, the Board of Directors will have a Chairman, the Directors and a Managing Director.

The role of the Directors is to lead the company, not essentially managing it. The management is done by the CEO, and may be under the direct leadership of the Managing Director.

The role of the Board of Directors can be briefly listed as,

  1. Ensuring legal compliance 
  2. Ensuring the company and its management does not do anything that harms the shareholder interest
  3. Planning and monitoring the growth of the company
  4. Ensuring the company is operating as per its vision and mission. Creation of the vision.
  5. Assisting the management in problems that they find it difficult to solve. This requires technical knowledge and expertise from the director’s side.
  6. Designing or Approving Organization Structures, Systems, Policies, etc. Either the board has to do it, or engage consultants to do it, and then approve it
  7. Recruitment of senior employees (who will be recruiting the rest of the team). This includes the creation of the organization hierarchy, job descriptions, remuneration packages, and work culture principles.  Either the board does it, or appoints a consultant to do it, and finalize the selection. 
  8. Approve important financial transactions be it related to investment, buying of assets, or creation of liabilities, that the company management suggests
  9. Approve suggestions of the management with regards to the creation of reserves or payment of dividends
  10. The Board has to engage external agencies and consultants, to audit not just the financial performance of the business, but also do management audits to ensure that management is managing the business well. It will involve doing studies and surveys on employees (for employee satisfaction) and customers (for customer satisfaction). This will empower the Board with data, beyond the information provided by the Management

So as you can see, the role of the directors is not to do daily operations. But to be the guiding and monitoring force. It is part of the process of separating management from ownership.

What is wrong with our Director Boards?

But unfortunately, instead of the above-mentioned roles, most small and medium companies have managers who are given the title of directors, because they are also shareholders of the company.

This means the real function of the leading and direction does not happen. This is not an issue if the company does not have shareholders beyond the directors working as managers. 

But in companies, where there are several shareholders, this system can mean a lack of accountability and be a cause of direction loss. 

How Management Consultants Can Assist the Board of Directors?

 

Sometimes, the board of directors will require the assistance of external consultants (like AASC). Some of these situations can be,

  1. When the board of directors has an important decision to take and needs an external expert to give an opinion on the topic. This expert opinion is very useful to convince the shareholders
  2. When there is a crisis between the Board Members and important decisions are not possible, external consultants can help in resolving the matter 
  3. As part of reviewing the performance of the management in terms of management, employee satisfaction, and customer satisfaction, the board of directors can employ management consultants  to do the review and submit reports on the same  
  4. If it’s a new venture, the Board of Directors can engage business consultants to prepare the detailed strategy plan or detailed project report with feasibility studies and organization structuring

If you have any points, experiences to add, or if you don’t agree to the post, please comment below. 

Explore how AASC can help transform your business. Call now +91-7558-900-800

AASC is a Business Strategy & Management Consulting (aascglobal.com) firm that serves Promoters to study, plan and set up new ventures, and Entrepreneurs to manage and grow their business, in a professional manner. 

To know more about AASC services for new ventures, please visit https://aascglobal.com/consulting-for-new-ventures-and-startups/

To know more about AASC services for businesses, please visit https://aascglobal.com/consulting-for-business-growth-and-expansion/

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Who Should Be In Your Board of Directors?

There is a general tendency among entrepreneurs to include those who invest ‘the most’ as directors. While this might look logical, it has many dangers for both the business and the shareholder himself. 

It has been found that, becoming the Director of a business, is seen as a special attraction to most investors. In fact, it is so popular that entrepreneurs promote it during their capital raising campaigns. But this is not a good method for businesses that have long-term plans and vision.

So what are the reasons why it’s a bad idea to have Directors who are there by virtue of the amount they invested?

  1. Directors are the people to lead the business to achieve its goals and vision. This requires good leadership skills, exposure, and vision. These qualities may not necessarily exist in the person who invests the highest. So having him on the board is not going to help. Instead, there are chances of his interference negatively affecting the business
  2. Directors are the people who should guide the business during bad times. They should have the maturity and capacity to guide the company’s top and middle management, to come out of the storm. On the other hand, a shareholder may not  necessarily possess these skills and knowledge and may not be able to contribute, or his contribution can have a negative impact
  3. Directors are part of the vision. And visions demand focusing on not just profitability or Return on Investment. It might involve investing in long-term assets, or low-income investments, or diversion of company profits to new expansions, or a substantial investment into branding, etc. But an investor need not always share that kind of vision. They are mostly in, to get a good return now, or a faster ROI. Hence, if they are on the board, they won’t be supporting such moves, hindering the progress of the company towards its goals
  4. Inability to take tactical or strategic decisions. As the saying goes, “Empty Kettle Rattles More”, investors who are on the board, whose only qualification is the investment they made, can make brainstorming a major headache as they come with suggestions and objections that are not qualified
  5. Some companies make the mistake of making every single investor a Director. Thereby having a ‘huge’ Director Board.  Most often these board members are not active. What is the use of having such a big board? It’s quite childish and should be avoided
  6. Some companies have NRI investors as Board members. Unless the investor has significant value to add it’s better to avoid such placements. As at times, when all directors have to sign certain legal compliance documents, it becomes a pain

It’s not just for the company, even investors should be careful before becoming a director. 

  1. “Sleeping Directors” or directors who are not really active in the company, and are just Directors for the “prestige” matter, should be careful. If the company does anything illegal, they can also get into trouble
  2. If the company has many directors, most of whom are outside the country, know that the company can have issues in smooth operations. Would an investor want to be in a company that will be having such issues?
  3. A company with several unqualified directors means that the company is not professional, does not have a vision, and is not going to last long or win big. A celebrity director does not qualify as a capable director. 

So ideally, when businesses are looking forward to new investments, they should not offer Directorship as an offer to investors. Instead, Directors should be handpicked from among the shareholders, who can really add value in the Board Meetings. Such capable people can be invited to be shareholders of the company. In fact, it always helps, if such people are made shareholders and directors first so that using their profile they can canvas the rest of the shareholders. 

Investors should opt to become a director, only if they feel safe and that they can offer real value in terms of ideas, management, and leadership to the company. Else it’s better to be safe as a shareholder. 

Investors can also form investment companies, and these investment companies can invest in other companies. In such situations, the Investment company’s representatives (who should be qualified) can also be board members of the companies in which they invest.

Action

So is your company having a strong Board? If not, it’s time to repair it. Because the first cause of business not growing can be a weak Board. “Repairing” the Board will involve reshuffling the Board, drafting new agreements and Corporate Governance, etc. 

It can be a sensitive matter. And has to be handled with care. It is a good idea to engage professional Management Consultants, to ensure no ego issues develop between Directors. And that the new change is in the right direction. At AASC we provide this service. 

If you have any points, experiences to add, or if you don’t agree to the post, please comment below. 

AASC is a Business Strategy & Management Consulting (aascglobal.com) firm that serves Promoters to study, plan and set up new ventures, and Entrepreneurs to manage and grow their business, in a professional manner. 

To know more about AASC services for new ventures, please visit https://aascglobal.com/consulting-for-new-ventures-and-startups/

To know more about AASC services for businesses, please visit https://aascglobal.com/consulting-for-business-growth-and-expansion/

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Location Does Matter

One of the biggest mistakes that promoters make, is falling in love with a business idea and believe that the idea will succeed no matter where it’s based.

Many a time, entrepreneurs start businesses they “think” people want, and get so hyped up about it. So much so that, if they didn’t get the right place, they start anywhere available, believing that customers will come to them. And that might not actually happen. The business fails.

Promoters spend a lot of time, sometimes even years, trying to find that one big idea that will click. A business idea is an opportunity that has potential in a market. But having a ‘Eureka’ moment is not enough to jump-start it as a business. 

For a good business idea to win, it has to satisfy several criteria. In this post, the ‘Location’ is our topic.

What is the point of starting a business where there are no target customers? That is why, when it comes to location, the right market has to be selected. So what is a market? It can be a village, a city, a district, a region or a state, or even a country or several countries. But it needs to have the target customer segment in it.

Once the market is selected, comes the second step. The exact location of serving the clients. This is specifically important where customers or clients have to physically visit the premises. 

The location in the market is crucial. It has to be located where it’s closest to the target customer and is easily accessible and visible to them. That is the reason why shops that are based in the right street but the wrong building fails. Or based in the right building but the wrong floor fails. Or based on the right floor but the wrong area fails. Or based in the right street but wrong visibility fails. It’s a very important matter and it’s a shame when a great business idea fails just because the location was not right.

So why do entrepreneurs make this mistake when it sounds like common sense? Several factors can play here.

One reason is the non-availability of space in the ideal location. In which case, we as Management Consultants would advise not to start now and wait for the right location to come up, or move into another market where the right space is available.

The second reason is the high rental of the properties in the right location. This is a tough reality and one has to be careful here. When faced with such a situation, the entrepreneur has to evaluate how much rent is viable for the business. This might be complicated for most entrepreneurs. In such cases, it’s ideal to engage management consultants or management consulting firms (like AASC) to do a detailed analysis on the financial viability of the location, and check if that rent is viable. Sometimes, a location that has high rent can still be a profitable option.

The third reason can be impatience to do a proper study. Promoters or entrepreneurs can fall in love with an idea, that they simply want to start ASAP. They get hold of the first property and launch the business there. And as the days pass by and they witness lower footfalls, they realize that the location or the building or the floor is not ideal for their customers. Here we as management consultants, always ask our clients to take it easy and do a proper study. In fact, a typical study at AASC takes about 2-3 months to complete. With the market study taking about 30 to 45 days. With such a detailed study, the pros and cons are evaluated before making a final verdict of not just the location but the business itself. 

The fourth reason can be overconfidence. The illusioned belief that the product or service that the entrepreneur intends to provide to the customer is so much in demand, or the price is so attractive or the quality is so high that the customer will seek them, no matter where they are. In most cases, it does not work. And the business goes belly. But in some rare cases, it can work- for some time. This is when the customers really do need it and they take the pain of reaching you despite the trouble or the inconvenience. But the moment a competitor starts the same business in a more ideal location, all the customers will move to him. Why? Customers are not loyal to any shop or brand, they are loyal to those who provide them what they want, when they want, where they want it, and in the way they want it.

Conclusion:

Don’t kill a beautiful business idea by starting it in the wrong place. This is applicable not just to retail outlets, it’s applicable to any business be it manufacturing, hospitality, service, or education. Even online businesses, have to be careful of the locations they choose. And another place to watch out for is the location in Search Engines, as customers use it to search for businesses. If it’s not on the first page, it’s not in a good location online.

It’s always recommended to start a business after a proper study. Do good market research, select the right business model, design the right management plans and systems and assess its financial feasibility. And since entrepreneurs might get emotionally inclined towards their business idea, and because in most cases promoters are not trained to do these works professionally… it’s better to engage professional management consultants like AASC (aascglobal.com)

So location does matter.

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The Different Generations in Market & Why They Buy

It is a wrong strategy to sell everything to everybody. Our products and services have to be customized to the needs of specific customer segments. Each customer segment has different needs, different pains, different jobs that need to be done, and different aspirations.

They are NOT SAME, hence what they need is NOT SAME.

So what happens when you sell the same to all customer segments? They will buy from you as long as they don’t have an option. And switch to a competitor the moment the competitor arrives with customized service or products. That’s the story of “successful” businesses having sudden death.

A study by McKinsey found some interesting insights about what drives consumption among each generation. And it’s worth knowing.

Consumption is viewed differently by each generation. For example, Generation Baby Boomers (born between 1940-59, those aged now at 60 to 79) viewed consumption as an expression of ideology (influenced by the global political turmoil of those times).

Generation X (born between 1960-79, aged now between 40 to 59), views consumption as a symbol of status.

While Generation Y or more popularly known as Millennials (born between 1980-94, now aged between 25 to 39), views consumption as an experience.

The youngest generation, Gen Z (born after 1995, that is aged below 25), views consumption as a search for truth. Their search for authenticity generates greater freedom of expression and greater openness to understanding different kinds of people and views.

So What Does It Mean To Your Business?

As an entrepreneur, you need to know who your customer should be. Which generation they belong to. And what prompts them to like your business and why they will buy from you.

Avoid targeting everybody. It doesn’t work long-term.

Now you know why they buy. Customize your business accordingly. The drive ahead is profitable but never easy.

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Transforming Outdated Schools

“We Have To Teach Our Kids Something Unique…” Jack Ma, Former Executive Chairman of Alibaba Group

This quote is the trigger for today’s post.

As the world progresses by leaps into work getting done more cheaper, faster, and efficient- human jobs are at stake. It’s a reality. It’s time for humans, societies, cultures, and organizations to evolve to survive.

It begins with what we teach our kids. Our schooling system is so outdated, one wonders who prepares its syllabuses.

School management and parents have to move from the comfort zone of standardized learning to the new age of individualized learning.

So how do we teach our kids, what machines can’t do? We teach them to be “more human”. But what does that mean?

We teach them values, so that they never create or use machines, Ai and robotics to destroy peace, instead use them to create a sustainable peaceful world.

We teach them independent thinking so that they become creative in innovations, discoveries and become masters of the very technology that can otherwise be used to enslave them. Present schooling does not promote independent thinking- it’s only what’s in the textbooks.

We teach them cooperation and teamwork so that they love and believe in each other. Help and support each other. Remove the present mark-based mindset, where one has to beat down the other to get to the next level or is measured in comparison to others. Where a lion is compared to a dolphin, while their skills are different.

We teach them leadership and the ability to take responsibility. Characters that are fast disappearing in the pleasure-seeking, me-me, materialistic generation. Students should be not just taught but trained, to take up responsibility, be accountable, be able to motivate others, take the lead, walk the talk. Be men and women of their words.

We teach them to care for others. That care is what is going to help the world and inhabitants, be at peace with each other.

We teach them the knowledge that is needed for life rather than in-depth science, physics, maths, and geography that is not needed for the vast majority who might not seek those streams. Instead, teach them young, topics such as basic finance & investment management(everyone needs it in life to manage personal finances, personal investments), economics (everyone needs to know how the economy functions), basic law (everybody is bound by it), political science (that’s what governs them). These are more important topics as they affect everyone. Only those seeking careers in biology, physics, mathematics, geography, and other conventional topics need to go in-depth to them. For these special clubs in schools can be formed. So interested students can go much deeper than their peers, based on their capacity. For the rest who are not seeking such careers, they don’t need to be tortured to study them.

We teach them how to be healthy and avoid lifestyle diseases. It is funny that we don’t teach our kids what to eat and what not to. It shortens their life. That’s not in the syllabus. We should have in curriculum topics such as food habits, what to eat and what not to, sleeping habits, exercising, natural herbs, organic home farming, natural therapies, first aid procedures. This not only makes them capable of making and eating right, doing right exercises, curing themselves with natural herbs (avoiding side effect medication), and being capable of rescuing life’s in danger; but also have a profound effect on the businesses around them. Junk foods providers will disappear, harmful nightlife businesses will disappear, the illegal drugs/ prostitution industry will disappear, the healthcare industry will be more ethical and responsible. These changes will not be driven not by law, but by enlightened people.

We teach them the value of family and relationships. It’s a topic that should not get restricted to a chapter. It should be a subject that will be studied from kindergarten to post-graduation. Because relationships are the foundation of human civilization. We should teach kids how to understand their parents, grandparents, siblings, relatives, and neighbors & how to behave with them in various situations. Kids today, do not really know it. We should teach how husband and wife should understand each other and behave with each other (it’s not something that can be achieved with a few hours of pre-marriage counseling). This reduces divorces, broken homes, domestic violence, wrong relationships, etc.

We should teach how parents understand and behave with their children. This opens up strong bonding. This prevents kids from drugs, depressions, suicidal tendencies. All these need to be learned when they are in their schools and colleges.

We should teach them about all religions in-depth. This helps understand every religion better and have a deep-rooted understanding that ultimately all religions are about peaceful co-existence and it’s evil people who divide people on religions.

We should teach them empathy and sympathy. It goes a long way.

Visualize a world where this is what people learn and do. Feel the peace and happiness. This is what we need to teach. The present syllabus has failed to create a good world. We witnessed all the world wars, civil wars, unethical corporations, corruption, exploitation- all by people who spend most of their childhood learning stuff that never was useful in their real life and decisions they took.

In these schools, it will be less of books and theory. More of exploration, activity, and doing. And the traditional marking and grading system? It will be in the dustbin- where it rightly belongs.

This should be the vision and strategy for schools, educational institutions, education boards/organizations, and education ministries.

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Asia is a Great Market: To Explore, To Expand & To Invest

As our entrepreneur’s businesses come under heat of recession and slow down, it’s time to explore unexplored new markets for expansion, diversification and investment. Geographic expansion is the buzz word that needs to be seriously considered by entrepreneurs who want to be relevant in the market place. Complacency in this matter, could mean falling out of the market in few years.

As NRI entrepreneurs, begin to explore African market, with all its hidden exoticness; there is yet another market that is more relevant. The growing Asian giant economy. It’s huge, its growing and it’s becoming less globally integrated and more regionally integrated. And this opens up many opportunities.

Asia is Big & Growing

Just to understand how big the Asian economy is, we can explore some numbers from the paper published by McKinsey Global Institute. For instance, the GDP of Asia has grown from 32% to 42% within a period of 2000 to 2017. And it is expected to reach 52% by 2040. As this happens, it is interesting to note that GDP of Europe, North American has been falling.

Not just that, at consumption level, Asian market is to consume 39% of the total global consumption by 2040. These numbers show immense opportunities not just for production or manufacturing but also for services, R&D and host of other.

That is, Asia is more promising the established present markets. And as entrepreneurs, it is important that we operate in growing opportunities rather than saturated markets.

Shift From “Globalisation” To “Regionalising”

Another positive findings is that, there is a growing shift from globalising (more inclined towards western cultures and products) to “regionalising”. Regionalising is about costumers preferring products and services that pertain to the asian region. Be it new products, services, mobile apps, tourism, food etc. This has resulted in more intra-region trade happening, and this opens up good opportunity for the entrepreneurs in the region.

To understand this better, it’s in interesting to find that 60% of goods traded in Asian countries was within the region itself. This is also the case, in Investments (71%) and FDIs (59%). And interestingly 74% of the travellers travel within the region. And because of this global recessions and crisis, may not affect the Asian economies in a major way.

I wish to make a special note on the tourism part. In Kerala, when it comes to foreign tourists, we see mainly Europeans and the Arabs. Asian tourists are not that common. This means, there is a new shift and boom happening in Asian tourism market that our Kerala tourism is missing out. Hope this write up would be an eye opener to the tourism operators to start marketing Kerala as an opportunity to the Asian market and have a good piece of that growing 71% travellers.

Asia Economy Is Diverse, Yet Similar

Understanding the Asian market is important before making a market entry or investment. Each country has different cultures, different laws, different priorities. And Each country is at a different economic level. McKinsey paper, divides the Asian market in 4;

– Advanced Asia: Countries that constitutes those with highest GDP (UDS 30,000 to USD 60,000), and are highly urbanised, like Australia, Japan, New Zealand, Singapore and South Korea)

China: China is a classification on its own. It is the world’s second largest economy. It acts as the anchor economy for the rest of Asia.

– Emerging Asia: These are diverse countries and economies but are highly connected economies. These includes countries such as Bhutan, Brunei, Cambodia, Indonesia, Laos, Malaysia, Mongolia, Myanmar, Nepal, Philippines, Thailand and Vietnam

– Frontier Asia and India: These are economies that have had historically lower intra-regional integration, and broader range of trading relationships. For example in 2017, Europe, Middle East, Africa and North America accounted for 45% of these economies imports, 66% of the exports, 53% of the FDI inflows, and 53% of the FDI outflows. This classification includes India, Afghanistan, Bangladesh, Fiji, Kazakistan, Kyrgyzstan, Maldives, Pakistan, Sri Lanka, Tajikistan, Turkmenistan and Uzbekistan

Steps to Enter The Asian Market

First, learn about the economic opportunities. It is important to understand that customers in each of these economies will have different tastes and preferences. You will be able to understand that with a single visit to a local supermarket, where perhaps half of the products will be unfamiliar to you or the economy you come from. The best way to start is to visit trade exhibitions in each of these countries. Exhibitions, help you to see what is on offer, who are providing it, and get more information about the economy and the products from the exhibitors.

Second, learn more. Visit each of the countries you wish to consider and walk through the streets, visit shops, and see what is being sold and how it is being sold. This is a great education and can spark many ideas

Third, interact with local business community. The possibility of an Indian association is very high in almost all countries. Visit them and talk to them. Their local knowledge and experience will go a long way. Also visit local chambers of commerce and Govt ministries that promote trade, FDI and economic activities.

Fourth, better to have reliable local partners, who will invest and be part of management. This will help a long in avoiding unnecessary mistakes

Fifth, be culturally relevant to customers. It is not enough to think about Loas market from an Indian perspective. Your product might have good demand and acceptability in India or Middle East, but it may not be on the country that you wish to target. May be, the product is relevant, but it will need to be packaged, branded, marketed and sold in a way that appeals to the local people.

Sixth, be culturally relevant to management. Operating in a foreign country will require having workforce and management that consists of largely local population. It is important to have a management system that appreciates and flows well with their culture. Else the business is bound to have management issues.

Seventh, proper risk analysis has to be done before embarking on a business venture, preferably a detailed PESTLE analysis. It is important to know, what all risks can come up, and also how to mitigate it when it comes up. Usually risk analysis will be done by a local business consulting firm. But there is a risk of the local business consulting firm, not recognising some elements as risk, which can be a risk factor to us, due to cultural issues. Hence it is always ideal to hire two business consulting firms while doing market research or risk analysis in a foreign country- one a local consulting firms that understands the market better, another an Indian consulting firm that understands the client better from a cultural perspective.

Conclusion

Asia is big, growing and attractive market for entrepreneurs and investors. Visionary entrepreneurs have to explore and expand in these markets.

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PEOPLE WHO THINK BIG, SHOULD START IN PHASES

Why Think Big?

As Stephen Covey said, “Start with the end in mind”. Thinking big allows you to think ahead to your ultimate goal, and provide constant motivation and drive to achieve your milestones. And small achievable milestones make your mission a reality; pragmatically speaking.

‘Thinking big’ means being able to dream and visualise what you can achieve on an audacious scale: with no limits on your thinking.

It is about being open-minded, positive, creative and seeing opportunity in the big picture. It allows you to set a grand purpose, a raison d’etre for your business, which would clearly help to think about the various paths to achieve your vision.

And subsequently, achieving Big does not necessarily require starting Big.

Why Start in Phases?

It’s always enticing for Investors to start capital intensive retail businesses with huge fancy stores and designer-clad interiors, all in the hope that customers will be attracted enough to purchase from them. But that expectation falls short when the business realizes that they have not yet established trust, brand image or goodwill. And one would start to realise this challenge whence they see the huge overheads and payables which mounts to a large sum within a year of operations.

Today we live in an age of brand based marketplace, where the idea of brand image and brand associations are ever so important and those who play the brand game very well know how to tap into the psyche, sensitivities and personal priorities of the consumers.

Brand building uses various methods to associate their brand image with the needs of its customers, and thus customers come back for more of their products just because of their brand affinity and status correlation.

Take the example of the clothing brand Supreme, which has an immense cult-like following. With only 11 Brick and Mortar Supreme stores operating worldwide, they currently have a valuation of $1 Billion US dollars. Do you think that they spent an immense amount of capital worldwide to gain such a valuation and customer base?

No.

Supreme started its operations in 1994 with a small store in Manhattan. With their exclusive apparel and accessories for skateboarders, they focused their design and brand to accustom to the needs of skateboarding sub-culture and streetwear.

Their strategies included ‘affordable exclusivity’ and increasing scarcity to create hype. All of these have made Supreme, establish itself among global giants like Vans and Nike who are competing in the same market.

Creating a great sought after brand and establishing goodwill requires patience and carefully planned customer acquisition strategy. And much of the initial capital investment should be utilised strategically. And also by fine-tuning the value proposition based on feedback from its lead users.

Starting small requires less resources and can minimize the risks.

Scaling up should be done in phases with each phase implementing a strategic action. This phased growth strategy provides the firm with substantial time to find shortfalls and mistakes, and thus gaining knowledge to take corrective measures. Gaining steady momentum and scaling up to achieve growth requires one’s own ability to find mistakes and correcting their actions to mitigate future costs and capture larger markets.

Think Big, Start in Phases and Scale-up.