Thursday, 4 September 2008

A dosa from McDonald's

For those unfamiliar with South Indian cuisine, a dosa is an Indian crepe!

Ritu and I recently wrote "The State of the West address"; "The State of the Union address" and "Desiging for the bottom of the pyramid". In this note, we are trying to close the loop.

1. India's per capita GDP of USD 1000 must grow at 9-10% for the next 25 years for the average Indian to enjoy a "western" standard of living. This is his right. Lets focus on making this happen.

2. The West cannot understand 9% GDP growth. No one in the working class has ever lived through 9% growth. From current literature, we gather that the long term projected growth rates for India and China are 6%. We challenge this. And ask whether western think tanks are trying to rationalise growth to bring it in line with their beliefs? 6% growth will continue to continue to leave almost 2 billion people in close to poverty conditions for another 25 years.

3. If you look at the average Indian, he lacks so many "day to day" products, that delivering 10% GDP growth should not be a problem. Whitegoods/ housing/ medical facilities/ name it and the penetration in India would be less than 10%. So why should high GDP growth be a problem? The Indian consumer sees, through the TV, products available around the world. And would like to access these products at reachable price points. (Think a Nokia phone at USD 30 with built in features such as a radio and a torchlight, which are relevant to the rural masses at the bottom of the pyramid).

4. Designing products for the Indian mass (at the bottom of the pyramid) requires not stripping away cost from western concepts, but adding value to current consumer practices. Western strength in R&D must be used to build products and services from the base-up.

5. This brings us to "a dosa from Mcdonald's". Why has a chain like Mcdonald's not gone much further than "Indianising" thier burgers? (Mcdonald's does not make beef burgers in India, but uses chicken. To cater to the vegetarian taste, McDonald's prepares various vegetarian options). Why has McDonlad's not developed a "parantha" (similar to a pancake) for the North Indian consumer, or a dosa for the South Indian consumer. Why has Levi's not gone further and developed Indian outfits....kurtas/ a means of tapping into consumers at he base of the pyramid.

10% GDP growth in India should not be dependent on whether Infosys sees its IT business grwoing or not.

Growth is possible as long as companies are willing to get their hands dirty in the Indian market and develop products based on the usage and habits of Indian consumers.
There are too many things an Indian consumer lacks today for us to believe that growth should be anything less than 10% on average for the next 2 decades.

Lets start to believe.

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