Friday, 4 December 2009

corporate strategy in India

This may be very ambitious, but here it is.

Say you are selling a standalone product. A standalone product can be used by itself using fuel- without the aid of any other product.
Eg; A car is a standalone product. A tire is not (since you need a car to sell the tire!)

I believe, that for standalone products priced at 30$ per unit, a penetration of 30% of India's households is possible. Do the math to calculate the volumes.
If the economy grows at 9%, then at constant prices, 9% more people will enter this market. Pricing innovations (producing the same item for 20USD) will get disproportionate volume growth.

For products cheaper than this, penetration will off course increase- around 0.25 USD per item, 60% product penetration is possible. (Distribution becomes the challenge- how do you reach 60% of India's population?)

There still is 40% (in my opinion) of the population for whom buying a USD 1 product is a luxury to be avoided.

At 3000 USD, the penetration of the product will drop to 4%.

So here it is : In 2009 prices:
Price USD 3000 Penetration: 4%
Price USD 30 Penetration 30%
Price USD 1 Penetration 60%

So where do you want to position yourself?

1 comment:

Buli said...

You have to tell me where is the magic hat you pull these price elasticity figures from! The dream of any consultant!! :)