The Rs 5,000 PC (5KPC) is the anchor for taking computing to the next 500 million users. These are markets which are as yet invisible. The technology vendors have not tapped these users in the past two decades, because, among other things, the price-points have been too high. The existing value chain created by the likes of Intel and Microsoft is not geared to tap these next users and make a profit. Whether they will do so in the future is a matter of conjecture. But what this does do is open up an opportunity for the creating of a new value chain, a new ecosystem built around the 5KPC.
Which are these markets? Think of the worlds emerging markets countries like India, China, Brazil, Mexico, Russia. Then think of the schools and colleges, the government offices, the small- and medium-enterprises, the BFSI (banking, financial services and insurance) sector branches, the homes, and the telecentres in these countries. These are what constitute the bottom of the pyramid. The limited adoption of technology has hampered their integration into the worlds economic system. This is where access to computing can make a big difference by making them more productive, their work and businesses more efficient, the children and students smarter and much more aware of the wide world outside. In essence, computing can be the passport to a better quality of life in the coming years for these nonconsumers.
These markets are what Vijay Mahajan, Marcos V. Pratini De Moraes and Jerry Wind call the Invisible Global Markets. They state that developed markets with a GDP of more than USD 10,000 constitute only 14% of the worlds population. Companies focusing on these markets do not see the other 86%. Among the strategies that they outline in their paper (Marketing Management, Winter 2000) are:
1. Build products to compete against bullock carts rather than automobiles
2. Create product and service revolutions that can be exported
3. Pay attention to the informal economy
4. Use global family networks
5. Understand that customers dont know how to be customers
6. Recognise that low income doesnt mean low quality expectations
7. Use demand pooling to reach critical mass
8. Bring your own infrastructure
9. Rethink the entire marketing and business strategy
10. Bridge the digital divide
(The most recent issue of The Smart Manager has an adapted version of the same set of ideas by Vijay Mahajan.)
In tomorrows column, well take a look at each of these ten ideas and apply them in our context to see what we can learn. And we can contemplate how to target this next (or rest) 86% of the world, it would be useful to keep the following comments by the authors in mind:
Customers in these invisible markets stretch out like countless grains of sand on the beach. Individually, they may represent a very small opportunity. Because of their sheer number, however, this forgottem 86% of the world represents a huge opportunity. Companies that see these opportunities will find creative ways to gather these grains together to build castles.
You cannot wait for these customers to appear on your radar screen. You have to go and find them. You need to move off the beaten path both in the products you develop and the creative strategies you use to turn these invisible markets into visible returns.
Tomorrow: 10 Ideas to Tap Invisible Markets
TECH TALK The Rs 5,000 PC Ecosystem+T