What is easier for any company?
A. To
conquer 1% of the huge, well established
Market
“Or”
B. To
conquer 100% of a completely new market
The majority of answers would go
in favour of “A”; majority of the already established companies and the soon to
be launched types feel that, it is easy to conquer 1% of the huge-well
established markets. They think this on the basis of different factors clubbed
together. Firstly the expenditure to get into an already available market or
business would be comparatively less when compared to the option B. The risk
involved is also comparatively very minimal.
But the main question is do these
companies which tries and enter an already available market with an already
available product/service do better or the one who gets into the new line of
innovative business?
Take example of Apple; i-Pod to
i- Phone to i –Pads to what not -A complete innovative product portfolio. That’s the company who followed the road less
travelled and made its mark on the world. It is rightly said that there are
three apples which changed the world:
- - One that Eve ate,
- - One that Newton saw Following and
- - One which Steve Jobs Co-Founded
Let us now consider example of
automobile two wheeler manufacturing case in India to check to project that why
it is not easy to get 1% space in already available market and industry.
When Bajaj had launched its
Scooter named Bajaj Chetak; it was a huge success. Following the wind, Lohia
Motors Limited was formed and started producing LML scooters. But what
happened, today we don’t find the company at all.
Same thing happened when bugging
on its success in the American Market, Kellogg entered India to cater to the
needs of Indian citizens with a new variant called “Kellogg Basmati” which
flopped miserably. Even after years of its arrival; Kellogg has not been able
to cater to 1% of total Indian audience. The main problem with Kellogg was
their unpreparedness. They thought that there is a great potential in India for
ready to eat breakfast items after observing the huge demand for the Idlis,
Chapatis and all which cater as the breakfast item to majority of Indians. But
what was wrong with this insight? The answer is that Kellogg forgot to
understand that “Indian unlike Americans likes to start their day with warm
milk or warm food stuff and Kellogg Cornflakes was on contrast a cool milk
based breakfast. If Kellogg has done this study then they should have done
well.
Now let us examine the opposite
of what we were talking about. Samsung has entered an available established
market just like LML and Kellogg’s did but it succeeded. Likely, there were
many new start-ups which created many unique products but failed miserably.
So the crest of the talk is that
it doesn’t really matter whether you enter an already established market with
available product or you try something innovative and create a new market. The
only thing that matters is “Do your Homework Properly before you enter any
market”. Companies have to do a proper research before entering a market or
launching a new product.
Regards,
Rohit Tiwari
Yes, you are absolutely right, before entereing into any Business, a proper Business plan should be made which should include the projection for next 5 years along with various other strategies like exit plan in case if they are not even able to break-even. Not to forget the working capital upto the point where we can actually start earning and making some profits.. :-)
ReplyDeleteHi Lokender.
ReplyDeleteFirstly thank you for taking out time and getting on to my blog. Hope you liked reading.
Yes, you have said it fantastically. A great plan should be designed before getting into the pool of business. But it should also be followed by a great execution part.