While consumers across the world are seeing a growing number of “Made in India” labels on the goods they buy, Indian shoppers are witnessing a more subtle change. Increasingly, multinational companies are selling products that are not just made in — but that are made for — India. Entire generations of Indian consumers, who once felt grateful simply for being able to experience the same brands as the rest of the world, are now realizing they can ask for products that cater to their wants and needs. And they stand a good chance of getting what they want. “The willingness of big brands to customize their products was never the issue,” says Harminder Sahni, managing director of Technopak Advisors India, one of the country’s largest management consultancies. “What has changed is that the Indian market has finally reached a critical mass — after the U.S. and China, this is the largest consumer market in the world — that justifies the investment.” That wasn’t always the case. Before the Indian economy opened up in the early 1990s, “imported” goods were a sought-after commodity, their foreignness often being their most desirable attribute. Not surprisingly, then, many multinationals didn’t think success would require much effort when their brands finally entered the country after 1991.Things have changed. As Indian consumers became more aware of trends and advancements in technology, they began to demand similar sophistication. More important, they wanted products built to their needs. That meant not just automobiles, household appliances and consumer electronics, but also mobile phones, foods and apparel. “Earlier, there was a reverence for anything foreign because local products were of terrible quality,” says Abraham Koshy, professor of marketing at the Indian Institute of Management, Ahmedabad (IIMA). “But as the market developed, the focus started shifting from the product to the brand. Customers started patronizing a brand only if the product suited them. So the need arose for companies to adjust their products to customers’ requirements.”It isn’t only about holding on to existing customers. If altering a product’s design or introducing a variant will help a brand reach out to an additional customer group, most companies would think it worth the investment. “Brands that establish their relevance with customers do well,” says Shripad Nadkarni, director of MarketGate Consulting, a Mumbai-based marketing and brand consultancy. The increasing use of third-party sourcing helps further the customization cause; companies can simply take on additional local suppliers who will adapt the products for different markets and customer groups. Of course, localization doesn’t work for all products. Many high-end luxury goods, for instance, rely on their country-of-origin tag to enhance their brand appeal. A “Made in India” label on these products would be disastrous, says Technopak’s Sahni. Koshy adds that products where the unit consumption is low may not justify huge outlays on customization.‘Culturally Sensitive’ FoodVariations in consumption patterns across countries, or even regions within countries, usually reflect historical, climatic, economic and cultural differences. But not all these factors are equally important. In her book Consumer Behavior and Culture, Dutch economist Marieke K. de Mooij asserts that “70% of differences between countries with respect to product ownership and usage can be explained by culture.”Nowhere is that more apparent than in food preferences and habits. Across most of the world, Nestlé’s Maggi is known best as a soups-and-sauces brand. In India, it has become the generic word for instant noodles. The product sold in India, though, bears little resemblance to the ramen of East Asia. It was introduced in 1982 with a masala (spicy) flavoring and, over the next 25 years, Nestlé continued to launch variants that would appeal to local and regional tastes. Of course, they weren’t all equally successful, and the masala variant continues to be Maggi’s best seller. At the other end of the scale, perhaps, is Kellogg India. The breakfast cereal giant has clung to its determination to popularize cold, uncooked breakfasts, even offering corn flakes in ethnic flavors such as mango, honey and saffron. But given Indians’ preference for hot meals, Kellogg’s is finding that the road to success can be a long one. “Some product categories are more conducive to local interpretation. If you don’t honor that, you’re likely to remain on a slow growth curve,” MarketGate’s Nadkarni says. “Food is perhaps the most culturally sensitive category.”The international fast food chains appear to understand the need for product customization particularly well. A significant number of Indians are vegetarian by choice or for religious reasons, and strict taboos remain on the mingling of vegetarian and non-vegetarian foods in the same kitchen or on the same table. McDonald’s took note of that as far back as 1990, when it began establishing local supplier partners, six years before it opened its first restaurant in India. Working on its first no-beef, no-pork menu, the company ensured that suppliers respected the beliefs of its future customers. Vegetarian products are prepared with dedicated equipment and utensils and, in some cases, by a separate workforce. All food is cooked in vegetable oil, and the mayonnaise and other sauces do not contain egg (considered a non-vegetarian food). “We understand Indian culture because we were born in it,” says Vikram Bakshi, managing director and joint venture partner, McDonald’s India (North and East). “Physical separation of vegetarian and non-vegetarian products is maintained right from the farm to the customer.” The Indian operations may have required extra effort, but McDonald’s executives say the dedication to local cultures is not new for the company: In the last 50 years, the chain has opened more than 30,000 restaurants in 120 countries (155 in India), adapting its menu and operations to complement existing eating-out options. While the iconic all-beef Big Mac has been replaced by the mutton and chicken Maharaja Mac in India, a kosher variant in Israel is served minus the cheese. In China, McDonald’s introduced red bean pies, while Norwegian restaurants offer the salmon McLaks burger. Of course, it helps to have local partners in these markets; about 70% of the chain’s restaurants are owned and operated by local entrepreneurs. “Local owners understand what their customers want and, perhaps more important, what is acceptable within local customs and values,” Bakshi says.Some learn that the hard way. When Yum Restaurants India opened the first Kentucky Fried Chicken (KFC) outlet in Bangalore in the mid-1990s, locals protested about the brand’s multinational origins. As the ensuing months proved, it wasn’t only KFC’s parentage that was too foreign; the chicken wings and wraps it offered were too alien for Indian taste buds. In just a few years, Yum closed all its KFC restaurants in India, and did not relaunch the brand until 2004. This time, though, the company was more market-savvy. It introduced a vegetarian menu that included rice meals, wraps and side dishes — the most extensive meat-free menu across the chain’s worldwide operations — and, like McDonald’s, stuck to eggless mayonnaise and sauces. Even its trademark chicken dishes were given a local flavor with the use of Indian spices and cooking techniques.“KFC’s strength is our brand-standard products,” says Unnat Varma, marketing director of KFC India. “We work around that core and give consumers products with familiar tastes.” That is in keeping with an independent study in 2001 by Technopak (then called KSA Technopak), which revealed that 70% of Indians preferred traditional foods and flavors over “Western” foods. The company’s new, balanced strategy appears to be working: In four years, KFC has increased its presence in India to 34 outlets, and plans to cross the 100-outlet mark in the next two years. “The vegetarian offerings have made the brand more relevant to a larger section of consumers,” says Varma, “and that is necessary for KFC’s growth.”In contrast to the KFC experience, Yum Foods’ other Indian operation, Pizza Hut, played its cards well right from the start. Within three years of its 1996 launch, Pizza Hut opened its first vegetarian restaurant in Ahmedabad, Gujarat, a state with a large Jain population. Not only did the outlet serve no meat, it also offered a selection of Jain toppings. (The Jain religion proscribes all meat and root vegetables, including ginger, garlic, onion and potato). There are now three all-vegetarian restaurants in India, the only such Pizza Hut outlets in the world. There are other signs of “Indianization”: Three years ago, Pizza Hut launched the “Great Indian Treat” product range, its first completely localized menu. Even now, the menu includes a mix of Indian and international ingredients and tastes. Says Anup Jain, director of marketing for Pizza Hut India: “We customize our international flavors to suit local preferences, and 20% of our overall menu is localized. World over, the toppings at Pizza Hut are mainly beef and pepperoni.” But in India, where up to 60% of the people are estimated to be vegetarian, “we have more variety in vegetarian toppings.”Practical Considerations IIMA’s Koshy points out that some product localization is the result of requirements that cannot be wished away — for instance, the need for right-hand-drive cars in India, or electronic equipment that operates at 220 volts. Physical conditions also matter a great deal. The Nokia 1100 is a case in point. Launched in 2003 as an entry-level mobile handset, the 1100 is designed especially for emerging markets such as India, and is the outcome of detailed studies of users and market conditions. The findings? Users in these markets placed a premium on ease of use and durability. A no-frills phone was acceptable as long as it provided necessary services such as text messaging and an alarm clock at an affordable price. The perfect handset would also be hardy enough to withstand India’s heat, dust and humidity, and would have a battery that could cope with uncertain recharging schedules, given the erratic power supply.Accordingly, the 1100 has a dust-free keypad and an anti-slip grip. It also has an alarm clock and a built-in flashlight that can be activated by pressing a single key. It was priced at less than $116, bringing it within reach of consumers from even lower-income groups. Not surprisingly, the 1100 is not just the world’s best-selling cellular phone model, but also the best-selling consumer electronics device, having sold some 200 million units since 2003.The 1100 is not the first example of Nokia’s product localization in India. The Finnish company started much earlier with a special edition of its 5110 model. Launched on August 15, 1998, the 5110 celebrated the 51st anniversary of Indian independence with a patriotic ring tone, adapted by the composer and sitar player Ravi Shankar. The next year, Nokia included Bollywood hit songs as ring tones in several handset models and introduced the 3210, which offered a user interface in local languages. Text messaging in Hindi followed soon.Other mobile handset manufacturers have been offering Indianized models as well. Bollywood themes and regional language text messaging remain the most popular tweaks, but other interesting modifications have been made. For instance, LG launched cricket-based games in some models a few years ago, while Samsung’s latest phones are loaded with a traditional Indian calendar. A new series of Sony Ericsson phones include dedicated radio speakers and have AM radio capabilities, a first for the Indian market.Mobile phones aside, the most common examples of product localization in India are consumer appliances. And, like the 1100, they are mostly the result of market abnormalities. The biggest barriers to increasing washing machine sales in India are the frequent power outages and the uncertain water supply. Whirlpool India kept that in mind and launched a series of semi-automatic washing machines that require less water and fully automatic machines that restart automatically after a power failure. Market leaders LG and Samsung include similar appliances in their India portfolios. Other region-specific products include refrigerators that keep food cold for four to five hours without electricity.Of course, not all modifications are the result of poor Indian infrastructure. Regional preferences also play a role. LG Electronics India managing director Moon B. Shin says the Korean company’s approach to product customization is one not just of localization, but of “micro-localization.” Intensive customer research and feedback determine the kind of adaptations to be made to products — the color of refrigerators, for instance. The generous use of oil and strong spices such as turmeric in Punjabi cooking can stain pastel-colored appliances, which is why more intense shades do particularly well in that market.Increasingly, the choice of accessories, too, is decided by local requirements. In South India, for instance, most microwave oven starter kits include an idli mold for making the steamed rice dumpling popular in the region. In northern markets, the mold may be replaced by a plate to heat kulcha, a traditional flat bread. “Product customization has to be considered in the social context as well as the physical requirement,” IIMA’s Koshy points out. “Tastes and habits are very individualistic.”Made for India, and OthersCustomizing products for one market doesn’t restrict their appeal. On the contrary, many products designed for the Indian consumer could well find takers outside the country, especially in the subcontinent and West Asia. McDonald’s, for instance, has already realized the potential of exporting its Indian offerings. Since 2004, the company has been exporting McAloo Tikki burgers, Pizza McPuff and Veg Surprise — products developed especially for India — to West Asia. Consumer electronics company Philips India, too, is benefiting from Indianization experiments. In 2007, the company introduced an intelligent water purifier, which works on ultraviolet light technology — a product created especially for India. It is now being exported to Eastern Europe, Thailand, Turkey and Brazil. Similarly, a food processor that generates less noise is finding takers in Sri Lanka and West Asia; another model being test marketed, which allows hands-free operation, may find export markets as well.Tupperware India started operations in India with products selected from its existing international portfolio. Within a few years, though, it had begun modifying products to appeal to Indian consumers and soon began designing specifically for the local market. The spice box is a classic example. Using existing modular containers, Tupperware created an ergonomically sound, rectangular spice box. It was a neat, space-saving design — and it bombed. The traditional spice box in India is made of metal and is round, with round containers inside. Feedback from the sales force revealed that consumers would accept a plastic alternative, but not an altered shape. Tupperware now sells a round version designed and manufactured in India.Even the serving spoons in India are custom-made, points out Anshu Bagai, head of marketing for Tupperware India. “The shapes are very different from what is sold in other markets,” he says. “Indians have specific designs for serving rice, gravies and dry dishes.”Tupperware India hasn’t just introduced new products in India, it has also added new materials. Typically, the company manufactures containers in polypropylene, a cloudy plastic. Given Indian consumer preferences, it has now introduced dinner sets in melamine and upgraded its factory to manufacture polycarbonate, a clear plastic. “Every market is different, but we find customization has to be of a higher degree in India,” Bagai says. “The market size should justify investing in product localization,” Technopak’s Sahni says. “Product customization is the result of a definite consumer need that has to be served without sacrificing profitability. And consumers will always want something different. There is no such Related Items
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