Jobless Growth in India

Economist’s survey of India points out:

Nasscom’s forecast for 2008 is that the IT industry will directly employ 2 million people, up from about 770,000 now, and create another 2 mn jobs indirectly. 2 mn jobs are no more than a drop in India’s 470 mn labor pool, joined each year by more than 9 mn new entrants.

In China, economic reform and growth led to millions of people leaving the land to work in factories. In India, growth has been largely jobless. Industry has become more competitive and productive, but without taking on huge numbers of people. Most Indians work on the land, or what is euphemistically called ‘the unorganized service sector’.

Dragon Powers Rising Sun
BusinessWeek (Mar 1, 04) describes how China’s strong growth is helping to power Japan’s turnaround:

• Trade: Exports to China helped boost Japan’s current account surplus by 11% in 2003, to $150 billion


• Inflation: Chinese demand for steel and raw materials has pushed up producer prices for the first time since 2000


• Industrial Production: Grew by 3.6% last quarter due in part to China-bound exports of machinery


• Investment: Thanks to China-fueled growth, foreigners last year poured $77 bn into Japanese stocks, the highest levels since 1981.

Permalink, (0) comments

 

CROSSING THE CHASM

This book by Geoffrey Moore is an interesting read on how high tech companies should channel their marketing efforts to cross the ‘chasm’ that divides main-stream markets from initial niche markets dominated by technology enthusiasts and visionaries. The author cites ample examples to clarify his analysis – case studies of past as well as present pre-chasm companies. Currently working for a pre-chasm company, this book has been a very insightful read to me. Many of the ideas may appear common-sensical yet their coherent and comprehensive coverage makes this book a great reference.

A few interesting excerpts:

Markets are always Self-Referencing
Markets (or market segments) are a set of actual or potential customers for a given set of products or services who have a common set of needs or wants and who reference each other when making a buying decision.
If two people buy the same product for the same reason but have no way they could reference each other, then they are not part of the same market.

Whole Product Concept
There is a gap between the marketing promise made to the customer – the compelling value proposition – and the ability of the shipped product to fulfill that promise. For that gap to be overcome, the product must be augmented by a variety of services and ancillary products to become the whole product.
The model identifies four different perceptions of product:

• Generic product: shipped in the box and covered by the purchasing contract


• Expected product: product the consumer thought she was buying when she bought the generic product. It is the minimum configuration of products and services necessary to have any chance of achieving the buying objective. For e.g., most people expect to get a monitor too when buying a PC.


• Augmented product: to provide maximum chance of achieving the buying objective. For e.g. software, printer, support, training etc. in case of a PC.


• Potential product: represents the product’s room for growth as more and more ancillary products come on the market and as customer-specific enhancements to the system are made.

Market Alternative and Product Alternative
It is the market-centric value system – supplemented (but not superceded) by the product-centric one – that must be the basis for the value profile of the target customer when crossing the chasm.

This involves using two competitors as beacons so that the market can locate your company’s unique value proposition.

• Market Alternative: a company that the target customer has been buying from for years. The problem that they address is the one we will address, and the budget that is allocated to them represents the money that we as a new entrant are going to preempt.


• Product Alternative: A company that has also harnessed a discontinuous innovation – not necessarily the same one we have – and is positioning itself like us as a technology leader. Our intent here is to acknowledge their technology but to differentiate from them by virtue of our own niche market focus.

Market alternative calls put budget whereas product alternative calls out differentiation. An example is VerticalNet that positioned itself as an AOL for specialized vertical niches. The market alternative in their case is trade magazine and product alternative is AOL.

Elevator Pitch
Can you explain your product in the time it takes to ride up in an elevator? Here is a formula (fill in the blanks):

• For (target customers)


• Who are dissatisfied with (the current market alternative)


• Our product is a (a new product category)


• That provides (key problem-solving capability).


• Unlike (the product alternative)


• We have assembled (key whole product features)

Hockey Stick vs. Staircase
Most business plans for high tech ventures predict a ‘hockey stick’ graph of revenue attainment – no revenue development for some period, after which there is a sharp inflection in the curve and rapid, continuous revenue growth.

But the revenue development looks more like a staircase. There is an initial period of rapid revenue growth, followed by a period of slow to no growth (the chasm period), followed by a second phase of rapid growth, representing return on one’s initial mainstream market development. This staircase can continue indefinitely.

Permalink, (0) comments