Understanding Chinese Consumers

Good article on China’s consumer’s environment.

RFID – Changing The Way We Live

Radio Frequency Identification (or RFID) uses radio-frequency electromagnetic fields to transfer data from a tag attached to an object for the purposes of automatic identification and tracking. Potential is tremendous with large number of usages in various areas raging from omni-channel retailing to healthcare. Let see table stakes it aims to offer in both the areas.

a) Omni-channel marketing:

An approach to track down customers through mobile internet devices, computers, television, and other similar platforms. To make it clear, suppose you like to buy a latest iphone. Today, you can either buy it online or from any nearby outlet. Keep in mind, there may be many retailers/wholesalers, available to you but you can’t just place your order with one and buy from another as each of them have their own separate inventory. But in coming years, you’ll be able to achieve that. Plus, you would get real-time updates including customer reviews, products cost and availability. Without any doubt, it provides a new supply chain and inventory management system.

But how BIG is the market to convert it into a profitable business?

* Mobile internet users by 2015 in Asia – 1.5 Billion  (India: 300 Million, China: 700 Million).
* Two-fifths of UK own a smartphone.
* US retail m-commerce sales shot up 81% to nearly $25 Billion last year.
* Worldwide 4% drop in laptop and desktop sales at the end of 2012 and continues to fall.

What these numbers suggest?

i) Merchandise to be more customer centric —- better customer satisfaction and engagement.
ii) Increase in customer retention rate and reach —– increment in sales volumes.
iii) Your company to create more job opportunities —– transforming whole community.

b) Healthcare:

RFID embedded sensors are used by a huge % of  medical fraternity nowadays. A patient’s day-to-day medical parameters like blood pressure level, heart-beat rate, sugar level, etc. can be processed and reported into useful data monthly, quarterly or yearly, providing doctors detailed analysis and help them managing their patients in an efficient way. It also provide solution(s) to countless problems mentioned below.

What are its benefits?

1) Patients check-up is faster —– you don’t have to wait long in long queues.
2) Proper tracking of medical equipments and inventory —– decrement in hoarding activities.
3) Eye on medical staff (esp. on working hours) —– more emphasize on patients’ care and health.

What all other global issues it can fix?

i) Large % of no. of births and deaths in low-income and middle-income groups are unregistered.
ii) Understand the source(s) of obesity by comparing data with food products companies (Around 25% Americans and close to 22% Europeans are obese, according to WHO).

Conclusion:

RFID implementation, in both the sectors, clearly put forth an opportunity for companies to be big and transformative by changing lives of billions of people worldwide.

The Tickle-up Innovation

Yesterday, I read an article about importance of investments in R&D to manufacture and sell low-cost products or technology in developing markets like India, China and Africa. It emphatically also pointed out troubles to promote such products because of their low customer reach, and lesser brand recognition due to a stiff competition from other well-established consumer products companies. One thing, which caught my eye, was the term “tickle-up innovation“. A total mystery for my knowledge, I decided to Google. Here are my findings and I will try to relate it to you in some or other forms.

First, what is Tickle-up Innovation? (also known as Reverse Innovation) is a practice, which is used first, in developing countries and then sold elsewhere in the world. Traditionally, innovation originates from a developed country, which further moves to a developing markets, if successful. But here life-cycle is reverse, hence the name “Reverse Innovation”. The contrasting point involved is that the products/technology/services, which are a part of it, are created locally in the developing markets.

But what edge does this gives to a local manufacturer?

1) Cut down huge shipment costs.
2) Easy availability of hundreds of low-pay skilled workers.
3) Customer feedback can be obtained and processed much faster and more efficiently.
4) Setup and opportunity costs are considerably lower.
5) Humongous market size to test/pilot any product/technology.
6) Superior customer acquisition model as product developers would mostly be from the country of origin.

Okay. Now comes the part: what all problems it can eradicate by providing a plausible solution. Following is sector-wise analysis:

a ) Food:

High price and Saddled working hours: Life style in developing countries is rougher in comparison with developed countries, thus people tend to miss a daily dose of healthy food or right amount of nutrition (both in rural and urban areas). Costly food further adds misery. Therefore, there is a dire need of a new category of food supplement.

b) Health:

Non-availability of state-of-the-art medical facilities: Paying monthly medical bills isn’t easy. Instruments with high cost and steep power consumption system makes a patient life’s more miserable. Steep power consumption means more electricity requirement, and countries like India, having acute shortage of electricity, ask for efficient and cost-cutting alternatives. To counter such problems many companies are recommending battery based medical devices as a solution.    

c) Technology:

The Power of Web: Everyone demands it but only few can afford. With mobile internet market size to grow to 300 Million by 2015 in India (and considerably at a higher or same rate in other developing countries) there are only two ways to cash-in the upcoming customers. Either by decreasing prices of smartphone devices or by innovating applications for non-smartphone segment to allow users to access web. The later could be a more cost-effective and plausible solution at this moment. Due to this reason alone, most of the tech companies are investing and betting on cloud computing today.

d) Travel and Transportation:

Easy on pocket, anytime, anywhere: The “mantra” for travel nowadays. Everyone loves to own car but affordability is the biggest issue stopping them from fulfilling their dreams. Projects like Tata Nano aims to fill that bridge, though, is far from a huge success and yet to be tested worldwide, provides ample opportunities for other Auto-manufactures to take a leap in this segment. Also there is a huge requirement for a new day-to-day transportation model, to keep pace with the growing demand and population.

What NEXT?……If it is successful in developing countries, then it can be upgraded for sales in developed world. But that raise questions about whether or not they be able to compete in the top-tier markets (as I pointed out early). This particular concept is called “provenance paradox“. Though, many experts suggest to go for a long-haul then looking for short-term profits and flaunt your country of origin, if you want build your brand for the future, the real deal is yet to be proven.

“Roadmap of business innovation for the world” –  Mukesh Ambani

“Essential for global business leaders” – NR Narayana Murthy

“Reverse Innovation explains how innovations are originating from developing countries” – Ratan Tata