Surviving under competition
Competition has assumed global proportions in recent times. Markets are not confined to one country or region but transcend national boundaries. With multiple players entering a market competition among them is at an all time high with profits reduced to marginal levels. Under such a circumstance, business in bulk or volume is the only alternative. Revenue generation is the principal focus of business houses now-a-days. Profit maximization is no longer the objective of commercial units as that would imply limited operations and truncated market share. As revenue maximisation is the ultimate objective of commercial houses market expansion is their primary lookout.
India with its huge population is an immense market, particularly for consumer items. FMCG (fast moving consumer goods), household appliances, electronic gadgets including mobile phones, dress materials and accessories, all fall in the category of consumption goods. A typical feature of market behaviour in India is its price sensitivity. Indian buyers are extremely price conscious and buy after plenty of bargaining. Another characteristic about Indian consumers is their weakness for big brands. There are certain products that are identifiable with their brands in India. For instance steel furniture, toothpaste, vegetable oil, shoes and so on. This explains the concept of brand loyalty in India. These brands have survived tough Indian marketing conditions like product acceptability, and affordability.
Indian market is now open to multinational corporations (MNCs) and business conglomerates. The participation of MNCs has made the domestic market scenario extremely challenging for domestic manufacturers and suppliers. The resource of a domesticated company is limited as compared to a conglomerate or MNC. Multinational companies have the flexibility of diverting resources from one location to a more profitable location. Further their product quality is always of a superior quality as they cater to a clientele spread across the globe. In case they discover that market proceeds are falling below expectations in a particular location, they might shift their focus on to a more lucrative market.
This flexibility is absent in case of domesticated or indigenous companies. Though global trade is a possibility, the formation of multi location structure is not always feasible. In spite of tough market competition an indigenous company has to strengthen and sustain. It needs to optimize on resource utilisation, and if possible diversify into other commodities or services. In India many finance companies have diversified into banking, and hoteliers into transport industry. Although this is usual among larger companies it is unusual among small and medium companies.
Kapil Chugh has taken up this challenge admirably and has set up an example for other small and medium companies. Together with its traditional business of PSF (polyester staple fibre), it has diversified into mobile manufacturing business, India is a stable market for PSF and a growing market for mobile telephones. This thinking on Chugh’s part speaks volumes of his foresight of Indian consumer goods market. Within the next couple of years Chugh’s endeavour would certainly reap rich benefits for his company.