With the gradual opening up of the Indian economy since 1991 across various sectors has made the Indian market very competitive. Gone are the days when one had to wait for years to get a telephone line connection, to get a scooter, a loan or a car. The times have changed. Instead today companies and marketers are chasing consumers with a variety of products at different price points, in different locations and different quality. Customers today have more options in almost everything – food and beverage, non-durable goods, durable goods, apparel, telecommunication, transportation, banking and financial services. As India’s economy has grown, so too has the spending power of people - real average household income in India has roughly doubled over the past two decades.
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In last decade, emerging markets have evolved not only as the biggest demand base for goods but also as innovation hubs for new products. One of the drivers of innovations from emerging markets is the easy availability of talent pool, which has transformed countries like India and China as the R&D sub headquarters for the MNCs. India and China together churn out more engineers then overall numbers from the developed countries. The cost of skilled labor in developing countries can be any where from 10% to 30% of the developed nations. Overall the attractiveness of these countries from talent supply and cost perspective is immense, which becomes a key driver of innovations in emerging markets. It can be labeled as “Economical innovations”.
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Slowing growth in US and European economy has made companies look towards the emerging markets as a driver for their growth. In 2008, India and China alone accounted for a combined population of 2.4 billion – a good 30% of the global population. Size of these markets is the only one side of the story, growth is another influencer. While the developed markets have registered an average growth of 1% to 2% in last one decade India and Chinese combined economies have grown with an average 8% to 10%. Emerging markets cumulatively account for more than 50% of clothing and grocery demand. However companies are facing tough challenges in tapping the potential of these markets in their current form.
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