December 15, 2003	Monday	Shawwal 20, 1424

Most companies tend to focus on the saturated markets of the developed nations, dismissing the other much bigger consumer markets as too poor to matter.

Developed states with per capita income of $10,000 account for 14 per cent of the consumers. Bulk of major companies miss out on 86 per cent of the world’s consumers. There is a huge “invisible global market” that can be tapped but is ignored.

With these observations, Professor Vijay Mahajan, Dean, Indian Business School, Hyderabad, advises firms: “You cannot wait for these customers to appear on the radar screen. You have to go and find them. Change your perspective and strategies to convert these invisible markets into visible returns”.

Industrial economies suffer from excess industrial capacities with markets not expanding as fast as the productivity increases, specially in the United States.

The three developed regions Europe, Japan and North America are struggling to come out from the economic slump. Much of Asia is witnessing a high growth rate, specially with the big populations and sizable poverty.

In informal discussions with this scribe Mahajan, who paid a short visit to Pakistan recently at the invitation of the Unilever, agreed that if multinationals want to target the 86 per cent consumers, they have to relocate their manufacturing in developing countries to produce goods at costs affordable to the less affluent.

There is also a need to focus on poverty reduction to make markets vibrant. He has innovative ideas about marketing strategies and designing new products to make this happen.

But the most appropriate response to the issue by the Indian scholar was: “People who have problems will find solutions. Don’t wait for the Americans and other nations to solve your problems”.

He sees major players in the corporate world emerging from the businesses which focus on invisible markets. He was also all praise for the management skills of Pakistani entrepreneurs after a presentation by the Pakistan State Oil.

Of course, the IBS dean was not oblivious of the fact that multinationals are looking at the emerging markets with high growth rates in Asia like China, India, Malaysia and Pakistan. South Asia is a huge market with its combined population approaching 1.5 billion.

India attracts $4 billion foreign investment annually, and the Multinational Corporations expect to enhance their presence in the Sub-continent. With an eye on the future, the MNCs and top Indian firms have financed setting up the Indian Business School two years ago.

On the governing board are the Chief Executive Officers and directors of top global firms, securities and banks including the Citigroup, the Standard Chartered, the Unilever, the Morgan Stanley, the Goldman Sach, the Novarti and the deans of top western universities”.

The Indian Business School is run on no-profit-no-loss basis and is expected to break even in the third year. It costs only one-sixth to train the business executives in India as compared to the United States. To cut the costs, multinationals would benefit from the business executives with demonstrated skills and leadership available in India.

Our job is to produce world class entrepreneurs and leadership which can make a difference”, says Mahajan adding, “it is the entrepreneurship and innovative leadership that has made the America great”.

In the IBS, the view that entrepreneurs are not born but created prevails.

The IBS is filling up a big gap in the business education. Of the 7000 students picked up by 20 top American companies of which one-third are international students, the number is just 385 for students from the Asian subcontinent. In India, a great number of multinationals are run by its own nationals.

A group of Pakistani businessmen and multinational executives are expected to attend the IBS convocation in March next year at the invitation of the IBS dean. Mahajan visited the LUMS in Lahore and also met the IBA director, Danishmand.

Professor Vijay Mahajan has researched and written extensively on product diffusion, market strategy and marketing research methodologies with presentations at more than 95 universities and research institutions worldwide.

He has conducted executive development programmes in the United States, Asia and South Asia. His book, Convergence Marketing, was published by the Financial Times.

He has come out with some very innovative ideas in marketing strategy for the world’s 86 per cent consumers. In developing markets, he says, “you have to compete against the bullock carts and not cars”.

Mahajan quotes the example of an Indian-Australian car manufacturer who has created a rural transport vehicle.

It was not designed to compete with automobiles but rather to replace the bullock cart. The new vehicle was able to navigate the rough, narrow roads of rural India and haul both people and cargo.

Like the bullock cart it replaces, it functions well at low speeds, with four low gears and carries up to 10 tons of weight.

“The focus should be using the market as a laboratory for new products designs rather than on conquering markets,” says the Jammu-born professor and son of an accomplished businessman under the British colonial rule.

The 86 per cent consumers are culturally very diverse, even within the borders of the same country. This requires rethinking of the entire marketing strategy.

This invisible market will become even more significant in future. As population growth slows down in the developed countries relative to developing nations, more customers will be from the invisible global market.

“You need to move off from the beaten path, both in the products you develop and the creative strategies you use, to turn the invisible markets into visible returns,” Vijay Mahajan concludes.