Tower Strategy Group Inc

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As product markets in industrialized nations mature, many companies are left wondering how to grow. Strategic alternatives to finding ways to take share and further penetrate existing segments with the existing portfolio include: When thinking about new customers / geographies, many companies attempt to go with alternative 2 above. Unfortunately, the problem with pursuing that strategy is that, as a company shifts its customer / geographic focus, the products and services in its portfolio may no longer meet the latent needs (attributes, price and a combination of the two) of those new customer / geographic targets. This is true when it comes to new customers in domestic markets. For example, a company that makes high performance bi-optic bar code scanners for major national and regional retailers would have an incredibly difficult time convincing smaller retailers, such as mom-and-pops to part with the hardware, service and maintenance fees required for such high-end solutions. As a result, major bar code scanner vendors have developed lower-end, dumbed-down versions of their premium offerings to meet the needs of downmarket customers. Alternative 2 above becomes even more of a potential pitfall as companies begin to evaluate emerging markets around the globe. Simply said the basic needs that companies must solve for consumers and business customers in Mexico, India, China, Kenya, etc. is far different than those solved for consumers and business customers in the US. By way of example, a client recently mentioned to us that, when they attempted to introduce one of their primary products (in almost every US home today) to the Indian consumer market, they experienced marginal uptake. Consumers in India didn't understand what the product was and also didn't have utility (in an economic sense) for the product in question. This fact was discovered after the client spent significant amounts of money building manufacturing, sales and distribution capacity in India. The client learned their lesson and readily admits that they did not do as much market validation and assessment work as they probably should have prior to making significant resource commitments to India. The client now also remains skittish about putting new effort behind expanding to emerging markets. A counter-example to the one above is Tata's play with the Nano. OK, a few have reportedly burst into flames and clearly that's more than just a "kink." But Tata's basic premise remains valid. The mass market in India doesn't have utility for and simply cannot afford automobiles developed for the US and other developed nations. The Indian mass market does have utility for a vehicle that provides a safer and more reasonable alternative to other current modes of transportation - e.g., hauling a four person family around on a scooter. Those families represent likely Nano buyers. It's no surprise that, by providing consumers a reasonable alternative to either not having a car or having a car developed to "Western" standards, the Nano has gained significant traction and will likely help Tata to carve out a strong position in India as well as other developing nations.

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