Will only cheap products succeed in Indian markets?

In most of our interactions involving marketing products for India, one hears the generalized view that "In India, unless the product is cheap it will not succeed".

From my experience in marketing technology devices, the price of any tech device depends on the cost incurred by the customer due to the problem the device is trying to solve, and also the other alternatives available in the market. That the tech device is able to solve the problem is of utmost importance, and not the price.

The best example is the Akash tablet. At 2500-3500 rupees you have a really clumsy device which does not solve anyone's problems. Instead, at 6500- 9000 rupees you have various tablets, including the micromax funbook, which address the customer's need to have a handy device with which to browse the internet. One would rather pay a little more and have something which works, rather than save a little and end up with something which is useless.

Innovation need not be focused on making 'cheap' products, rather the innovation could be in a business model where a moderately priced product is made affordable in a pay per use or some other revenue model. My belief is that in the same way rural India warmed up to the sachet SKUs for urbane products like shampoos, Indian customers may pay premium on smaller affordable units that work.

Innovation: Local or Western?

In a recent debate, Peter Thiel, well known technology Venture Capitalist, made a comment that India and China need not innovate anything, rather they need to just look at what is successful in the West and copy that. A good write-up on why this approach is wrong is written by YourStory

And today, Hindustan Times has written about Prof Anil Gupta, who had moderated the panel discussion on innovations at Emtech 2010 (in which I was a panelist) and his work on discovering and popularising Indian innovations. The list of some innovations that have made a huge impact on the ground, but are totally indigenous and popularized by Prof Gupta must be an eye opener for Peter Thiel. I think none of these could have been thought of in the West.

I believe that each region comes with it's own separate challenges. I have seen this happen before - the West looks at solving problems in an entirely different way from the way the East does. This is not to say that one of these methods are better, but only to say that each place has a different set of constraints, and for the best solution to the local problems to emerge, the solutions have to emerge from places where the local constraints are best known. For example, taking the case of Vortex ATMs, I think the greatest innovation is not the reduced cost of ATMs, but the fact that due to its lower power consumption, the back-up time is greatly multiplied. The optimized solution for power constraints emerged only because the solution emerged from India, which faces a lot of power problems.

Similarly, the solutions like the cycle powered washing machine could also only emerge from places where making regular washing machines are a problem - places facing a lot of power cuts.

Hats off to Prof Gupta for his tireless efforts in spreading these ideas and popularizing them. May the local inventors thrive.