It might be natural to start small and then grow while entering a new market such as India and the strategy designed accordingly – here are a few tips on what to keep in your checklist while making a strategy for entering Indian market for business expansion or a new start-up (based on our past experience in the Indian market)
Phase – 1
At the initial stage, companies find simple to export products to India and work with established distributors of similar products or hire independent agents from the market to sell and distribute their products. This of course helps to hedge the country business risk and at the same time test the water.
The catch here is however that the firm’s products but can get lost in big distributor’s entire portfolio of products/services. Moreover, sales agents can create performance issues:
- Do they have the incentive to maximize sales or competency to move beyond initial few customer contacts?
- Will they project the right image for your product/service in the market?
- Will they seed the market or focus on the low hanging fruits alone?
These are some relevant questions to be addressed during the due diligence at the prospecting stage.
The partner (distributor or selling agent) needs to be communicated clearly in terms of what the brand stands for and how it has to be presented in the market. A close contact with the front line sales people could help align the communication. A random customer contact or customer meeting could also be a good indicator of the direction the things are moving in.
Phase – 2
Over time companies realize that to be successful in India, they need a larger footprint, which may not be possible through a third party. In most of the cases, companies grow in size and capability and then make a local acquisition or establish local full time employee base that may involve marketing, distribution, sales, testing, assembly and ultimately manufacturing.
It might be more expensive to get to the next step of own set up in India but it allows having much control over the business products, brand, customer & finances. Fundamentals which are essential to lay a strong foundation for a sustainable growth curve.
Most of the ambitious SME firms looking at sizable business in India will move from phase 1 to phase 2 eventually. The question is on the timing and how does the transition happen? While the timing could be linked to the objective of the firm and its goals vs reality assessment, transition is trickier.
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