Before CK Prahalad described the ‘poor’, as an opportunity in the Harvard Business Review, and coined the elegant phrase ” the bottom of the pyramid” to describe the large mass of poor people in the world, companies and their consultants used to spend lots of time and effort trying to define the size of the Indian market – is it 400 million people? Or a mere150 million? Consulting firms used say that international experience shows that markets “take off’ when per capita income of about 2000 USD PPP is achieved. Today, the line seems to be “there is a lot of pent up demand in the lower income, and if you find the right strategy to tap the bottom of the pyramid, then the market in India could explode”.

 Is this new untested wisdom? As far as I remember, back in the1980s, Nirma was the first to recognize it. They figured that if you managed to get prices really low, more people could afford to buy; and if you found a way to get costs really low, then you could make a profit as well. And the arithmetic of small margins multiplied by huge volumes could create a huge gross margin pool which could pay for overheads comfortably, and leave behind a handsome profit. It took Levers a while to realize this, and thus was born the famous ‘low cost business’ model, and the thinking that Mr Banga articulated in his first chairman’s speech: “fix the consumer price and work backwards towards a challenge cost”. About ten years later, Akai (Baron) decided that if prices of television sets were discontinuously lowered, they could explode the market. As their marketing director said, “it does not take rocket science (or market research!) to know that everyone would like a colour television (and it is the cheapest way to keep a whole large family entertained), and to know that the only reason they don’t buy one is because they don’t have the money and no one will lend to them”. He asked “whoever decided that a colour television is a statement of lifestyle? Why can’t it be just another utility in the house like, say, a tap?” And so the product at the lowest priced end of their range was a single model ‘basic, no frills’ version, at a much lower price than ever before, and the market did explode. People are quick to point out the unfortunate fate of the company later on. But did it negate the strategy? On the contrary it confirmed that there is a Nirma way to play in every business, which can unlock lots of suppressed demand. However the business system was not truly a sustainable low cost one, though it did have elements of smart thinking in sourcing and distribution. Today the high desire to own CTVs but low affordability continues to exist among the large numbers of low income consumers, but there is no really low price television available in the market – maybe it isn’t easy to build one cheap, that can still work well, maybe second hand refurbishing isn’t easy business?

And that is the real bottom of the pyramid challenge – to give consumers something that actually serves their needs well, at a price they can afford, and yet make a profit by creating and selling them through a system that is low cost enough to do so. Not mopeds that are offer far worse performance at about the same price than second hand motorcycles, or small cheap tractors that don’t do the job at all, but are attractively priced.

But beyond just the numbers is the issue of profiling and understanding the Indian netizen of today and the future, which would significantly add to our understanding of e- India. Are they homes, offices, office users using company provided accounts the way they use company provided cars? Early adopters everywhere in the world are the rich. So are these numbers to be viewed as presenting a nice, niche, easy to get at , rich people consumer opportunity?

However to my mind, the more interesting question is what will drive Internet adoption in our country? Our lessons from what drove (or in many cases did not drive) growth of various consumer goods in the so called middle class is simply affordability, availability and relevance (perceived value) – the three golden keys. We also learnt that driving growth is different from waiting for growth to happen. Those categories where players engineered growth and made it happen, grew. Those that waited for growth to happen, as in “there are things happening out there which will benefit us, did not.

So triggers like an organised second hand pc market (which are so ridiculously cheap) and / or companies with financial muscle and an innovative spirit who decided to storm the market with dedicated booths and / or offer free Internet time for their potential customers could indeed change the landscape totally. Is that happening, is the question we need to ask; an even better question would be “can I make that happen?” Affordability and availability , we have talked of. Let’s explore relevance or high perceived value as a driver to growth.

I read about some net content providers who are targeting the teenage education market. Subject specific queries for students, post your problems and they will be answered by a panel of ICSE teachers drawn from various schools, tutorials, on line work sheets….. Develop this further to provide services which could make you more competitive for all the entrance exams, and see what an amazing adoption rate we could have! That’s because this is the most pressing ‘life and death’ agenda in the mind of every middle class family. Tuition and coaching classes cost a packet, school teachers are overloaded, parents not well informed enough, college seats scarce and there is a desperate search for solutions. Add to this an intrepid company who sets up and manages free access at a community level, and I suspect that there will be a quantum jump in net users. On the other hand, leave it to bawarchi.com or jeans and music.com, and the market size and character will look very different.

So perhaps the biggest driver of internet usage in India will depend on the number of companies who offer services that are relevant and empathetic in the local content to create consumer pull, and who find innovative ways to make availability and affordability happen. Wasn’t that our key learning from the great Indian Middle Class saga?