Monday, December 15, 2003

When Russel Crowe sells T-Shirts

That was an etymologically challenging article by Bala. As I think on the crux of the issue, it seems to be either going for "more produce - less quality - less price - more consumers" or "less produce - more quality - high price - less consumers" I guess, there is not too much to choose between the two at first-shot. There are a lot of market driven forces that need to be taken into account as well... Xavier starts to sell the t-shirt for INR 50, without much investment in marketing and brand building, but I have a few more questions to ask. 1. Is he the first one in the business..? If so, well and good... but probably there are roughly atleast 5 other vendors who might price t-shirts as much as Xavier and are thinking of similar strategies as him. And some vendor's additional cash reserves might enable him to invest in building a brand even though it may be a small investment, and it might have the capability to impact xavier's sales. 2. How many direct competitors are there for the product in the region where xavier is concentrating and how many of the "strategy-2" kind of businesses are looking at expanding with a "strategy-1" range of t-shirts. If Xavier is beginning his business with some entries in this scenario, the entire outlook of the business changes. 3. Given the segment and pricing, how long and sustaining could a product be in the absence of investment in designing/R&D/branding etc., over a significant period of time. Once Xavier starts a business, and Ram begins to concentrate on "strategy-2", Bala might get some commission for all his consulting work that he did for them, and build up considerable cash reserves and then start a business of his own choosing a via-media between his two strategies... by going for a larger produce than Xavier, but lesser quality than ramgopal, and priced in between his two counterparts and use his cash reserves in some brand building efforts. And he might showcase his product as "almost as good as Ram's with lesser price" and "much better than Xavier's with a little higher cost". So that he could cater to multiple income groups at one-shot.. and unless Xavier and Ram act quickly Bala is going to suffocate their business... after all, he knows their tricks...

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