Tatas add more punch to mass push
Low frills, high profits cheap water purifier marks latest in push to find fortune at the bottom of a pyramid of one billion people, reports Sandeep Singh. See graphicsdelhi Updated: Dec 12, 2009 01:52 IST
“I am excited about Tata Swach because in my native village every house needs a water purifier as the water is contaminated,” says Dharmendra Jha, working in Patna.
Jha’s aspiration is tied to the fortunes of the salt-to-software Tata Group, whose Tata Chemicals has priced at a market-beating Rs.749 the purifier that could make a dramatic difference in interior Bihar.
“It is going to be a runaway success in rural Bihar as it won’t be consuming electricity which is a scarce commodity for us,” said Chotte Singh of Madhupur village in Samastipur district.
This down-to-earth product touching lives far away from the enchanted corporate environs of Bombay House, from where Ratan Tata’s industrial empire is run, is not the first such product addressing the lower end of the social pyramid.
Budget hotel Ginger, a cut-rate housing project that sells homes at less than Rs. 4 lakh and of course, the Tata Nano car that has caught the fancy of the world – all fall into the same vision that aims at seeking profits built around mass aspirations.
“We are trying to create a new category and are trying to convert non-users into users,” said R. Gopalakrishnan, executive director, Tata Sons.
Ginger was a brainchild of management guru C.K. Prahalad, who has been advocating for businesses “fortune at the bottom of the pyramid” on which he has also authored an acclaimed book.
“A majority of the Indians live with very little resources and so to come up with products of acceptable quality at lowest possible price is indeed a sound business strategy,” said Sam Balsara, chairman and managing director at Madison Communications. “It meets both a social need and a business need.”
“In the hotels we decided to provide what was essential and remove feature that were not important,” said Prabhat Pani, CEO, Roots Corporation a subsidiary of Indian Hotels. But cut-rate products need not lack features. They are just smart and cheap. Tata Swach uses advanced chemical technology, Tata Nano has a sharp design and Ginger hotels offer wi-fi connectivity for business travellers.
While the hospitality industry suffered in the slowdown, Ginger hotels had positive impact and it saw its occupancy rates go up.
With inputs from Vijay Swaroop in Patna