"We can't compete globally as we are organised primarily as small and medium enterprises. Satyam, Infosys, Wipro are all great companies, but they lack in scale when compared to global IT firms," says marketing guru Dr Jagdish Sheth.
Nations have to compete just like corporations, he says highlighting the need to brand and promote quality products and services.
Dr Jagdish Sheth, who has authored of over 200 books on marketing and business strategy, has served as a professor at University of Illinois, Columbia University, and Massachusetts Institute of Technology.
His books, The Theory of Buyer Behaviour, written along with John A. Howard, is considered a classic in the field of marketing. Clients for Life, written with Andrew Sobel in 2000, was also a bestseller. His views on global competition, strategic thinking and customer relationship management are considered to be pathbreaking. In an interview with Shobha Warrier, he emphasises the need for branding of nations and how India can be a global brand.
Could you explain the concept of marketing a nation?
One of the fundamental changes since the collapse of communism is that market ideology has become even more important outside the traditional place where marketing discipline and practices are needed. Market segmentation, positioning, branding, et cetera have become more and more relevant as nations have to compete for resources. Nations have to compete just like corporations. So, they have to position themselves and brand themselves.
This trend of branding by the nations really began on the resource advantage. The oldest brand turned out to be China because silk made in China was sold worldwide even in 650 BC. China's image came from its resource and it did very well. Similarly, you have champagne from France. So, the identity of many products originally came from the geographical base.
Now, nations have to compete against each other and states have to compete against states.
Is it similar to cities like Bangalore, Chennai and Hyderabad competing against each other for the IT space?
Exactly. It begins at a state level but ultimately it comes down to the city level. My work for the government of Singapore has been positioning of Singapore city. Interestingly, in my observation, I find that most of the civilizations are really identified with cities and not with nations. Venice and Rome became famous because of the commercial activities.
In the globalised world, is marketing of nations more important than just performance?
Yes, it is more important in a globalised economy. Nations and cities will have to learn how to market themselves. For e.g., Singapore was the undisputed leader in the world once. Today, Dubai is coming up the same way. Dubai is now competing with Singapore.
Where will this competition between nations lead?
There are two notions about competition. The western view of competition is: 'I can get ahead at your expense.' It is a win-loss definition of competition. The other one is, an athlete's way of competition. Two athletes challenge each other; get more out of both of them, which is more healthy. If Dubai begins to challenge Singapore, Singapore will do better, which will lead to Dubai also doing better.
What are India's strengths in this competitive world?
The key strengths of India are its resources. Firstly, it has great potential in agriculture. India will soon become one of the largest producers of fresh fruits.
Earlier we used to ship raw materials, now, we do more value-addition in the country. Rather than selling raw tea, today we export packaged and branded tea and sell it worldwide. The second largest tea company in the world is Tata Tea. Today, we are going to blur the boundaries, Tata Tea will be in every American and British household just like Lipton or Brook Bond tea. So, we are going to do more value-add on our resources rather than just sell raw materials.
We are the largest producers of milk and milk-based products. So we can become cheese and butter providers for the world. I have always suggested that a brand like Amul need not be limited to India. It is a brand that can become a global brand very quickly.
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India also has great human resource base, which is very valuable for the global economy. The developments in the IT field will be replicated in other fields as well. There is a worldwide shortage of nurses, and we produce some of the best nurses in the world. India can also benefit from the hospitality sector.
What are India's weaknesses?
The first weakness surprisingly is that we can't compete globally as we are organised primarily as small and medium enterprises. Unless we consolidate within the country, it will be difficult. We have too many smaller operators. You need scale to be globally competitive. Scale gives you mostly procurement advantages. This is the key difference between global Chinese corporations and Indian companies. For e.g., 65 per cent of the luggage industry in India is unorganised and unbranded.
Satyam, Infosys, Wipro are all great companies, but they lack in scale when compared to global IT firms. They all have $2 billion revenue each. Even TCS has only $2.5 billion, whereas the revenues of these companies worldwide are $30-40 billion. So companies like Accenture, IBM will come to India for resources.
The second weakness is that we have never invested aggressively in quality. Now, we know that quality matters, earlier we thought only price mattered. To sell in the world market, we have to make the best quality products at lower prices.
The third weakness has to do with branding. We are just beginning to brand things, and brand does matter. The deteriorating infrastructure in India is going to slow down this economy by 2-3 per cent of GDP growth. If we had good infrastructure, our economic growth would have been above 9 per cent.
Do you think a dot-com boom is possible?
The dot-com failure had nothing to do with entrepreneurs; it had more to do with venture capital money. It corrupted the whole process. There were venture capitalists who doled out money too easily, and they were there for a short period. Thus the whole system got corrupted. There was no discipline. Hence there was a bubble, speculative, of course, and it collapsed.
Now, venture capitalists are not doing the same thing anymore. The quick money is gone. There is much more business discipline in the dot-com industry. So, the next set of entrepreneurs will succeed. If you look at the big companies of today, you will see that they all had humble beginnings.
What would be the new trends in the dot-com business?
The dot-com business will happen in newer fields. It may not be in the application of information technology. Instead, it will probably in biogenetics and bio-sciences. There will be more developments in business process outsourcing, which requires more infrastructure, significant commitment of capital.
There will be a boom in digital media as well. India has a great potential in visual effects. But it requires significant capital commitment. It is like the industrial age where you cannot think of starting a steel mill without having significant capital. Nobody will invest in the business proposals or ideas that are not viable.
Where do you see India in the global map in the next decade?
I'm very optimistic about India's future. Tomorrow's India will be shaped by outsiders and not by Indians. There's nothing wrong with that because every big nation rich is resources has always been made by outsiders. The best example is America.
Do you like being called a 'marketing guru'?
I like it but I think the word 'guru' has been misused today. The old meaning of guru was great especially in the Asian tradition. In India, China, etc, the word guru reflects a positive feeling. However, in recent times, in the western world, guru is used almost like a satirical tone, in a negative way although the western culture is learning the true meaning of the word guru. Now, refer to Peter Drukker as a management guru in the right sense. So, the word guru is gaining respect. In that case I don't mind being called a 'marketing guru'.
Photo: Sreeram Selvaraj
