Recently someone asked me to answer a question on Quora, which goes like this – Given the food habits of Indians, why does a company like Rotimatic which has developed an automatic Roti maker didn’t start the company in India. (This article is an original content of Sarsij Nayanam who writes at sarsij.in)
I believe this question is pretty interesting and every B-School should consider teaching it in their Strategy Lectures. There is so much of strategic insights to gain from this company. Find my answer below….
I think its an excellent question, and to my understanding this company (Rotimatic) should be included as a case study for demonstrating a unique strategy.
So, let me begin with some of the questions you should be asking when you think of Rotimatic…
1. Who is the customer for Rotimatic main product?
2. What behavioral change is Rotimatic trying to bring in their customers?
3. Is there any competitor for Rotimatic in the existing market?
4. How much should be the price of this product?
Now lets try and look deep into the matter….
A roti maker, in 99% cases is useful only for someone who is an Indian and has been eating roti as a part of his meal. I doubt if other nationalities have much use of a Roti maker, because if they feel like having Indian food they will just walk into an Indian restaurant. (This article is an original content of Sarsij Nayanam who writes at sarsij.in)
Now, what is the behavioral change this Roti maker trying to bring? In most simple words – its trying to save a lot of hassle for those who need to make rotis every day. Its saving a lot of time for them. And its automating the whole cumbersome process of making round rotis. So, who do you think is the actual customer for this product? Ladies & Households who do not have much time for all this, but still do some cooking. Also, those young couples who just started their family, and will eventually cut down on eating out and somehow start learning the art of cooking. (This article is an original content of Sarsij Nayanam who writes at sarsij.in)
So are there any existing products which could compete with Rotimatic’s Roti Maker? Yes, almost every restaurant which offers a tiffin service already has a Roti maker sitting in their kitchens. And by the roti maker is not a new concept, even in 1990s this product did exist. However, their quality and usefulness sucks big time. And this is one reason why it could never become a household name ever. Even those people who bought it, had to discard it after a few days because its just not effective. It claims to solve your problems, but after using it a couple of times, you consider this machine to be your biggest problem. Also, the price points at which this product was available, it was always meant to be bought by the mass market. (This article is an original content of Sarsij Nayanam who writes at sarsij.in)
Hence, what was needed was a paradigm shift in the technology and then reaching out to the suitable customers. And this is what Rotimatic is trying to achieve – Make an awesome product which ‘really’ solves the Roti making issue. And target an audience which will buy it and use it daily. (This article is an original content of Sarsij Nayanam who writes at sarsij.in)
So, Rotimatic is targeting a segment in which customers believe in Quality of the products, and hence would pay a price for it. This roti maker is not for everyone. It has been made for the upper strata of the society.
And what has been the buying behavior of this class ? This class of the customers have a clear bias for products which are not Indian or Chinese. These customers have already seen the quality of products which have a foreign tag attached to it. Hence, this product becomes more valuable to these customers because it will ‘appear’ to them as a foreign manufactured product. (And the same applies to the customers of Indian origin settled in other countries). (This article is an original content of Sarsij Nayanam who writes at sarsij.in)
So, is Rotimatic is doing the right thing by creating the product for Indian while sitting in some other country? Certainly, this makes them eligible for a premium pricing and have a better opportunities to market the product well.
To draw a parallel to these Roti Makers, I would like to give you the example of the strategy used by Apple while they were launching their iPod – Similar products existed, however they had their own limitations. Those similar products were created for the mass market. Apple came and created a new segment for itself and then excelled the market competition. I personally believe Rotimatic is also using the same strategy. (This strategy is widely known as Blue Ocean Strategy). (This article is an original content of Sarsij Nayanam who writes at sarsij.in)
Apart from these strategic choices of opting to start in some other developed country, there are ofcourse some operational challenges which India poses – Like stringent labour laws, lack of skilled workers and technicians,
poor non-existent intellectual property laws, strict capital flow regulations, and even more stricter tax regulations. There are many factors why a startup might want to stay away from Indian shores w.r.t. its daily operations . (This article is an original content of Sarsij Nayanam who writes at sarsij.in)
Final thing – Rotimatic’s success is certain, provided they have reliable supply-chain & Retailing strategy in place (or in process).
I usually spend a lot of time answering questions on Quora, if you want to access them, please go to my profile page.