They arrived in the US with the kind of fanfare normally reserved for visiting Bollywood royalty. The stars in question? Indian mangoes.
Banned nearly two decades ago due to concerns over excessive pesticide use, the king of fruits was recently allowed back into the US market. Last month, the first shipments of Indian mangoes arrived on American soil after extensive negotiations on both sides and an agreement by India to irradiate all mango exports to the US. To celebrate, gala parties were thrown to herald the deal and tout the increased commerce it would bring.
Although India is the world’s largest producer of mangoes—14 million tonnes (mt), accounting for more than half of the worldwide production of 25mt—it only exports about 60,000 tonnes. The destinations are mostly neighbouring countries, as well as some countries in Europe, according to the Agricultural and Processed Food Products Export Development Authority (APEDA).
The opening up of the US—the world’s largest importer of mangoes—is a step towards addressing the production versus export disparity, says Ron Somers, president of the US-India Business Council, an advocacy organization based in Washington, D.C. “Growers are now meeting with transshipment companies and distributors to work out the logistics,” says Somers. “The scope is enormous, and the American market is nascent. Imagine what it could be if US consumers really got a taste for the Indian mango.”
Speaking at a celebratory event organized by the Indian consulate in New York City, K.S. Money, chairman of APEDA, extolled the virtues of demand-based food production. “This is an important phase in the development of Indian agriculture,” he noted. “For decades, the focus has been on the supply side. It is time to orient production towards demand. We have been producing many fruits and vegetables, but our international trade participation has been marginal. Now we have realized the importance of market requirements and meeting quality standards.” Money stated that about two-thirds of the Indian people depend on agriculture for their livelihood, so catering to the needs of global consumers could help the industry to reach growth targets set out by policymakers.
Companies should identify the ‘walking dead’
Think of them as the “walking dead”. They’re not ghosts or freaks from a horror movie but, rather, “customers who currently maintain service but whose next action will be to discontinue all services, an important economic consequence to the firm,” according to a new study that examines how the customers of a telecommunications firm acquire and discard services over time. Companies would be wise to identify their walking dead and not market additional services to them because there may be an unintended effect, the paper suggests.
“Not only are you going to waste marketing and advertising dollars, you’re going to remind these customers they’re dead,” perhaps prompting them to cancel their service altogether, said Wharton marketing professor Peter S. Fader. “It’s better to leave the walking dead alone.” Fader co-authored the paper, Modeling the Evolution of Customers’ Service Portfolios, with Wharton marketing professor Eric T. Bradlow and David A. Schweidel, a marketing professor at the University of Wisconsin-Madison.
In examining the subscribing patterns of more than 3,000 customers of a major telecom firm over two years, the researchers identified three general states that define a customer’s relationship with a company. In State 1, customers are new to certain key services, such as basic cable. State 2 represents a broadening of the relationship—for example, through the purchase of premium cable channels.
State 3 customers, the “walking dead”, are just one move away from severing their ties with the company. “However, customers’ transition to this state may not be immediately observable; they may maintain their current portfolio for several months (or longer) due to inertia. Having plateaued in their level of service, their next change almost certainly will be to drop all services,” the researchers state.
Knowing what kinds of customers are in each state can help a company shape its marketing efforts. With State 3 customers, for example, “cross-selling activities may actually encourage the customer to reconsider his portfolio—and drop all services in the process,” the researchers contend. “Rather than devoting resources to waning customers, it may be more profitable to target new prospects and provide them with incentives to begin (and broaden) their relationship with the firm.”
India’s ‘wealth belt’ spawns new breed of managers
Until recently, wealth management for high net worth individuals was an almost unheard-of concept in India. Rising incomes and the unlocking of wealth from closely held businesses have created a whole new generation of individuals that constitutes a credible market opportunity for asset managers, private bankers, financial advisers and others. Simultaneously, new options for investing are emerging as well, including art, overseas investments and real estate venture funds.
“Traditionally, the wealth management market in India was served by those that cross-sold mutual funds and broker/banker products to mass affluents,” or individuals with liquid assets of between $50,000 and $300,000, says Leo Puri, managing director at private equity firm Warburg Pincus in New York City and a former director at McKinsey & Co. in Mumbai. “A true (wealth management) market is just beginning to develop.”
By Puri’s estimates, India now has roughly 20 million urban households that earn between $5,000 and $10,000 annually. Another six or seven million households earn between $10,000 and $100,000. Wealth managers are actively developing products and strategies to tap into those markets, says Puri. India has fewer than 100,000 individuals with a million dollars or more to invest—the international definition for high-net worth individuals—he says.
“The wealthy Indian has just recently started waking up to the concept of private banking,” says Sutapa Banerjee, senior vice-president and head of Indian private banking at ABN AMRO Bank. But there are some hurdles, such as deep-rooted cultural beliefs about keeping money matters strictly private. For wealth managers, “it is an extremely challenging task to break the traditional mindset” and convince high-net worth individuals to embrace “an asset allocation methodology through a professional wealth manager”, she says.
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