Modern Monopolies - book review

This book Modern Monopolies by Nicholson is a must-read for all entrepreneurs, start-ups, strategy heads of brands/ Products. It highlights the importance of being in platform business and how this impacts the growth of organisation, as most software companies are becoming commodities.

As you move towards chapters four, the author gives examples on successful platforms like Facebook, Twitter,  Android OS, AirBnB, Uber and reason behind their success. He also highlights platforms like Windows OS, BlackBerry OS, MySpace, Friendster, etc and why they failed or failing.

He furthers goes on to explain interesting shifts that are happening in the platform business. Earlier examples include iTunes during launch of iPod became the largest music company, but now people are shifting towards newer platforms like Spotify, Saavan, Gaana, etc.

Even when Amazon launched Audible platform, which became a market leader in it's category. But now new platforms like Storytel are offering ebook + Audio book + Regional at a monthly nominal subscription. Though subscription cost is higher but, this gives the customer freedom to choose and read / hear multiple books.

Here is the story which I loved from the book ans have copied as is, since it makes sense and easy to understand. Though many argue this is not a real story, but conclusion is important for learning.

An entrepreneur, tired of the long waits he is experiencing in his dentist’s office, decides that dentist offices are badly managed. So he designs and builds a comprehensive dentist office management system and brings it to market. The software is expensive, at $25,000 per year per dentist office, but it’s a hit anyway as dentists realize significant cost savings after deploying the system. The company, Dentasoft, grows quickly into a $100mm annual revenue business, goes public, and trades up to a billion dollar valuation.

Two young entrepreneurs graduate from college, and go to YC. They pitch PG on a low cost version of Dentasoft, which will be built on a modern software stock and include mobile apps for the dentist to remotely manage his office from the golf course. PG likes the idea and they are accepted into YC. Their company, Dent.io, gets their product in market quickly and prices it at $5,000 per year per office. Dentists like this new entrant and start switching over in droves. Dentasoft misses its quarter, citing competitive pressures, churn, and declining revenues. Dentasoft stock crashes. Meanwhile, Dent.io does a growth round from Sequoia and hires a CEO out of Workday.

Around this time, an open source community crops up to build an open source version of dental office software. This open source project is called DentOps. The project takes on real life as its leader, a former dentist turned socialist blogger and software developer named NitrousOxide, has a real agenda to disrupt the entire dental industry. A hosted version of DentOps called DentHub is launched and becomes very popular with forward thinking dentist offices that don’t want to be hostage to companies like Dentasoft and Dent.io anymore. 

Dentasoft is forced to file for bankruptcy protection while they restructure their $100mm debt round they took a year after going public. Dent.io’s board fires its CEO and begs the founders to come back and take control of the struggling company. NitrousOxide is featured on the cover of Wired as the man who disrupted the dental industry

Towards the end, the book explains how to identify true potential of your own product and how you can make the shift towards becoming a platform.

Software is a commodity, think platform.

You can click on this link to buy - 

Modern Monopolies @ Amazon

Digital Media Influence on Indian Consumer Buying Behavior

India has over one billion people with 120 dialects & languages. Three-fourths of the population lives in rural areas, contributing one-third of the national income. India ranks third, in terms of internet penetration in the world, while social media growth is by 37.4 percent. The e-commerce market is expected to grow from $11 billion in FY14 to $20 billion FY15. India is one of the most lucrative markets even though the per capita income is low, but has huge market for costly products. A recent development in India’s consumerism is the emergence of the rural market for several basic consumer goods.

Characteristics Of Indian CB 

“Indian consumers are noted for the high degree of value orientation; due to this Indians are labeled as one of the most discerning consumers in the world.” 

Even, luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market.

“Indian consumers have a high degree of family orientation.” 

Brands with identities that support family values tend to be popular and accepted easily

“Indian consumers are also associated with values of nurturing, care and affection.” 

Product which communicate above feelings and emotions gel with the Indian consumers.

Influence of Internet / Social Media / Ecommerce 

With the advent of eCommerce portals like Flip-kart, Amazon, Snap-deal, etc the buying behavior of Indian consumers has increased, as they meet shopping requirements of Indian consumers. 

Some of the facilities offered, which lead to growth of eCommerce in India are:

• EMI options
• Cash on Delivery
• Huge discounts to buy online
• Cheaper than brick – and –mortar stores
• Increase in usage of internet through smart phones
• Social reviews

But the major game changer being able to reach to rural India, since they already have disposable income, but no stores (Brick – N – Mortar) selling luxury branded products. With ecommerce and smart phones with internet, they are now able to order brands which they wish to wear, without traveling to city to buy those brands.

Different Segments of Indian Consumers

Socialites Consumer 

Socialites belong to the upper class. They prefer to shop in specialty stores, go to clubs on weekends, and spend a good amount on luxury goods. They are also brand and fashion conscious and would mostly shop at luxury malls, fashion designers boutiques or abroad.

Conservative Class of Consumers 

The Conservatives belong to the middle class; they are true reflection of Indian culture. 

Slow in decision making and seek a lot of information before making any purchase. Most often they look for durability and functionality of the product, but at the same time are also images conscious.

Working Woman 

This segment is the one, which has seen a tremendous growth in the late nineties and has opened the floodgates for the Indian retailers. Working women have disposable incomes and have their own buying decisions for products which appeal to them

Rural Consumer 

The Indian rural market has been growing at 3-4% per annum, adding more than 1 million new consumers every year and now accounts for close to 50% of the volume consumption of fast-moving consumer goods (FMCG) in India. The market size of the fast moving consumer goods sector is projected to more than double to US$ 23.25 billion by 2010 from the present US$ 11.16 billion.

Over the years, as a result of the increasing literacy in the country, exposure to the west, satellite television, smart phones, Bollywood movies, social media and newspapers there has been significant increase of consumer awareness among rural Indians. This awareness has made the Indian consumers seek more and more reliable sources for purchases such as organized retail chains that have a corporate background and where the accountability is more pronounced

The Indian consumers are price sensitive and prefer to buy value for money products. Here are few influences on the Indian consumer buying behavior, which a marketer should know.

Ecommerce Marketing 

Indian eCommerce industry is set to become a $0.5 trillion business in the next 10 years. With the sudden rise of eCommerce, most brand and cost conscious consumers are turning towards portals for buying or comparing product price with brick – N – Mortar stores. Currently the products Indian consumers are buying through online are smart phones, clothes, books, low value white goods, stationery, electronics, educational material and lately e Learning courses.

Celebrity Influence 

In India, celebrities are regularly used as brand ambassadors in marketing communication by marketers to lend personality to their products, increase trust factor and promote the brand. Celebrity endorsements work to a great extent for all class of consumers in India, as Bollywood and cricket plays a huge role in INDIAN life-cycle.

Quality Oriented Outlets 

Indian consumers looking for quality choose expensive brands as they feel that price is an indicator of quality. Most products in India have long shelf life, even after break down, they get it repaired. Most consumers ensure that products / brands have a service outlet in their nearby area for future break down repairs. If a product / brand don’t have any service centres, it is difficult to sell to INDIAN BUYERS.

Freebies 

Indian consumer’s buying behavior is influenced by freebies, discounts, one – on – free, 40% discount, etc. Freebies are consumer products given free of charge as gifts to purchases of selected products above a certain value. Freebies generally comprise tooth paste, soaps, detergent, cooking oil, cash back, USB, headphones, speakers, mobile covers, etc.

Changing Trends in Indian Consumer Behavior

Bulk Purchasing 

Urbanization is taking place in India at a dramatic pace and is influencing the life style and buying behavior of the consumers. Bulk purchases from hyper stores seems to be the trend these days with purchasing becoming more of a once-a-week affair, rather than frequent visits to the neighborhood store.

Trendy Lifestyles 

The current urban middle and upper class Indian consumer buying behaviour to a large extent has western influence. The Indian consumer has become much more open-minded and experimental in his/her perspective towards western trends. Most international Brands have presence in India and have gained wide consumer acceptance.

Buyers’ Market In The Making 

Post India’s economic liberalization, policies were initiated in 1991 for opening of market, many new product offerings have entered the Indian market and product variety has also increased manifold. Indian consumers have always preferred foreign goods and with liberalization, they have a choice vis-à-vis local products. 

The sellers’ market is slowly moving towards becoming the buyers’ market.

Social Media + Internet Influence 

Social media has played a spoilt sport, now people buy to get LIKE. Often, users check reviews on social media prior to purchase decision, even prefer movie review from friends rather than film critics. With lowest broadband connectivity, most Indians are turning towards smart phones with internet, often checking new offers and products on mobile app.

Consumer Spending Behavior 

Possibly the most challenging concept in the marketing is to understand the buyer behavior. The attitude of Indian consumers has undergone a major transformation over the last few years.  The Indian consumer today wants to lead a life full of luxury and comfort. Wants to live in present and does not believe in savings for the future.  

Consumers now have the power of information at their fingertips, enabling them to compare and shop wide range of goods and services anytime, anywhere. 

Lately, this trend has accelerated, as mobile apps have been playing larger trans-formative role to consumer fingertips.