New Business Models with old basic formula

Over the years businesses across the world look forward to two basic things while creating a competitive advantage in the market. They are namely Low cost and high differentiation in the market with their product/service. It’s not rocket science and the mantra is simple, products/services with low price tag and highest possible value gives the much needed competitive advantage in the market.

Economic slowdown and lower demand from western countries have only given a reasons for companies to cut back on their staff strength and salaries. However, the silver lining is that we still have few companies who are ready to go back to basics, tweak their business models and create value for both customer and economy. These are the companies which have the inherent ability to create demand even during a recessionary period.

The best example is the TATA group, first it was the NANO with the 1lakh car and then the housing scheme (named Shuba Griha) that stirred demand in their respective markets. In fact TATA housing website has received around 15lakh hits within four days of the announcement of its low cost housing scheme (homes priced in the range of 3.6lakhs to 7.3lakhs).

This response is phenomenal especially keeping in mind the current real state sentiment in India. The industry which is in doldrums and was cribbing about lower demand and rising interest rates has suddenly woken up to this huge market potential and has started thinking about how to position them for this huge market.

There is a huge responsibility of the government to remove roadblocks and to promote these companies which create demand by their competitive, low cost and high value business models. The resultant effect will fuel the economy activity, add to the companies bottom-line and create more jobs in the market.

The tremendous response both TATA housing and TATA NANO got bears testimony to the fact that there is still demand in spite of the slowdown. Companies only need to adapt themselves by sticking to the basics of age old Low cost and high value mantra.