How much did you pay for the last replacement blades for your razor? If you use the new Gillette fusion power, an 8 count will cost you a cool $32 ($4/ razor). This is problematic as P&G, Gillette’s parent company, looks to expand in countries like India, where the gross national income (per capita) is $441 or $36.75/month. Again this is almost exactly the price of an 8 count blade cartridge with 8% tax. For me that is a huge/sick reality check that we are spending more on 8 razor blades than the average Indian is spending on food, housing, medicine etc. Global businesses like P&G, IBM & GE also see great advantages in learning from developing markets.
At the beginning of October, P&G released the Gillette Guard in India which has one blade, a lighter handle and a much a lower price. P&G currently has a “70 percent of global razor and blade sales, but it lags in India and other developing markets, because consumers can't afford to buy their main products” (Business Currier). The new razor developed for the Indian market will cost $0.34, with replacement blades selling for only $.11 each. As a savvy shopper I am dying to know why I have been paying over 36X this amount in the United States for one razor?!?!
The answer is a product of something called reverse innovation. Reverse innovation is a market back perspective where companies are creating products within developing regions instead of just adapting current products to fit local needs. Companies then “complete the reverse-innovation process by taking the innovations originally chartered for poor countries, adapting them, and scaling them up for worldwide use”(business week).
The Gillette guard was the first razor P&G had ever designed from start to finish for consumers in emerging markets. They gathered rich consumer insights and found out what people were willing to pay for a razor in India and then developed it so that they could price it for that much. GE has also had great success from reverse innovation in India with their portable electrocardiogram machine called the Mac 400. Check out this video (http://www.youtube.com/watch?v=yB47wx-b6sY) to see the product of thinking differently. GE believes the future of their company lies in successfully moving away from a “headquarter centered” viewpoint and embracing reverse technology. The Harvard Business Review described GE’s strategy as disrupting itself which is exactly what GE believes they need to do to survive in the future global marketplace.
Why is all of this important? As tomorrow’s business leaders we must acknowledge this trend happening in emerging markets and be open to new ways of learning and doing business. Politicians and diplomats have been trying to change the world for thousands of years but we have an opportunity to tangibly impact the world by just helping change the way corporate America thinks. It is imperative that today’s companies take advantage of the creativity and ambition in emerging markets.
How will you leave your mark? Do you think it’s possible that the most important innovations in the future will be adopted first in the developing world?
Also, check out this funny commercial for the Gillette Guard!
http://www.youtube.com/watch?v=uffvu0aztAA
Happy Monday
-Olivia Mills
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