The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the 21st Century [Hardcover]

Vijay Mahajan (Author), Kamini Banga (Author)

Book Description

Publication Date: September 24, 2005

Most global businesses focus nearly all their efforts on selling to the wealthiest 14% of the world's population. It's getting harder and harder to make a profit that way: these markets are oversaturated, overcompetitive, and declining. The Invisible Market shows how to unleash new growth and profitability by serving the other 86%. Vihajan Mahajan offers detailed strategies and implementation techniques for product design, pricing, packaging, distribution, advertising, and more. Discover radically different 'rules of engagement' that make emerging markets tick, and how European and Asian companies are already driving billions of dollars in sales there. Mahajan shows how to understand and manage lack of infrastructure and media, low literacy levels, and 'unconventional' consumer behavior. Learn how to redefine the 'real' competition; tap into the informal economy and unconventional channels; leverage expatriate word-of-mouth; pool demand to reach critical mass; piggyback innovations on local tradition; and price and package to reflect local realities. As traditional markets become increasingly unprofitable, emerging markets become the #1 opportunity for growth.

Editorial Reviews

From the Back Cover

Most global businesses focus nearly all their efforts on selling to the wealthiest 14% of the world's population. It's getting harder and harder to make a profit that way: these markets are oversaturated, overcompetitive, and declining. The Invisible Market shows how to unleash new growth and profitability by serving the other 86%. Vihajan Mahajan offers detailed strategies and implementation techniques for product design, pricing, packaging, distribution, advertising, and more. Discover radically different 'rules of engagement' that make emerging markets tick, and how European and Asian companies are already driving billions of dollars in sales there. Mahajan shows how to understand and manage lack of infrastructure and media, low literacy levels, and 'unconventional' consumer behavior. Learn how to redefine the 'real' competition; tap into the informal economy and unconventional channels; leverage expatriate word-of-mouth; pool demand to reach critical mass; piggyback innovations on local tradition; and price and package to reflect local realities. As traditional markets become increasingly unprofitable, emerging markets become the #1 opportunity for growth.

About the Author

The 86 Percent SolutionHow to Succeed in the Biggest Market Opportunity of the Next 50 YearsAbout the Authors

Vijay Mahajan, former dean of the Indian School of Business, holds the John P. Harbin Centennial Chair in Business at McCombs School of Business, University of Texas at Austin. He has received numerous lifetime achievement awards including the American Marketing Association (AMA) Charles Coolidge Parlin Award for visionary leadership in scientific marketing. The AMA also instituted the Vijay Mahajan Award in 2000 for career contributions to marketing strategy.

Mahajan is author or editor of nine books. He is one of the world's most widely cited researchers in business and economics. He edited the Journal of Marketing Research, and has consulted with Fortune 500 companies and delivered executive development programs worldwide.

Kamini Banga is an independent marketing consultant and managing director of Dimensions Consultancy Pvt. Ltd. Her clients have included Cadbury, Philips, Johnson & Johnson, Coca-Cola, and many others. She has traveled extensively in Asia and Southeast Asia, conducting training programs on market research and consumer behavior. During a three-year stint in London, she worked with the Harris Research Center as a consultant on ethnic issues for companies including British Airways and the BBC.

Banga writes and edits business articles for Economic Times, The Smart Manager, Business Today, and other leading Indian business publications, and is a non-executive director on several company boards. She is a graduate of the Indian Institute of Management, the premier institute for MBA education in India. A former resident of Mumbai, India, she now lives in London.

© Copyright Pearson Education. All rights reserved.

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Product Details

• Hardcover: 256 pages
• Publisher: Wharton School Publishing (September 24, 2005)
• Language: English
• ISBN-10: 0131489070
• ISBN-13: 978-0131489073
• Product Dimensions: 9.1 x 6 x 1 inches
• Shipping Weight: 15.5 ounces
• Average Customer Review: 4.8 out of 5 stars  See all reviews (17 customer reviews)
• Amazon Best Sellers Rank: #494,492 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

14 of 14 people found the following review helpful:

5.0 out of 5 stars Expert Guidance to Almost Unlimited Opportunities, January 4, 2006

By 

Robert Morris (Dallas, Texas) - See all my reviews
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This review is from: The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the 21st Century (Hardcover)

With regard to the meaning and significance of the title, Mahajan and Banga explain that 86% of the world has a per capita gross national product (GNP) of less than $10,000 per year. So what? Not only do those markets represent the future of global commerce; "they also present rich opportunities for companies that have the imagination and creativity to envision [consumers within those markets]. But you won't recognize these opportunities through the lens of the developed world. You won't reach these consumers through the market strategies that work in the 14 percent markets. Developing markets have no smooth superhighways, no established consumer markets, no distribution networks, and, in many cases, no electricity. Developing markets are younger, behind in technology (but rapidly catching up), and inexperienced as consumers. These markets are very different. Yet with creative solutions tailored to their distinctive characteristics, ...you can realize the rich opportunities of these 86 percent markets."

Mahajan and Banga have carefully organized their material within eleven chapters which range from a rigorous analysis of "the lands of opportunity" to a "Conclusion" in which they explain why the markets in underdeveloping countries "not to be missed." More specifically, they discuss what they describe as a "complex tapestry" of convergent civilizations in which there really do seem to be almost unlimited opportunities to increase both the standard of living and quality of life for hundreds of millions of consumers. The challenge for those companies which attempt to market various goods and services in those markets is to understand their unique characteristics. To me, it seems at east as important to understand what they are not as it is to understand what they are...or can (and will) become.

Here are two brief excerpts and then a checklist which, I hope, indicate the scope and depth of Mahajan and Banga's analysis.

"There is no Chinese market. There is a market in Shanghai, or in a neighborhood in Shanghai. There is no Indian market. There is a market in Mumbai or Chennai, or in their local neighborhoods. Developing countries are a collection of fragmented local markets in a country that is gathered loosely under a single flag." (Page 77)

"Think English is the language to know for business? Maybe not for long. Consider that Mandarin Chinese has the largest number of speakers in the world -- a billion, including second-language speakers. This is followed by English, with about half as many speakers, and then Spanish, Hindi, Arabic, Bengali, and Russian. If you want to work with 86 percent of the world, you need to speak the languages of the 86 percent." (page 83)

Which strategies will be most effective when "taking the market to the people"? Mahajan and Banga suggest seven:

1. Position for the paanwalla (i.e. small shop)

2. Create multiple levels of distribution (e.g. Hindustan Lever's "Project Shakti" based a direct-to-home model involving self-help groups, each comprised of 10-15 underprivileged women)

3. Use distribution bubbles (i.e. carnivals, market days, and vans which come and go) to find customers where they are

4. Take the bank out of the branch (e.g. Citibank's use of vans and a network of 9,000 direct-selling agents, called "Citi Friends," who visit homes)

5. Develop on-the-ground insights (i.e. understand and adapt to local aND even neighborhood regulations and conditions)

6. Create distribution systems from scratch (e.g. a new distribution system, based on grassroots networks, which built a supply chain for a camel's milk dairy in Mauritania)

7. Use existing networks creatively (e.g. the "dabbawala system" in Mumbai, India, probably the world's most efficient lunch delivery system which collects 175,000 home-cooked meals from workers' homes and delivers them to their offices)

Thoughtfully, Mahajan and Banga provide a section at the end of each of the first ten chapters, "The 86 Percent Solution," which summarizes key points and facilitates subsequent review of them. Before concluding their brilliant book, Mahajan and Banga share these thoughts when explaining why numbers are on the side of the developing world: Population Equals Profits. "The transformation is just beginning. There will be hiccups along the way and further surprises over the next two decades as the next `Chinas' and `Indias' emerge. The only certainty is the the 86 percent markets are here to stay. These markets are young and growing. Even though they won't become developed tomorrow,,, they are the future. And the companies that can develop the right solutions to meet their needs will find a rich source of growth."

Who will derive the greatest benefit from Mahajan and Banga's book? In my opinion, they are decision makers in two different categories of companies: Those which now market or are about to market in underdeveloping countries, and, other companies which now do business with -- or plan to do business with -- those in the first category. I also think this book will be of substantial interest and value to public officials who are now actively involved with helping to support global commerce.

Congratulations to Mahajan and Banga on a brilliant achievement!

9 of 9 people found the following review helpful:

5.0 out of 5 stars The markets are there, but the rules are vastly different..., December 15, 2005

By 

Thomas Duff "Duffbert" (Portland, OR United States) - See all my reviews
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This review is from: The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the 21st Century (Hardcover)

Business is obviously always on the lookout for growth opportunities. In the book The 86% Solution - How To Succeed In the Biggest Market Opportunity of the 21st Century by Vijay Mahajan and Kamini Banga, the argument is made (and quite effectively) that the largest new markets are in the developing countries... 86% of the world. However, the rules are significantly different in those markets...

Contents: The Lands of Opportunity; Don't Build a Car When You Need a Bullock Cart; Aim for the Ricochet Economy; Connect Brands to the Market; Think Young; Grow Big by Thinking Small; Bring Your Own Infrastructure; Look for the Leapfrog; Take the Market to the People; Develop with the Market; An Opportunity Not to Be Missed; Index

Many companies that have tried to move into these developing countries did so by following the same rules that worked in the richest 14% of the world. They more often than not failed miserably. The economies are different, the purchasing power is different, and the market plays by different rules based on culture. The authors do an excellent job in showing how a different approach to these markets are necessary in order to succeed. For instance, in "Grow Big by Thinking Small", they explain that developing country consumers are using to buying what they need when they need it, and only the amount they immediately need. They often don't have either the space to store bulk quantities nor the extra income to stockpile. Trying to sell laundry detergent for 100 loads will fail. Selling enough soap for one load for a few pennies will work. The margins are thin, but the volume is huge. Your company needs to figure out how to make it all work. In "Take the Market to the People", you'll learn that the concept of going to the nearest Wal-Mart is completely unknown. Your "store" may be a stall at a weekly market bazaar or a person cycling your wares from village to village. You better understand that and package/price accordingly. And what do you do when you're marketing electrical items in a country where power is normally unavailable for hours each day? That's your new reality...

For any business or entrepreneur looking to tap into the vastly underserved global markets, this book is required reading. Even if you're just moderately interested in business and markets, the information here is fascinating. What we consider normal, really isn't...

13 of 15 people found the following review helpful:

5.0 out of 5 stars Gold in the Crumbs, October 7, 2005

By 

Craig L. Howe "The Pointed Pundit" (Darien, CT United States) - See all my reviews
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This review is from: The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the 21st Century (Hardcover)

For years the developed world has been viewed as the "mother lode" for worldwide business. Companies poured their resources into serving the 14 per cent of the world's population that is fortunate enough to live there.

According to the authors, Vijay Mahajan, former dean of the Indian School of Business and current holder of the Harbin Centennial Chair in Business at the university of Texas in Austin and Kamini Banga, an independent marketing consultant, these markets are over-saturated, over-competitive and aging.

The growth, they argue, lies in reaching the rest of the world. Focusing on the 86 percent of the world with a per capital gross national product of less than $10,000 year offers a rich opportunity. These markets have been largely invisible to worldwide companies and even some firms operating there. Yes, the authors acknowledge, these countries lack infrastructure and media. They have low literacy rates. Their consumers react in unconventional ways.

Yet with the right solutions, these markets represent staggering opportunities. The authors suggest realizing that potential by:

1. Reaching middle class and the affluent consumers along with the poor. These markets are larger, wealthier and more diverse than you realize.
2. Designing products that reflect local environments and cultures.
3. Using expatriates to ricochet your products into the local economy.
4. Growth big by thinking small.
5. Bringing your own infrastructure with you.
6. Take the market to the people.

To illustrate these strategies, the authors draw on dozens of emerging market examples. They offer actionable strategies and tactics for product design, pricing, packaging, distribution and advertising.

Emerging markets are different. Yet, worldwide companies are already reaping billions of dollars in sales from them.