1.0 Case Study : Microsoft in India
1. Why does Microsoft’s traditional strategy of one size fits all not work well in emerging markets such as India?
There are four main marketing strategies. It can be categorized as Globalization strategy, transnational strategy, internationalization strategy and localization strategy. As shown in diagram 1.0.
Emphasis on local responsiveness
Emphasis on cost reduction
Microsoft in India initially, pursued globalization marketing strategy. Globalization strategy puts less emphasis on local responsiveness and possesses high emphasis on cost reduction. Basically, globalization strategy focuses on product standardization. That is where the idea of one-size-fits all walks-into the picture. One size fits all, defined as “acceptable or used for a wide variety of purposes or circumstance; appealing or suitable to a variety of tastes” (one-size-fits-all, n.d.). According to the Case Study Microsoft has set the one-size-fits-all strategy, where Microsoft has assumed that people around the world will be able to buy their software. Microsoft has conquered the top most position in the ‘global software top 100 list with revenue exceeding $50,000million’ in 2005 (siliconIndia ,2012). Unfortunately, Microsoft just could not succeed in countries like India and China, particularly in India. As in India, based on statistics, compared to United States, and china, uses fewer personal computers per 100 population as shown in diagram 2.0.
(Source : UNdata | record view | Personal computers per 100 population. ,2012)
Microsoft penetrated the Indian market during the 90s. In 1990 the United States has 21.7 personal computers per 100 populations, but in India at the same time, the statistics was low with only 0.03 personal computers per 100 populations. While in 2000, there is a 35.4% increase in US, but in India there is only 0.41% increase. In 2005, the number of users rose to approximately only 1.11% in India. The fundamental reason behind the least usage of personal computers in India is poverty. Poverty has hit India for a very long time, even since Microsoft came to India during the 90’s.
As stated in The World Bank, definition of poverty line is Rs1 per day per each person, which is considered Rs365 per year. There are approximately 1.1 billion people in India and the number of population below the poverty line is 300 million, which concludes that approximately 75% of the Indian populations are poor. As for the Government of India, poverty line in the urban areas was Rs296 per month and Rs276 per month in the rural areas. In addition, the Government has also stated that, what they earn is perfect for their fundamental need for a day, like food, medical help and every basic need, or at worst the money they earn will sometimes not be enough (Krishan. n.d)
Diagram 3.0 below shows a population under poverty line in India during a time period of 15 years. In 1994, the percentage was high but it decreases in 2002 followed by an increase in 2007 and kept increasing since 2010. This graph shows that, poverty in India is never stable as it fluctuates unsystematically.
Population under Poverty Line (%)
(Source : India - Population below poverty line - Historical Data Graphs per Year, 2013)
As stated earlier, Microsoft did not achieve the expected sales in India because, even the few number of users, would want to purchase software as cheap as possible. There are other cheaper software that can also be found in India are known as Linux and the Pirate Microsoft itself.
Linux is a...
Please join StudyMode to read the full document