Saturday Morning Sale

Most of my regular readers are aware of my long term aspiration of being an entrepreneur. Towards that end, I keep thinking of ways to add value to the society and make money out of it. Not many ideas survive the rigorous thought experiments they are put through. But one of the ideas I have had recently has come a long way.

It was inspired by a not so pleasant Saturday morning towards the end of last year. I spent a good Friday night playing poker, returned home to watch the world famous gult flick, "happy days" and slept somewhere in between wondering why the director had such a huge crush on females in "langa-oni" (half Saree). I never cared to have a well formed opinion on half sarees, probably 'cos I never found them attractive and was fairly surprised that people could get so aroused by it. (Interestingly the wiki description says that they are worn by unmarried females. Probably it is an indication that you could go hit on them.) Before you jump to conclusions I am not planning to make a fortune by selling langa oni's to the world, though it might still be a good idea going by the success of this particular movie. So going back to that day, it was well past 6am by the time I slept. And at around 11 am I heard a knock on the door. When I opened the door, still half asleep, I found 2 neatly dressed men in black pants and white shirts, with sweet manners. They very politely asked me if I'd be interested in buying their product and I, as politely as I can, told them I wont need it since I don't use it. They tried their best to educate me on the benefits of their products and why it is better than the gazillion other ones out there in the market. I thought of making a case for the benefits of not using the product at all and persuading them not to use the product either, to make the world a better place, but it was Saturday morning and I wanted to get back under my comforter. So I just told them that I am not interested and sent them away, as politely as I can.

I, understandably, was not very happy with these blokes who spoilt my nice Saturday morning to sell their shit. I went back still angry with them to salvage what's left of my hard earned Saturday. Later that day, when I am significantly more conscious, I thought about their business model and it made perfect sense. The market is huge and there is lots of money out there. This is the field to be in.

The market is pretty big. Of the 6 billion people in the world, 5 billion actively use these products. There are 2 major players spread over the globe. The biggest player has 2.1 billion dedicated customers and is continuing to grow in newer markets. The next biggest player has a customer base of 1.5 billion and it also has very active acquisitions strategy. There is one regional player confined geographically, with a little less than a billion customers. They don't have a very aggressive acquisition strategy which is why they have not expanded to other regions. And then we have 1 billion who don't buy any of the products currently available in the market. But atleast about 80% of them are not sure of their needs and will very likely buy if you have a right customized product for them. The other 200 million think they don't need the product, like yours truly, and are virtually non existent for our purpose.

The two major brands in this space have been highly successful in expanding their operations. They competed fiercely against each other to capture new markets. As you would expect, there is not much love lost between the two brands. There have been several ugly instances where they had come in contact of one another. They monopolize the markets they are in and restrict the entry for other players. They have monopolized some of the markets so badly that they have to diversify the brand and compete fiercely with themselves.

The third big player, the regional one, has not been very focussed on the expansions and acquisitions. They have seen some amazing internal organic growth, which has almost become unmanageable and are now trying to restrict it. They have also started some acquisitions overseas but still very small in numbers and is negligible.

All these big players have a common strength of highly loyal customers. They have never tried the other products but are convinced that their product is far superior and believe that everybody in the world should use it. A good percentage of these customers are actively involved in acquisitions and help sell their products to new customers. They even try to poach customers from the other brands. Very often from the smaller players who don't have very organized operations.

And the money is big too. While it is tough to get the actual incomes of these huge players as they are spread over several countries and diversified several times. But the largest subdivision of the biggest player had an annual income of 422 billion dollars in 2001. It is known to be growing at 7% on an average every year which puts it currently at 677 billion USD. They have a customer base of 1 billion. So by quick extrapolation we can put the potential market size at 4.06 Trillion USD annually all over the world. Now even if we only target the confused customers who currently don't use any of the available products, we have a potential opportunity of 540 billion USD. Capturing even 1% of this particular sub segment will still make us 4 times bigger than Infosys by income.

So you see, this is the most happening thing to be in. Lets go sell FAITH on Saturday mornings.