The moment you enter any business school, one jargon which echo's itself into limelight is the term "Value". I am not too sure who came up with this initially, but regardless most lecturers tend to think business is all about Value Creation - Societal, Personal, etc. I tend to be Its-all-about-Value type of a guy when I teach at the undergraduate, since my belief revolves around the point that if satisfaction is defined as value then utility is too, which makes everything a value - due to the main reason that even money, health & wealth (the basics) revolve around attaining utility and satisfaction.

Just to illustrate this with an example - In my previous post, I mentioned about the emergence of middlemen as the utmost dominion among business models. Along the same route, I am now getting focussed into a niche segment – which is the Indian Society living abroad, sweetly termed as the Non-Returning-Indians or the Non-Resident-Indians (NRI’s). Since the numbers tends to be larger, the market for the same tends to be on the larger scale. So there can be many smaller business models emerging out of this context, to exploit the opportunity. Again, another business opportunity if someone is able to think about anything value creating.

One such major example is the Indian restaurant located near 4 university accommodations and by far 2 biggest universities itself. The place is owned by an Indian, who leased it to another Gujarati Indian Businessman initially. These guys named the place Tandoori Jacks – very captivating name for an Indian restaurant. But the business proved to be a failure due to many underlining basic reasons. Firstly, the market he was trying to serve was relatively large and definitely not his market. Secondly, the core product was itself blemished – here being the food itself.

Considering the location, what do his customers want?

1. Authentic Indian food – since there are many other take away shops nearby who provide the same product but catering to the local western audience, who are more inclined to non-spicy food; reducing the level of authenticity.
   
2. The price elasticity of demand is greater than one – which means, the target market being students are very price conscious.
3. Service – I believe food business is half product- half service. So service plays a pivotal role in retaining customers. The basic law of marketing – Customer Retention to make more profits.

Taking these into account, the old business failed because he fell into the trap of doing business the other way round. He wanted to please his customers by offering surprise sweets by increasing the price, failing to understand that it was a surprise so the customers won’t know – all they will know is the price is increased and the core product is not worth that money; so his sales struggled to take-off. Since the turnover wasn’t great, he was forced to serve stale food making the core product even weaker. In all, without realising his own Value creation offerings, he fel into the trap. After 3 months, Tandoori Jacks was out of the business with closed doors.

But now after six months, a new Sardar took control of the place with a new name – The Haveli. Haveli opened one week back and we have already visited the place three times in the last four days - minimum gang of 4 people ($40 per person). People will always notice change; so getting customers the first time is definitely not a big deal. But the challenge here is retaining them for the future.

Haveli understands the business dynamics very well. I guess they must have read Purple Cow by Seth Goddin, where he talks business becoming successful due to serving the niche markets than the mass market, along with value creation by serving the Early adopters. Authenticity is the key, so the core product gets most marks. Secondly, the customers feel Value-for-money since the Quantity served is exhaustible comparing to the Quality and the price. They are adding extra value in terms of the Service by combining the art of mixing take-away business model with eat-in business model. Now, this is new in this business in Sydney which automatically creates an Out-of-the-world-value. Plus the ambiance inside the restaurant is pretty similar to any other restaurant back home in India, giving a bonus edge.

But the challenge they face would be sustainability on the longer run. All we hope is they don’t decrease the two Q’s when they acquire more customers. I have visited the same Subways hundred times in the last 18 months, than trying to get to a new subway purely due to geographic reasons. So likewise, once they acquire a new set of customers thanks to Viral Marketing, they need to make sure the longer they retain them against the Law-of-Diminishing-Marginal-Utility.

It is another matter of debate that we students are in such a rotten state of life that would eat anything that smells Indian. In all, I feel this business is creating and delivering more Value than the old one. Lets see if my business school education is right - we need to wait in the future to know!

Till then, happily signing off with a sigh of relief :)

Filtered by sambhar....

Labels: B-School, Business, NRI, Purple Cow, Value