Marketing Guru Jagdish Seth has been promoting his theory rule of three and has a book on the topic named The Rule of Three. The basic proposition put forward by him and his co-author Rajendra Sisodia is that in just three major players emerge in all markets. Which essentially means that in any product category only three players would survive and all other players in the given industry will have to limit themselves to being niche players in the market.
Ex- US food restaurants McDonald's, Burger King and Wendy's, Automobile market in the US. The book was written in 2002 and in one of his visits to India the author was asked if the rule of three would apply to Indian markets, to which he had said it would be applicable here and perhaps in response his new book on Rule of three in India is also coming.
Infact is one were to observe the Consumer Durables market the phenomenon can be seen to be working already. Coming back to Fridge purchase again, our visits to many shops across the city found only two brands being promoted LG and Samsung. When we asked for other brands either the variety was not there or the salesman didn't show any interest in promoting them. Other than the fact they are not Indian companies a consumer doesn't have much to complain agianst the two companies , they provide good quality products at reasonable prices and have built their brands based on that ..........
Sir, I don't think that can be generalized so easily. For example, in the Mobile sector, we have BSNL, Airtel, Idea, Tata and Vodafone all being major players, none of then having market-share that can be called insignificant.
ReplyDeleteSame is the case with the Toothpaste - We have Colgate, Pepsodent, Dabur and Cose-Up all in close competition.
I don't think it applies to a product market. In case of the cola industry, only Coke and Pepsi are significant (2 companies). So it is wrong to generalize it, isn't it?
I agree with you when you say that one has to be careful before generalizing, but what the Jagdish Seth talks about is consolidation in an industry. Continuing with your example of Mobile sector, because the sector is in it's growth stage so u find many players to be there but slowly over a period of time you will see that consolidation would take place and number of players would reduce. Initially in car manufacturing in US there were 100's of companies manufacturing cars,that it before 'Model T' was introduced and the subsequent consolidation saw most of the other manufactures close down.
ReplyDeleteCoke and Pepsi are examples used by Seth to reinforce the rule of three (though it might be two)....how exactly would this be manifested in Indian market is something to be seen and reading his book on Indian rule of three would also help....