Question 3 & 4

QUESTION 3: How does Microsoft vary the marketing mix of its existing product offerings to
gain traction with Indian customers? What else has Microsoft done to make headway in India?
ANSWER 3: Microsoft has focused on finding not only cheaper options for its Indian customers,
but also alternatives that work with the Indian way of using technology. To that end, Microsoft
has developed the Window XP Starter edition that allows access to a more limited version of its
traditional Windows software for a lower price. The Windows Starter edition is available in
several Indian languages as well as English making it attractive to many Indian consumers.
Microsoft is also offering its traditional software on a subscription basis allowing customers to
buy only what they need and can afford. The company is also exploring ways to capture more
sales from farmers and other small businesses that rely on cell phones for tasks normally
performed on computers in the developed world.
QUESTION 4: What general lessons can be derived from Microsoft’s experience in India?
ANSWER 4: Most students will probably suggest that Microsoft’s experiences in India clearly
illustrate the importance of understanding the local customer. Microsoft initially found it
challenging to gain market share in India because it was trying to use a strategy that had
worked in the United States without considering whether differences in the market place might
imply the need for new strategy. This ethnocentric approach failed because most Indians simply
cannot afford to buy computers in the same way that U.S. citizens and businesses can. t
Microsoft has learned that it is important to “think outside the box.” Many Indians use cell
phone to perform tasks commonly completed on computers in the United States and other
developed countries. In order for Microsoft to capitalize on the potential of this market, it had
to rethink its entire business model and identify ways to capture some of these users. This
meant developing software for cell phones that met the needs of small Indian businesses and
farmers. Some students are likely to suggest that the decision to establish an R&D center in
India is instrumental has been instrumental to the ability of Microsoft to successfully navigate
the Indian market.
Why does Microsoft’s traditional strategy of the “one size fits all” not work well in emerging markets
such as India? What is different about these Markets? How do customers differ both in their
characteristics, and in the way they use technology?
Team two does a very good job of describing the issues that face Microsoft in developing countries. The
biggest of these is the fact that fifty percent of their manufacturing is composed ofsmaller companies
consisting of twenty or fewer employees. These companies do not have the profits to afford the
Microsoft operating system or Microsoft office. This will then unfortunately lead them to using pirated
software or Linux which is a free operating system. However this is an extremely small market with only
25pcs to 1000 people in India whereas the USA has 997pc’s to1000 people. This only allows for a market
of 31,750,000 due to India’s population of 1.27 billion people4. Which may seem small but for software
company this is a very small target market. However if this software becomes successful in India, We
believe that Microsoft should add windows XP starter edition to its product mix. This can be extremely
useful to many different market segments. For example most of the time students or corporations do
not use multiple programs all at once, mainly just a text editor and an internet browser. So this software
could be very beneficial to offer a low cost product offering.
2.What steps did Microsoft have to take to develop products that are customized to Indian customers?
Team two does an excellent job of using price elasticity of demand. India is a very volatile market for
Microsoft and they are extremely influenced by price fluctuations. Microsoft biggest way that they
compete however is due to its product differentiation. By constantly adding new features and upgrading
its products they stay ahead of the competition. However, they need to be able to compete based on
price in developing countries. When a company can barely afford a computer, they really do not care
about all of the bells and whistles they just want something that is functional and works well. Microsoft
has taken a big step into getting this software into a viable product. They will allow companies to access
Microsoft office online. “Microsoft is betting on increasing adoption of the cloud computing model
coming to its rescue in beating piracy. In the cloud model, as the software is sold or offered as a service
over a network, rather than physically installed on client premises, there is little room for illegally
copying it.”5Withoutthe ability to download the software it will make it much more difficult for people
to pirate their 4 "India's Population 20135 Microsoft wants India among top five markets software.

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QUESTION 3: How does Microsoft vary the marketing mix of its existing product offerings to

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