INDIAN CONSUMERS

Presented by
Swati

INTRODUCTION
The countrys retail market is projected to touch US$ 1.3 trillion

by 2020, as per Mr KV Thomas, Indias Consumer Affairs Minister.

With the online medium of retail gaining more and more
acceptance, there is a tremendous growth opportunity for
companies (international and domestic) in the retail and fastmoving consumer goods (FMCG) segment.
The Indian consumer sector can be broadly categorised into
urban and rural markets.
Indias consumer market is changing can be put down to
dramatic shifts in consumer behaviour, increasing urbanisation,
presence of a strong service sector, changing lifestyle, and most
significantly, the expanding retail segment.
Businesses that can cater to the requirements of India's
ambitious middle class, keep prices reasonable, build brand
loyalty in new consumers, and adapt to a rapidly changing
environment will find tremendous rewards in Indias potentialfilled consumer market.

Some Examples
India belied expectations never before
has any market been so rebellious about
what it will embrace and what it will not.
Nokia wins, Coke and Pepsi struggle,
Honda wins, Mercedes struggles,
LG and Samsung walk away with the
market, GE struggles,
Levis fights,
Diageo fails,
Star TV reinvents itself time and again,
MTV localizes,
Kelloggs still struggles, Heinz fails

An intriguing element of this mystery is

Indias consumer market; characterized by

diverse languages, regions, religions ,
economic and social status, this market has
always been a tricky proposition to
understand.
Now, as the market undergoes a paradigm

shift due to Indias rapid economic growth

and favourable demographics, it has also
become a market impossible to dismiss

Sources of Heterogeneity
Consumer classes with different value

orientation(just discussed)
Urban Rural (differentstages ofevolution)
Age two cohorts with distinct ideologies
Geographical differences (across states) economic

conditions, government policies,cultures, attitudes

Five economies withdifferentmindsets

IT,Manufacturing,Services,Agriculture,Government

Indian Consumers in Retail

Indian Market Segment

Segmentation contd..

Indian Market Insights

Globalstandards

do notautomatically apply
High volume low per capita incomeDiversity
culture,rural/urban,etc.Impact of own history and culture
Continuity with change
Clever, low-cost solutions
Indias market today isdifferent from developedmarkets yesterday
Consumers exist in real time: TV and internetNota virginmarket
Range of products and services availableSophisticated advertising and
branding strategies
Mosaic of Tradition and Modernity
Many Indiasbeing transformed by atdifferent levelsof intensity by
different forcesMixture of old and new
Implication:
Cannot simply fit India into a global strategy need to develop strategy
for theIndian market
MultinationalCorporationIndianconsumer

Decoding the empowered Indian

consumer
The Indian consumer market is drawing

global attention not just because of its

promise of sheer volumes but also because
of the tectonic shift happening in the
nature of demand.
The result of this flux is a new Indian

consumer who is more discerning than

ever, ready to place his money on brand,
quality and convenience and eager to
explore the organized retail market.

Aspiration for a better life

As millions of economically deprived households move

into the lower strata of the middle class segment, they

will begin to be able to afford and demand products
and services beyond food and clothing.
Together the aspirants from rural and urban areas will

push up demand for goods and services at the lower

end of the spectrum.
The new Indian consumer will be as discerning when

buying a product as his previous avatar. In fact, due to

a rise in income, increased awareness about products
and proliferation of choices, he will become pickier
with his purchases.

An Example
Indian consumers have not embraced the culture of

cola drinking as many other emerging markets have.

To begin with
Water holds a pre-eminent place in Indian food and

drink. Water is loaded with cultural meanings and is

considered the elixir of life.

Offering water to a stranger in the middle of

summer is the epitome of hospitality and kindness

Further
There is already a well developed in-home

beverage market for tea and coffee.

Added to this is the fact that American culture, of

which cola is a prominent symbol, has not had the

Consumer India: A
Consumer India is large
Snapshot
Over one billion people and still growing at 1.6 percent
annually. India adds to itself a population equivalent to
that of Australia each year.
It will comprise 18% of the worlds population by the
year 2030.
In terms of sheer numbers, the center of gravity is
towards where the consumers are.

It is mostly poor but is getting less poor

A marked increase in per capita income from a USD 120
in 1991 to USD 700 today.
Between 1993 -4 to 2004-05, according to NSS, the % of
people below the poverty line has dropped from 36% to
22%

It has some rich people who are getting

richer

Since 2001, the the average annual growth rate of high

income households has been double that of any other

India: The growth story

A guaranteed growth story
It is a large economy and has a large consumer base
growing steadily at a modest and sustainable pace.
It has the proven environment for guaranteed to
happen growth
A sustained GDP growth rate of 6 to 6.2 percent per
annum.

Young people, virgin market

Consumer India offers a guaranteed growth source of
400 million people below the age of 21 and over 20
million new babies each year.
Also, as income increases steadily, each year there
are more and more new consumers just entering
consumption, resulting in significant market
expansion.

 Low country risk

In addition to interesting demographics, India is
a story of inclusive growth that is stable both
politically and socially.

Strong institutions
Another key aspect that makes a country an
attractive investment destination is the
presence of strong institutions. Indias
separation between the legislation and
judiciary, tough election commission and the
glare of an independent free press enable a
variety of voices of viewpoints to be widely
heard.
It is a country, where the person living below
the poverty line can make or break a
government at will.

 Change confluence
There is a change confluence that is
happening, which is creating the tipping point
for a vibrant consumer market.
The average Indians income is growing,
Indias economic fundamentals are growing
stronger, rural India is decreasing itse
dependence on agriculture, the self employed
population dominates the process of making
India a vibrant nation of strivers, and
consumption is a huge growth machine.
While private consumption accounts for less
than half of Chinas GDP, it accounts for over
60 percent in the case of India.
China 2005 = India 2015
In about 8 years time, India will have the same
per capita income that China had in 2005. and
if China is being considered a hot and
attractive consumer market, then India will be
just as hot in a few years time.

Indias Tipping Point

Tech comfort of
masses spreading

Rural Indias
metamorphosis

Stronger India
Getting larger

Indias tipping
Point

Changing shapes
in income distribution

Step change in
Consumption comfort
and aspiration

Sophisticating
Of middle class
consumers

Growth of self
employed strivers

Generational
Transition 2005

Changing shapes in income

distribution: Rural

Changing shapes in each

income group: Urban

Urban
We are looking at an
increase in demand for
the higher performance
offerings even at higher
prices
Rural
We are looking at a
quality consumption
boom in rural India if only
quality supply could be

Consumption comfort
drivers
Actual visible increase
in consumption

Increased aspiration with

increased information

Increased
consumer
confidence

Consumption
Growth
Drivers
Increased
borrowing
comfort

Decline of
Poverty effect

The New Market Structure

Construct
The Rich

Oriented towards money for value willing to

pay more and targeted by luxury brands.

The Consuming
Class

Oriented towards value for money judiciously

balancing benefit and price to make value
optimising decisions.

The Climbers

Cash constrained benefit maximisers looking at

the best at a confined budget.

The Aspirants

The Destitute

New entrants in the consumption arena, they go

for the paisa pack of tea and detergent, low
price shampoo sachets, glucose biscuits, etc. .
Not into consumption of anything living as they
do from hand to mouth. This category is the
wellspring that will fuel growth of the other
consumer classes as income increases.

Dynamics of future growth

Volume growth due to the destitute
transforming into aspirants

As economic growth occurs, the destitute will

transform into aspirants and enter the
consumption arena creating an automatic volume
growth for several categories. Categories like toilet
soap and detergent gained a great deal during mid
1990s from this source of growth.

Volume growth due to the climbers

increasing their per capita
consumption

As the aspirants become climbers, they fuel

volume growth by consuming greater quantities of
products than they did earlier. This is true for any
category from textiles (expanding wardrobes) to
poultry (chicken twice a week and one piece for
everybody).

Value growth due to the climbers occasionally using superior

products
Climbers also contribute to volume and value growth through
occasional use of luxury or indulgence items.
These are best defined as superior performing substitutes
(upgrading from a monotone 1000 rupees cell phone to one with
a 1.5 MP camera)
Value growth due to the consuming class upgrading to better
quality products/brands
In mature categories like toilet soaps, home care products,
refrigerators, two wheelers both the growth of the consuming
class and their quest for better value drive value growth.
The Indian experience has been that this growth is hard to come
by unless
marketers
makeof
the
continue market
to deliverfor the
Value growth
through
creation
a effort
supertopremium
value right products at the premium end. When this does not
rich benefit
maximizes
happen,
we see the reverse phenomenon of down trading.
This has occurred where appropriate money for value offers have
been made in segments like cars, apparel, home fittings and
accessories, jewellery, watches, etc.
The six fold increase in this consuming class makes it a good market
niche for international brands offering world class quality at world
class prices.

The three drivers

Popular theories about the Indian market say
that there are three things that will drive the
growth of consumer India
The coming of age of liberalization children
who will drive consumption with a new vigour
The changing Indian woman
The rising income and consumption and the
eventual transformation of rural India.

What did marketers lack?

The marketers did not figure out that the Indian
youth were assertive but within the framework
of the family as the Indian society, unlike
America, is more about affiliation and family
and less about individualism.
Also, nobody actually strived hard enough to
create a youth culture. Most marketers tried to
emulate the american youth culture in India
and failed to create an impression.

CONCLUSION
The Indian consumer market is thus on a cusp of
metamorphosis. The upbeat mood of the economy,
the youthful exuberance of the population and its
increasing integration with globalized lifestyle and
consumption patterns will drive growth in the Indian
consumer market.
Consumer companies are thus realizing that the
Indian consumer market is a tough nut to crack but
the one they cant do without.
For global marketers India still offers a fertile ground
for a long term sustained growth.
It is a must exploit opportunity to global businesses