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Marketing And Strategy

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Marketing and Strategy

August, 2011


With India moving strongly on its growth trajectory, markets are witnessing a fundamental shift in consumers’ buying behaviour. While purchasing power has enhanced significantly over the last decade, people are looking for price ‘plus’ value options in whatever they buy, that is, an option which balances the variables of price, quality, convenience, consistency, innovation and shopping experience. Hence, the marketers are continuously on their toes to provide the best deals to their existing as well as prospective clients. Marketing tactics and business strategies are worked upon meticulously by the service providers to facilitate competitive edge for themselves.

According to McKinsey Global Institute (MGI), India’s consumer markets are touted to grow exponentially during 2000-2025, wherein the total consumption in the country is likely to quadruple, making it the fifth largest consumer market by 2025. MGI expects India’s real gross domestic product (GDP) to grow at 7.3 per cent annually through 2025.

According to the latest edition of the Nielsen Global Online Consumer Confidence Survey (which tracks consumer confidence, major concerns and spending intentions among consumers), for the second quarter of 2011, Indian consumers continue to stand most optimistic globally. India fared at 126 index points for the survey, followed by the Philippines (115) and Indonesia (112).

Rural Markets: The Mushrooming Opportunity

The household consumer expenditure survey for 2009-10, released by the National Sample Survey Office (NSSO) has rejected the notion that growth made by India in the last five years has hardly benefitted hinterlands. The survey reveals that rural Indian households are spending more on consumer goods like durables, beverages and services as compared to their expenses on such things five years back. The 66th round of the National Sample Survey showed that monthly per capita expenditure (MPCE) in rural India was Rs 953.05 (US$ 20.86) in 2009-10, an increase of 64.6 per cent over 2004-05.

World's largest motorcycle maker, Japan's Honda Motor, is pushing its small capacity 100-cc economy bike model to get closer to rural Indian consumer. The company, which sold its stake in the alliance (Hero Honda) with Hero brand, is reversing its sales strategy to lay the thrust on Indian hinterland which has been a major contributor in the former alliance’s revenue.

People in rural areas are increasingly using internet for entertainment and communication. An increase in the use of internet by rural households is majorly an outcome of Government initiatives propelled by Department of Information Technology (DIT) such as National e-Governance Plan (NeGP), State Wide Area Network (SWAN) and Common Service Centres (CSC).

Indian manufacturers, from pin to car, are focusing their efforts towards rural areas to mark their presence in the unexploited markets. India’s largest carmaker, Maruti Suzuki India, is devising marketing tactics to attract first time buyers that would majorly include those form hinterland.

Hindustan Unilever Ltd (HUL), which targets to have a million outlets in rural areas by 2011-end, has initiated a project named 'Gateway to Rural: Beyond FMCG'. In a bid to penetrate deeper into rural India in a cost-effective manner, the company is in talks with telecom firms, banks and financial services companies to create a joint distribution model to cover India's 6.38 lakh villages.

Pilot project initiated with India's largest bank, the State Bank of India (SBI) in Maharashtra and Karnataka, has shown amazing results with the help of HUL's Shakti Ammas. They have doubled up as customer service-providers and opened around 1,000 accounts for the rural clan. If this exercise proves viable, HUL would roll out the plan across the country by 2012.

Similarly, the world's largest bicycle maker Hero Cycles has initiated discussions with insurance companies to provide health cover to its rural customers as a part of its poor-emancipation program.