Indian consumer markets are currently in a transformational stage. Broadly categorised into urban and rural markets, the Indian consumer segment is gaining high attention and pampering from marketers across the world. An expanding middle class, rising incomes and spending power, majority of youth in total population, rapid urbanisation and several other factors have glorified India's consumption story thereby giving everything what an economy would require to mark a growth rate of about 9 per cent.
Global research company McKinsey had referred to India as the 'Bird of Gold' in its report titled 'The Bird of Gold: The Rise of India's Consumer Market'. Consumer product makers and analysts now believe that this bird is ready to fly with wings wide spread in the global sky.
Another change that Indian consumer markets are experiencing is the blurring difference between rural and urban consumers. Rural consumers' basket mirrors that of their urban counterparts, giving a rise to the concept of 'rurbanisation'. This implies that marketers are making urban-centered products (such as diapers and deodorants) available in the rural markets as well.
'Geography is history', has been well said by Sameer Satpathy, executive vice-president and business head, consumer product business at Marico Ltd. He mentioned that location of the consumer does not really matter now. The mind-set is the same in urban and rural areas, but the challenge is to get access to such consumers who have similar approach.
Companies across the globe are scouting for a space in Indian consumer markets. They are willingly tuning their strategies and offerings to please the Indian tastes and preferences. Some of the efforts, investments and developments are discussed below-
Two of the confirmed national distribution chains are Redington India and Ingram Micro. Moreover, in order to convince the Indian customer that Lenovo is more than just a PC company, it is initiating a multi-crore-advertising and marketing campaign.
This fact has given Procter & Gamble (P&G), the world's biggest maker of consumer products, an attractive signal to invest in Indian dental care market. With an intension to leverage on the fact that consumers are continuously upgrading their preferences, the company had roped in popular Bollywood actor Madhuri Dixit-Nene to endorse its Oral-B Pro-health toothpaste in India.
HUL's decade-old Shakti initiative underwent a technology-overhaul in 2012 wherein about 40, 000 Shakti Ammas were equipped with a basic smartphone. These smartphones had inbuilt software that enabled them to take and bill orders, manage inventory and receive updates on promotional schemes offered by the company. This eventually enhanced their productivity. Reportedly, the Shakti initiative delivers around 20 per cent of Unilever's overall rural sales.
While HUL empowered rural women as Shakti Ammas, Dabur India made rural people use the company's sample products and experience the benefits for themselves. The idea was to spread the awareness about the company's products through the word-of-mouth advertising.
India's urban population, though small in proportion, has a big contribution in the evolution of the internet genre in the country. Finding the Indian e-commerce space lucrative enough, Amazon, the world's largest online retail company, has entered the market with a promise of ensuring low prices for users and a better platform for sellers. India is the tenth market where Amazon has come up with a country-specific retail Web site.
While Amazon.in will introduce categories like mobile phones and cameras in its online store eventually, it has made available books, movies and TV shows for sale to its users.
Online portals are also expected to be very instrumental for companies trying to access rural markets in near future. Internet facilitates a cost-effective means to expand a company's reach exponentially by overcoming geographic barriers. With rural India getting empowered with computers and smartphones, internet is definitely going to make its way very soon.
Indian Government plays a catalytic role in the growth of Indian consumer segments and their welfare.
The Cabinet Committee on Economic Affairs (CCEA) has recently approved Swedish furniture retailer IKEA's application to enter the Indian industry and set up a single brand retail venture in the country. FDI would be to the tune of Rs 10, 500 crore (US$ 1.7 billion), making it the largest investment to be made by a foreign brand in the Indian retail sector.
Moreover, the Government may further simplify investment norms in multi-brand retail to please foreign retailers who intend to invest in India but are a little hesitant on certain clauses. Mr Anand Sharma, the commerce and industry minister has re-iterated that any FDI proposal in multi-brand retail will be fast-tracked for sure.
The Indian Government has also envisaged various schemes, support policies and relaxed-regulations for companies looking at venturing into rural markets.
Similar Recently, the Shiv Nadar Foundation has invested about Rs 500 crore (US$ 81 million) for establishing world class schools called Vidya Gyan for poor rural children. Part of HCL Technologies founder Shiva Nadar's philanthropic initiative, the foundation has signed a Memorandum of Understanding (MoU) with the Uttar Pradesh Government.
The MoU would enable Vidya Gyan schools to conduct entrance tests across all Government schools in rural Uttar Pradesh to find talent, who would then be provided free education from class 6 to 12 at par with the best private schools in the country.
Vidya Gyan aims to transform the lives of meritorious but poor students from rural parts of the state.
McKinsey Global Institute predicted that India's consumer market would be worth US$ 1.5 trillion by 2025, surpassing Germany to become the fifth largest economy (behind the US, Japan, China and the UK) in the world.
Despite the strong blows of financial crises in 2010-11, Indian's consumption growth projections look attractive to major retailers. The retail market is expected to grow 14-15 per cent in 2013-14, according to a recent report released by CRISIL. Moreover, a larger section of consumers are expected to increase discretionary spending, making India all the more lucrative for multinationals seeking growth beyond their home markets.
Exchange Rate Used: INR 1 = US$ 0.01620 as on August 17, 2013
References: Media Reports, Press releases.