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Indian Consumer Market

August, 2013

Indian Consumer Markets: Brief Overview

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.

Recent Developments/ Investments

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-

  • Chinese personal computers (PC) maker Lenovo is vying for a substantial market share in the Indian smart-phone space. The company has already started executing strategies that will enable it to achieve the desired position. Lenovo has recently launched six new models to the Indian market and has inked deals with three national distribution chains while striking a partnership with HCL Care for after-sales service.

    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.
  • Indian consumers are increasingly upgrading to toothpastes that give relief to sensitive teeth and have whitening agents, according to a research analyst from Euromonitor. This new shift in consumption pattern has helped the dental cream market expand 19 per cent to US$ 896 million in 2012 and is expected to flourish in the future.

    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.
  • With rural consumers increasing their appetite for better products and high-standard services, fast-moving consumer goods (FMCG) companies intensified their efforts in rural India in 2012-13. FMCG majors like Dabur India and Hindustan Unilever (HUL) vouch for their rural markets and consider them to be extremely critical for the growth of their businesses.

    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.

Catching-up Online

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.