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The Walk-Talk Gap On Financial Inclusion
Corporate Governance

The Walk-Talk Gap On Financial Inclusion

This potential customer is 5th standard passed, poor, lives in Mumbai in her employer’s house, has some family in a distant village, and is acutely aware of her need for financial security and independence. Demographic data shows that there are many like her in our big cities. Indeed, they are the consumer segment that Kishore Biyani, Chairman Future Group calls “India 2” i.e. people who help “India 1” make the money that they do; a consumer segment whose thinking has been influenced by being in close proximity and observing “India 1”. This is a primary opinion leader segment even for the folks back in their village. We went to the nearest public sector bank branch. Somehow, we felt that compared to the others, public sector banks may be more willing to admit such customers, given that their owner, the government, is constantly espousing it. But obviously public sector banks have […]

August 10, 2009
Understanding Consumer India Better
Consumer Trends

Understanding Consumer India Better

While consultants and companies advise investing in India based on the current and projected size of the middle class, the bogey of the definition and sizing of the middle class hasn’t gone away, says Rama Bijapurkar B2C business in India continue to struggle with defining target markets based on the most logical measure – household income. Every meeting we go to, the target market definition, based on which market potential is calculated and business plans are drawn up, is either hotly debated or accepted with a sceptical shrug of the shoulders by some people in the audience. The definition is based on some income band per households per month or year, and this income band neither makes blindingly obvious sense nor is it standardised across data bases. People have their own definition and they qualify this with labels like high / rich / middle / lower middle or labels like […]

July 27, 2009
The Shatabdi – A Metaphor for the New Middle Class India
Consumer Trends

The Shatabdi – A Metaphor for the New Middle Class India

A recent trip from Delhi to Rishikesh on the Shatabdi was a “eureka” moment. The Shatabdi is definitely the perfect metaphor for the middle class. Santosh Desai of Future Brands wrote once that the autoricksha is a metaphor for India. It can weave its way in and out of utter confusion, is ugly, noisy and inconvenient, but it serves the purpose quite well, at an incredible low price. Unlike an amusing bumper sticker on a Volkswagen that said “when I grow up, i will become a Mercedes”. the autoricksha will not grow up to become a car. It will – and is – becoming a much better autoricksha. But after seeing the Shatabdi, the thought occurs that the autoricksha may be a metaphor for the lower SEC (Socio economic class) C and D Urban India (roughly the second and third income quartiles of urban India); but the Shatabdi is definitely […]

March 30, 2009
The Rural Consumer Myth – II
Consumer Trends

The Rural Consumer Myth – II

“We should envision villages smartly and not assume that they are at a lower evolutionary stage.” By Rama Bijapurkar & Rajeev Shukla The recent media attention paid to the rural economy would make it seem as if the rural consumer is a different Indian altogether. But this is not such an open-and-shut case. In the first of our two-part article on Wednesday, we had concluded that the rural economy isn’t as isolated from the urban downturn or from the vicissitudes of agriculture as most would imagine. Here we address the issue of the nature of the rural consumer, etching out a mental model. Many of us are not sure how much water of progress has flowed under the rural bridge. Some are beginning to wonder if there is indeed a rural-urban market divide. A corollary to this is the growing belief that our domestic market has at last reached a […]

March 26, 2009
The Rural Consumer Myth – I
Consumer Trends

The Rural Consumer Myth – I

“Growth in the hinterland is neither insulated from the rest of the world nor any different from it.” There is a worrying groundswell of optimism that rural consumers will come to the rescue of an Indian economy which is in the midst of a sharp slowdown. This optimism may be misplaced. We examine two issues. One: How safe and insulated is rural consumption, both from the travails of the world around it and from its own special sources of volatility and shock? Two: How different is the nature of rural consumption, now and going forward, both from its urban counterpart, as well as from its own past patterns? We’ll tackle the first issue in this piece and the next in the concluding article. Hearing phrases such as “rural renaissance” or “rural India to the rescue”, makes us nervous. Such talk bears overtones of the “Great Indian Middle Class” story of […]

March 25, 2009
MBA Placement Season 2009
Business Strategy

MBA Placement Season 2009

The tough decision for this month’s column was whether to write about the prognosis for consumer demand in India, post the global meltdown, India slow-down, e-sops (as the ET elegantly described vote inducing election expenditure); OR whether to write about what lessons placement committees (mostly comprising students) of top tier MBA schools ought to learn and act on, after the 2009 stressful placement season. This column opted to discuss the latter, because we want to urge future leaders of India Inc. to use their intellect and education to courageously depart from the past and do things differently for the different world of the future. If they are content being status-quo-ist in their placement models with the justification of “hamare khandaan ke purane rivaaz hain”, they are out of step with the mindset that winning companies of India Inc. and the world want and need. Closer home, students running placement at […]

March 3, 2009
The Three Ns of Made for India
Business Strategy

The Three Ns of Made for India

“Nirma, Nokia, Nano: Market creating products that truly understand the India Consumer.” Sasta, Sundar, Tikau, the mantra for success in the Indian market, has just got a new benchmark, and a new poster child: The Nano. Nirma took the Indian market by storm, as did Nokia, and as we hope, will Nano. What they all have in common is that (1) they are market creators unfettered by analyses of what the current market size is and what it is forecasted to grow to, (2) they recognise that current product markets are the size they are not because Indians are too unevolved to have desires, but because they don’t have enough money and (3) they start with a potential customer base (and not a current industry size), they define a price and a quality that customers will accept, and then challenge themselves to deliver it profitably. It is here that many companies, […]

March 24, 2009
Going Native In Bits
Consumer Trends

Going Native In Bits

Matters came to a head when mother asked me to wear a half sari to Miranda House. The native place became my official enemy. Copious explanations were given about our “back home” to neighbours in the cantonment, to explain exactly what kind of ‘madrasi’ we were-and were not (“No, no, we don’t use coconut oil and eat fish, we are not from Kerala. In ‘our parts’, we cook in til oil, eat lots of red chillis”). And every year, when my father got his annual leave and ltc, the “native place” loomed large, as did the furrows on my mother’s forehead. That’s when our Telugu would have to be brushed up, my clothes reviewed for modesty, the hateful long silk skirts (pavadais or “park-in-ee”) brought out of the trunk, and a string of dos and don’ts dinned into me. Don’t be rude, don’t be forward, don’t say you don’t like […]

March 20, 2009
Bharat Buying
Demand Drivers

Bharat Buying

In a previous column in this paper, I had suggested that what was more likely to upset our economy was, companies failing due to bankers’ reluctance to lend, than evaporating consumer demand. I had, perhaps naively, suggested that instead of the government spending good money to bail out consumer demand, they should spend it to incentivize banks to lend to those companies, which are otherwise fundamentally healthy, but suffering from a severe hangover, due to excessive expansion in boom time. This has elicited a sharp response from bankers who say they are not in the ‘bailing out’ business, and must evaluate lending risk even more stringently now than they did in the past. THAT IS A FAIR POINT; HOWEVER, THE RISK ASSESSMENT HAS TO BE SOPHISTICATED ENOUGH AND AT THE FIRM LEVEL SO THAT THE BABY IS NOT THROWN OUT WITH THE BATH WATER AND LONG TERM WINNERS HAVING A […]

December 30, 2008
Problem Isn’t Consumer Demand
Policy Perspective

Problem Isn’t Consumer Demand

The primary problem at this juncture is not the lack of consumer demand, but the lack of funds desperately needed by companies to stay afloat on a week to week basis. This, if not addressed soon, will cause corporate collapses, leading to job losses and business associates collapsing, leading to more job losses, and a shattered faith in the economy. Typical stories around us today are of companies that have over leveraged themselves and expanded aggressively in the past few years; and who have, until recently, diverted cash flows to fund even more aggressive expansion. The implicit assumption they made was that further equity and/or debt would be available on call; the question was never about its availability, but only about its price. Part of the reason for the aggressive expansion was the valuation payoff that several of them, especially not-yet-listed companies, assumed that they would get. Part of the […]

December 10, 2008
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