The Economic Times - April 14, 2012
There is something seductively reassuring about operational performance improvement (OPI). Narendra Modi’s speeches at business forums have been all about it and he offers himself as an OPI-delivering chief operating officer (COO), with a successful model demonstrated in one pilot state, ready to be scaled to the rest of India. This resonates deeply with Corporate India, which has improved margins and taken advantage of the rising tide of ‘automatic’ GDP-driven revenue growth, for the past 15 years, on the back of an almost maniacal focus on building a lean, mean, efficient, scalable supply machine that could make maximum hay when the sun shone. Given how flabby and dirty the government machine is, there’s clearly a lot to be tangibly gained by the citizen-shareholder too – as is the case with investors in India Inc – and they may well elect him for that reason. Given all the case studies he […]
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The Economic Times - March 26, 2012
Consumer demand is still a large pie, and the bigger share will go to agile consumer-centric businesses Is consumer demand alive and well, even after the Budget? Prices will go up, driven by service tax and excise duty increases; cost of fuel, freight and utilities, and EMIs too, have shot up. India Inc will most likely take a one-shot price correction and pass on even past-absorbed cost increases to consumers in for a penny, in for a pound being their logic. And, in any case, the stock market is too woebegone to react too much. Of course, the absolute truth is that when prices go up, demand comes down, and it is tempting to conclude that consumer demand is heading for the ICU and tough times lie ahead. However, business logic should not be as simplistic as that, and before FY13 business plan targets are slashed, consider this: the total […]
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The problem with Income Data in India Income data in India has always been a contentious issue. There is a lot of intuitive discomfort that we have with the numbers, especially when you have to explain them to someone from overseas who is evaluating the potential of the Indian market with a view to investing in it. “How can any one who earns so little, afford to buy so many things, and still manage the living expenses of a family of five?”, they ask, puzzled! We can definitely vouch for the fact that the income data is generated by reputed, world class organizations, using rigorously designed, huge sample size surveys that would satisfy any survey data excellence standard, anywhere in the world. So, there is no “survey science” flaw on which to hang our discomfort with the data. Obviously something isn’t adding up. For example, consider the NCAER data (2001-02, […]
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India is far too complex a market with multiple determinants of consumption behaviour, that no single consumer classification system works well for all kinds of product categories, and for all kinds of strategies. Income is one basic classificatory system which we have discussed earlier. The SEC (socio Economic Classification) system for classifying consumers is a favourite and, some would argue, more robust alternate system used by marketers and market analysts to classify consumers based on their propensity to consume. More robust because it is closely correlated with income, and easy to accurately elicit from respondents, no matter how poor or illiterate they are. The Urban SEC system (classes A to E) is based on the occupation and education of the head of the household, while the rural SEC (R1 to R4) system is based on the education of the head of the household and the type of house lived in. […]
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Business Standard - April 16, 2011
Future income projections will show what we already know based on data of the last five and ten years: that between now and 2015, if there is no dramatic change in policy, past patterns of income growth will perpetuate and the top (richest) 20 percent of Consumer India will increase its income at a much faster rate than the rest of India and get even more unequally rich. We also know from past data that this group has a healthy income surplus, so, despite inflation, it will continue to increase its surplus. That’s why we haven’t seen any demand-led slowdown in expensive durables including cars, the stock market, in high-end smartphones and so on. That is why business class seats are not going a – begging despite ridiculous spot fares, because the opportunity cost of the buyers’ time to earn more is greater. Housing is never a good indicator of […]
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