Willing Spirit, Weak Flesh

It isn’t easy to imagine the sort of pressure on public goods when a billion people – mostly young, slowly getting richer – aspire for a better life, especially when infrastructure and public goods are already of poor quality and in short supply. This is the environment in which the great Indian consumer story will “live” for the next several years, shaping consumer behaviour and throwing up unique market opportunities quite different from those of the past two decades. Toilets; affordable housing; health care; old-age homes; schools and colleges; power and water; police; garbage clearance; bandwidth; buses, trains and metros; playgrounds and parks, and many such improvers of life are just not available. Domestic tourism is burgeoning, thanks to more money, but there are no decent public conveniences. Next to premium Mumbai apartments with breathtaking sea views, the rocks in low tide are an unending public toilet for people living […]

The Consumption Journey

Think local; it’s pointless to use western standards to measure India’s consumption base. India’s domestic consumption story has been told in terms of income based number crunching on the size of India’s middle class, and sales data from companies. After rural consumption came to the rescue in 2008-09-10, the story of rural consumption being the bulwark of future consumption has gained currency, almost as if the urban frontier has been conquered. Facts viewed through the lens of households help to do a reality check on existing mental models and numbers about India’s consumption story but are hard to get. We therefore welcome the new 2011 edition of the Indian Readers Survey (IRS) report, Guide to Indian Markets. Based on a rolling annual all India sample of 250,000 households, it is a standard market planning database, vetted by the Media Research Users Council (MRUC) and conducted by Hansa Research for over 10 […]

What Consumers Really Want

With more competition and more cautious consumers, companies will need smart marketing moves It is business plan season again. Most managers will argue for their new targets based on some rule of thumb linking overall market growth of their sector to GDP growth. Aiding them will be analysts’ views – mostly people who believe that all markets follow the same logic as the stock market – on whether consumer demand is ‘still strong’ or ‘softening’ based on quarterly results of companies and year-on-year comparisons. Using the health of consumer demand to assess the health of GDP growth, and using that, in turn, to predict consumer demand, is a bit confusing to some of us. Intuitively, the idea is sound that even with low GDP growth, companies can find healthy consumer demand for their business by persuading consumers to buy from them.. That is why our IT companies have healthy top […]

The Business of Financial Inclusion

The discussion on financial inclusion ought to focus a lot more on building an economically viable and consumer acceptable business model, with a specially designed regulatory ecosystem appropriate for that model. Evangelism or moral pressure to force banks to serve those not so far served by them cannot help square a circle. But a new tetrahedron that is superior to both the circle and the square can be built if we abandon orthodoxy and do not constrain the business model by saying: (a) Financial inclusion has to be driven by banks because we know how to regulate them, and should not be driven by a new ecosystem that does not have an existing bank as the lead; (b) it has to be offered below a particular price point which is defined either by some fuzzy-logic comfort level or by a mandated number based on somebody’s test of reasonableness (not the […]

Innovate India’s Way To Modernity

In fact, the newer markets of the world often create a “champion’s disadvantage”, because most champion companies are prisoners of their past success formulae. They are far too deeply vested in every way in the religion and the ritual that they have built so far and the risk of change is real. The same applies to western academia, who have built knowledge based on the experiences of global businesses. Their predicaments are understandable. But it is puzzling why Indian business executives and thinkers, who do not carry any such baggage, don’t think differently and originally. Perhaps, we need to reflect on whether there is an incumbent advantage or disadvantage for reigning champions of the developed world. If they have an incumbent disadvantage, then the new kid on the block (Indian business) is not a challenger risking a bloody nose but a leading-edge innovator. It’s what CK Prahalad calls the “next […]

Drunken Man’s Walk

Unprepared for Our Consumption

Danger: A Vulnerable Consumer Base

Why are car sales zooming? Here’s an explanation. Because it is only the rich who buy cars – car penetration is a bit over 20% in the topmost quintile of Consumer India (i.e. the richest 20% of India), and 5% or less in the remaining quintiles. Car sales also come out of corporate pockets as much as out of consumer pockets in this segment of income. and Rich India is actually back to feeling comfortable – the stock market is back up again, and everyone is feeling secure looking at their NAVs climbing back. Banks are lending for car purchases again, corporate profits have been very good and tax planning time is near The economic typhoon seems to have mildly hit and then gone away, adding to an increase in level of this consumer’s confidence. Pragmatic consumption is back again, and a new car with a bank loan is a […]

Tales From Modern Consumer India

An earlier set of columns discussed how India changes in insidious and tricky ways: it morphs, slowly changing from within, and keeps reshaping itself just like an amoeba. With each bit of outside matter it ingests, it changes shape a wee bit and, before you notice it, there is a whole new shape. The last column reflected on what modern Indian goods and services were looking like. This one is about consumer insights gleaned from a trip through Uttaranchal to Badrinath-Kedarnath, and one to Kolkata and Jamshedpur. The realisation from the Uttaranchal trip was that religiosity, cell phones and Maggi Noodles are three things that hold modern India together. Since the latter two are not part of our ancient heritage, we can heave a sigh of relief that we are evolving and not stuck in the past! The Kolkata-Jamshedpur trip had flight cancellations on account of an airline expanding too […]

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 […]