Consumerism overwhelming Indian markets

Wednesday, January 2, 2008

India. Shining India. Consumer India. High?Growth India; Market-Oriented India; Investment?Inviting India. Since 1991, when India first broke away from its Nehruvian socialist ideology and went in for a market economy, things have been changing so fast as to make the progress achieved and noticeable, unbelievable. It has now the fourth largest gross domestic product (GDP) in the world in purchasing power parity (PPP). Of its 1.2 billion people, as many as 450 million are apparently below the age of 21, each vying to scale the inviting heights of economic prosperity. And they have become the target of products in a big way. But what sort of products sell in such a society? The investor?especially the foreigner, anxious to exploit a growing market?is beginning to ask highly relevant questions such as: Is there enough evidence that India can be a consumer powerhouse? What is the exact purchasing power of the market? Is there really a fortune at the bottom of the pyramid? Why are demand patterns so capricious? Is rural India a sophisticated enough or primitive market? Foreign investors who have no idea of Indian society and its demand are searching for answers.

In this book Rama Bijapurkar, an expert strategist in marketing and a consultant besides, has sought to provide them. And they have been highly appreciated by no less a figure than C.K.Prahalad, professor of Corporate Strategy at the American University of Michigan. Several points are made. One is that the investor must not take the GDP as a measure of the capacity to consume. Another is that rural India is neither as poor as is popularly imagined, nor is it entirely agriculture?dependent. Yet another point reminds us that Indian consumers are value-oriented and even if they are poor, they are not backward and know exactly what they want. As N.R. Narayanamurthy, Infosys Chairman who has provided a preface to the book says, investors in the consumer market must know the socio-cultural habits of the Indians consumer, understand the sheer heterogeinty of the Indian market and remember that, as Bijapurkar herself has noted, the number of middle income house-holds in rural India is around 27 million while the corresponding number in urban India is just a bit higher at 29 million. How can one capture their market? Why has Nokia won, while Coca Cola and Pepsi are struggling? Why is Honda winning while Mercedes is limping? How come Levi?s lags behind in expectations? Why are salwar Khameez so popular all over India? Why hasn’t Heinz ketchup caught up, and Kellog is till way behind? Fascinating questions.

But Bijapurkar is giving equally fascinating answers. She notes the first few years if hyped expectations, the early demand boom, the subsequent demand stagnation and explain how these changes happened to take place. Note is taken of zigzag economic growth that was reflected in zigzag sales in the consumer market.

To read this book is to get a different picture of another India, seldom portrayed in the media which concentrates so heavily on politics. One of the most notable?and true?things said is that India is a mosaic of tradition and modernity and obviously as a consumer market it is no less a land of conflicting truths. And yet there are facts that cannot be ignored. Thus, with a population already over 1.2 billion in numbers, it is growing at the rate of 1.6 per cent, adding to itself, a population equivalent of that of Australia every year! And by 2030 India?s population will comprise 18 per cent of the entire world?s population! If India, then, won?t be a target for investors, which country would? And yet the consumer investor will have to realise the customs, habits, culture and aspirations of a heterogeneous society that India is, with the heterogeneity being more marked than that of a United Europe. As Bijapurkar aptly notes “India is a long-haul market and what it offers is cheap entry tickets into a guaranteed long-term, slow-burn growth”.

Equally true is what she says about winning in the Indian market. As she puts it so precisely: “Winning in the Indian market is about being able to design the right business machine which can profitably deliver adequate quality at affordable prices to serve the mass market which is a large base of consumers with modest incomes but sophisticated needs and demands”. They must also give due recognition to the fact that consumer India is a “federation of different cultures that just happen to be sharing the same geography.” Yet Bijapurkar believes that there is a shared ethnicity in India and acknowledges that “there are many levels at which business houses in India have dealt with ethnicity and made it work for them”. Bijapurkar knows her market as few do. The big national ?pan Indian? brand according to her is now beings given a run for its money and the big national FMCG (Fast Moving Consumer Goods) brands from large companies are increasingly under attack from small but sharply targeted brands who operate in narrow localised geographies. This must come as a revelation to many companies.

As Bijapurkar sees it “the media, especially television, has become much more strongly localised and regional language, ethnic state-level television has firmly entrenched itself?” Many in the business world would find this book a real eye-opener.

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