Indian Consumer Behaviour

Presented By:
Aditya Gour Gaurav Singh Himanshu Gupta Sangya Swati Sharma Rathore

 India is a big country with 29 states, over one billion people and 325 languages.  From the market perspective, people of India comprise different segments of consumers, based on class, status, and income.  An important and recent development in India’s consumerism is the emergence of the rural market for several basic consumer goods.  Three-fourths of India’s population lives in rural areas, and contribute onethird of the national income. This rural population is spread all over India, in close to 0.6 million villages.  India is a lucrative market even though the per capita income in India is low and it remains a huge market, even for costly products.

Thus customer is a sub set of consumer. they buy benefits.  The central premise to understand consumer behavior : ‘People do not buy products or services. who has made a custom to purchase a particular company's product/services. especially one that acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing.  Customer is one who is brand loyal. A consumer is an end user.’ .Difference between customers and consumers  Every customer is a consumer but not every consumer a customer.  One that consumes.

 Apart from psychology and economics.  Indian consumers have a high degree of family orientation. . Product which communicate feelings and emotions gel with the Indian consumers. one sees traditional products along side modern products. These values are far more dominant that values of ambition and achievement. the role of history and tradition in shaping the Indian consumer behavior is quite unique. Perhaps. For example: hair oils and tooth powder existing with shampoos and toothpaste. only in India. luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market.Characteristics Of The Indian Consumer Behavior  The Indian consumers are noted for the high degree of value orientation.  Indian consumers are also associated with values of nurturing. Brands with identities that support family values tend to be popular and accepted easily in the Indian market. Even. care and affection.

 They are also very brand conscious and would go only for the best known in the market. .  They are always looking for something different.Different Segments Of Indian Consumers The Socialites  Socialites belong to the upper class.  They prefer to shop in specialty stores. and spend a good amount on luxury goods. go to clubs on weekends. exclusive products.  They go for high value.

 They prefer high value consumer products.  They look for durability and functionality but at the same time are also image conscious.The Conservatives  The Conservatives belong to the middle class.  Slow in decision making. but often have to settle for the more affordable one.  They are traditional in their outlook. cautious in their approach towards purchases. .  This segment is the reflection of the true Indian culture. spend more time with family than in partying and focus more on savings than spending. they seek a lot of information before making any purchase.

The working woman today has grown out of her long-standing image of being the homemaker. .  This segment has opened the floodgates for the Indian retailers. which has seen a tremendous growth in the late nineties.The Working Women  The working woman segment is the one.  Working women have their own mind in decision to purchase the products that appeal to them.

 Across the category.  They spend more on leisure and entertainment-activities than on future looking investments. to attain the super-rich status. backgrounds are distinctly middle class. .058.per annum.India’s Rich India’s rich can be categorized into five major categories as follows: The Rich     The rich have income greater than US$11.961. They aspire. therefore. Total household having such incomes are 1. These people are upwardly mobile. Some of them in this category are Double Income No Kids (DINK) households.000/.

900. They buy many durables and are status conscious. Total number of households is 320.The Super Rich • • • • • The Super Rich have income greater than US$22. There are less DINK families here than in the rich category. . The Super Rich are mainly professionals and devoted to consumerism.per annum.000/.

There is no typical profile of the ultra-rich. The number of households in this category is 98.289.000/. There are some DINK households of middle-level executives. who have been rich for a long time. Some rich farmers.per annum. Some single earning households are of first generation entrepreneurs.The Ultra Rich • • • • • • The Ultra Rich have income greater than US$44. . belong to this category.

000/. • There are joint families as well as nuclear families in this category. • They do not have a homogenous profile. • They own multiple cars and houses.The Sheer Rich • The Sheer Rich is made up by households having income exceeding US$110.per annum. . • They aspire to social status and power.863. • They consume services greatly. • Such households are 20.

• They are just equivalent to the rich in the developed countries. • Most premium brands are relevant to them.000/.The Obscenely Rich • The Obscenely Rich is made up of households having income exceeding US$222. • There are hardly 6. .per annum.515 such households in India. • A variety of people belong to this category. • They are first-generation entrepreneurs who have made it big. • They crave for exclusivity in what they buy.

specially in the Indian cities. adding more than 1 million new consumers every year and now accounts for close to 50% of the volume consumption of fast-moving consumer goods (FMCG) in India.  As a result.16 billion.25 billion by 2010 from the present US$ 11.  The market size of the fast moving consumer goods sector is projected to more than double to US$ 23.Rural Consumer About three quarters of the Indian population are in the rural areas and with the growing middle class.  The Indian rural market has been growing at 3-4% per annum. it is becoming an important market place for fast moving consumer goods as well as consumer durables. the spill over effect of the growing urban middle class is also felt in the rural areas. .

 Indian consumers are now more aware and are knowledgeable about technology.  This awareness has made the Indian consumers seek more and more reliable sources for purchases such as organized retail chains that have a corporate background and where the accountability is more pronounced. as a result of the increasing literacy in the country.  The Indian consumers are price sensitive and prefer to buy value for money products. foreign magazines and newspapers. there is a significant increase of consumer awareness among the Indians.Increasing Awareness Of Indian Consumers  Over the years. exposure to the west. satellite television. . products and the market and are beginning to demand benefits beyond just availability of a range of products that came from ‘trusted’ manufacturers.

Marketing Strategies Online Marketing  A study by the Confederation of Indian Industry (CII) and the International Trade Centre predicts that e-commerce activity in India will rise from US$ 0. the products Indian consumers are buying through online are greeting . CDs/VCDs/DVDs.41 billion. of which the business to business segment will account for US$ 5.10 million in 2000-01 to US$  www.rediff. magazines.8 billion in  www.ebay. clothes.  books.myntra. medicine and educational material.  The popular online shops in India include:  www. cassettes.

 Celebrities may also help reposition products.  In India.  With the visual media becoming more popular the use of celebrities in the TV media has increased. . celebrities are being increasingly used in marketing communication by marketers to lend personality to their products. What they endorse sell like hot cakes.  Celebrities create headlines. Their activities and movements are being closely watched and imitated. Products with sagging sales needs some boosting and in this Indian celebrities can help by way of they endorsing the product concerned.Celebrity Influence  This is an important tool which is able to influence Indian consumer buying behaviour.

soaps.  Freebies generally comprise tooth paste.Quality Oriented Outlets  Indian consumers looking for quality choose expensive brands as they feel that price is an indicator of quality. Freebies  Indian consumer buying behaviour is influenced by freebies. washing machines. Freebies are consumer products given free of charge as gifts to purchases of selected products above a certain value. . in the absence of well known brands in selected product range. consumers are likely to take cues from well established retail outlets hoping that these outlets carry quality products.  TVs.  However. and ready made clothes are some of the product categories in which freebies are given to Indian consumers. cooking oil etc. detergent. refrigerators.

 Indian consumers are likely to buy environmentally responsible products and packs. which is also convenient for consumers.  The future key for marketing could be to select more ethical and ecological responsible products and packaging.Eco-Friendly Products  The environmental awareness in India has started affecting marketing of products based upon their eco-friendliness.  Consumers in India are taking lead in prompting manufacturers to adopt technologies to produce eco-friendly products. .

 The popular growing shopping trend among urbanities is purchasing from super markets to hyper stores. .  The working urbanites are depending more on fast and ready-to-serve food. rather than frequent visits to the neighbourhood market/store/vendor.Changing Trends In Indian Consumer Behaviour Bulk Purchasing  Urbanisation is taking place in India at a dramatic pace and is influencing the life style and buying behaviour of the consumers.  Bulk purchases from hyper stores seems to be the trend these days with purchasing becoming more of a once-a-week affair. they take less pain in traditional method of cooking and cleaning.

eateries. watches. Foreign brands have gained wide consumer acceptance in India. they include items such as:  Beverages  Ready to eat food  Canned food  Personal care products  Garment and apparel  Sportswear Indian consumers have also developed lifestyles which have emerged from changing attitudes and mind sets. There is an increase in positive attitude towards western trends. Beauty parlours in cities. designer wear. The Indian consumer has become much more open-minded and experimental in his/her perspective.Trendy Lifestyles The current urban middle and upper class Indian consumer buying behaviour to a large extent has western influence. hi-tech products are a few instances which reflect these changes. .

 Since.  Indian consumers have always preferred foreign goods and with the liberalization. they now have a choice of foreign products over the local products.  Import licensing restrictions are being eliminated and tariffs significantly reduced and this has led to large range of consumer goods made available in India. India’s economic liberalization policies were initiated in 1991. many new product offerings have entered the Indian market and product variety has also increased manifold.Buyer’s Market In The Making  The seller’s market is slowly moving towards becoming the buyer’s market. .

medical and healthcare spending has increased from 3.07 per cent in 1998-99 to 40.Consumer Spending Behaviour  The Indian consumer spending has increased from US$ 133. a compound annual growth of 10.5 per cent of total expenditure over the same period. Consumer expenditure has been in tandem with the annual GDP growth. Similarly spending on transport and communication has grown at 13.2 percent. for example.  The way Indian consumers are spending their money on various items has changed in recent years. there have been sharp ups and downs. Other items have increased in importance.60 in 1992-93 to US$ 350.  While the Compound Annual Growth Rate (CAGR) in total consumer spending has been around 12 per cent a year over the past decade.13 per cent at current prices. .8 per cent in 2010-11. The share being spent on the basis (food and beverages) has fallen from 54.5 per cent to 8.74 in 2002-03.

 In India. .190) spends more on consumer expendables than the rich.  The middle income group (US$1. Non-food expenditure per person in the urban sector was more than double of that for the rural sector. the higher income group (>US$2.162 – US$1.  Combined the middle and the lower income group provide 60 per cent of the value of the Indian market. where it was about US$ 5.55.465) spends more amount of their income on luxury goods and trendy products than fact moving consumer products.

manufacturers should see the substantial middle class and base the market demand/projections on this roughly estimated at 250 million people with substantial disposable income.Conclusion  Top class. middle class and lower class are income related classifications of the population and each of this class has its own consumption pattern. .  For the Indian market.

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