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This study on Indian consumer behavior is aimed at helping Malaysian businessmen to get a better understanding of the Indian market place thus enabling them to embark on selected strategies to effectively reach the Indian consumers. India is a big country with 28 states, over one billion people and 120 dialects/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 one-third 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. Among the total 164.8 million households in India, 80.7 million households comes under low income group ( <US$ 581 ), followed by 50.4 million lower middle income households ( US$ 581 to US$ 1162), 19.7 million middle income group (US$ 1162 to US$ 1190 ), 8.2 million upper middle income group (US$ 1790 to US$ 2465 ) and 5.8 million high income group (>US$ 2465).
Even. exclusive 2 . They are the darlings of exclusive establishments. Indian consumers are also associated with values of nurturing. Indian consumers have a high degree of family orientation. These values are far more dominant that values of ambition and achievement. only in India. Brands with identities that support family values tend to be popular and accepted easily in the Indian market. Product which communicate feelings and emotions gel with the Indian consumers. one sees traditional products along side modern products. This orientation in fact. For example. extends to the extended family and friends as well. 3. Perhaps. They prefer to shop in specialty stores.1 The Socialites Socialites belong to the upper class. and spend a good amount on luxury goods. Such orientation to value has labeled Indians as one of the most discerning consumers in the world. go to clubs on weekends. hair oils and tooth powder existing with shampoos and toothpaste. luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market.0 Different Segments Of Indian Consumers 3. Apart from psychology and economics. care and affection.2. They go for high value. They are always looking for something different.0 Characteristics Of The Indian Consumer Behavior The Indian consumers are noted for the high degree of value orientation. the role of history and tradition in shaping the Indian consumer behavior is quite unique.
which has seen a tremendous growth in the late nineties.3 The Working Women The working woman segment is the one.0 India’s Rich India’s rich can be categorized into five major categories as follows: 4. They prefer high value consumer products. Slow in decision making. cautious in their approach towards purchases.products. 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.2 The Conservatives The Conservatives belong to the middle class. Socialites are also very brand conscious and would go only for the best known in the market. This segment has opened the floodgates for the Indian retailers. but often have to settle for the more affordable one. The conservative segment is the reflection of the true Indian culture. Today. proving herself to be equally good. 3. she is rubbing shoulders with men. Working women have their own mind in decision to purchase the products that appeal to them. if not better. 3. They are traditional in their outlook. They look for durability and functionality but at the same time are also image conscious. These habits in turn affect their purchasing habits where they are trying to go for the middle and upper middle level priced products. The working woman today has grown out of her longstanding image of being the homemaker.1 The Rich 3 . 4.
961. who have been rich for a long time.000/. therefore.per annum. The number of households in this category is 98.289. 4.per annum.863. belong to this category.000/.900. They consume services greatly. Across the category. They aspire.5 The Obscenely Rich 4 . They spend more on leisure and entertainmentactivities than on future looking investments. They buy many durables and are status 4. They aspire to social status and power. There are joint families as well as nuclear families in this category. backgrounds are distinctly middle class. They own multiple cars and houses.4 The Sheer Rich The Sheer Rich is made up by households having income exceeding US$110.per annum.058. There are less DINK families here than in the rich category.per annum.000/.The rich have income greater than US$11. to attain 4.3 The Ultra Rich The Ultra Rich have income greater than US$44. Some single earning households are of first generation entrepreneurs.2 The Super Rich The Super Rich have income greater than US$22. Total These people are upwardly mobile. household having such incomes are 1. 4. There are some DINK households of middle-level executives.000/. Some of them in this category are Double Income No Kids (DINK) households. They do not have a homogenous profile. The Super Rich are mainly professionals and devoted to consumerism. the super-rich status. Some rich farmers. There is no typical profile of the ultra-rich. Total number of households is 320. conscious. Such households are 20.
The Indian rural market has been growing at 3-4% per annum. there is a significant increase of consumer awareness among the Indians.0 Increasing Awareness Of Indian Consumers Over the years. There are hardly 6. satellite television. Most premium brands are relevant to them. This awareness has made the Indian consumers seek more and more reliable sources for purchases such as organized retail chains that have a corporate 5 .16 billion. Today more and more consumers are selective on the quality of the products/services. The market size of the fast moving consumer goods sector is projected to more than double to US$ 23.000/. foreign magazines and newspapers. They are first-generation entrepreneurs who have made it big. As a result. 6. Some of them are techies. the spill over effect of the growing urban middle class is also felt in the rural areas. it is becoming an important market place for fast moving consumer goods as well as consumer durables. They are just equivalent to the rich in the developed countries. exposure to the west.515 such households in India. as a result of the increasing literacy in the country. 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. They crave for exclusivity in what they buy.25 billion by 2010 from the present US$ 11.The Obscenely Rich is made up of households having income exceeding US$222.0 Rural Consumer About three quarters of the Indian population are in the rural areas and with the growing middle class. 5.per annum. specially in the Indian cities. A variety of people belong to this category.
CDs/VCDs/DVDs.com www.10 million in 2000-01 to US$ 5.shopping.expomarkets.1 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. cassettes. of which the business to business segment will account for US$ 5. 7.0 7. books.41 billion.com www.ebay. The Indian consumers are price sensitive and prefer to buy value for money products. magazines.shopping.rediff. The popular online shops in India include: • • www.background and where the accountability is more pronounced. medicine and educational material. the products Indian consumers are buying through online are greeting cards. clothes. In India.8 billion in 2005-06.reliablegreetings.in www. Currently. The consumer also seeks to purchase from a place where his/her feedback is more valued.com • • 7. celebrities are being increasingly used in 6 . Indian consumers are now more aware and discerning. products and the market and are beginning to demand benefits beyond just availability of a range of products that came from ‘trusted’ manufacturers. and are knowledgeable about technology.2 Celebrity Influence This is an important tool which is able to influence Indian consumer buying behaviour.
the advertisements that celebrities endorse also achieve high recall rates. he or she is more likely to accept what the celebrity says about the advertised product and therefore will develop more positive feelings toward the advertisement and the brand itself. they pay more attention to them. Indians always love their heroes and heroines. it is not difficult to look for the reasons as to why companies are increasingly using celebrities. In the midst of the advertisement clutter. Celebrities may also help reposition products. of they endorsing the product concerned. Famous celebrities are able to attract attention and retain attention by their mere presence in the advertisements. Products with sagging sales needs some boosting and in this Indian celebrities can help by way 7. In India especially.3 Quality Oriented Outlets 7 .marketing communication by marketers to lend personality to their products. When people see their favoured reference group members or celebrities in the advertisements. The Malaysian businessmen can contact celebrities for endorsing their products through advertising agencies. When a consumer likes the celebrity in the advertisement. It is not surprising therefore that using celebrities in advertisements has become common practice. Consumers like advertisements more if they are admirers of the celebrities in the advertisements. Celebrities create headlines. Their activities and movements are being closely watched and imitated. What they endorse sell like hot cakes. The contact addresses are given in the appendix-1. With the visual media becoming more popular the use of celebrities in the TV media has increased.
4 Freebies Indian consumer buying behaviour is influenced by freebies. Malaysian businessmen who prefer not to go for high-visibility. refrigerators. Malaysian companies wanting to penetrate the Indian market. Some of the established retail outlets in India for selected products are found in Appendix II. 7. The future key for marketing could be to select more ethical and ecological responsible products and packaging. costly campaigns may embark on the strategy to engage well known retail outlets to capture the segment of Indian consumers looking for quality products. which is also convenient for 8 . Freebies generally comprise tooth paste. consumers are likely to take cues from well established retail outlets hoping that these outlets carry quality products. In general.5 Eco-Friendly Products The environmental awareness in India has started affecting marketing of products based upon their eco-friendliness. cooking oil etc. Indian consumers are likely to buy environmentally responsible products and packs. perhaps should consider giving freebies for the purchases made by the Indian consumers. However.Indian consumers looking for quality choose expensive brands as they feel that price is an indicator of quality. TVs. washing machines. Freebies are consumer products given free of charge as gifts to purchases of selected products above a certain value. Malaysians can work with the local business partners to attract the consumers by way of such promotion campaigns. soaps. in the absence of well known brands in selected product range. detergent. 7. and ready made clothes are some of the product categories in which freebies are given to Indian consumers.
The Indian consumer has become much more open-minded and experimental in his/her perspective. The working urbanites are depending more on fast and ready-to-serve food. There is now an exponential growth of western trend reaching the Indian consumer by way of the media and Indians working abroad. The popular growing shopping trend among urbanities is purchasing from super markets to hyper stores. Bulk purchases from hyper stores seems to be the trend these days with purchasing becoming more of a once-a-week affair. 8. Consumers in India are taking lead in prompting manufacturers to adopt technologies to produce eco-friendly products. balancing environmental concerns with commercial considerations. rather than frequent visits to the neighbourhood market/store/vendor. There is an increase in positive attitude towards western trends.1 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. 8. thus.2 Trendy Lifestyles The current urban middle and upper class Indian consumer buying behaviour to a large extent has western influence. they take less pain in traditional method of cooking and cleaning. 9 .consumers.0 8.
Beauty parlours in cities. • • • • Beverages Packed food Ready to eat food Pre-cooked food Canned food Personal care products Audio/video products Garment and apparel Footwear Sportswear Toys Gift items • • • • • • • • Foreign brands vie increasingly with domestic brands for the growing market in India. designer wear. exposure to western influences and a need for self-gratification.3 Buyers’ Market In The Making The sellers’ market is slowly moving towards becoming the buyers’ market. Italian furniture are growing in popularity in India.Foreign brands have gained wide consumer acceptance in India. hi-tech products are a few instances which 8. reflect these changes. watches. Foreign made furniture is well accepted by the Indian consumers. Indian consumers have also developed lifestyles which have emerged from changing attitudes and mind sets. eateries. 10 . they include items such as. Chinese. Malaysian.
5 per cent to 8. and US$ 5. there have been sharp ups and downs. For rural India. India’s economic liberalization policies were initiated in 1991. on an average. they now have a choice of foreign products vis-à-vis 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.2 per cent. per capita 30 days' consumer expenditure of US$ 12. Other items have increased in importance.56 for non-food.0 Consumer Spending Behaviour The Indian consumer spending has increased from US$ 133. The way Indian consumers are spending their money on various items has changed in recent years. medical and healthcare spending has increased from 3.25 for cereals and cereal substitutes. for example.34 was split up into US$ 6. and US$ 2. While the Compound Annual Growth Rate (CAGR) in total consumer spending has been around 12 per cent a year over the past decade.74 in 2002-03.8 per cent in 200203.60 in 1992-93 to US$ 350. 9. Similarly spending on transport and communication has grown at 13. Food expenditure included US$ 2.78.13 per cent at current prices.07 per cent in 1992-93 to 44. Indian consumers have always preferred foreign goods and with the liberalization. for food. Consumer expenditure has been in tandem with the annual GDP growth. many new product offerings have entered the Indian market and product variety has also increased manifold.Since.37 11 . a compound annual growth of 10.5 per cent of total expenditure over the same period. a compound growth rate of 19. The share being spent on the basis (food and beverages) has fallen from 54.71 per cent.
190) spends more on consumer expendables than the rich. US$ 2.65 on clothing and footwear and US$9. Combined the middle and the lower income group provide 60 per cent of the value of the Indian market. except on cereals and cereal substitutes.16. In India. milk and milk products. The item-groups viz.53 for non-food.45 on other non-food expenditure. footwear and US$3.11 was spent per person per month on fuel and light. edible oil and US$ 2. Non-food expenditure included US$ 1.67 was spent on milk.96 on other food items. milk products.55. vegetables and edible oil and US$3. For the urban sector. education. US$ 2. 12 .53 was split up into US$ 10.465) spends more amount of their income on luxury goods and trendy products than fact moving consumer products. Of food expenditure. Urban expenditure levels per capita exceeded rural levels for all the product groups. fuel and light.00 for food and US$ 13. conveyance and rent contributed to the gap significantly.162 – US$1. The average monthly per capita expenditures on cereals and cereal substitutes for rural and urban areas are very close to each other. milk products.for milk. Non-food expenditure per person in the urban sector was more than double of that for the rural sector. The middle income group (US$1. where it was about US$ 5.00 for clothing.11 for fuel and light. The gap between rural and urban averages of MPCE was of the order of US$ 11.77 on other non-food items. miscellaneous consumer goods & services.37 went towards cereals and cereal substitutes while US$ 3. average Monthly Per Capita Consumer Expenditure (MPCE) of US$ 23.16 on others. beverages etc. and another US$1. the higher income group (>US$2. and US$ 1. vegetables.
SANT NAGAR. NEW DELHI . ARYA SAMAJ ROAD. DUGGAL Email : email@example.com. LTD. EAST OF KAILASH. M-138.IST FLOOR.com Contact : MR.conquestin.110048 Phone : 91-11-51638000 Fax : 91-11-51638001 Web-site : http://www.110065 Phone : 91-11-26464520/26464521/26292455 Fax : 91-11-26464520 13 . For the Indian market. middle class and lower class are income related classifications of the population and each of this class has its own consumption pattern.10.110005 Phone : 91-11-25860501/2/3/4/25726055 Fax : 91-11-25860505 Web-site : http://www.in 2. CONQUEST COMMUNICATIONS PVT. BEAUTEX ADVERTISING MEDIA 1715. 37A. GREATER KAILASH-II. NEERAJ JAIN Email : neeraj73@satyam. MATRADE CHENNAI APPENDIX 1 ADVERTISING AGENCIES IN INDIA 1. S.com Contact : MR. TOP CLASS SALES PVT.com 3. LTD.beautexindia.P. Malaysian exporters/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. NEW DELHI . KAROL BAGH. NEW DELHI .0 Conclusion Top class.
LAKECITY WEB PRIVATE LIMITED 226-3 (B).com 7. ANJANI COMPLEX. ABHAY GODBOLE Email : firstname.lastname@example.org Phone : 91-294-2524615 Fax : 91-294-2523034 Web-site : http://www. MUMBAI Phone : 91-22-26582434 Fax : 91-22-26589471 Web-site : http://www. 2ND FLOOR. LTD. HIMADRI COMPLEX. INTEGRATED BRAND. SALES INDIA. Juneja popclass@topclasssales. SECUNDERABAD . KORAMANGALA VI BLOCK. 1. 216. Sajid Mansuri Email : ahmedabad@selvel. UDAIPUR .selvel. 46. PARK LANE. 14 . NO. OPP. PVT. K. Satish Email : email@example.com 8.net Contact : MR. 100 FEET ROAD.500003 Phone : 91-40-55325705/06 Web-site : http://www. RADIANT A/210.com Mr.lakecityweb. S. PERCEPT H PRIVATE LTD.com 5. CHENOY TRADE CENTRE.com Contact : Mr. ASHRAM ROAD. COMM. SELVEL PUBLICITY && CONSULTANTS LTD.com Contact : Mr. 2ND FLOOR.net 6.com Contact : Mr. PP.com 4. SARDARPURA.Web-site Contact Email : : : http://www. 2ND FLOOR. ANDHERI(E). 201. Akhilesh Gupta Email : lakecityweb@yahoo. NINE MAGESTIC.380009 Phone : 91-79-7541081/7540915 Fax : 91-79-7541081/7540915 Web-site : http://www. AHMEDABAD .topclasssales.radiantmedia.perceptindia.
IMAGINE 38. MOHAMMADPUR.com APPENDIX ll MAJOR RETAIL PLAYERS IN INDIA FOOD AND GROCERY Foodworld Nilgris Subhiksha Adani – Rajiv’s Nirma-Radhey FASHION Shoppers’ Stop Westside Lifestyle Piramyd Globus Ebony Pantaloon OTHERS Viveks’s (Consumer Electronics) Planet M (Music) Music World (Music) Crossword (Book) Gautier (Furniture) Durian (Furniture Style Spa (Furniture) 15 .110066 Phone : 91-11-26191802/26162443 Fax : 91-11-26169265 Web-site : http://www.560095 Phone : 91-80-25539369/25539258 Fax : 91-80-25539369 Web-site : http://www.brand-comm.BANGALORE . Muruga Email : nfo@brand-comm. NEW DELHI .com Contact : Mr.com 9.com Contact : MR. SUJIT SANYAL Email : firstname.lastname@example.org.
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