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Journey of Indian Consumerism – Study on Telecommunication and Automotive

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Conference Paper · February 2015

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Journey of Indian Consumerism – Study
on Telecommunication and Automotive
Industry
ABHIJEET ATHIPET
abhijeet.a2014@srisriuniversity.edu.in

1 s t year MBA, Sri Sri University, Odisha.

GOBIND GOPAL
gobind.g2014@srisriuniverstiy.edu.in
1 s t year MBA, Sri Sri University, Odisha.

Mentor: Asst. Prof. Somnath Dutta

somnath.d@srisriuniversity.edu.in

Sri Sri University, Odisha.

Abstract

Consumerism has different aspects of a consumer which deals with the rights, quantity,
economic policies of consumption etc. It may also deals with the development in the consumer
oriented tendencies, marked by the availability of a variety of manufactured consumer goods and
active advertising of the products in various media.
Indian consumerism is full of richness of events, cause and effect which is leading the Indian
market to a mature market, or maybe to a globalized market. Journey of the Indian Consumerism
also talks about the tale, the consumers’ raised the voice for rights, how their purchasing power
has increased through the times.
Telecommunication and Automotive industry is traced in this paper to understand and analyze
the consumerism and the trend of the Indian consumerism with respect to the global standards.
Keywords: Indian Consumerism, globalization, telecommunication industry, automotive
industry, Journey of Indian Consumerism, study of the consumers.

1
Introduction

Consumerism can be defined in many ways and viewed in different perspective. It is a social and
economic order and ideology that encourages the acquisition of goods and services in ever-
greater amounts. This speaks about the active buying and selling by the consumer.
The development in the consumer oriented tendencies, marked by the availability of a variety of
manufactured consumer goods and active advertising of the products in various media. A large
part of consumerism depends on advertising. A second aspect of consumerism discourse relates
to the everyday patterns of behavior one expects to find in consumerism or commercialism. This
also means that a large percentage of Indian population lives in rural sector as opposed to urban
centers. Currently, the division between rural and urban population distribution is 70% to 30%.
While this reveals a large rural bias, it however points to a dramatic shift to greater urbanism
because in 1960 the distribution was 85% and 15%. Urban industry, which was barely existent
thirty years ago, generates 40% of the national output. While the rural labor force still exists
based on historically constructed caste lines as non-competing groups, the structure of the urban
labor force is becoming more cosmopolitan.
In another perspective of economics, consumerism also refers to economic policies placing
emphasis on consumption. In an abstract sense, it is the consideration that the free choice of
consumers should strongly orient the choice of what is produced and how, and therefore orient
the economic organization of a society.
Consumerism essentially means the growing wants and needs of an individual for goods and
services. India is one of the largest and fastest growing economies in the world. The consumer’s
standard of life is going higher and hence his needs are escalating as well. Consumerism in India,
is in a new high, and refuses to show signs of budging anymore. The Indian consumer, due to his
exposure, of the global market, strives to get the best of the goods in his home land.
Consumer tastes and preferences are definitely changing. Even children have their own
preferences. The retail sector- both organized and unorganized, strive hard to cater to the vast
range of the Indian consumers. Eg : The retail sector in India, with its present pace, is expected
to grow at a rate of 25%- 30% annually.

Being the fifth largest retail industry in the world, the trends of the retail industry in India is
quite remarkable. The consumer group can literally be divided into three clear groups:
1. The first group comprises of consumers who are extremely brand conscious and depend
upon the high end retail stores to satisfy their needs
2. The second group is another extreme who satisfy their consumer needs from outlets that do
not hold popular brands and are also much cheaper;
The third group however follows the middle path- they satisfy their consumer needs either from
high end retail outlets or the less popular retail outlets, as and when necessary.

Special Features of Indian Consumers:

2
a) India is multilingual, that is, it has 16 major languages and ten non-comparable scripts. For
consumer researchers and practitioners, multi-linguicism presents some challenging issues of
translation, semantic representation in advertising and package design. Even for consumers, the
semantic differences create problems of meaning and comprehension.
b) India is multi-cultural. (Here, following Maus, an Indianist himself, we have to emphasize that
India is culturally diverse but not culturally heterogeneous (Dumont l986, p. xiv)). This means
that various practices relating to food, clothing, the use of symbolic forms, and rituals have
regional as well sub-cultural variations, while they also have many common threads both at the
religion-social and semantic levels.
c) Indian society is stratified hierarchically and laterally on the basis of caste. Caste is a social
category that is unique to India and cannot be compared to race or class while some of its
features may have some resemblance to both of them (Beteille l991).
d) India is multi-religious. The majority (82%) are Hindus, followed by Muslims (12%), and
Christians (4%). The rest include Sikhs, Buddhists and Persis. Religious strife in India has been
historically confined to Hindus and Muslims although the recent conflicts involving Sikhs have
widened its scope. Although religious symbols are not frequently used, it is not uncommon to
find them in the ads.
e) India is witnessing some of the most significant changes in the economic and social status of
women. The attitudes of women with respect to marriage, career, and their roles in the family
and society are undergoing radical changes and there is considerable literature describing these
changes (Liddle and Joshi l986, Sharma l986, Wadley l977). The changing roles of women is
accompanied by similar changes in the family structure and household systems (Saradamoni
l992).
f) The clash between traditionalism and modernism, or the blending of the two, is a perennial
theme that one discovers while studying India, and is played out in different ways depending on
the social and historical contexts. From an etic point of view, one can find Indians who are
traditional, or modern, or progressive, or even Westernized, or some combination thereof
(Chakraborty l991, Srinivas l966). From an emic point of view, similar labels are used by Indians
to describe themselves, although the term "Westernized" seems the least favored (based on
personal interviews). Indians use a combination of this terminology, to represent the notion that
on some aspects of their lives, they are modern, while on some other aspects, they are quite
traditional. Among many middle-class Indians this ontological tension exists regardless of age or
gender, signifying the fear of a possible loss of cultural identity in moving away from their
imagined notions of Indianness.
h) In terms of the contemporary power structure based on political, social and economic means,
but leaving the caste aside for a moment, we describe India as a multi-layered society. The layer
significant for our study includes a variety of groups, the salaried middle class, professionals
(lawyers, doctors, business managers, some bureaucrats, etc.,), small entrepreneurs, educationists
and the like. It is this layer that is most significant from the point of view of social change. The
changing values within the Indian context that are having an impact on the rest of the society

3
seem to find their most resonance in this class of people. People in this category seem to be very
ambitious, work very hard, and want to improve their financial condition. We regard this
category of people most important for studying the changing consumer culture.
Consumer in India had started its journey with a need to raise his voice against the quality of
goods as back as in 1969 through housewives at Mumbai .It took a shape of revolution at later
stage and one day our parliament passed an act for the welfare of consumers in 1986 .This
Consumer Protection Act 1986 had further undergone many challenges, criticism and even
question on its legal validity was also put before the honorable Supreme Court of India After
hearing all sort of accusation and constraints from the big business houses , our apex court held
this welfare act very much valid , legal and within the framework of our constitution .
Since 1986 and after three important amendments to the act ,scenario in the market has
drastically changed and consumerism in India is diverted to more of lust than limited to needs
.We are now easily confusing the things with what we need and what we want Its true ,if we
work hard, we deserve nice things.

Literature Review
The study of consumerism [1] and the different aspect of consumerism. The factors and
emerging issues that affect the consumerism has been studied in the paper [2]. Introduction to
telecom and some basic overview from Wikipedia encyclopedia. Does India’s
culture/demographics has a role to play [3] [4]? The importance of what happened in the telecom
industry was necessary for the study [5]. The trend and the other factors that happened in the
telecoms sector was needed to analyze [6] [7]. The regulations and policies came into existence
that impacted the consumerism. The formation of different bodies of policy-makers and
implemented laws [8]. The analysis was made through the data received through TRAI’s report
[9]. Important analysis and comparison of Indian telecom industry with the global companies
was analyzed was done [10] [11]. Major Telecom Industries in India and their impact on India
and its consumers [12] [13]. Recent trends and projection reports analyzed for predicating the
way of consumerism [14] [15]. Pre liberalization era of automobiles were studied in the article
[16]. Forecast of automobile sector growth SIAM report and auto financing in India data for
1970’s sales [17]. Study of Per Capita Income [23]. Data required to plot the trend and to
understand the attributes. [19][20][21][22][24][26] [28] [29]30] to describe the automotive
history [27]

Telecommunication Industry
The cellular mobile industry in India is undergoing rapid changes as a result of globalization and
liberalization. As a result of fast growth and severe competition, customer retention and
managing high churn rate are the most important challenges faced by telecom companies today.
Although the Indian telecom industry is one of the fastest-growing industries in the world, the
current tele density or telecom penetration is extremely low when compared with global
standards. India’s tele density 77.58% but the rural tele density is just 46.09% according to the
Telecom Regulatory Authority of India (Retrieved on February 2015). As majority of the

4
population resides in rural areas (72.2%), it is important that the government takes steps to
improve rural tele density. Many measures are taken by the Government (like the creation
Universal Service Obligation Fund). These measures are expected to improve the rural tele-
density and bridge the rural-urban gap in tele-density.

History
Indian telecom sector is more than 165 years old. Telecommunications was first introduced in
India in 1851 when the first operational land lines were laid by the government near Kolkata
(then Calcutta), although telephone services were formally introduced in India much later in
1881. Further, in 1883, telephone services were merged with the postal system. In 1947, after
India attained independence, all foreign telecommunication companies were nationalized to form
the Posts, Telephone and Telegraph (PTT), a body that was governed by the Ministry of
Communication. The Indian telecom sector was entirely under government ownership until
1984, when the private sector was allowed in telecommunication equipment manufacturing only.
The entire evolution of the telecom industry can be classified into three distinct phases. (In the
figure 1)
Phase I- Pre-Liberalization Era (1980-89)
Phase II- Post Liberalization Era (1990-99)
Phase III- Post 2000
Until the late 90s the Government of India held a monopoly on all types of communications – as
a result of the Telegraph Act of 1885.

5
Drivers in Telecom Growth

Growth of IT-ITeS and Financial Sector

India has entered the league of countries with the most-advanced telecommunication
infrastructure after the industry was deregulated. Furthermore, deregulation has stimulated
India’s economic growth through industry growth and through rise in investments. It is evident
that a well-developed communication sector improves access to social networks, lowers
transaction costs, increases economic opportunities, widens markets, and provides better access
to information, healthcare and educational services. The growth in Indian telecom sector has
been concomitant with overall growth in GDP, government revenue, employment et al. Besides,

6
telecommunication has increased efficiency, reduced transaction costs, attracted investments and
has created new opportunities for business and employment.
The NTP-99 was particularly helpful for the ITeS-BPO industry as it ended the government
monopoly in international calling by introducing IP telephony. After the introduction of IP
telephony, there was rapid growth in the number of data processing centers and
inbound/outbound call centers, which ultimately led to the outsourcing revolution in India.
The telecom sector has been instrumental in creating jobs for a vast pool of talented and
knowledge professionals in the IT and ITeS-BPO industry, which thrives on reliable
telecommunication infrastructure. India has become an important outsourcing destination for the
world and the boom in this sector also has transformed India’s economic dynamics. The
evolution of telecom sector has brought about a revolutionary change in the way some businesses
operate.
Another beneficiary of the telecom revolution is the financial services industry, which has been
on a growth trajectory. The progress and quality of the financial sector has been a key factor that
has driven the pace and diversity of the real economy. India has an extensive and well-developed
financial sector with wide and sophisticated banking network. Banking in India has become
service-oriented, and has matured greatly from the days of walk-in customers to the present
situation when banks have migrated to a 24-hour banking platform to attract customers; however,
this disintermediation in the business has led banks to be extremely prudent in terms of their
internal operations and has led them to adopt newer products and delivery channels. Further,
with introduction of internet & mobile banking the long queues at the banks are slowly becoming
a thing of the past.
Both the financial and the IT-ITeS segments rely on good domestic as well as international
network connectivity; therefore, there is a need for a sound telecommunication network.
Factors Facilitating Growth of the Sector
The phenomenal growth in the Indian telecom industry was brought about by the wireless
revolution that began in the nineties. Besides this, the following factors also aided the growth of
the industry.
Liberalization
The relaxation of telecom regulations has played a major role in the development of the Indian
telecom industry. The liberalization policies of 1991 and the consequent influx of private players
have led the industry on a high growth trajectory and have increased the level of competition.
Post-liberalization, the telecom industry has received more investments and has implemented
higher technology.
Increasing Affordability of Handsets
The phenomenal growth in the Indian telecom industry was predominantly aided by the meteoric
rise in wireless subscribers, which encouraged mobile handset manufacturers to enter the market
and to cater to the growing demand. Further, the manufacturers introduced lower-priced handsets

7
with add-on facilities to cater to the increasing number of subscribers from different strata of the
society. Now even entry-level handsets come with features like colored display and FM radio.
Thus, the falling handset prices and the add-on features have triggered growth of the Indian
telecom industry.
Prepaid Cards Bring in More Subscribers
In the late nineties, India was introduced to prepaid cards, which was yet another milestone for
the wireless sector. Prepaid cards lured more subscribers into the industry besides lowering the
credit risk of service providers due to its upfront payment concept. Prepaid cards were quite a
phenomenon among first-time users who wanted to control their bills and students who had
limited resources but greater need to be connected. Pre-paid cards greatly helped the cellular
market to grow rapidly and cater to the untapped market. Further, the introduction of innovative
schemes like recharge coupons of smaller denominations and life time incoming free cards has
led to an exponential growth in the subscriber base.
Introduction of Calling Party Pays (CPP)
The CPP regime was introduced in India in 2003 and under this regime, the calling party who
initiated the call was to bear the entire cost of the call. This regime came to be applicable for
mobile to mobile calls as well as fixed line to mobile calls. So far India had followed the
Receiving Party Pays (RPP) system where the subscriber used to pay for incoming calls from
both mobile as well as fixed line networks. Shifting to the CPP system has greatly fuelled the
subscriber growth in the sector.
Changing Demographic Profile
The changing demographic profile of India has also played an important role in subscriber
growth. The changed profile is characterized by a large young population, a burgeoning middle
class with growing disposable income, urbanization, increasing literacy levels and higher
adaptability to technology. These new features have multiplied the need to be connected always
and to own a wireless phone and therefore, in present times mobiles are perceived as a utility
rather than a luxury.
Increased Competition & Declining Tariffs
Liberalization of the telecom industry has fuelled intense competition, especially in the cellular
segment. The ever-increasing competition has led to high growth of subscribers and has put
pressure on tariffs, which have seen a sharp drop over the years. When the cellular phones were
introduced, call rates were at a peak of Rs 16 per minute and there were charges for incoming
calls too. Today, however, incoming calls are no longer charged and outgoing calls are charged
at less than a rupee per minute. Thus, the tariff war has come a long way indeed. Increased
competition and the subsequent tariff war has acted as a major catalyst for attracting more
subscribers. Apart from these major growth drivers, an improved network coverage, entry of
CDMA players, growth of value-added services (VAS), advancement in technology, and
growing data services have also driven the growth of the industry.

8
Journey through the Telecom Sector
Telephone connections are today affordable to everyone and are also easily available. Gone are
the days, when one had to wait for years to get a telephone connection. The number of telephone
connections which was only 2.15 million (fixed lines) in 1981 increased to 5.07 million (fixed
lines) in 1991. Today (as in 2003), there are 54.62 million telephone connections of which 41.33
million are fixed line telephone connections, 12.69 million are cellular mobiles and the
remaining 0.60 million are WLL telephones1. Wireless in Local Loop (WLL) telephones and
cellular mobile telephones were unknown in India a few years ago. Cell phones charges have
come down so much that today one can see even a common man going around with a cell phone
in his hand. The private companies are giving various incentives to attract customers, a situation
which is entirely opposite to the conditions prevailing in the pre reforms era when one had to
wait for years to get a telephone connection.

Service Quality - One of the main reasons for encouraging private participation in the provision
of infrastructure rests on its ability to provide superior quality of service. In India, as in many
developing countries, low teledensity resulted in great emphasis being laid on rapid expansion
often at the cost of quality of service. One of the benefits expected from the private sector's entry
into telecom is an improvement in the quality of service to international standards. Armed with
financial and technical resources, and greater incentive to make profits, private operators are
expected to provide consumers value for their money. Telephone faults per 100 main lines came
down to 10.32 and 19.14 in Mumbai and Delhi respectively in 2002-03 compared to 11.72 and
26.6 in 1997-98 (Figures 6 and 7). Quality of service was identified as an important reform
agenda and TRAI has devised QOS (Quality of Service) norms that are applicable across the
board to all operators (Singh et. al. 1999).
The first step toward deregulation and beginning of liberalization and private sector participation
was the announcement of National Telecom Policy 1994.NTP 1994, for the first time, allowed
private/foreign players to enter the 'basic' and the 'new cellular mobile section. FDI up to 49% of
total equity was also allowed in these sectors. The policy allowed one private service provider to
compete in basic services with the incumbent DoT in each DoT internal circle. It allowed
duopoly in cellular mobile services in each circle. As part of the implementation of the NTP 94,
licenses were issued against license fees through a bidding process. This policy initiated the
setting up of an independent regulator–the Telecom Regulatory Authority of India (TRAI),
which was established in 1997. The main objective of TRAI is to provide an effective regulatory
framework to ensure fair competition while, at the same time, protect the interest of the
consumers.

9
 Foreign Direct Investment (FDI):
Another important policy initiative endeavored to promote FDI in the telecom sector, a measure
considered necessary to augment the resources available to the sector. The new Policy permitted

Total No. of Subscribers

1200
NO. OF SUBCRIBERS IN MILLION

1000

800 TRAI, Entry of new private

players
600

400

200

0
1948 1971 1981 1991 1997 2002 2007 2010 2011 2012 2013 2014
YEARS

Total Subscribers

foreign ownership of up to 49% of a telecom venture, automatically, and up to 74% subject to

certain conditionality’s. In the manufacture of telecom equipment, however, sole foreign
ownership has been permitted, subject to sectoral requirements. The new FDI policy has yielded
good results as is evident from an increase in FDI inflow from Rs. 3.43 billion during 2000 to
Rs. 45.97 billion during 2007 through October.
Tariff
Other initiatives taken by the Regulator in the area of tariff include the introduction of the
“calling party pays” (CPP) regime and cost-based IUC. These measures positively affected the
competitiveness of the cellular mobile telephone services market in India and resulted in
significant reduction in international, and domestic long-distance call charges, the rationalization
of roaming charges, and the reduction in tariffs for mobile telephony. The positive impact
achieved thereby on the affordability of service for the common person contributed to the rise in
overall tele density. The continuous decline in the tariff for fixed line.

There is an increase in the subscription in the telecom industry shown in the figure.

The factor that affected the growth are discussed above.

10
Trends in the Industry
The impact of the telecom industry for the Indian consumer can be better understood through the
comparison of global standard and its analyzing where current trends and understanding the
future projections. In this
Table there are some interesting data regarding the telecom industries across the global.

courtesy: stakeholders.ofcom.org.uk

Comparing the different nation on some of the factors like Telecom per capita income and
Mobile connections per 100 population give some indication.
The mobile connection per 100 population is low for India compared to other nations. This
means that there is whole chunk in India waiting to be tapped into the telecom sector.
The telecom per capita income of India is very low compared to the other nations. This shows
that the profit margin from a subscriber is low in India compared to other state. Revenue from

11
Indian telecom is from the volume of consumers to the profit margin per subscriber. To
understand this more clearly, we can analyze the data of top 15 telecom companies in the world.
China and India has three companies in the top 15 telecom companies in the world.

Company Country No. of. Revenue (US$) Revenue

Subscribers (in billion) per
(in million) Subscriber
(US$)
China Mobile China 683.08 22.05 32.28
British 439 13.92 31.71
Mexico 251.83 7.98 31.69
Bharti Airtel India 250.04 3.04 12.16
Spain 243.51 11.4 46.82
Unicom China 219.25 4.95 22.58
Netherland 205.05 4.58 22.34
Reliance Comm India 154.6 0.48 3.10
Norway 152.72 2.55 16.70
China Telecom China 144.18 3.37 23.37
South
136.59 3.85
Africa 28.19
France 133.38 7.18 53.83
Indonesia 117.24 1.43 12.20
Idea Cell India 117.16 1 8.54
Russia 114.51 2.54 22.18
From this data we can see that India has low revenue per subscriber as discussed early. Other
developed countries has large revenue per subscriber.
To understand this better we have plotted and tried to analyze the trend and the projection of the
telecom sector in India in the effect of globalization and its impact on the consumers.
Here in countries like Mexico, Spain one could see the high revenue per subscription. But for
India this is low. The reasons are low penetration in the rural tele density, low per capita income,
and low purchasing power. This means that subscriber in India pays less to the telecom company
than by other countries.

12
Courtesy: Easy Investment- Industry Update

The Impact on Consumers

Consumers are will enjoy the benefits from the government policies dedicated to penetration
strategy and cut throat competition. They consumption in PPP terms will remain low for the
consumer.

Revenue & Subcribers Analysis

1200 90.00

REVENUE/SUBSCRIBER ($ PER NUMBER)

80.00
1000
SUBCRIBERS IN MILLION

70.00
800 60.00
50.00
600
40.00
400 30.00
20.00
200
10.00
0 -

Revenue (in Billion $) per Subscriber (in Million)

The companies will try to gain the market share than try to increase the profit share. The profit
will be depend upon the number of subscribers. This will also give rise higher power for the
consumer and better value proposition for the consumer.

Premium
consumers
From call rate Rs. 16
(1990) – Rs. 0.60 (2014);
headset Rs. 45,000
(1990)– Rs. 500 (2014)

Rural/low value
consumers

13
 The telecom sector has witnessed huge transaction in the price on the consumer over a period of
time. From the premium consumer to lower order consumers. There has been many reasons for
this transaction (discussed before) like liberalization, TRAI regulation and policies, new
technology, cost effectiveness.
Driven by falling handset prices and rise in smartphone penetration, data subscribers in India are
likely to grow an average 25% every year to reach 519 million by 2018 fiscal. This will increase
more consumers in the telecom industry.
Increase in the data consumer and the popularity of social media has a huge impact on the
consumption.
Demographics also plays an important role, as India’s main chuck of population are youth. These
factors tend to increase the consumers in the telecom industry.
Projection of the impact
In a short term the government and private players are trying to get more consumers or the
market share. The cost of increase in the subscriber in telecommunication is high due to usage of
spectrum.
The companies are auctioned for buying the spectrum allotted by the government to these
companies. The rise in price of the spectrum can trouble the companies to get the profit from the

Revenue & Subscribers Analysis

1200 90.00
Possible Trend
in the Indian 80.00

REVENUE/SUBSCRIBER ($ PER NO OF UNIT)

1000 Telecom
Industry 70.00
SUBSCRIBERS IN MILLION

800 60.00

50.00
600
40.00

400 30.00

20.00
200
10.00

0 -

Revenue (in Billion $) per Subscriber (in Million)

14
business. This happened in 2013 where it showed a slow growth rate (5%) compared to earlier
higher rate of growth (19%)
The balance sheet of the companies are weak. They have a low CAPEX which makes it hard for
better investment and new innovation in the field which are very essential in the field.
This may impact on the rise in the price for the services the companies provide.
The growth in per capita income in the coming future (by Economic Survey) will lead to higher
purchasing power in the hands of the consumer. This can facilitate for higher revenue collection
for the telecom companies for the services they provide.
Technology invention and implementation can also be the impact in the price rise of the services.
The 4G service is available only on the metropolitan cities of India. The service make demand
more money from the consumer. Another notable example which support this prediction is one
of the recent change in policy by Airtel. Airtel: - We, believe that VoIP services in their current
form are not tenable for us as a business. As a result, we will charge separately for VoIP
services.”
Our Customers can enjoy a superior VoIP calling experience on Airtel’s network by choosing
from a range of new VoIP specific data packs that will soon be launched. For prepaid users, the
VoIP exclusive pack will be priced at Rs. 75 for 75MB with a validity of 28 days

. The Internet is an access service, for which consumers pay Airtel, and VoIP is a service that
consumers use via the Internet. What is provided over the Internet should be none of Airtel’s
concern, providing the Internet should be. What Airtel is doing is slicing up the Internet into
types of services, and charging for those separately. Which means, and this is a privacy issue,
it checks what you are doing online.
Last quarter, Airtel reported Rs 1,805 crore of Mobile data revenue, up 73.8% Y-o-Y in India.
Data was 14.5% of Airtel’s revenues for the three month period ending September 2014,
compared with 5.2% at the end of September 2012. Its data customer base has increased
by 43.0% and higher usage per customer by 31.2%. Not counting accidental usage, Airtel has
40.1 mobile Internet connections active. Data consumption has increased to 40.1 billion MB
from 15.87 billion MB in Q2-FY15. If you just look at 2G data rates, Airtel now charges Rs 249
per month for what it used to charge Rs 99 a couple of years ago.
The globalization has also made the impact on consumerism. To compete and standardize the
product in the global market the companies will put the burden on the consumers.
To protect the rights for the value proposed and enable better services will are also some factors
which are demand evolved with time. This will further put more pressure back on the consumer
where he has to finally pay more.

These factors can drive this impact on the consumer.

15
Evolution of consumerism in Automobile sector:
The modes of transport from 1960’s till date have changed drastically. The force behind this is
the development in various sectors of our industry. Various Factors that contributed for this
change are advent of technology, liberalization, increase in purchase power of consumers etc.
Graph-1

Total sales vs Percapita Income

20000000 70000
18000000
60000
16000000
14000000 50000

12000000
40000
10000000
30000
8000000
6000000 20000
4000000
10000
2000000
0 0
1970 1980 1990 2000 2010 2014

total sales percapita income

The growth trend in percapita income has be multi folded post liberalization which describes the
increase in purchasing power of consumers. Post 2000 with emerging private sector the
opportunities also increased and new avenues to support the purchase of individual vehicle has
led to drastic change in the purchase and customization of vehicles. With evolution in private
sector various categories or target segments have evolved basing on their needs and preferences.
The evolving of each segment has described as follows.

Automobile sector and Auto Financing:

All the three segments (2, 3, 4 wheeler) briefed below have been effected by the introduction of
auto financing sector which started post liberalization. Pre liberalization ordinary citizen could
not take loan as owning an individual vehicle was not as much important as that of daily needs.
The major reason behind the sluggish growth in1980’s were
 Low paying jobs and risk averse attitude of Indian consumers.
 Access it loan was not easy process.
 Low priority for owning the vehicle.
 Financing facility for vehicle was also very low.

16
Post liberalization, in late 90’s the auto financing sector grew multi fold this increased the
affordability of the lower class to buy economy vehicles. While it also addressed the aspirations
of the economy class to own premium models. Initially which Started with Securitization of
Automobiles, with access to direct selling, collection and recovery agents have probed into the
untapped rural markets. This helped the rural people to access to a higher opportunity and mode
of interaction to various works. The could achieve higher income with accessing to various other
works than only binding them to their surroundings. Using these multiutility vehicles they could
reach out to various other needs in some other area which brought them income. Some schemes
introduced to various people according to their current status are
 Margin money scheme
 Advance equated monthly installment scheme
 Hire purchase
 Lease Financing Purchase

Three wheeler’s – segment:

The change in the mode of transport (referred-fig-1) was majorly throttled by the change in the
auto mobile sector. The sluggish growth till 1880’s didn’t contribute much for the growth.
Initially in 1960’s having a motor vehicle was a sign of pride. They were generally owned for the
government officials or by high earning groups of the then society which was a very small
segment of the society. The transport section was dominated by bicycles and public transport in
1960. The uncertainty in public transport timings and need for higher effective individual
transport system brought in the use of autorikshwa in Indian society. The ability of consumers to
afford an own family transport was very low which lead to a need of a fast and available public
transport. This lead to rise of hiring auto’s for the purpose. The early autos were LPG driven
with its engine below the driver’s seat. The capacity of the auto was 4 including the driver. Over
a decade the increase in demand for this mode of public transport created a major source of
income for many in India. Till late 90’s the 3 wheeler market was reigned by Bajaj, followed by
Force motors, Kerala Autos and Mahindra & Mahindra in early 2000’s. This segment grew as a
commercial segment with mini goods carrier and is mow merging with 4 wheel segment with
mini vans coming in to picture.

17
Graph-2

Total Sales VS 3 Wheeler

20000000 600000

18000000 financing
facilities, higher
500000
16000000 demand as
public carrier
14000000
400000
12000000

10000000 300000
Liberilization
8000000
200000
6000000

4000000
100000
2000000

0 0
1970 1980 1990 2000 2010 2014

total sales 3 wheeler

Availability of
Introduction to individual
Bajaj Auto’s vehicles at
cheaper rate. 18
Two wheeler sector:
Foreign collaborations lead to increase in opportunities and increase in income. Till 1970’s
vespa150 of piaggio was sold under license here and variants of Luna’s were only under vicinity
for individual transport. Till 1980’s the two wheeler market was contested only with Enfield,
Escort, and Bajaj and kinetic later came LML, and TVS. Among these while Royal Enfield
served as a premium class and military vehicle, with robust body and high acceleration rajdooth
RD350 was introduced by Escort -Yamaha during 1980’s. Its 7 port 2 stroke engine gave high
torque which continued its glory till it was banned in 2005 and twin shoe drum break placed it as
high performance vehicle of the time at par to Enfield. It was the 1st made in India high
performance vehicle followed by road king the first to separate petrol and lubricant with an oil
pump which replaced the contact breaker with a CDI electronic ignition engine. They could not
last more than a decade in the fuel efficient based Indian market. Liberalization of the market in
early 90’s introduced various MNC’s to India by FDI’s and collaborations like Honda,
Kawasaki, and Suzuki etc. This gave rise to higher technology improving the quality and
reducing the cost. The increase in need of individual vehicle with increase in affordability
brought various mutually exclusive target segments in the society. The Bajaj Sunny 60cc started
in 1991 was targeting the teens and the then young generation as it was unilateral and could be
licensed at the age of 16. The consumer‘s need for easier way of starting transferred the market
of mopeds with pedals to a kick rod scooters and sunny. Through all these changes consumer’s
attitude for fuel efficiency remained unchanged, which made Hero-Honda today’s market leader.

market share
1%

19% 14%

24%

42%

Enfield Yahama Escot Hero Honda Bajaj TVS And LML

19
Graph- 3

sales of two wheelers(Units) total sales 2 wheeler

20000000 Scooter
(Activa) as
18000000 family utility
vehicle, PEP,
16000000 wego &
Entry of Honda Fuel economy Pleasure
14000000 (hero Honda), vehicles like segmented
TVS (TVS-Suzuki) Splendor by for women.
12000000
Hero-Honda.
10000000

8000000 liberalization,
higher
6000000
employment,
and increase
4000000
in percapita
2000000 income.

0
1970 1980 1990 2000 2010 2014

Success of CBZ,
MPFI engine, Liquid Rise of
initiates
and oil cooling more safe
performance
System scooters.
Initiation of Bajaj- chatak, vehicles like pulsar
Multi coil and fluid
Bajaj- paiggeo super, LML, in 2001
pressure
scooters kick Kinetic Si to DTS-I,
Suspension, Alloy
rod scooter mopeds technology
wheels, Disc breaks

The less costly 4 stroke fuel efficient variants of Hero-Honda splendor series have attracted the
consumers from the old 2 stroke scooters. This started cannibalization of the scooter by fuel
efficient 100cc four stroke engine bikes market in India. This segment was then occupied by TVS
and Honda, by upgradation of sunny to a new class of scooty. The launch of scooty pep 90cc
attracted the untapped women segment. This changed male dominated scooter segment to a family
oriented segment. Honda‘s Activa of 110cc which was modified to a metallic body in late 2000’s
grabbed majority of this segment .By the mid of 2000’s Scooter considered a necessity rather than
a comfort, and a family vehicle. The introduction of auto-start was the best thing that happened to
the scooter market. This helped to fulfil the aspirations of women and youth. Until then, the scooter
was a male thing and kicking to start the vehicle put it out of consideration for women and young
persons. The issue of balance in chetak was addressed in 2005 by TVS wego as body balance
vehicle to compete with Honda. Since then every now and then the features like rim for tail lamp,
new multi spring suspension, and CBS & IBS break system are being upgraded as per consumer’s

20
requirement. This contributed for the present versatility of products in the market targeted to
various segments and their requirements in the society.

While Enfield was serving the premium niche segment the era of 2stroke Yamaha and Suzuki
engines ended by the pollution norms and availability of 125cc vehicles with higher fuel
efficiency in the market. With the success of Honda’s- CBZ 150cc engine screened the scope for
high performance vehicles with its high acceleration features. Improvements in this segment was
very high in the last decade. The introduction of DTS-I (Duel twin spark ignition) system
boosted the acceleration and higher combustion of fuel. The air cooled 100-125cc engine are
now restricted to the economy and fuel efficient class and was replaced by an oil cooled System
for faster reduction of heat. The first 17inch profile and alloy wheel was introduced by Bajaj in
2005 which gave an edge to performance making the vehicle lighter which. Introduction of disc
brakes provides higher grip and higher safety. The uneven terrain issue which gave discomfort
for heavy travelers was addressed by replacing multiple spring and fluid shock absorbers. A four
valve DTS-I engine with a liquid cooling system has been introduced in 2011 for today’s high
performance vehicles like pulsar -200 series, apache etc. . . . Time and again the features like
hazard lights, LED light and other dressing accessories are added as for the requirement.
As two wheelers have become the necessity for a middle class family. The family utility
vehicles (scooters) are fast growing than the motor cycle sector .the statistics are given in (chart -
2).

total 2 wheeler vs scooter

16000000

14000000

12000000

10000000

8000000

6000000

4000000

2000000

0
2005 2010 2014

total sales scooter sales

21
The 4 wheeler – Segment:
To start from the early primer cars and ambassadors, the usage was restricted to high government
officials and super premium society. In 1960 the only existing members in this market were hind
motors, Premier, force motors and Mahindra & Mahindra. Existing models were Ambassador of
Hind motor and Premier Padmani. In the lower segment and the new Premier car Contessa with
a 4 speed unsynchronized gear box served the higher segment. The M&M were the monopolist
in the Jeep manufacturing sector. The old version of the ambassador 1500cc and Padmani
1000cc fiat had a remarkable style with the gear shifters behind the steering wheel with a 4 speed
gear box. They were a status symbol and was adopted as government’s vehicle. With availability
of variations in the model from 1500cc 55bhp ambassador and 1200cc 40bhp padmani petrol
engines to their diesel versions in 1990’s with slight interior cosmetic like a bucket seat instead
of bench seats have made them adopt as the taxies in various major cities of India. In 1980’s
Suzuki’s collaboration with our government Maruti Udyog started an 800cc hatch back family
vehicle for rs 45000. This economy class vehicle probed the untapped market. The gypsy also
entered with 1000cc into the M&M’s jeep segment but could not stay long. Maruti had 80% of
market share by early 90’s. The advent of full liberalization introduced India to global market.
New entrants like Hyundai, Toyota, Honda etc. Tata and Mahindra also probed into the primary
carrier sector. Hyundai’s Santo, an economy class vehicle snatched the maruti’s market share as
its price of the basic model was within the reach for the segment of who preferred Alto or
wagon- R. The 800 segment was cannibalized by ZEN and Alto an advanced 1000cc version in
economy class. Where as in premium class esteem and Bolero competed with Accent with its
new CRDI (Common rail direct ignition) system. The MPFI and CRDI technology
revolutionized the fuel efficiency of the vehicles. The increased performance simultaneously
brought in an individual suspension system to support its performance on the terrain. With
increase in performance the number of accidents also increased this issue emerged with various
safety systems. The major issues were observe to be faulty steering practices which brought in
Power steering system to nullify the over steering or understeering in low speed maneuvers. The
speed sensitive power steering provides a free flow at low speed while it firms at high speed
which gives a clear judgment of grip of wheels. The hydraulic power steering is now advanced to
electronic for higher sensitivity. Also the strictness of the norms emphasized on providing
various types of seat belt locks to comfort the driver. With technology the wireless features of
the cars increased.

22
Graph-4

Sensor operated
total salesvs 4 wheelers(Units) Engine; ABS; Air bags
20000000 Power steering; (Front and Side). 3000000
18000000 MPFI Petrol,
CRDI –diesel 2500000
16000000
engine. Wireless
14000000 Introduction of
lock 2000000
12000000 maruti to Indian Diesel
market. 1st version;
10000000 1500000
economy class Air
8000000 condition,
hatch back.
1000000
6000000 Gypsy king Zen 1000cc
4000000 introduced. 500000
2000000
0 0
1970 1980 1990 2000 2010 2014
total sales 4wheeler

1500cc 55bhp 4 gear Introduction to 5 Tata indicia

ambassador, speed gearbox for Taxi version cars.
1500cc engine;
1000cc, 40bhp, padmani both maruti and Alloy wheels And
Wagon-R, Santo
4 speed gear, bench other vehicles. Disc brakes,
series;
seats Centralized lock.
CNG (2002)
Contessa premium class Seat belt,
With

The trends from late 2000’s have shifted the focus from the performance features (which were
standardized by this time) to safety and luxury features. Tata indicia the most sold economy class
vehicle had a bouquet of verities serving various purposes, with standard engine specifications
(performance) and variation of luxury and safety. Technological advancement have brought new
safety features like Anti Break locking System (ABS) helps in taking sharp turns to avoid sudden
objects which might enforce the driver to over pressurize the break and in turn lock/ jam the
wheels; Central locking system, Child lock, auto temperature control, Flexible side view mirror
to prevent the damage of the mirror in congested lanes or heavy traffic. Also improvement in
telecom sectors has brought advanced features like Bluetooth calling, by understanding the habit
of Indian consumer to attend calls while driving. GPS navigation system to address the travelling
habit of Indian consumers to unknown places which they had to ask someone for Direction,
voice control operator for those who like to switch various audio files during as their mood.

23
Thus the consumer attitude drove automobile industry through 12 decades from an autorikshwa
in 1970 to a 4 wheel mini load carrier. From standard premier padmani and ambassador models
to a versatile models to serve various segments and their purpose.

Conclusion
Telecom:
Consumerism will be an enduring factor, beneficial, premarketing, and if understood can be
made profitable to the business. The consumerism mobilizes all the energies of the consumer,
businessmen and government to seek solution to different complex problems in a globalized
market or a matured market.
Telecommunication is one of the sector in India where the consumerism has impacted and much
transactions are noted. The impact made to different segment of the consumer through different
changes that occurred in the market scenario. The changes that happened through the years can
give insight on the behavior of different aspects from consumer, supplier and other social-eco-
political factors.
Auto mobile:

sales forecast(Units)
30000000 8000000

7000000
25000000

6000000

20000000
5000000

15000000 4000000

3000000
10000000

2000000

5000000
1000000

0 0
1970 1980 1990 2000 2010 2014 2015 2016

total sales 2 wheeler 3 wheeler 4 wheeler others

24
 Vehicle type Growth
Cars 3-5%
2wheelers 7-8%
3 wheelers 1-3%
MUV’s 1-3%

Basing on the research of SIAM data of growth in 2014-2015 (table) in the automobile sector is
forecasted assuming the growth trend remains to be approximately same. This shows a clear
view of consumer switching from two wheeler to a primary carrier (4 wheeler). As the growth
trend in percapita income shows high purchasing power and high financing and availability of
other support opportunities tends consumer aspiration move towards premium products than the
basic models. Also as the performance features are standardized the emphasis will be on luxury.
The multi utility and 3 wheeler sector the growth has reached a saturation and MUV’s might
attentively have a demand with new technology probing in to the sector or by discovery of any
untapped segment.

Reference
[01] “What consumerism means for marketers” – Philip Kotler
[02] EMERGING ISSUES OF CONSUMERISM IN GLOBALISED INDIAN ECONOMY -
EMERGING ISSUES OF CONSUMERISM IN GLOBALISED INDIAN ECONOMY- July
2012/ Volume 2/Issue 7/Article No-3/1132-1144 Dr. Himachalam Dasaraju__ Dr Kota Srinivasa
Murthy*2, K. Manohar3, C.Udayakumar Raju
[03] INDIA'S CHANGING CONSUMER ECONOMY: A CULTURAL PERSPECTIVE
Alladi Venkatesh, University of California, Irvine
[04] CONSUMERISM & INDIAN CULTURE ;Dr. Abhishek Gupta, MBA, Ph.D -
Research Journal of Business and Rural Development Studies Vol. 1, No. 2, December 2013,
PP: 08 - 13
[05] http://www.indianetzone.com/42/history_indian_telecommunications.htm
[06] PwC view -Five trends to watch in telecom during 2014
[07] A Brief Report on Telecom Sector in India – January 2015 – ASA & Associates LLP
chartered accountants
[08] Stanford Center for International Development - Working Paper No. 361
The Impact of Policy and Regulatory Decisions on Telecom Growth in

25
 India - R.U.S. Prasad - July 2008

[09] "Press Release on "Telecom Subscription Data - Telecom Regulatory Authority of India
[10] http://stakeholders.ofcom.org.uk/binaries/research/cmr/cmr13/icmr/ICMR_2013_final.pdf
[11] http://easyinv.blogspot.in/2012/10/telecom-industry-update_28.html
[12] Bharat Sanchar Nigam Ltd. www.bsnl.co.in
[13] Bharti Airtel – www.airtel.in
[14] http://timesofindia.indiatimes.com/tech/tech-news/India-to-have-519-million-mobile-
internet-users-by-FY18-Morgan-Stanley/articleshow/36656019.cms
[15]http://www.thehindu.com/business/Economy/india-4th-largest-economy-but-has-low-per-
capita-income-survey/article2998234.ece

[16] Indian Automotive Industry: Innovation and Growth- Mamata Parhi.

[17] http://www.rediff.com/business/report/pix-auto-the-incredible-journey-of-
car-makers-in-india/20150127.htm

[18] http://www.gifre.org/admin/papers/gjcmp/PRODUCTION-Vol%202%284%29-gjcmp.pdf
[19]Study of autorikshwa Sector in Bangalore- by Dr. T. G. Sitaram; Professor; IISC
[20] PERFORMANCE EVALUATION OF HYUNDAI MOTOR INDIA LIMITED: AN OVERVIEW
DR.MURLIDHAR A.LOKHANDE*; MR.VISHAL.S.RANA
[21] International Journal of Marketing, Financial Services & Management Research
[22] IBEF- presentations( slide share. Com)
[23] http://www.tradingeconomics.com/india/gdp-per-capita per capita income
[24] http:// www. Maruti.com
[25] http:// bajaj. com
[26] http://www.knowindia.net/auto.html
[27] http://www.anjeel.com/auto/indian_automotive_history.html
[28]Wikipedia rajdooth , bajaj; Honda etc
[29]Wikipedia ambassador, premier,
[30] Wikipedia santro, zen, 800, etc

26

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