CHAPTER 7

Marketing Environment
of India

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 Chapter 7: Marketing Environment of India

At the end of this chapter, you should be able to:

⮚ Understand India’s Environment, a Masterpiece in Heterogeneity
⮚ Understand the Current Performance of the Indian Economy
⮚ State impact of Global Slowdown/Financial Crisis on Indian Economy
⮚ State the Dramatic Changes taking place in Indian Marketing Scene
⮚ Grasp how the World Views India today
⮚ Elaborate how ‘India Takes on the Globe’
⮚ Discuss the drivers behind the Takeover Spree by Indian firms
⮚ Discuss India’s Consumer Environment
⮚ Appreciate the Retail Boom that is going on
⮚ Discuss the Rural Marketing Scene
⮚ Appreciate the Negative Aspects of India’s Growth Story
⮚ Comprehend how, despite some negative aspects, India portrays a
Robust, Competitive and Globalising Environment
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 Chapter 7: Marketing Environment of India

■ The Two Indias and The Many

Indias
⮚ The two Indias
⮚ The many Indias: the country of
contrasts
⮚ Wide disparities in economic
condition and income distribution
indicate many Indias
⮚ The ‘two-India’ view does not
constitute a correct reflection of
India
⮚ There are Indias within urban India
and Indias within rural India
⮚ With some Indias, much has
changed; with others, almost
nothing has changed.

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 Chapter 7: Marketing Environment of
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Performance of the Indian Economy

■ The Past Story
■ The Recent Past
⮚ The economy climbs on to a higher growth trajectory
■ The Present
⮚ A trillion dollar economy: India’s GDP crosses $ 1 trillion in FY 07
⮚ Per capita income rises to Rs 29,382 per year
⮚ The fourth largest economy in the world and heading to be the third
⮚ Also the second fastest growing
⮚ Set to stay on a reasonably good growth trajectory

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 Chapter 7: Marketing Environment of
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Performance of Indian Economy (…contd)
■ A Very Distinctive Growth Model
⮚ Indian growth story different from other high growth economies
● Indian boom has been mainly service-sector led
● India’s growth fuelled largely by domestic consumption
● India’s growth characterised by lower savings rate
● India did not resort to any tools of an autocratic state
⮚ Manufacturing and services on a high growth path
⮚ Growth of corporate sector/capital markets
⮚ Quite a few Indian companies in Fortune Global 500/Forbes’ list
⮚ Many $ 2 billion companies and some $ 4 billion ones
■ Becomes a Major Player in the Global e-Enabled Economy
⮚ Forges ahead in internet use, and online marketing
⮚ IT services companies, India’s major economic growth engine
■ Achieves sophistication and productivity in manufacturing
■ Becomes far more capital-efficient
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 Chapter 7: Marketing Environment of
Impact of the Global Slowdown/Financial Crisis on the
India

Indian Economy
■ Indian Economy Too is Bound to be Affected; There is no Such
Thing as Total Insulation
⮚ Capital flows into India will slowdown.
⮚ Indian economy will get hit by the US recession.
■ The Silver Lining
⮚ India’s financial system is far more robust, better capitalised, and better
monitored.

India’s Marketing Environment Undergoes Dramatic Change

Exhibit 7.4 What a Change! (Page 96)

How the World Views India

■ Overall perception of the world about India is
positive
© Macmillan
Exhibit 7.5 How Publishers
the World Views India(Page 98)
India Presently
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 Chapter 7: Marketing Environment of
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India Takes on the Globe; It is No Longer Just India
Being Globalised

■ Acquisition Abroad Seems a Favoured Route for Globalising Indian Firms

⮚ Indian companies maraud across the globe; India’s annual
outbound FDI crosses $ 10 bn

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 Chapter 7: Marketing Environment of
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■ Acquisition Abroad (…contd)
⮚ From being targets of acquisition, Indian firms become
champion acquirers
⮚ A strong message/signal
⮚ Through global acquisitions Indian companies become leaders in their
respective fields

Exhibit 7.7 India Takes on the Globe (Page 102)

How did Such Indian Takeover Spree Happen?

■ Forces from 2 directions worked together to create the climate
⮚ New appetite of Indian firms for consolidation and globalisation
⮚ Capital funding for acquisitions became more readily available
■ Diaspora Impact
⮚ Lives/careers of Indian’s abroad impacted India’s global perspective
▪ According to India’s Knowledge Commission, at any time 1,60,000 Indians are studying

© Macmillan Publishers India

abroad spending $ 4 billion a year

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 Chapter 7: Marketing Environment of
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India’s Consumer Environment
■ India’s Markets
⮚ Second largest market in the world.
⮚ Fastest growing market in passenger cars, cell phones, travel
and tourism, DVDs, dig-cams, and laptops, among other things.
⮚ The size of India’s consumer market was around US$ 383
million in 2003-04.

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 Chapter 7: Marketing Environment of
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India’s Consumer Environment (…contd)

■ FMCG and FMCD Sectors

⮚ FMCD Spurt: Mobile sets/AC’s/Two wheelers/Passenger car etc.
● Steady growth due to rising consumer income and falling prices.
■ Call of the Mall : The Retail Boom
⮚ India’s retail industry expected to hit $ 255 billion in 2010
⮚ According to a CII Report, the year 2010 will see a 10 per cent
contribution by modern retail to all FMCG.
⮚ In metros, this figure is expected to be 30 per cent.

The Media, Advertising and Entertainment Scene

■ The Media Revolution
⮚ TV spearheading the media revolution

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 Chapter 7: Marketing Environment of
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Media and Entertainment Scene (…contd)
■ Growth in Advertising

■ The Entertainment Industry

⮚ It is big business and the favourite for foreign investors/venture
capitalists

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The Rural Marketing Scene Chapter 7: Marketing Environment of
India

■ Rural income now exceeds urban income by handsome margin

■ Rural market accounts for a large share of the expenditure on
manufactured and branded consumer goods.

■ Rural children take to English education

⮚ 30% of rural children go to private English medium schools
■ Rural market carries huge opportunities; also huge challenges
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 Chapter 7: Marketing Environment of
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The Negative Aspects of India’s Growth Story
■ India a Superpower? Think Again
⮚ India remains a world leader in hunger, illiteracy and HIV
⮚ Biggest single problem is the lack of jobs for ordinary people

■ Inflation an Obstacle; Growth Coupled with Low Inflation is

Becoming Difficult
⮚ In 2008 Inflation crossed 12%
⮚ Agriculture remains in shackles
⮚ Manufacturing has not boomed
⮚ Oil Imports and high oil prices continue as a burden
⮚ Infrastructure inadequacy
⮚ Investment is the key and it is not easy to come by
⮚ Weak fiscal position
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 Chapter 7: Marketing Environment of
Negative Aspects (…contd) India

■ Still Poor in Global Competitiveness

⮚ The IMD survey
⮚ World Bank’s ‘doing business survey’
■ India’s rank is 116 out of 155 countries.
⮚ Rating by Transparency International
■ India very high in corruption level.

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 Chapter 7: Marketing Environment of
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India Needs More Reforms for Sustaining the Growth
and that is Not Easy
■ More structural adjustments needed
■ India’s labour laws - a major obstacle to growth and thus
needs to be reformed
■ Further deepening and widening of reforms in banking and
financial system is required

On the Whole, a Robust, Competitive, Globalising,

Environment Full of Challenges as well as Opportunities
■ India to become an economic power, boosted by sustained
economic growth, high savings, and rising exports
⮚ Expansion and diversification in the manufacture and marketing of
consumer goods is on
⮚ Evolution of a large middle class is taking place
⮚ Rural areas© Macmillan
have emerged asPublishers
a large and India
growing market
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