CHAPTER 17

The Indian Consumer

and the Rising
Consumer Market of
India

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India

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

⮚ Grasp Why We are Having Separate Discussion on Indian Consumer

⮚ Understand Consumer India and its General Features
⮚ Appreciate the ‘Many Indias’ within ‘Consumer India’
⮚ Appreciate the need for a Classification of ‘Consumer India’
⮚ Grasp Why a Classification based on Income has more Merits
⮚ Comprehend the Size and Composition of India’s Consumer Market
▪ The Rich
▪ The Middle Class, its Changing Profile
▪ The Lower Income Section
▪ The BOP/BPL Section

⮚ Appreciate that The Indian Consumer is in the Grip of Big Change

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India

⮚ It is important to understand cultural nuances of different

nations/communities before forging strategies

Consumer India: General Features

■ Demographics
⮚ Size of population
⮚ Density
⮚ Gender ratio
⮚ Literacy
⮚ A vast educated workforce despite high illiteracy rate
⮚ Age-mix of the population
▪ A nation of working age people
▪ A nation of middle age people
▪ A nation going through a youth explosion
▪ A nation with a huge population of kids
▪ A nation with a huge mass of senior citizens

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India

■ Demographics (…contd)
⮚ What is the truth about the age mix? How will it be in the
future?

Table 17.1 Age Mix

of Consumer India

⮚ Highly favourable dependency ratio

Dependency
Ratio

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India

Demographics (…contd)
⮚ Economic condition/income/purchasing power
⮚ An economic transition is on; the rich getting richer, the poor getting
less poor
▪ A shift in the attitude towards spending too

⮚ Culture Profile
⮚ A cultural transition is on
⮚ A social transition too
⮚ Influence of media
⮚ IT influences consumer India significantly
⮚ Constructive discontentment

Exhibit 17.1 Indian Consumer – Some Cultural Dimensions (Pg 271)

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India
The ‘Many Indias’ Within ‘Consumer India’

■ Structure of Demand, Extremely Complex

⮚ Harish Manwani’s views on the diversity
⮚ Rama Bijapurkar’s views
⮚ McKinsey report

■ All Round Diversity, the Hallmark of Consumer India

⮚ Religious diversity
⮚ Linguistic diversity
⮚ Diversity in density and growth rate of population
⮚ Diversity in literacy
⮚ Cultural diversity – social customs, dress, food habits
⮚ Diversity in economic conditions/income/consumption
⮚ Diversity in poverty rate

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India
Classifying ‘Consumer India’
⮚ The classification has to be free of confusion
⮚ Ongoing classifications had no ref. whatsoever to income
■ NCAER has Come Up with a Classification Based on Income
■ SEC vs Income Classification
■ How Does the SEC System Operate

Table 17.3 The Rural SEC System

Table 17.2 The Urban SEC System

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 Occupation and education of head of household, the basis
Rural17: The Indian ConsumerSEC
Chapter System
and the Rising Consumer Market of India
Education
■ How of SEC
Does the head System
of household
Operate and type of house, the basis

⮚ Urban SEC System

▪ Occupation and education of head of household, the basis

⮚ Rural SEC System
▪ Education of head of household and type of house, the basis

Table 17.5 Number of

Households in India by Income
Brackets (Estimated)
Table 17.4 Number of Households in
each SEC Category
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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India
Classification of Indian Consumers by Income
⮚ Recent surveys have brought out useful data on
income/consumption
■ McKinsey’s Fivefold Classification Based on Income

▪ The Global Indians ▪ The Strivers ▪ The Seekers Exhibit 17.2 McKinsey
▪ The Aspirers ▪ The Deprived Classification (Pg 278)

⮚ McKinsey modifies NCAER’s sevenfold classification

■ The Traditional Fourfold Classification
■ Matching the McKinsey Fivefold Classification with the
Traditional Fourfold One

India’s Consumer Market – Size and Composition

■ What do We Mean by Consumer Market/Consumption Basket?
▪ It represents the spending by households / people in the domestic market
▪ In India, a larger percentage of GDP is accounted for by private
consumption basket
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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India

India’s Consumer Market – Size and Composition (…contd)

■ Size of India’s Consumer Market at Present

Table 17.6 India’s Consumer Market in 2005

■ Good Growth and Favourable Shift in Consumption Basket

⮚ Share of food decreases and share of other products gets larger

⮚ A larger share goes to transport and communications

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India

Favourable Shift in Consumption Basket (…contd)

⮚ More goes to medical care too
⮚ Shares of the expenditure on education, clothing, and household
goods remain stable
⮚ Share-of-wallet shifts from category to category not Just from brand
to brand

Exhibit 17.3 India’s Consumer

▪ Projected Spending Pattern by 2025 Market 2005 to 2025 (Pg 281)
⮚ Category-wise position
Exhibit 17.4 India’s Consumer Market (Pg 282)

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India

The Rich/Global Indians

⮚ Showing a new attitude towards consumption
⮚ Indulgence regardless of cost; buying status through super
brands
⮚ Goes for products, low on functionality and high on indulgence
⮚ ‘The rich’ are found in tier-two cities and rural areas too

The Middle Class

▪ A Middle Class was There Even Before Liberalisation
⮚ Explosive growth came with liberalisation
⮚ Economic factors, as well as socio-cultural, and lifestyle
factors contributed to the phenomenon

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India

The Middle Class (…contd)

▪ Who Constitute the Middle Class? What is its Size?
⮚ By 2025, it will have 583 million, making India a truly
‘middle class country’

■ Concentrated Somewhat in Urban Areas

■ Not totally confined to urban areas, not just to the big cities, anyway
■ There are middle-class consumers in small towns; they are buying
high-end durables
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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India
The Changing Profile of the Middle Class
■ A Class Growing in Confidence
■ Acquires New Values, New Orientations
■ Becomes India’s ‘Consumption Community’
⮚ Paradigm shift in outlook on consumption
■ Spending Pattern Undergoes a Major Shift
■ From Functional Living to Lifestyle Living to Flaunting the Affluence
⮚ From ‘family-need based spending’ to ‘spending for pampering oneself’
⮚ Goes after lifestyle products/activities
⮚ If you have got it, flaunt it
■ Votes for Premium Products and International Brands
⮚ Products from across the globe make it to Indian retail shelves
■ Seek World-Class Shopping Experience
■ Want Modern Apartments, Newer Gadgets, One More Car . . .
⮚ Go for modern, attractive and fully loaded homes
⮚ Go for one more car, one more TV . . .
⮚ Go for fast replacement of appliances/gadgets

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India
Middle Class Profile (…contd)
■ Changing Food Habits – Growing Fast-Food Culture
Exhibit 17.5 Middle Class settles into Fast-Food Culture (Pg 290)
⮚ Proliferation of new generation coffee cafés
■ The Globetrotter
■ The Middle-Class Youth, Poised to Change Traditional Profile of
Consumer India
Exhibit 17.6 Today’s Youth will Change the Indian Consumer Profile (Pg291)

■ Young India is on the Move; in Fast-Forward Mode

■ The Teens
⮚ Consumer electronics players target the teenager
■ The Tweens

Exhibit 17.7 Tweens Market in India (Pg292)

■ The Kids

Exhibit 17.8 Pester Power of Kids (Pg293)

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 Chapter 17: The Indian Consumer and the Rising Consumer Market of India
The Lower Income Section
■ With this Class, Product Categories Compete for the
Same Consumer Rupee
⮚ The climbing up process will continue
⮚ The class is poised to become a market for modern products like
mobile phone
Exhibit 17.9 Different Product Categories Compete for the Same Rupee (Pg294)

The Poor or the BOP/BPL Section

⮚ Some favourable changes in recent years
⮚ BOP/BPL was reduced by half in the past 20 years and will
be reduced again by half in the next 20 years
⮚ BoP/BPL Section can be Converted into a Consuming Class
▪ Marketers must see the conversion as a developmental activity

To sum up, The Indian Consumer is in the Grip of Big

Change
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