Introduction to Consumer India

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INTRODUCTION TO CONSUMER INDIA Sameer Mathur, Ph.D.

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Sameer Mathur smathur.com Asst. Professor (Marketing) 2009 – 2013 Ph.D. and M.S. (Marketing) 2003 – 2009

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Agenda

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L argest democracy; 7th largest Country. L argest employer in India: Indian Railways. A bigger movie market than America and Canada combined, India sold 3.2 billion tickets last year. The Unique Indian Context

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Consumer India is large Mostly poor, but getting less poor Increasing number of rich people Totally schizophrenic => unusual strategic complexity Basics of Consumer India

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Large Population (Growing at 1.6% annually) 18% of world’s population by 2030 Consumer India is Large World Population Comparison

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Increase in Per Capita Income US$ 120 in 1991 to US$ 720 in 2007. Large reduction in number of people below poverty line. Mostly Poor but Getting Less Poor

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Per Capita Income levels comparison Top 10% of India’s population = Top 60% of Malaysia’s population = Top 80% of Brazil’s population However, a small percentage of India’s large population is still a large number of people. Increasing Number of Rich People

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Diversity within India: 23 languages, 28 states, Climatic Diversity Co-existence of Rich and Poor Social Development Disparities Varying norms and cultures Varying Economies: Agricultural vs Infotech Totally Schizophrenic

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Change Confluence Real GDP Growth 1990’s Average: 6.3% p.a and 2000’s Average: 6.2% p.a Demographics 400 million people below 21; 20 million new babies each year Low Political and Social Risk : Democracy Strong institutions Comparable to an IPO India: Long Term Sustainable Growth

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India’s Tipping Point

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Entrepreneurial - generates wealth through trade, finance and technology. Visible improvements in education, healthcare and housing. Strong India G etting Larger

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Urban Areas: Pyramid  Diamond  Cylinder (future) Change in the Shape of Income Distribution

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Rural Areas: Pyramid  Diamond  Distinct Diamond (future) Change in the Shape of Income Distribution

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Actual Visible Consumption Increases Cars and two wheelers, Cell phones, Televisions Visible Consumption breeds more consumption Step change in consumer confidence Affordability growth greater than income growth Drop in prices of goods and an increase in their performance Step Changes in Consumption, Comfort and Aspiration

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Step Changes in Consumption, Comfort and Aspiration 5. Increased comfort with borrowing Low interest rates, Increasing confidence, EMI Repayment 6. Decline of the poverty effect Consumption increase lags behind income increase 7. Rampant Rise in Aspiration

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Price drops lead to increase in sales volumes and creation of markets to cater to middle-income India. Increase in high-quality budget hotels, airlines, apparel brands, pre-paid card and high-end banking facilities. Sophisticating Middle-Class Consumers

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Liberalization generation will lead to consumption-friendly ideology. The first non-socialist generation of India. Generational Transition 2005

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Rise of the self-employed and the service economy. 90% of rural households and 60% of urban households are headed by a self-employed person. S ource: NCAER Growth of Self-Employed Strivers

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Decreased dependence on agriculture which depends on the monsoon season Reduction in boom and bust cycles Rural India’s Metamorphosis

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Increased IT awareness and IT employment opportunities across all social classes. Tech Comfort of Masses Spreading

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Summary Consumer India is large Mostly poor, but getting less poor Increasing number of rich people Totally schizophrenic => unusual strategic complexity

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Summary

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Summary

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Background Reading

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Recommended Reading

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