Aarya (02) Archit (11) Gaurav( 20) Gowtham (29) Raj Karan (38) Sambit (47) Varsha (56)

4 STRATEGIES

SIZE OF THE PRIZE

UNDERSTANDING THE PRIZE

FINDING THE PRIZE

CAPTURING THE PRIZE

THE SIZE OF THE PRIZEConsumer spending is likely to nearly quadruple by 2020

Items Spending in 2010 ($ billions)

Spending in 2020 ($ billion)

Food

Housing and consumer durables

Transportation and communications

Clothes and foot wear

Education and leisure

Health

Other

Total

328

186

168

71

59

49

129

991

895

3,584

570

183

225

296

664

752

3.6x

UNDERSTANDING THE PRIZEHOUSEHOLD INCOME:-• India has had a wide range of “struggler” households.

• More than one-third of the population is likely to reach “aspirer” class by 2020 compared with 20% in 2010 and 9% in 2000.

• The share of households(strugglers) are earning less than $3,300 which is likely to fall from 51% in 2010 to 28% by 2020.

URBANIZATION • In 2010, 31% India’s population lived in cities

• By 2020, the % will be raised to 35% . As people move from rural areas to cities they tend to increase their expenses

• People living in urban areas have better access to goods and are more exposed to consumerism

• For Eg-, television is owned by 80% of urban households, whereas in rural households it is only 39%.

THE NUCLEAR FAMILY• The % of nuclear family increased from 61% in 2006 to 66% in 2010.

• A nuclear family spends more on clothing, housing, education and leisure activities whereas they both spend equally on food and health.

• The per capita expenditure of these families is 20%-50% higher than that of joint families.

GEN-I• Economic liberalization in 1991 marked a turning point for India.

• They have different believes and have made different choices other than their parents.

• The Gen–I have far greater choice than prior generations. The number of car models, for example has jumped from about 5 in 1990 to more than 160 today.

3. FINDING THE PRIZE • Professional Affluent• Traditional AffluentAffluent• Urban Aspirers• Rural AspirersAspirers• Large Town Next Billions• Small Town Next BillionsNext Billions

Strugglers

AFFLUENT :• Annual household income > US $18,500

• This section of the society are well educated, have companies in middle or large scale sectors or good jobs with sufficient income.

• This segment constitutes 6% of households in India.

ASPIRERS • Annual household income between US $ 7,400 and US $ 18,500.

• This section of the society are educated, have middle sized businesses or stable jobs with income sufficient to live comfortably..

• This segment constitutes 14% of households in India.

NEXT BILLION • Annual household income between $ 3,300 and $ 7,400.

• They have basic education and have small businesses or hold low paying jobs.

• This constitutes 30% of households in India.

STRUGGLERS • Annual household income < US $ 3,300.

• Typically illiterate with limited education. These consumers have jobs that are manual labour.

• Strugglers are generally based on daily wages.

Graph

4. CAPTURING THE PRICE.For companies to invest in a developing country like India, they need to have a deep understanding to capture the market.

Hence, they need the following two strategies to achieve the same.

1. Follow an Indian Market Approach :-• Consumption Pattern.

• Lifestyle.

• Attitudes and Behavior.

• Financial Maturity.

UNDERSTANDING THE EVOLUTION OF CONSUMPTION TREND

• Children : Driving consumption growth.

• Internet wave.

• Trading up.

• Brand : Strong recognition, weak loyalty.

• Healthy living.

CONCLUSIONThe resonance of a Tiger Roar in current years shows the consumer spending in India. Within the same income segment, the attitudes and behaviours are dramatically different as consumers are trading up and down at the same time. The increase in consumption will be driven by four factors - rising incomes, increased aspirations of the young India, widespread media proliferation that has democratized the phenomena and the increased physical reach in all the corners of the country. Thus, this 'sensible consumption' has the potential to drive the economic growth of the country for years to come. Organized retail has played an important role in supporting the creation of this demand - through developing an enabling environment to satisfy this consumption growth. The shape of that growth—the changing patterns of and attitudes toward consumption—is even less well understood. Most notably, a new generation of consumers has grown up in an era of economic liberalization and social freedom. The members of this generation are entering their prime spending years, and they will indelibly and dramatically reorient the market. Call them “Gen I.” “I” stands for India, independence, and individuality. There are segments and categories where consumers are paying more for more but in others they are cutting down consumption. Indian consumer pyramid is shaping into a diamond but more importantly income is only one variable that is driving this consumption.