Indian online consumers & their buying behaviour

Indian online consumers & their buying behaviour

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Presented by- vikas udit

Introduction India is a big country with 28 states, over one billion people and 120

dialects/languages. From the market perspective, people of India comprise different segments of

consumers, based on class, status, and income. An important and recent development in India’s consumerism is the

emergence of the rural market for several basic consumer goods. Three-fourths of India’s population lives in rural areas, and contribute one-third of the national income. This rural population is spread all over India, in close to 0.6 million villages.

  India is a lucrative market even though the per capita income in India is low

and it remains a huge market, even for costly products. Among the total 164.8 million households in India, 80.7 million households

comes under low income group ( <US$ 581 ), followed by 50.4 million lower middle income households ( US$ 581 to US$ 1162), 19.7 million middle income group (US$ 1162 to US$ 1190 ), 8.2 million upper middle income group (US$ 1790 to US$ 2465 ) and 5.8 million high income group (>US$ 2465).

The internet has developed in to a new distribution channel and online transactions are rapidly increasing. This has created a need to understand how the consumer perceives online purchases.

Price, trust and convenience is identified as important factors. Price is considered to be the most important factor for a majority of the student.

There are main three segments has identified High spenders price easers and bargain seekers.

History of online shoppingIn 1990 Tim Berners-Lee created the first

World Wide Web server and browser.It opened for commercial use in 1991In 1994 other advances took place, such as

online banking and the opening of an online pizza shop by Pizza Hut.

During that same year, Netscape introduced SSL encryption of data transferred online, which has become essential for secure online shopping.

In 1995 Amazon launched its online shopping site, and in 1996 eBay appeared.

What is online shoppingOnline shopping is the process whereby consumers

directly buy goods or services from a seller in real-time, without an intermediary service, over the Internet.

If an intermediary service is present the process is called electronic commerce.

An online shop, eshop, e-store, internet shop, web shop, web store, online store, or virtual store evokes the physical analogy of buying products or services at a bricks-and-mortar retailer or in a shopping mall. The process is called Business-to-Consumer (B2C) online shopping.

When a business buys from another business it is called Business-to-Business (B2B) online shopping.

Both B2C and B2B online shopping are forms of e-commerce.

 

Characteristics Of The Indian Consumer Behavior

    The Indian consumers are noted for the high degree of value orientation. Such

orientation to value has labeled Indians as one of the most discerning consumers in the world. Even, luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market.

  Indian consumers have a high degree of family orientation. This orientation in

fact, extends to the extended family and friends as well. Brands with identities that support family values tend to be popular and accepted easily in the Indian market.

  Indian consumers are also associated with values of nurturing, care and affection.

These values are far more dominant that values of ambition and achievement. Product which communicate feelings and emotions gel with the Indian consumers.

  Apart from psychology and economics, the role of history and tradition in shaping

the Indian consumer behavior is quite unique. Perhaps, only in India, one sees traditional products along side modern products. For example, hair oils and tooth powder existing with shampoos and toothpaste.

Online consumer characteristics   The Indian consumers are noted for the high degree of value orientation. Such

orientation to value has labeled Indians as one of the most discerning consumers in the world. Even, luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market.

  Indian consumers have a high degree of family orientation. This orientation in

fact, extends to the extended family and friends as well. Brands with identities that support family values tend to be popular and accepted easily in the Indian market.

  Indian consumers are also associated with values of nurturing, care and

affection. These values are far more dominant that values of ambition and achievement. Product which communicate feelings and emotions gel with the Indian consumers.

  Apart from psychology and economics, the role of history and tradition in

shaping the Indian consumer behavior is quite unique. Perhaps, only in India, one sees traditional products along side modern products. For example, hair oils and tooth powder existing with shampoos and toothpaste

Different segment of Indian consumerThe SocialitesThe ConservativesThe Working Women

Different segment of Indian consumerThe SocialitesSocialites belong to the upper class. They

prefer to shop in specialty stores, go to clubs on weekends, and spend a good amount on luxury goods. They are always looking for something different. They are the darlings of exclusive establishments. They go for high value, exclusive products. Socialites are also very brand conscious and would go only for the best known in the market.

 The Conservatives

  The Conservatives belong to the middle class. The conservative segment is the reflection of the true Indian culture. They are traditional in their outlook, cautious in their approach towards purchases, spend more time with family than in partying and focus more on savings than spending. Slow in decision making, they seek a lot of information before making any purchase. They look for durability and functionality but at the same time are also image conscious.

 They prefer high value consumer products, but often

have to settle for the more affordable one. These habits in turn affect their purchasing habits where they are trying to go for the middle and upper middle level priced products.

.The Working Women The working woman segment is the one, which

has seen a tremendous growth in the late nineties. This segment has opened the floodgates for the Indian retailers. The working woman today has grown out of her long-standing image of being the homemaker. Today, she is rubbing shoulders with men, proving herself to be equally good, if not better. Working women have their own mind in decision to purchase the products that appeal to them.

India’s Rich-----India’s rich can be categorized into five major categories as follows

The RichThe Super RichThe Ultra RichThe Sheer RichThe Obscenely Rich

Increasing Awareness Of Indian Consumers

Literacy rate has gone up from 64.83% in 2001 to 74% in 2011.(times city ) 

Over the years, as a result of the increasing literacy in the country, exposure to the west, satellite television, foreign magazines and newspapers, there is a significant increase of consumer awareness among the Indians.

  Today more and more consumers are selective on the quality of the

products/services.   This awareness has made the Indian consumers seek more and more

reliable sources for purchases such as organized retail chains that have a corporate background and where the accountability is more pronounced. The consumer also seeks to purchase from a place where his/her feedback is more valued.

Indian consumers are now more aware and discerning, and are knowledgeable about technology, products and the market and are beginning to demand

Quality Oriented Outlets

 Indian consumers looking for quality

choose expensive brands as they feel that price is an indicator of quality.

 However, in the absence of well known

brands in selected product range, consumers are likely to take cues from well established retail outlets hoping that these outlets carry quality products.

FrieebiesIndian consumer buying behaviour is influenced by

freebies. Freebies are consumer products given free of charge as gifts to purchases of selected products above a certain value. TVs, washing machines, refrigerators, and ready made clothes are some of the product categories in which freebies are given to Indian consumers. Freebies generally comprise tooth paste, soaps, detergent, cooking oil etc.

Malaysian companies wanting to penetrate the Indian market, perhaps should consider giving freebies for the purchases made by the Indian consumers. Malaysians can work with the local business partners to attract the consumers by way of such promotion campaigns.

 

Changing Trends In Indian Consumer BehaviourBulk Purchasing Urbanisation is taking place in India at a dramatic

pace and is influencing the life style and buying behaviour of the consumers.

 The working urbanites are depending more on fast and ready-to-serve food, they take less pain in traditional method of cooking and cleaning.

 Bulk purchases from hyper stores seems to be the trend these days with purchasing becoming more of a once-a-week affair, rather than frequent visits to the neighbourhood market/store/vendor.

 The popular growing shopping trend among urbanities is purchasing from super markets to hyper stores

Consumer Spending Behaviour The Indian consumer spending has increased from US$ 133.60 in

1992-93 to US$ 350.74 in 2002-03, a compound annual growth of 10.13 per cent at current prices.

  The way Indian consumers are spending their money on various items

has changed in recent years. The share being spent on the basis (food and beverages) has fallen from 54.07 per cent in 1992-93 to 44.8 per cent in 2002-03. Other items have increased in importance, for example, medical and healthcare spending has increased from 3.5 per cent to 8.5 per cent of total expenditure over the same period, a compound growth rate of 19.71 per cent. Similarly spending on transport and communication has grown at 13.2 per cent.

  While the Compound Annual Growth Rate (CAGR) in total consumer

spending has been around 12 per cent a year over the past decade, there have been sharp ups and downs. Consumer expenditure has been in tandem with the annual GDP growth.

.For rural India, per capita 30 days' consumer expenditure of US$

12.34 was split up into US$ 6.78, on an average, for food, and US$ 5.56 for non-food. Food expenditure included US$ 2.25 for cereals and cereal substitutes, and US$ 2.37 for milk, milk products, vegetables, edible oil and US$ 2.16 on others. Non-food expenditure included US$ 1.11 for fuel and light, and another US$1.00 for clothing, footwear and US$3.45 on other non-food expenditure.

 For the urban sector, average Monthly Per Capita Consumer

Expenditure (MPCE) of US$ 23.53 was split up into US$ 10.00 for food and US$ 13.53 for non-food. Of food expenditure, US$ 2.37 went towards cereals and cereal substitutes while US$ 3.67 was spent on milk, milk products, vegetables and edible oil and US$3.96 on other food items. US$ 2.11 was spent per person per month on fuel and light, and US$ 1.65 on clothing and footwear and US$9.77 on other non-food items.

.  Urban expenditure levels per capita exceeded rural levels for all the

product groups, except on cereals and cereal substitutes. The average monthly per capita expenditures on cereals and cereal substitutes for rural and urban areas are very close to each other.

 The gap between rural and urban averages of MPCE was of the order of US$ 11.16. The item-groups viz. milk and milk products, beverages etc, fuel and light, education, miscellaneous consumer goods & services, conveyance and rent contributed to the gap significantly.

 Non-food expenditure per person in the urban sector was more than double of that for the rural sector, where it was about US$ 5.55.

 In India, the higher income group (>US$2,465) spends more amount of their income on luxury goods and trendy products than fact moving consumer products.

 The middle income group (US$1,162 – US$1,190) spends more on consumer expendables than the rich.

 Combined the middle and the lower income group provide 60 per cent of the value of the Indian market.

 

Factors That enhance Online Shopping in India Rapid growth of cybercafés across India Access to Information The increase in number of computer

users Reach to net services through

broadband Middle-class population with spending

power is growing. There are about 200 million of middle-class population good spending powers. These people have very little time to spend for shopping. Many of them have started to depend on internet to satisfy their shopping desires

Online Shopping Tips

1. If you go for online shopping , always better to deal with the companies which are known to you. Sometimes you tend to deal with unfamiliar companies. In such circumstances you can do few things so as to ensure the credibility of the company. If any phone number is given make a call and do some queries. Also ensure that you get satisfied with their answers. You can even ask for references. You can also contact any friends or relatives who are staying near to the address of company.

2. Good online merchants have cut out privacy and security policies so as to build the customer confidence. Check whether the website contains these policies. However keep it in mind that these policies can be changed at varied circumstances.

3. When you transfer data online, ensure that you are using a secure website. Secure websites send the data in scrambled form ( encrypted ). Check the following conditions to ensure the security of the website.

a) Look at the bottom of your browser for padlock displayed. If the padlock remain closed, the site is secure.

b) Look at the website address and see that it contains https:// where "s" denotes the secured connection.

c) Ensure that you are actually visiting the real website rather than look-alike websites ( made in order to deceive customer). You can check the address bar on browser to check the address, which is called uniform resource locator(URL).

4. Credit card transactions are considered safest while doing online shopping. All the other modes have limitations or are in risk of malpractices.

Continue… 5. Sometimes few companies ask many questions for the purpose of

marketing. You can avoid answering questions you feel uncomfortable to answer. If the website keep on insisting answering those questions, it is better to avoid shopping from that site.

6. Watch out for extra ordinary claims or unbelievably low prices for the product with an critical eye. You are suggested to approach cautiously in such cases.

7. Ensure that your credit card number is not misused in any circumstances. Make it as a practice that you are regularly checking the credit card transactions. If any irregularities are found, immediately contact the credit card company and withhold the operation in that number.

8. Ensure that your choice of shipping is in compliance with what offered by merchant. Also note down the shipping cost, duration to get delivered etc. Note down who is paying the shipping charges and ensure that it is reasonable.

9. Good companies have thier order cancellation or good return policies. Make a note of it imagining such a situation. Also note down the warranty period and warranty conditions. Check out how the company is proposed to attend the complaints and clear it.

ADVANTAGES AND DISADVANTAGES OF ECOMMERCEThe invention of faster internet connectivity and powerful online tools has resulted in a new commerce arena – Ecommerce. Ecommerce offered many advantages to companies and customers but it also caused many problems.

ADVANTAGES OF ECOMMERCEFaster buying/selling procedure, as well as easy to

find products.Buying/selling 24/7.More reach to customers, there is no theoretical

geographic limitations.Low operational costs and better quality of services.No need of physical company set-ups.Easy to start and manage a business.Customers can easily select products from different

providers without moving around physically.

DISADVANTAGES OF ECOMMERCE

Any one, good or bad, can easily start a business. And there are many bad sites which eat up customers’ money.

There is no guarantee of product quality.Mechanical failures can cause unpredictable effects

on the total processes.As there is minimum chance of direct customer to

company interactions, customer loyalty is always on a check.

There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways, all are always prone to attack.

Top 10 shopping sites in India Home Shop 18

HomeShop18 is a venture of theNetwork18 Group, India's fastest growing media and entertainment Group. Network18 operates India’s leading business news television channels - CNBC TV18 and CNBC Awaaz. HomeShop18 has also launched India’s first 24 hour Home Shopping TV channel. The company has its headquarters in Noida, UP. http://www.homeshop18.com/

India plazaIndia plaza, with operations in Bangalore, Chennai and Austin is now the world's largest India-centric e-commerce company with over one million online transacting customers globally. It offers a catalogue of over 3.5 million items for sale and also has in-house control of web technologies, warehousing and logistics; supported by a 24-hour Customer Service Centre in Bangalore. India plaza offers support to shopping gateways of Sify, Manorama etc. http://www.indiaplaza.in/

EBay IndiaeBay. In is the Indian version of the popular online shopping portal eBay.com - world's online marketplace. EBay has a diverse and passionate community of individuals and small businesses. EBay offers used and fresh items with a wide network of international shipping. http://www.ebay.in/

NaaptolLaunched in January 2008, Naaptol has grown to become India's leading comparison based social shopping portal, the one-stop destination for all shoppers, merchants and market enthusiasts. http://www.naaptol.com/

Future BazaarFutureBazaar.com is owned and operated by Future Bazaar India Ltd. (FBIL), the people behind Pantaloon Retails, Big bazaar shopping mall. FBIL is the e-commerce arm of the Future Group. The company was incorporated in 2006 and began business in 2007. Future Bazaar has its office and customer care (24 X 7) at Mumbai. http://www.futurebazaar.com/

India timesIndia times shopping has the widest range of consumer electronic items at lowest prices. The portal is supported by the Times of India group and offers support mostly in the north western part of India. http://www.shopping.indiatimes.com/

Rediff Rediff shopping is the online shopping division of India's leading news and entertainment portal Rediff shopping