Rama Bijapurkar

Mysterious India

Maharajas , palaces and Taj Mahal Temple elephants and tigers Snake charmers and magicians Sadhus ,Fakirs and Godmen

India is merely a geographic expression. It is no more a single country than the equator Winston Churchill

India : The Land of Contradictions

There are many Indias There can not be any broad generalizations about Indian consumers Bullock cart to business class economy

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More color TVs than toilets More mobile phones than bank accounts

India : The Land of Contradictions

Indians live in many centuries simultaneously (Solar eclipses and Chandrayaans) Smallpox eradicated. Infanticides and feticides still continue IT power house of the world . With a yawning digital divide. This as well as that culture

Can MNCs Overlook India?

Large population(1.17 Bn). Every year we add one Australia . It is poor. But getting less poor. Per capita income 1991=120$.Now 1000$(Real terms) Worlds fourth largest economy(PPP terms) GDP growth 7-8% .For the last 10 years. Private consumption accounts for more than 60% of GDP.

Indian Imperative

Political , economic and social stability Strong institutions 400 million people<21 years of age 500 million<25 years old

Presence in the Indian market is a matter of compulsion . Not choice.

Why were some MNCs not so successful in India?

Nokia wins. Not Motorola and SonyEricson Hyundai wins. Fiat quits(Trying to make a reentry through TATA Motors). Coke and Pepsi :Performing much below the expectations Nike and Levis not big hits Kellogg's struggles. McDonald localizes. Heinz ?What is it ? A car rental?

Why were some MNCs not so successful in India

The wrong assumption that there is only one model of evolution for the entire world Corporate imperialism Emerging markets are not what the developed markets were 15 years ago. Emerging markets are not virgin markets. Local solutions existed and will continue to exist

Why were some MNCs not successful

Made in US or made for India? To win in India companies have to create tailor made solutions for India instead of mechanically transplanting their best practices. It is not about best practices. It is about next practices. C.K. Prahalad Penetration and per capita consumption are two different things . The latter was overestimated.

Consumer India

Income Distribution: Urban India

Percentage
60 50 40 30 20 10 0 Upper&Upper Middle Middle&Lower Middle Lower class 5 52 43

Percentage

Income Distribution: Rural India

Percentage
70 60 50 40 30 20 10 0 Upper&Upper middle Middle&Lower Middle Lower 15 65

Percentage 20

Consumer India

Consumer Indias Demand Structure

Emerging markets are individually poor but collectively rich. Distinctly different from developed markets* (The great Indian rope trick) Urban population= 330 million(More than the USA) Rural=840 million(42 Australias!) Even 1% increase in penetration is a BIG NUMBER

Consumer Indias Demand Structure

FMCG consumption in the lowest income group is thrice that of highest income group* Premium , popular and discount markets in India are roughly of the same size in value terms!** Implications for marketers?

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Relentless innovations and cost reduction measures to reach the masses

Consumer Indias Demand Structure

Class or mass dilemma Has popular segment graduated to premium class? NO. In fact some of the elite consumers also started patronizing popular products.(PCs, cell phones). This is because of the explosion of priceperformance combinations available to consumers.*

Consumer Indias Demand Structure

Apart from consumers down trading, manufacturers are also up-trading , particularly in popular and discount segments The paradigm of premium-populardiscount= rich, middle class and poor has become irrelevant

Consumer India

Great Indian Middleclass

The myth of the Indian middle class has caused more heartache than happiness to business captains. Estimates of MNCs of Indian Middle Class vary from 200 Million to 500 Million, homogenous chunk. Hopes of some of the MNCs shattered Is there any common definition? What is its accurate size? Depends on through whose lens it is seen.

Great Indian Middleclass

If we consider the consuming class as the middle class the number is 375 M If we consider middle 30% of the population the number becomes 300 M Indian middle class ,however is much poorer than the middle class of developed nations. If we go by NCAERs criterion(annual house hold income of 1900-2900 $) it is 170 M

Purchasing Power of Consumer India

The top 10%(100 million)-account for 35% of Indias income and 30% of its expenditure. Thrice as large as Canada. Five times the population of Australia. The top 30% have a per capita GDP of $1136,which is above the consumption take-off point of $1000

Purchasing Power of Consumer India

Number of middle class households in Rural India is growing at a much faster pace than Urban India.* Creation of low-cost-right-benefit business models led by innovations is what is required to tap the climbers and aspirers(Lower two layers of middle class).

How to Read Market Changes

In India change is of a low acceleration and high mass type F=M x A It is of a morphing nature. Not molting. Change confluences: Coming together of several seemingly insignificant little changes. Creeping trends and ripple effects(Self employment , education, IT sector) Poor/Aspirers grabbing economic opportunity instead of fighting for social justice.

Distinct Cultural Changes Post Liberalization

End of abstinence and contentment (End of Gandhian era?) Nationalism gives way to pragmatism(including W.Bengal) ICE wave(IT, Communications and Entertainment/Exposure)

Resultant Changes
Reducing power distance Tech-led democracy(Silicon Moksha) People discriminate. Machine does not. Empowerment Self- Reliance. Not charity. Hybrid models(This as well as that) Borrowing is no sin! EMI does the magic. Performance neutralizes all the disadvantages of ones background

Winning in the Indian Market

Plurality is the DNA of consumer India Do not target only class market(top 10% of Indian consumers) .It accounts for only 30% of consumer expenditure. Unless mass markets are targeted by product-price-performance innovations volumes can not be reached Shed your intellectual arrogance. Adapting to local conditions-an absolute must.

Winning in the Indian Market

Muti -pronged strategy for multi-tiered market Understand that leap- frogging happens Centre of gravity of Global is shifting to Asia. Have new solutions for a new and different world that is emerging. Do not ask whether market is ready for your strategy. Ask yourself Are you ready with your strategy for this market?

Any Questions?