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Presentation at Marcus evans "Introducing New Pharma Products Into Emerging BRIC Markets" conference,London,April 2012 on Rise of Middle Class
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The rise of middle class
Satya MAHESH, India
17th April 2012, London
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3
Change is a Cliché
250 Years5 Million Years
but ,the Speed of Change is not…
5 Mio years ago the first modern humans appeared / 500,000 years ago - Homo sapiens / 50,000 years ago agriculture started / 5,000 years ago moved into towns and cities./ 500 years ago : Industrial revolution or mass production (Printing Press) – 30 years ago Information AgeEach era lasted for one tenth of previous era !!!
Image from FMSI web site (Financial Management solutions Inc)
Future - not a linear extrapolation of the past
Trends may show the path
Increase of population under democracies
More hands to earn.. fewer mouths to feed
Money begets money Vicious to Virtuous
Increase of population under democracies
The Indian ‘Palmystery’
Health
Wealth
Happiness
Individually poor – Collectively middle class
Gapminder
Individually middle class – Collectively Rich
Pay cheque to pay cheque
Exercises more consumer rights than civil rights
Education, family house, Manager or Professional
White collar Job
Who are middle class ?
Ask ten economists , get eleven answers
Define the purpose
Earning
Absolute
Consumption
Relative
Individual Household
includes those earning more than $10 a day, but excludes those in the top 5 percent of the income distribution Birdsall (2010)
Per capita earning of $16 - $80 / Day Goldman sachs
Per capita earning of $10 - $ 20 / Day World Bank
Per Capita earning of $2 - $ 13 / Day Ravallion
who could routinely buy items sold at a typical Western-type discount store Miller-McCune ( 2008)
Income interval from 75% to 125% of the median Thurow (1987)
1/3 of income left for discretionary spendingn Dilip K. Das
$2 and $10 per person per day consumption Banerjee and Duflo (2007)
$5K - $15K Disposable Income/ Yr Euromonitor
Earn
ing
Cons
umpti
on
Is this the BRICs Decade ? Gold man Sachs Publication May ,2010
To be used To be managed To be invested
Quantity Quality Presentation
Present Future Traditions and History
Valued and Revered Crucial Imp for making connections
Survival, Relationships & Entertainment
Work & Achievement
Financial , Political &Social connections
Ruby Payne, A Framework for Understanding Poverty, Highlands, TX: aha! Process, Inc.,1996 pp. 42 - 43
Money
Food
Time
Education
Driving Forces
Poor Middle Class Rich
Leapfrog the paths
Can differentiate cheap.. Economical and premium
Guarded…Saving
Modern yet ,traditional
Shifting brahminical restraint
!ndia
Middle Class Car Tata Nano?
Time Cover Photo by Arthur Hochstein. Woman by hill street studios-getty images blend collection
More mobiles than toilets (not just mobile..FM,Calc,time)
3Cs: Cable TV ,Cinema & Cricket
Global Middle ClassMC Population in Mios 2009 2020 2030 2009 2020 2030Asia Pacific 525 1,740 3,228 28% 54% 66%Europe 664 703 680 36% 22% 14%North America 338 333 322 18% 10% 7%Central and South America 181 251 313 10% 8% 6%Middle east and North Africa 105 165 234 6% 5% 5%Sub -Saharan Africa 32 57 107 2% 2% 2%
World 1,845 3,249 4,884 100% 100% 100%
Mio of 2005 PPP $ 2009 2020 2030 2009 2020 2030Asia Pacific 4,952 14,798 32,596 23% 42% 59%Europe 8,138 10,301 11,337 38% 29% 20%North America 5,602 5,863 5,837 26% 17% 10%Central and South America 1,534 2,315 3,117 7% 7% 6%Middle east and North Africa 796 1,321 1,966 4% 4% 4%Sub -Saharan Africa 256 448 827 1% 1% 1%
World 21,278 35,046 55,680 100% 100% 100%
Mid
dle
clas
s
Popu
latio
nM
iddl
e cl
ass
Spen
ding
Future : Wave of Consumption
The emerging middle class in developing countries : Homi Kharas
Medicine and middle class
Disease does not discriminate
Awareness and Affordability
Individual Income Vs. Family Income
Near dry pipe lines
Price pressures even in mature markets
Few innovative mols. Vs. Essential drugs
is middle Good enough?
The next 4 Billion : GEM
Growing Emerging Middle
26% of Population
Urban - Rural divide of GEMs
Urban
Rural
41% of Population
59 % of Population
74% of Population
Middle Class GEM
Strategic imperatives….
Urban
Value
Rural
Volume
Life Style Life
What organizations can do?
Play across tiers and SE Strata
Many small Vs few Big brands
High Quality – Low Cost
Ideal Admixture
InterdependentSocially
sustainable Business models
Volumes will bring Values
Share Opportunities ,
costs and profits
Improve Trust
2012 Edelman trust barometer
Individual and references & Image Credits
My Wife, Syamala and My collegues M/S Amlesh Ranjan , Venkatesan Subramanian
and Parthasarathy Marcus evans and Sponsors Bio Portfolio
Gapminder Photographs from various unknown artists, CIA Fact book Profitable growth strategies for the Global Emerging Middle
by PWC The emerging middle class in developing countries : Homi
Kharas 2012 Edelman trust barometer Many more references books , articles from Google search
Backup
GDP BRICs
CIA World Fact Book
Population Dynamics
CIA World Fact Book
Healthcare in BRICs
CIA World Fact Book
Relationships
Diverse n Multi ethnic
Hierarchy
Individual Loyalty
Middle Class Ethos : Brazil
Independent
Intellect
Adherence to Order
Russian and Non Russian
Community over Individual
Middle Class Ethos : Russia
Knowledge for Money
Hierarchy
Joint Families and Loyalty
Jugad
Spirituality and Modesty
Middle Class Ethos : India
Family : Valued
Society over Individual
Hierarchy : Patriarch
Relationships and Reciprocity
Morality in life: Confucius
Middle Class Ethos : China
Brazil : Health and Wealth last 200 Years
Russia : Health and Wealth last 200 Years
India : Health and Wealth last 200 Years
China : Health and Wealth last 200 Years
End of the presentation
