20100331 Changing Consumer Behaviour Patterns

8/3/2019 20100331 Changing Consumer Behaviour Patterns

1/18

Changing Consumer

Behaviour Patterns OfIndian Middle Class

Prof.Sundaram RajagopalanDean Executive Education

SP Jain Center of Management Singapore


2/18

Outline

Evolution of Indian consumer market in growth phase

Consumer markets India vs. China

increasingly affluent Indian Middle class harder to ignore

Indian middle class as a distinctive segment - profile,dimensions, and location

Changing patterns of middle class behavior

How India's rising and unique middle class will reshape

Indian / Global consumer markets ?Implications to companies thru cases


3/18

Over the next two decades , Indiasmiddle class will grow from about 5

percent to more than forty percent

and create the worlds fifth - largest

consumer market

- McKinsey Quarterly 2007


4/18

Indias economy has been growing rapidly

What impact has growth had on Indian

incomes and how quickly will they grow in thefuture?

How is the distribution of income changing?When will its middle class take off?

How is income growth effecting urbanversus rural areas?

How much of rising Indian incomes will be

spent versus saved?

What will Indian consumers spend theirnewfound wealth on?

What does thismean forbusinessand investmentopportunities?

How shouldcompaniescompete for thenew Indian

consumer?

Source : MGI


5/18

India will emerge as the worlds fifth

largest consumer economy

Indian incomes will triple over the next two

decades, significantly reducing povertyRising household incomes will be the keydriver of consumption growth not changes

in savings


6/18

A large urban middle class will develop,but rural areas will benefit too

Urban India will account for more than two-thirdsof Consumption growth over the next 20 years

Middle class households will dominate urban

IndiaLarge cities tend to have highest incomes, butsmall niche cities prospering too.

Per-household consumption in rural India willreach today's urban levels by 2017


7/18

Indian Middle class defined

Source: NCAER The Great Indian Middle Class; McKinsey Global Institute


8/18

Middle Class Consumer Markets

Comparison with China

Capacity to spend in middle class of Chinaand India widely differs.India's consumer driven economy is starklydifferent from China's capital-investment-

dominated one.The differences go beyond the two countries'rising middle classes.Urban consumers in India will likely drive

more global business than their Chinesecounterparts while India's rural developmentfar outpaces China's


9/18

Where is the real

Indian middle class market ?

The Indian urban growth story until nowhas been driven largely by metros

This is now moving beyond metros intosmaller towns.


10/18

Classification of Cities and TownsSource: The Great Indian Middle Class, NCAER; McKinsey Global Institute


11/18

Changing patterns of middle classconsumer behavior Trendy lifestyles

bulk buyingPositive attitude towards western trendsmuch more flexible and experimental in theirapproachesstylish Lifestylesexponential growth of western trend reachingthe Indian consumer by way of the media andIndians working abroad


12/18

Four Key segments

Kids / Family

Mass Niche

Bread winners

Home makers

SEGMENTS
http://images.google.co.in/imgres?imgurl=http://english.kbs.co.kr/ICSFiles/artimage/2006/07/04/c_lfe_trd/TREND_vol16_01.jpg&imgrefurl=http://english.kbs.co.kr/life/trend/1404072_11857.html&h=264&w=252&sz=34&hl=en&start=5&tbnid=2K1wcSsoALqCTM:&tbnh=112&tbnw=107&prev=/images%3Fq%3Dmasstige%26gbv%3D2%26svnum%3D10%26hl%3Denhttp://images.google.co.in/imgres?imgurl=http://cec.wcln.org/albums/album12/Rustam_cartoon_man.thumb.jpg&imgrefurl=http://cec.wcln.org/index.php%3Fmodule%3Dpagesetter%26tid%3D1%26orderby%3Dcore.publishDate:desc%26filter1%3Dcecnewscat:like:544%26page%3D7&h=100&w=100&sz=15&hl=en&start=11&tbnid=IlArzV3uuu7vnM:&tbnh=82&tbnw=82&prev=/images%3Fq%3DIndian%2BMan%2Bcartoon%26gbv%3D2%26svnum%3D10%26hl%3Denhttp://images.google.co.in/imgres?imgurl=http://www.ctsnet.org/images/WHFOnLocIndia0705Figure4.jpg&imgrefurl=http://www.world-heart.org/doc/10764&h=575&w=883&sz=147&hl=en&start=11&tbnid=gOSRidCXoPhgAM:&tbnh=95&tbnw=146&prev=/images%3Fq%3DIndian%2Bfamily%2Bwith%2Bkids%26gbv%3D2%26svnum%3D10%26hl%3Den


13/18

Values of Home maker middle

class

Want to feel moreproductive ( use

my talents)

Embrace Measuredmodernity ( e.g.Jeans + Kuta or

Salwar )

Embraceconvenience (slowly)

Yearn intimatemoments with

Husbands

Family Provider(through efforts )-money still got by man

Kids my world

Value and Budgetconscious

Some

Changing Somesame

S
http://images.google.co.in/imgres?imgurl=http://www1.istockphoto.com/file_thumbview_approve/544102/2/istockphoto_544102_married_indian_woman.jpg&imgrefurl=http://www.istockphoto.com/file_closeup/%3Fid%3D544102%26refnum%3D406027&h=380&w=117&sz=19&hl=en&start=17&tbnid=I45KPhxFoT3V2M:&tbnh=123&tbnw=38&prev=/images%3Fq%3DIndian%2Btraditional%2Bwife%26gbv%3D2%26svnum%3D10%26hl%3Den%26sa%3DGhttp://images.google.co.in/imgres?imgurl=http://static.flickr.com/44/177018981_ff3064cbf7.jpg&imgrefurl=http://blog.360.yahoo.com/blog-87vqgkA9RLD914ILtAOL%3Ftag%3Djointblog%26list%3D&h=500&w=482&sz=131&hl=en&start=16&tbnid=dd3502UxZs6O8M:&tbnh=130&tbnw=125&prev=/images%3Fq%3DIndian%2Btraditional%2Bwife%26gbv%3D2%26svnum%3D10%26hl%3Den%26sa%3DGhttp://images.google.co.in/imgres?imgurl=http://www.oralchelation.com/heart/images/worried.gif&imgrefurl=http://www.oralchelation.com/heart/heart.html&h=363&w=344&sz=6&hl=en&start=1&tbnid=3oUgZvY2ha-MeM:&tbnh=121&tbnw=115&prev=/images%3Fq%3Dworried%26gbv%3D2%26svnum%3D10%26hl%3Den


14/18

Some unknowns for middle class( usually bread winners)

Yet most+ve andhopeful

of a greatfuture
http://images.google.co.in/imgres?imgurl=http://www.oralchelation.com/heart/images/worried.gif&imgrefurl=http://www.oralchelation.com/heart/heart.html&h=363&w=344&sz=6&hl=en&start=1&tbnid=3oUgZvY2ha-MeM:&tbnh=121&tbnw=115&prev=/images%3Fq%3Dworried%26gbv%3D2%26svnum%3D10%26hl%3Den


15/18

CHANGING MIDDLE CLASS PARENTS

Kids have anew

relationshipwith theirparents
http://images.google.co.in/imgres?imgurl=http://newsimg.bbc.co.uk/media/images/42366000/jpg/_42366294_india_ap416.jpg&imgrefurl=http://news.bbc.co.uk/1/hi/in_pictures/6191162.stm&h=300&w=416&sz=23&hl=en&start=16&tbnid=oOvGSCX1uMr6nM:&tbnh=90&tbnw=125&prev=/images%3Fq%3DIndian%2Bfamily%2Bwith%2Bkids%26gbv%3D2%26svnum%3D10%26hl%3Denhttp://images.google.co.in/imgres?imgurl=http://www.ctsnet.org/images/WHFOnLocIndia0705Figure4.jpg&imgrefurl=http://www.world-heart.org/doc/10764&h=575&w=883&sz=147&hl=en&start=11&tbnid=gOSRidCXoPhgAM:&tbnh=95&tbnw=146&prev=/images%3Fq%3DIndian%2Bfamily%2Bwith%2Bkids%26gbv%3D2%26svnum%3D10%26hl%3Den


16/18

The Niche mass

I Want it Now!

Time poor, cash rich

Moving away from traditional values and focusing on

image and brandingConvenience

Looking for shopping short cuts are also looking forquick fixes for their looks.

Attracted by modern retail environments


17/18

The future .

Banking, electricity, telecommunications, water, white

goods & beauty industry sectors would thrive and push

the middle class into consumerism.

Industries will see higher cost of doing business.

The Urban middle class will always dwarf Urban

Affluent consumers in spending power because of their

sheer size.

Health and Education will be key spending areas and

will even take precedence over consumerism.


18/18

Trends

Product will proliferate, consumer will complain of excesschoice although would love the excess choices.

Consumers will enjoy income levels unmatched by that

of previous generations. (esp in Metros and large towns)Widening income levels, migration (rural to urban) will

create new opportunities.

Most consumers will continue to embrace traditional andmodern values and will be eager for modern products

with Indian tastes.

Documents

20100331 Changing Consumer Behaviour Patterns