Consumerism in India PDF

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Consumerism in India...

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Consumerism in India First, consumer luxuries have got democratized during this decade: Products that were considered for a few started to reach larger and larger masses of consumers — from colas to shampoos to ready wear to mobile to airlines. Categories that started in the 90s began to expand their footprint and became a part of mass life. Consumption and consumerism reached more people than it did in the 90s. Social inequity continues to be part of India’s economic, but the capitalistic principle that “open up from the top to a few, and the benefits will flow down to many” has come true. Consumerism is truly mass! Along with this, has come a culture of upgrade and step movement rather than lifetime ownership and gradual movement. Technology, mobile handsets in particular, made consumers get used to constant change — buying a new product even when the old one was “functional”, thus breaking the barrier of the “replace when it’s broke” mindset. And then this extended to other categories in life — from clothes to televisions to homes. ADVERTISEMENTS:

Every Indian market presents an opportunity to marketers to get consumers to move up. As technology improves and consumers’ disposable income increases, the willingness and propensity of consumers to make leaps from unbranded to branded and pay

significant premia is also increasing. There is no longer “lifetime ownership”, but “lifetime consumer value’! Third, there has been a shift from product to services and experiences: And this is taking place across categories. Coffee has become Cafes, beauty products are transiting into Parlors — and this is going into small towns too with local “aunties” sensing business opportunities opening parlors and beauty counseling centres at home — and home videos have become multiplexes. And in every case, it provides marketers an opportunity to extract more value. The great Indian middle class and rise in Indian consumerism: McKinsey global has released its India consumer research and here are a few key insights from the report: a) Indian income will triple over the next two decades. ADVERTISEMENTS:

b) Over the next two decades, the country’s middle class will grow from about 5 percent of the population to more than 40 percent and create the world’s fifth-largest consumer market. c) In 2005, private spending reached about 17 trillion Indian rupees($372 billion), accounting for more than 60 percent of India’s GDP, so in this respect the country is closer to developed economies such as Japan and the United States than are China and other fastgrowing emerging markets in Asia.

d) India remains the least urbanized of the emerging Asian economies. Today only 29 percent of Indians live in cities. India Shining: a. Extreme rural poverty has declined from 94 percent in 1985, to 61 percent in 2005. b. In 1985, 93 percent of the population lived on a household income of less than 90,000 rupees a year by 2005, that proportion had been cut nearly in half, to 54 percent. ADVERTISEMENTS:

c. The growth that has pulled millions of people out of poverty is also building a huge middle class that will be concentrated in India’s urban areas. d. If India can achieve 7.3 percent annual growth over the next 20 years, 465 million more people will be spared a life of extreme deprivation e. About 400 million Indian city dwellers a group nearly 100 million people larger than the current population of the United States will belong to households with a comfortable standard of living. Consumer Spending in India: Discretionary spending in India will rise from 52 percent of total private spending today to 70 percent in 2025.

a. By 2025 India’s wealthiest citizens will total 24 million, more than the current population of Australia. By that year too, India’s affluent class will be larger than China’s comparable segment, projected at about 19 million people b. Spending on purchases that improve the economic prospects and quality of life of a person or family health, education, transport, and communications will soar and eventually command a greater share of consumption than they do elsewhere. c. Despite India’s fondness for cricket and “Bollywood” movies, recreational products and services will take a smaller slice of household spending there than in other countries. d. Transportation, already the largest category of expense after food, will take a bigger portion of household budgets in coming years, exceeding its share in all of our benchmark countries. The highest growth will come from car purchases. Categories such as clothing and household goods are expected to post slower annual growth relative to overall consumption...