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The Indian ‘Consumer’ Market: Deprived to Democratic?

CASE STUDY, CONSUMER BEHAVIOR
ET Cases, 16 pages

Case Preview

The Indian ‘Consumer’ Market: Deprived to Democratic?

 

The Indian consumer market landscape has undergone a paradigm shift since the country’s independence in August 1947. While the country earned its independence in 1947, the consumers seem to have achieved their independence around 1992. While 1991 spelt economic liberalization in India (through LPG – Liberalization, Privatization and Globalization), 2005 spelt digital and mobile liberalization with increased internet and mobile penetration. Some of the important reasons for this change are an expanding economy, the rising urbanization as reflected in an increase in the urban population and a rise in the number and size of urban agglomerations, increasing disposable incomes of individuals, robust growth in the middle class population and the proliferation of organized retail, including malls. Purchase of most of the products is a click away for the present day consumer. Consumers are being empowered through the internet primarily due to employing the online platform to research various products and to connect with other consumers. However, will companies be able to build profitable businesses by catering to the wants of consumers for whom purchasing power is no longer an unbridgeable constraint and whose awareness levels cannot be undermined? The new face of Indian consumer market is millennials with their intriguing contradictions. What do these seismic changes mean for consumer behavior? While Indian consumers’ aspirational lifestyles are being converged, their value systems seem deep-rooted in Indian ethos. What were once taboos are now well-accepted emerging phenomena. How should marketers keep pace with the changing paradigms?

Indian Economy: The New Economic Consensus

Since gaining independence in 1947, India made significant progress, both in economic progress indicators as well as social indicators (Exhibit I) (Annexure I for additional macroeconomic indicators). The country’s gross domestic product has witnessed a steady rise and the connected fluctuations have reduced.1 Per capita income also reflects the same scenario. An alteration in the composition of the country’s economy is, to a certain extent, responsible for the reduced fluctuations. The percentage contribution of agriculture to the economy, as a whole, is considerably lower in FY2013 when compared to FY1951. This is notwithstanding a substantial increase in the agricultural yield.2 The literacy rates in the country have witnessed considerable rise with the concerned momentum being much more in the 1980s and 2000s.3................................

 



1 “StatsGuru- How India has changed since gaining independence”, http://www.business-standard.com/article/economy-policy/statsguruhow-india-has-changed-since-gaining-independence-114081800016_1.html, August 18th 2014, (accessed date: September 10th 2014)
2 Ibid.
3 Ibid.

Teaching Note Preview

The Indian ‘Consumer’ Market: Deprived to Democratic?

 

Synopsis

This case study enables a discussion on how the Indian consumer market has changed since the time of attaining independence. The primary reason for these changes is the country’s economic development since independence, which is evident from a rise in the country’s gross domestic product. Another key driver of these changes is the increasing urbanisation of the country. The rise in the urban population and the increase in the number of cities with population of over 1 million stand testimony to this phenomenon. The increase in the incomes of individuals has resulted in the increased demand for and consumption of branded products and a rise in discretionary expenditure.

India’s growth story is also marked by a rise in the economically active age group of 15-64 years, which increases the income available for consumption. This is besides an increase in the country’s middle class population, which today is a key driver of consumption in the economy.

The consumption patterns of Indians have also been undergoing a metamorphosis due to the growing digital influence in their daily lives – the number of internet users in the country increased from 1,006 (approximately) in 1992 to 189 million in 2013. The phenomenon of accessing the Internet on mobile phones is registering a speedy growth. An important consumption-related effect of increasing internet penetration is the explosive growth being registered by e-tailing in the country. E-tailing also owes its popularity to the innovative business models being employed by e-commerce companies, the hassle-free shopping experience and the convenient payment options being provided by them. Apart from this online purchase of goods, an increasing number of Indians are employing the Internet to research both the quality and prices of products.

Apart from e-tailing, the entire organised retail segment in the country is witnessing considerable expansion. The entire shopping experience, including the ambience, has become important for consumers and they no longer hold the notion that Indian products, are by default, inferior to foreignmade products. The restaurant and multiplex businesses have been booming primarily on account of the patronage from the growing number of affluent households. However, can companies sustain their efforts to build businesses by catering to the requirements of the new Indian consumer and which are marked by customer-centricity?

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

This case study introduces the students of the Consumer Behavior subject to the evolution of the Indian consumer. The participants were asked to read the following articles to better appreciate this evolution:

  • • Subbu Narayanswamy and Adil Zainulbhai, “India’s consumption evolution”, http://www.business-standard.com/article/opinion/india-s-consumption-evolution-107050501032_1.html, May 5th 2007
  • • “Tapping into the Indian Consumer Market”, McKinsey Global Institute, June 28th 2007

 

Expected Learning Outcomes

  • • How has the Indian consumer market evolved and what are the forces that have contributed to the evolution?
  • • What are the defining characteristics of the new age or millennial Indian consumer?
  • • How can companies consistently derive business from and grow profitably with the new age Indian consumer?

 

Positioning/Case Setting

This case study can be used in the following course/module:

  • • Consumer Behavior Course (as outlined under PCU) –To understand the different nuances of the new Indian consumer market and to act as a background for appreciating the practical implications of various concepts constituting the course.

 

Assignment Questions

  • I. From the case facts, what is your analysis of the Indian consumer market and the Indian consumers?
  • II. If you are one of the following (or representing one of the following), how would you interpret the case facts:
  • ....................................

 

Case Analysis

The classroom discussion and analysis for this case study could be summarized through the Board Plan [Exhibit (TN)-I]. The classroom discussion comprised two exercises spread over 120 minutes. The first exercise involved an exhaustive analysis of the changes that the Indian consumer market has undergone and the linking of the case with some of the consumer behaviour and marketing concepts. This exercise lasted for 60 minutes. The second exercise involved a  discussion of the assignment questions.................

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Abstract


This case study is enlisted primarily as an inaugural case study in the Consumer Behaviour course in the Indian context. With relevant data, this case study provides a landscape of the evolution of Indian consumer and Indian consumer market. Since independence in 1947, the Indian consumer has evolved to be an intriguing and discerning consumer. 'Study the past, if you would divine the future', said Confucius centuries ago and this case study provides a historical context for understanding and analyzing the Indian consumer market and Indian consumers over the last six and half decades. Written to paint the Indian consumer canvas over four generations traditionalists, baby boomers, Gen X and Gen Y/millennial, this case study enables an understanding of the transition of the Indian consumer market from being a sellers' market to a buyers' market. With about 35% of the Indian consumer market comprising of millenials (with intriguing characteristics, though), how should Indian marketers tap this demographic dividend? Or, would it be a complicated demographic divide? What would digital density mean for demographic diversity?




Pedagogical Objectives


  • To understand how the Indian consumer market evolved since independence (1947) and examine what factors have contributed to the transformation of the Indian consumer market from being sellers' market to buyers' market

  • To trace the evolution of new age Indian consumer through four generations traditionalists, baby boomers, Gen X and Gen Y/ millennial, and contrast the emerging Indian consumer landscape with the new rules of marketing

  • To discuss and debate on what do the metamorphic changes mean for Indian marketers and how should they engage with the new age Indian consumer




This Case Pack Includes:
 - Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
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