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The Indian ‘Consumer’ Market: Deprived to Democratic?

ET Cases, 16 pages
AUTHOR(S) : Vijay Kumar Tangirala, Dr. Nagendra V Chowdary

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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. 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. The literacy rates in the country have witnessed considerable rise with the concerned momentum being much more in the 1980s and 2000s.3There has been a 30 times rise in the number of colleges between 1952-1953 and 2007-2008. Infant mortality rate – the number of infants dying prior to reaching the age of one year for every 1000 live births – has witnessed steady reduction. There has also been a decrease in the fertility rate, the number of children conceived by an average female. This rate is lower than the replacement levels in urban regions, which implies that there will be a reduction in the country’s urban population without migration from villages.

The Phenomenon of Urbanization

An important aspect of India’s growth story is its increasing urbanization. The percentage of urban population increased from 25 % in 1987 to 32 % in 2013. The country’s urban population nearly doubled from 202.7 million in 1987 to 400.9 million in 2013 (Exhibit II). Migration from villages to urban areas in search of employment or entrepreneurial opportunities has been steadily increasing. However, this meant a gradual reduction in the number of active farmers and it is also feared that if this continues unabated would pose a serious problem for food security (Food Security Bill was passed by the Indian Parliament in 2013).............

Rising Incomes

India’s economy has also been witness to rising incomes, driven primarily by increase in employment opportunities, especially in metros and tier I cities leading to rapid urbanization. This increase in employment avenues has its genesis in the liberalization and increasing privatization that the economy embarked upon in 1991. The significance of incomes emanates from their impact on the spending patterns (Exhibit III). The Gross National Income per capita (GNI per capita) according to the World Bank’s Atlas method in current $ increased from $330 in 1993 to $1,570 in 2013 (Exhibit IV).............

Increase in the Digital Footprint

The number of internet users in the country increased from 1,006 (approximately) in 1992 to 189 million in 2013 (Exhibit VII). By October 2013, this number had increased to 205 million. Rajan Anandan, Chairman of the Internet and Mobile Association of India as of November 2013, observed, “Internet is now, clearly, mainstream in India.” The number of internet users in rural areas was estimated to have reached 38 million by the end of 2012.............

Increased Organized Retail Footprint

Foreign participation in India’s organized retail story began in 1997 when the government permitted 100% foreign direct investment (FDI) in cash & carry wholesale trade. The government permitted 51% FDI in single-brand retail in 2006 and raised this limit to 100 % in 2012. 51% FDI in multi-brand retail, with some caveats, was also permitted in 2012. The demand for organized retail, which offers superior shopping experience is on the rise on account of increasing urbanization............

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:

(a) A global beverages company (from Western Europe) trying to enter the Indian market and is keen to know the ideal Segmentation, Targeting and Positioning
(b) An Indian fast food retail chain operating only in metros, wants to expand in II and III tier cities
(c) A first-generation entrepreneur planning to start an e-commerce company focusing on retired/older people

III. Who are millennials? What do they mean for companies’ marketing communications (for product innovations, product launches, customer service, etc.)?

IV. ..............


Exhibit I: India’s Growth Story since Independence

Exhibit II: India’s Increasing Urban Population

Exhibit III: Different Levels of Income and Their Dynamics

Exhibit IV: The Increasing Incomes of Indians

Exhibit V: Increase in the Population (in the 15-64 Years Age Group)

Exhibit VI: Increase in the Number of Middle Class Households

Exhibit VII: Increase in the Number of Internet Users

Exhibit VIII: Emerging Consumer Segments

Exhibit IX: The New Business Model: Marketing Products to Cultivating Customers


Annexure I: India’s Growth Story Since the 1970s

Annexure II: 49 Metropolitan Clusters to Contribute to Growth

Annexure III: Pattern of Purchase of FMCG, Premium and Super Premium Products

Teaching Note Preview

The Indian ‘Consumer’ Market: Deprived to Democratic?



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”,, 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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Product code: CB-1-0002, CB-1-0002A


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

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