MARKETING Magazine talks to India’s marketing expose author about its dark secrets
EVERY marketer should be aware by now that China and India are the markets to tap into due to the burgeoning population sizes in these mammoths of Asia. Nonetheless, desire to break into these inviting untapped markets must be supplemented with knowledge on the inner workings of the societies involved; otherwise, marketers risk huge wastes in terms of energy and resources.
Luckily, Alam Srinivas has just come up with a concise, well-researched paperback that gives readers plenty of insight into the inner workings of the Indian shopper. In his own words, the book is a must-read for the many potential foreign investors who wish to enter India, and for those who are already there and are looking to expand.
“Many of them, including Indian businessmen, have little idea about the size, spending patterns, mindset and behavior of the Indian Middle Class. Most are groping in the dark to discover the real middle class. Every marketer has to realize the bitter truth about the Indian Middle Class: it is not uniform; it consists of hundreds of subsets, Even if it conforms to the income-definition, its spending mindset changes according to the city, neighborhood, caste, family size, and profession,” says the renowned investigative business journalist who has exposed several corporate and stock market scams.
Srinivas felt compelled to write The Indian Consumer: One Billion Myths, One Billion Realities because of all the irrational hype and exuberance about the size and consumption behavior of the Indian Middle Class, right from the 1990s when India took the first tentative steps towards a market economy. While many economists and retail experts have talked of a figure of 350 million, this is an oversimplified fallacy. Many studies have found that the size of the middle class is less than 100 million today.
So, it is high time for a much-needed reality check.
The information in this book has been gleaned from academic papers and studies, reports by various research organizations and consultancy firms, internal studies by corporations in the consumer goods and consumer services segments, personal interviews with members from different categories of the Indian Middle Class, country studies by foreign media groups like The Economist, lessons from popular culture and a deep dissection of existing data.
The author strongly believes that India is likely to attain high growth rates over the next decade or so. Naturally, there will be hiccups but those will be temporary because India’s fundamentals are strong. And if all goes well, he foresees India achieving world-class status in several service sectors, as it has done in software and Business Process Outsourcing (BPO). Indian manufacturing, though it lags behind China today, has the potential to become world class in value-added areas.
Furthermore, in areas such as auto components, pharmaceuticals, research, design, software, BPO, telecom, and financial services, India can become the market leader. There are two snags, however – the country’s dependence on agriculture and those living in destitute poverty. Although the number of poor Indians has reduced, it’s not fast enough as they continue to live outside market forces and beyond the reach of state policy.
When asked for a surprising fact about the Indian middle class, Alam Srinivas talks about how caste, profession, family size, and even the number of sons and daughters are all important factors that throw up different perspectives on the Indian middle-class behavior.
“Even among urban middle-class households, there are huge differences in consumer behavior. In the case of Mumbai, the middle class in the south is different from the suburbs, and the two are different from the ones who reside in New Mumbai. Similarly, the middle class in Mumbai is different from that in Delhi,” he notes.
The same difficulty arises when you try to look at the Indian consumers in terms of their professions – the private sector manager thinks differently than the public sector one, the software engineer is a different breed compared to his or her manufacturing counterpart, the middle-class households in institutions like the Indian Army behave differently. Indian is as complex as it is large.
When comparing the Indian economy to China or Russia, Srinivas feels that the pace of China is far ahead. But he also believes that the “base effect” may eventually weigh China down, and allow India to grow faster in the near future, as she will be doing so at a lower base. In fact, this is one reason why India has been able to withstand the adverse implications of the current global slowdown. Russia, meanwhile, has the potential to grow faster or as fast as India, but is bogged down by other problems, which are political, social and economic in nature. Therefore, India may actually be in the best position to clock double-digit growth rates.
Tremendous insight into the Indian market has been concisely presented in this book. To find out why many middle-class Indians are simply pretending to be spenders, be sure to
grab a copy of the latest offering from Alam Srinivas.