I have been reading a number of books on marketing in India, and noticed a consistent theme in the analysis. I am referring to a body of published and unpublished literature, research reports commissioned for specific purposes and sociological studies. While these agree/ disagree on a number of issues, all these research agree on the peculiar position of brands in the Indian marketplace.
India is supposed to be an attractive marketplace. Supposed to be, as the numbers are huge and a bit of money is supposed to be floating around. So, there is talk about an Indian middle class, the size of which is hotly debated and put anywhere in between 40 to 400 million. The variance is based on what one will call the middle class. The bottom three-fourth of this populace will not qualify as middle class by any rich country standards; but, of course, the new fortune-at-the-bottom-of-the-pyramid thinking has certainly brought them into the party. This is the figure which George Bush famously quoted when he was in India, and one would assume that this is what most policy-makers will see when they see India from outside.
I remember saying this when I first joined Rutledge and was asked to brief the managers on how big the opportunity in India is. I paraphrased James Kynge [from his award-winning China Shakes The World] to say that, from outside, India looks huge, a market for one billion people; but from inside, India is a million country itself, differentiated by language, culture, history, religion and education - an uniquely diverse country within a political union. I urged a balanced view of the challenges as well as the opportunities.
Interestingly, that is the key point made in an excellent recent book - The Indian Consumer : One Billion Myths, One Billion Realities, by Alam Srinivas - wherein he looks at the emerging consuming class of the Indians. While attempts have been made to classify the Indian middle-class as one segment, Mr. Srinivas maintains, the consumption pattern and preferences are hugely diverse within this segment. Of course, he talks about different economies, as did Rama Bijapurkar, in her Winning in The Indian Market: Understanding the transformation of consumer India, and classifies the middle class on the basis of its origin - the bureaucracy of state and union level, the railways, the public sector, the private sector, the self-employed, etc [Ms. Bijapurkar talked about a 'government economy', comprising of the first three segments] and asserts how the spending pattern and consumption preferences actually vary between these different 'middle classes'.
I think this is a very interesting point, one that can be of crucial importance to all marketers approaching the Indian market. It is not good enough to think about a huge Indian consuming class. It is important to take this sociological perspective into the account, and decide whether the market is big enough and if there is enough incentive built into the product to attract the target segment.
I shall give an example from our own experience. We are trying to sell English language training to India. Our broad definition of the target market was those who 'has English locked inside', roughly meaning those people who have received tertiary education but can not speak in English. However, what we did not take into account is the sociological root of this segment - these people will mostly come from 'government' families, where the main breadwinner of the family would have been employed in a government job.
I say this because such families actually sustained the private education sector in India for last two decades. These are the families where getting a job is important, but with the decline in intake in the government jobs, the known routes of employability are all closed. While it is far more likely for a Private sector employee to open doors for his/her children through networking, this has increasingly become difficult for a government employee, due to various restrictions and affirmative action programmes in the government sector. So, this generation flocked the Engineering/ Medical entrance examinations and later in the private training schools.
The peculiarity of this segment will be in terms of (a) price sensitivity, even if they can afford, they would not want to spend more; (b) outcome orientation, they would want a certificate, a proof of credentials; (c) product-over-brand mentality, wherein the actual product features and deliverable will matter more than the brand perception.
Since we, and our partners, so far looked at a straight-forward Indian middle class segmentation, we ended up building a posh centre in a big city offering a premium English course, without a certification. We got what we did not ask for - expats trying to learn English, companies trying to educate their employees and rich housewives preparing for next trip abroad - but did not get the 'mass' that we hoped for.
My takeaway from this new set of research is the perspective I mentioned here. What's needed is a product for the 'government' middle class - value-for-money, outcome orientated and easily accessible - and our future business strategies will surely be deeply influenced by this thinking.
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