Identifying 5 demand classes in India

Marketing in an emerging or a developing market is often an uphill task; particularly if its population and literacy rates are on the negative scale, or the economic data is either of bad quality or is limited to make any meaningful trend analysis.

Thankfully, India as a country is an exception to some extent. Its robust comprehensive census is one of the most respected census operations worldwide, even though the benefits of such a colossal amount of data have been under-utilized for development, by the political system.

Recently I came across some rather interesting facts and / or observations from Rama Bijapurkar, on consumerdemands in India, which are worth noting – especially for developing the foundations of new marketing campaigns:

(image source: insightinstore.com)

  1. India is primarily an “Individually Poor” but “Collectively Rich” country, since proportionally higher consumption takes place at far lower-income levels. Therefore currently “volume” consumption holds more importance than the value consumption – particularly in case of FMCG category and to some extent in case of “fast moving consumer durables”, e.g. mobile phones, footwear, garments, etc.
  2. Indian Consumers could be broadly recognized as 3 broad segments – Premium, Popular and Discount. By volume, these segments roughly represent 10%, 30% and 60% of the population respectively. However, in terms of value, each of these segments are roughly equal to each other.
  3. Thanks to some socialistic trends prevailing till the late eighties and early nineties, the “unorganized sector” and the “unorganized small-scale buyers” have continued to drive consumption to a larger extent. As a result, despite the post-nineties liberalization of Indian economy, the “organized large-scale buyers” – the dream of every retailer – are still far lower than the small-scale unorganized ones.
  4. Indian consumers have successfully bucked the traditional consumption upgrade patterns – i.e. moving from “Popular” products to “Premium Products”. Instead it’s common to see that the premium segment customers gradually “down-trade” to popular products (esp. FMCG), while the popular segment customers, start looking for “premium-quality” products – though not necessarily “premium-priced”. Premium-Popular-Discount segments do not necessarily represent the Rich-Middle-Poor segments respectively.

It’s no surprise then, that the market structure of India is likewise defined in terms of “consumer classes” or groups and not their disposable incomes or other similar metrics. Known as the “Consumer Classes Framework” model developed by NCAER, the 5 broad categories of Indian consumers are:

A)     RICH – consumers of cars, PCs, ACs, etc., particularly the premium and luxury goods.

B)      CONSUMING CLASS – consumers of utility durables and bulk of FMCG products

C)      CLIMBERS – consumers of at least one major durable, and main consumers of popular consumer goods

D)     ASPIRANTS – new consumers / new entrants to consumption; hence have very basic watch, radio, phone, etc.

E)      DESTITUTES – who consume practically nothing; living hand-to-mouth perhaps

Finally it’s also very interesting to note that while any one product might be consumed across multiple classes, the performance price points however within each could be multiple. As a result a Nokia phone might tend to be consumed across the first 4 classes, but each class would have it’s own price points for the brand.

Marketing in India with its myriad layers could be as mysterious as its people, culture and its economy. It’s therefore wise to carefully weigh each available statistic and explore possibilities before taking a campaign decision.

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