Is there a market at the bottom of pyramid?

Understanding the market opportunities BY Meenakshi Raina

BY

Meenakshi Raina

Defining the Great Indian Middle Class – The tireless engine of Growth Mckinsey Global Institute has divided the Indian population into five distinct groups on basis of their Annual Income Deprived : < Rs. 90,000 Aspirers : Rs. 90,000 to Rs. 2,00,000 Seekers: Rs. 2,00,000 – Rs. 5,00,000 Strivers: Rs. 5,00,000 – Rs. 10,00,000 Global Indians: Rs. 10,00,000 +

Mckinsey Global Institute has divided the Indian population into

five distinct groups on basis of their Annual Income

Deprived : < Rs. 90,000

Aspirers : Rs. 90,000 to Rs. 2,00,000

Seekers: Rs. 2,00,000 – Rs. 5,00,000

Strivers: Rs. 5,00,000 – Rs. 10,00,000

Global Indians: Rs. 10,00,000 +

Defining the Middle Class…ctd Mckinsey has divided the Indian population into five distinct groups on basis of their Annual Income Deprived : < Rs. 90,000 Aspirers : Rs. 90,000 to Rs. 2,00,000 Seekers: Rs. 2,00,000 – Rs. 5,00,000 Strivers: Rs. 5,00,000 – Rs. 10,00,000 Global Indians: Rs. 10,00,000 +

Mckinsey has divided the Indian population into five distinct groups on

basis of their Annual Income

Deprived : < Rs. 90,000

Aspirers : Rs. 90,000 to Rs. 2,00,000

Seekers: Rs. 2,00,000 – Rs. 5,00,000

Strivers: Rs. 5,00,000 – Rs. 10,00,000

Global Indians: Rs. 10,00,000 +

Analyzing the consumption pattern of the Indian middle class

Analyzing the consumption pattern of the Indian middle class

Overview Development, market diversification and financial capital returns cannot be limited to a niche segment Important factor to understand is : The potential of the rising middle class in the developing countries and emerging markets.

Development, market diversification and financial capital returns cannot be limited to a niche segment

Important factor to understand is :

The potential of the rising middle class in the developing countries and emerging markets.

Projection 2025 India is 4 th largest GDP in terms of PPP Current income level 12 th , projected position 5 th largest. 291 million people will move from desperate poverty line to sustainable living. Middle class will swell to 583 million.

India is 4 th largest GDP in terms of PPP

Current income level 12 th , projected position 5 th largest.

291 million people will move from desperate poverty line to sustainable living.

Middle class will swell to 583 million.

Rural market development Large firms work collaboratively with civil society organizations and local governments. Market development at BOP will create millions of new entrepreneurs at grass root level. Women working as distributors and entrepreneurs to village level micro enterprises.

Large firms work collaboratively with civil society organizations and local governments.

Market development at BOP will create millions of new entrepreneurs at grass root level.

Women working as distributors and entrepreneurs to village level micro enterprises.

Huge market More than 4 billion people at the bottom of pyramid. Latent market. India accounts for more than 400 million. $13 trillion global market.

More than 4 billion people at the bottom of pyramid.

Latent market.

India accounts for more than 400 million.

$13 trillion global market.

Transition in Indian Economy 1991-3 liberalization 94 million uplifted in 10 years to sustainable class. Nature of emerging market

1991-3 liberalization

94 million uplifted in 10 years to sustainable class.

Nature of emerging market

The changing face of consumer India Two India many India's Rich and poor India ( five consuming classes) Many shades of rich, not so rich, not so poor, poor India's Urban India and rural Bharat Many oases and deserts within India as well as Bharat Two age cohorts with uniform consumption ideologies- all brought up in a socialist ethos Four age cohorts with distinct consumption ideologies, shades in between Three economies – agriculture, manufacturing, government Five economies- agriculture, manufacturing, government, services. IT From To

Branding India In September 2006, Davos, Switzerland, India branded itself in World Economic Forum as: “ Fastest growing free market democracy.”

In September 2006, Davos, Switzerland, India branded itself in World Economic Forum as:

“ Fastest growing free market democracy.”

Market and financial returns Case analysis: HLL: project Shakti ICICI: micro financing ITC: E-choupal Lindt

Case analysis:

HLL: project Shakti

ICICI: micro financing

ITC: E-choupal

Lindt

Changing shapes of income distribution

Making it happen? Price performance relationship Innovation: hybrids, disqualification of water down theory Scale of operations: Huge market for: finance sector for rural development FMCG products Services and IT enabled

Price performance relationship

Innovation: hybrids, disqualification of water down theory

Scale of operations:

Huge market for:

finance sector for rural development

FMCG products

Services and IT enabled

Recommended approach

Understanding Indian consumer mindset

Price performance recommendations Outsourcing to dedicated suppliers Logistics and distribution system and use of CDS Innovations must be value oriented

Outsourcing to dedicated suppliers

Logistics and distribution system and use of CDS

Innovations must be value oriented

The new face of global marketing Emergence of free market and liberal trade WTO s agenda of uniform development in world Huge capital returns in emerging markets Agro based industry Growth rate of 8.8% approx (India) BRIC economies

Emergence of free market and liberal trade

WTO s agenda of uniform development in world

Huge capital returns in emerging markets

Agro based industry

Growth rate of 8.8% approx (India)

BRIC economies

The benefit of international trade: a more efficient employment of the productive forces of the world. John Stuart Mill

The benefit of international trade:

a more efficient employment of the productive forces of the world.

John Stuart Mill

Idea conceived “ The application of second best economics needs first best economists, not its usual complement of third and fourth raters” Anne Krueger, First Deputy Managing Director, IMF

“ The application of second best economics needs first best economists, not its usual complement of third and fourth raters”

Anne Krueger,

First Deputy Managing Director,

IMF

Existence of market 60,000 villages,790 million 15% of rural population lives in 20,000 large non urban centers. 63% with population of 1000 to 5000 /village 390,000 have less than 1ooo people in size and account for 22% of the total rural population.

60,000 villages,790 million

15% of rural population lives in 20,000 large non urban centers.

63% with population of 1000 to 5000 /village

390,000 have less than 1ooo people in size and account for 22% of the total rural population.

“ for every truism in India, there is equal and opposite truism.” Shashi Tharoor

“ for every truism in India, there is equal and opposite truism.”

Shashi Tharoor

Sources The elephant, tiger and the cell phone: by Mr. Shashi Tharoor The fortune at the bottom of pyramid: Mr. C.K. Prahalad We are like that only: Rama Bijapurkar World Economic development report 2006 Marketing: kotler Mc Kinsey global institute report: for figures Hybrid management by Malcom Warner The marketing book: Business standard Economic times(dec 2007, first week for global market) Amartya sen on social inequality

The elephant, tiger and the cell phone: by Mr. Shashi Tharoor

The fortune at the bottom of pyramid: Mr. C.K. Prahalad

We are like that only: Rama Bijapurkar

World Economic development report 2006

Marketing: kotler

Mc Kinsey global institute report: for figures

Hybrid management by Malcom Warner

The marketing book: Business standard

Economic times(dec 2007, first week for global market)

Amartya sen on social inequality