Schizophrenic India Diveristy in Indian markets

SCHIZOPHRENIC INDIA
DIVERSITY IN INDIAN MARKETS
Sameer Mathur, PhD (http://smathur.com)

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These presentations are part of Sameer Mathur's teaching portfolio.
They are free to view or download for non-profit, academic use.
Disclaimer: These teaching materials have been compiled from multiple, non-creditedsources for non-profit, academic use. Copyright is retained by the original content creators.
SameerMathur, Ph.D.
Assistant Professor (Marketing)
Web: www.smathur.com
Email:sameer.mathur@mcgill.ca
Twitter: @ProfessorMathur
Facebook:Click Here

Logic of Indian Segments
Sudden shifts in sales patterns and sales volumes can occur – not caused by slowdown in GDP , environmental shocks or consumer confidence
Logic: India’s numerous demand segments-- subjected to varying forces and responding differently to the same environmental forces

Plurality of Indian Markets
Plurality beyond 62 socio-cultural regions, 23 languages and diverse food habits, climatic conditions and cultural orientations
More than simply tweaking marketing strategies, products and pack sizes and communication for socio-cultural diversity
For maximum value: Need to develop mindset, strategy and competencies to manage plurality

The Correct Mindset
Belief
‘Monolith’ mental model
One Indian Market
Single unified economy, demand driver, consumption pattern and demography
Reality
‘Schizophrenic India’ mental model
Many Indian Markets
Multiple distinct economies, demand drivers, consumption patterns and demography

Drivers of Heterogeneity

Consumer Classes Recap
Benefit-Maximizer class (The rich)
Cost-Benefit optimizers ( The consuming class)
Cash-constrained benefit maximizers (The climbers)
New Entrants into consumption (The aspirants)
Not yet into consumption (The destitute)

Geographic Differences (States)
28 states in India:
Varying Growth Rates: Some at China’s pace others at Sub-saharan Africa’s pace
Varying state governments
Varying Literacy rates: 91% literacy in Southern Kerala, less than 50% in Bihar
Varying policies: Some are business and investment friendly, others are not and receive less FDI and project loans.

Urban-Rural evolution
Evolving at different speeds
Some parts of rural India may overtake Urban India due to new and better infrastructure, technology and superior retail environment
Market potential and consumption sophistication based on population strata is inapplicable

Age Cohorts
Two distinct age cohorts:
Children born after liberalization: India’s first free market, capitalist generation who are coming of age and entering the workforce
Post independence generation: Parents of above generation and are brought up with a socialistic, xenophobic outlook

Four Economies within India
Infotech
Industrial
Agricultural
Government

IT India
Global outlook, rich, relatively small, very young and well educated
~ 1.5 million direct employees, ~10 million dependants
5% of India’s GDP
Benefits from globalisation

Agricultural India
Local in outlook, old and very low on education
50 times more people than IT India
25% of India’s GDP
Vulnerable to globalization and WTO directives

Industrial India
Shift from old, small-scale, labor intensive factories to modern large-scale, capital intensive onesEg: Tata Steel and Tata Motors

Government India
~ 20 million direct employees, ~ 150-200 million dependants
Two-thirds of organised sector employment –but shrinking segment
Segment is cautious, regular and conducts planned spending with spending spurges after receiving bonuses

Strategic Business Units
Businesses need to pursue well organized strategic business units (SBUs)
Requires appropriate systems, structure, skills, costs and investment-return profiles
Example : Polyurethane targeted towards low cost rubber footwear consumers as well as footwear exporters for international companies

Contrasting SBUs generalized
Belly of the Market
Appropriate quality at low prices
Gradual upgrade in price and quality with market evolution
Major long term opportunity, low initial profitability
Jewel of the Crown
World class quality at global prices
Focused target towards international companies in India
Highly profitable, slow-burn approach
vs

Rural Company Comparison
Hindustan Lever
Focus on deeply rural, media-dark, low literacy India
Target Market: Bottom 20% of rural India, with 5% of GDP
Creates new markets, using well spread infrastructure and network
ICICI Bank
Focus on developed and well off rural India
Target market: Top 1% of rural India, with 5% of GDP
Uses strong reputation in urban markets to enter rural markets
vs

Summary
Belief
‘Monolith’ mental model
One Indian Market
Single unified economy, demand driver, consumption pattern and demography
Reality
‘Schizophrenic India’ mental model
Many Indian Markets
Multiple distinct economies, demand drivers consumption patterns and demography

Summary

Background Reading

FREE TEACHING
RESOURCES
ON MARKETING
MANAGEMENTATWWW.SMATHUR.COM
OVER 130,000 VIEWS
FROM 96DIFFERENT COUNTRIES
These presentations are part of Sameer Mathur's teaching portfolio.
They are free to view or download for non-profit, academic use.
Disclaimer: These teaching materials have been compiled from multiple, non-creditedsources for non-profit, academic use. Copyright is retained by the original content creators.
SameerMathur, Ph.D.
Assistant Professor (Marketing)
Web: www.smathur.com
Email:sameer.mathur@mcgill.ca
Twitter: @ProfessorMathur
Facebook:Click Here

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Schizophrenic India Diveristy in Indian markets

by Sameer Mathur on Jul 21, 2011

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