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Published: Mint dated 18h July, 2011The heterogeneitythat characterizesthe modern Indianconsumer hascreated a mazethat mar...
According to the five income-segment classification of the Indicus urban consumerexpenditure spectrum, in the second rung ...
It is the upper-income segments that form the big savers of the country, with high-disposable incomes, making them attract...
Food comprises a little less than one-quarter of the household budget; not just thebasics, but vegetables, milk and milk p...
Travel is an important item to budget for in urban households, especiallythose who can afford to travel by air. Holiday de...
Per household expenditure on the three main components of the budget variesacross regions. On average, the north and the w...
Yet, there are again differences among these topcities. For instance, Mumbai spends more inaggregate on healthcare and edu...
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The second rung of affluence

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According to the five income-segment classification of the Indicus urban consumer expenditure spectrum, in the second rung of affluence, or the upper middle class, among urban Indian households are those who earn between Rs. 5 lakh and Rs. 10 lakh annually. The population in these households comprise a little less than 10% of all urban households, but contribute around one-fifth of the total urban savings.

It is the upper-income segments that form the big savers of the country, with high-disposable incomes, making them attractive markets for financial products. They are also the spenders in the high value category, contributing to about 17% of urban consumer expenditure in India. While this share is approximately the same as the lowest two income segments, being a relatively smaller segment, expenditure per household would be relatively higher. Moreover, the type of goods and services consumed would, of course, be quite different across the income segments.

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Transcript of "The second rung of affluence"

  1. 1. Published: Mint dated 18h July, 2011The heterogeneitythat characterizesthe modern Indianconsumer hascreated a mazethat marketerswould like tounravel in order totarget theirproducts andservices precisely.In this fortnightlyseries, IndicusAnalytics willpresent the variousfacets of urbanconsumers, acrossgeographies andsocio-economicgroups Indicus Consumer Data Products
  2. 2. According to the five income-segment classification of the Indicus urban consumerexpenditure spectrum, in the second rung of affluence, or the upper middle class,among urban Indian households are those who earn between Rs. 5 lakh and Rs. 10lakh annually. The population in these households comprise a little less than 10% ofall urban households, but contribute around one-fifth of the total urban savings.
  3. 3. It is the upper-income segments that form the big savers of the country, with high-disposable incomes, making them attractive markets for financial products. They arealso the spenders in the high value category, contributing to about 17% of urbanconsumer expenditure in India. While this share is approximately the same as thelowest two income segments, being a relatively smaller segment, expenditure perhousehold would be relatively higher. Moreover, the type of goods and servicesconsumed would, of course, be quite different across the income segments.
  4. 4. Food comprises a little less than one-quarter of the household budget; not just thebasics, but vegetables, milk and milk products form important parts of the foodbasket. Households in this segment also like to spend on processed food,experimenting with new items in the market as families look for new tastes, varietyand convenience. The largest component of the budget is, of course,miscellaneous goods and services, of which the prime components are travel andconveyance, consumer services and rent, each making up more than 12% of thetotal budget.
  5. 5. Travel is an important item to budget for in urban households, especiallythose who can afford to travel by air. Holiday destinations abroad, especiallyin South-East Asia, and within India, have to be factored in for familiesmoving up the ladder. Packaged consumer goods expenses comprisearound 10% of the budget, while clothing and footwear make up a little lessthan 5% of the budget.While states in the north comprise the largest share of population in thissegment, essentially because of the sheer number of people, it is thewestern states that come in second, with the affluent in Maharashtra andGujarat tipping the scales. The eastern region lags behind with low incomesand smaller share in total population.
  6. 6. Per household expenditure on the three main components of the budget variesacross regions. On average, the north and the west have the highest perhousehold expenses on travel and conveyance, the south is at the top when itcomes to rent, and the east spends the most per household on consumer services.Once again, the diversity across regions in socio-economic profiles stands out inthe data on expenditure patterns in this segment.Delhi and Mumbai, together, make up close to 20% of the expenditure in thissegment, with Thane, Bangalore and Ahmedabad completing the list of top fivemain centres. While the other metros follow, cities such as Surat, Vadodara,Coimbatore, Nagpur, Ludhiana, Rajkot and Lucknow also make it into the top 20.
  7. 7. Yet, there are again differences among these topcities. For instance, Mumbai spends more inaggregate on healthcare and education in thissegment than Delhi, while Delhi outstrips Mumbaiwhen it comes to travel and conveyance, milk andmilk products. Taking another example,Ahmedabad, which has significantly lowerpopulation than Mumbai or Delhi in this segment,has almost similar total spends on basic food.When it comes to healthcare, Bangalore andHyderabad have much lower total spends thanother cities in this category. On the other hand,Chennai and Bangalore spend a relatively muchhigher proportion on rent compared with cities suchas Pune and Ahmedabad. It is differences likethese that highlight the need for much finersegmentation, both within the segment and acrosscities, to tap urban Indian consumer profileseffectively.
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