Published: Mint dated 29h August, 2011The heterogeneitythat characterizesthe modern Indianconsumer hascreated a mazethat m...
Under the Indicus Urban Consumer Expenditure Spectrum, the bottom of thepyramid in urban India is comprised of households ...
For these households, the major share of expenditure is on food, which takes up43.6% of the budget. The basics in this cat...
The average income per household in the western states is the highest in thissegment, followed by the eastern states. The ...
When it comes to rent, the southern cities of Bangalore, Hyderabad, Chennai,Madurai and Coimbatore top the list, making th...
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At the bottom of the pyramid

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Under the Indicus Urban Consumer Expenditure Spectrum, the bottom of the pyramid in urban India is comprised of households that earn less than Rs. 1.5 lakh per annum. This class forms the bulk of the population in cities, but contributes less than 15% of total urban income and less than 10% of total urban savings. Household sizes are typically smaller than in the more affluent classes. One reason is that there are many migrants in this segment; with little skills and low education, their earning opportunities are low, albeit they supplement family incomes in the villages. Northern states, however, have larger household sizes within the segment.

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At the bottom of the pyramid

  1. 1. Published: Mint dated 29h August, 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. Under the Indicus Urban Consumer Expenditure Spectrum, the bottom of thepyramid in urban India is comprised of households that earn less than Rs. 1.5 lakhper annum. This class forms the bulk of the population in cities, but contributesless than 15% of total urban income and less than 10% of total urban savings.Household sizes are typically smaller than in the more affluent classes. Onereason is that there are many migrants in this segment; with little skills and loweducation, their earning opportunities are low, albeit they supplement familyincomes in the villages. Northern states, however, have larger household sizeswithin the segment.
  3. 3. For these households, the major share of expenditure is on food, which takes up43.6% of the budget. The basics in this category account for the largestexpenditure—close to a quarter of total expenses. The next group is vegetables andfruits, while rent takes the third place at 7.7% of total expenses. Food has displacedthe miscellaneous goods and services group, which has the highest share ofexpenses in all other income classes, pointing to bare necessities being the mostcrucial at the lowest level. Moreover, processed food, and milk and milk productsmake up a little more than 7% each of the total expenses. Interestingly, this segmentcontributes the most (more than 40%) to overall urban consumption of paan, tobaccoand intoxicants in India.
  4. 4. The average income per household in the western states is the highest in thissegment, followed by the eastern states. The western region also has significantlyhigher savings per household. Interestingly, while the western states spend thehighest per household in many categories, the per-household expenditure oneducation is the lowest. While the eastern states spend the most per household onbasic food, the northern states spend the highest on an average on milk and milkproducts; the southern states have the highest spends on rent and entertainment.There are wide differences in income and expenditure patterns at the district level—per-household income in Gurgaon and Gautam Budh Nagar (Noida and GreaterNoida) is the highest in India in this segment, and twice that of households in Bellaryand Jabalpur, the lowest in this segment.
  5. 5. When it comes to rent, the southern cities of Bangalore, Hyderabad, Chennai,Madurai and Coimbatore top the list, making these the most expensive cities to livein for the lowest income class. Expenses on medical care are the highest in Thrissurand Kollam in Kerala, while Dehradun, Haridwar and Kolkata are the top three urbanareas for expenses on education.Basic food takes up more than one-quarter of thehousehold budget in more than 20 cities: Nanded, Bardhaman and Durg top this list.Close to 30 cities spend more than 10% of their total budget on milk and milkproducts, and Amritsar, Bikaner and Jaipur top here. There are 17 cities across thecountry where households in this income segment spend on an average more than10% of total expenditure on processed food. Mumbai, Gautam Budh Nagar, Guntur,Dibrugarh, Ahmedabad and Chennai top the table here.The largest markets at thebottom of the pyramid remain Delhi and Mumbai, which house a total of 12% ofIndian urban households earning in the lowest income bracket. In fact, one-third ofthis population lives in 10 major cities in India—this is where earning opportunitiesabound for those with minimal skills and education.

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