story of Indian economy with respect to its marketing environment. how rural markets are changing the growth of india.

2. Economic liberalization commencing from 1990 actually set the pace of India's
growth story. The country was able to break away the traditional trend of 3 percent to
4 percent growth rate. Huge array of product and services entered the Indian market.
The growth and changes were not confined to economic and business; significant
social changes were also taking place with trio of business ,technology and marketing
together impacting the life of the individual, the home and the society.
India certainly became economically stronger and stood tall in the global stage,
commanding the respect of the developed and developing world and drawing
investment from all corners.
The world saw the way India---its people, economy and markets—were changing and
growing. The world recognized India as an emerging global economic power.

3. YEAR INFLATION(CPI) PER CAPITA INCOME (INR) GDP(INR) CRORE
1990-91 13.88 % 6,270 5,31,814
1991-92 11.88 % 7,000 6,13,528
1992-93 6.31 % 7,899 7,03,723
1993-94 10.24 % 8,928 8,17,961
1994-95 10.22 % 10,283 9,55,386
1995-96 8.98 % 11,861 11,18,586
1996-97 7.25 % 13,492 13,01,788
1997-98 13.17 % 14,646 14,47,613
1998-99 4.84 % 16,528 16,68,739
1999-00 4.02 % 18,194 18,58,205
2000-01 3.77 % 19,115 20,00,743
2001-02 4.31 % 20,259 21,75,260
2002-03 3.81 % 21,529 23,43,864

4. YEAR INFLATION(CPI) PER CAPITA INCOME (INR) GDP(INR) CRORE
2003-04 3.77 % 23,775 26,25,819
2004-05 4.25 % 26,629 29,71,464
2005-06 5.79 % 29,869 33,90,503
2006-07 6.39 % 34,249 39,53,276
2007-08 8.32 % 39,384 45,82,086
2008-09 10.83 % 43,604 53,03,567
2009-10 12.11 % 49,402 61,08,903
2010-11 8.87 % 58,534 72,48,860
2011-12 9.30 % 66,997 83,91,691
2012-13 10.92 % 80,879 93,88,876
2013-14 6.37 % 90,688 1,04,72,807
2014-15 5.88 % 98,983 123,83,908

5. 7.7% 8 % 7.9%
6.4% 7.3% 6.6%
5.4% 5.7% 4.3% 5.4%
1.4% 4% 3.8%
91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04

6. 8.6% 9.3%6.5%
9.5% 9.6%
9.3% 8.4% 8.4%
7% 7.2% 7.6%
6.7% 6.6%
6.2% 5.6%
04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16

7. • GDP growth rate went down to 6.5% in FY 2012 from the high of 9.6%in FY 2007 .
• Industrial output declined, between 2010-11 and 2011-12 the decline was 5.3%.
• Agricultural production was languishing.
(the share of agriculture in the rural economy dropped from 74% in 1970 to 41% in 1993 to 40 % in 2007-08)
• Centre’s fiscal deficit kept going up; it reached the high point of 6.4% of GDP in FY 2010.
• Inflation shut up, reached double digit in FY 2010.Food inflation went disturbingly high.WPI based inflation was 9.6% in FY 2011.
• Household savings fell from 25.4% of GDP in 2009-10 to 22.8% in 2010-11
• Current account deficit (CAD)-excess of Import over Export- as a proportion of GDP rose to the highest ever level of 5.4% during Q2 of 2012-13
from 4.2 % of Q2 2011-12.(CAD- $22.3 Billion in 2012-13 from $18.9 Billion in 2011-12)
• The rupee depreciated, reaching a low of Rs.56 to US $ by 2011.capital flows, commodity prices, petroleum prices, trade deficit, all impacted the
currency depreciation.
• India’s investment attractiveness declined; foreign investment took the reverse flow .FII’s were on selling spree, FDI was uncertain to enter.
• IT exports was in trouble as overseas customers cut IT spending.
• Job market became dull due to contraction in industrial and business activity.

8. THE MAIN CAUSE BEHIND THE SLOWDOWN SINCE 2008
The global crisis since 2007-08 led to risk aversion by investors.
Due to a variety of reasons- largely due to CAD-the rupee depreciated to a record low against the US $.
This combination of factors led to not only drying up of foreign direct investments and flight of capital to
perceived safer havens but also a selling spree by FII’s.
As a consequence ,local stock markets fell.
Cost of dollar –denominated debts also went up due to acute weakness of the rupees.
All this hit Indian corporate sector hard.
Domestic controls followed; interest rates rose sharply ,cost of local debt increased ,liquidity became tight.
Weakness in local stock markets made access to local equity capital also difficult.
The rising fiscal deficit hand-tied the Govt. to come up with a public investment. In other words ,drying up of
investment avenues---private ,public ,domestic and global—was the main cause for decline.
Governance problem in the country and lack of reforms also made a sizable contribution to this decline.

9. AS PER GOVERMENT
Global economic crisis was the major cause of
Indian's economic decline.
Global risk highlights the uncertainty in the Euro
Zone and the US.
AS PER RBI
• Petering out of investment .
The impact of the decline in global
growth in our industrial output is no
doubt there; but the domestic factors
cannot be ignored. Between 2010-11 and
2011-12,there was 5.3% decline in our
industrial output. Global growth declined
by 1.4% points only during this period.
Domestic interest increase too has
contributed its bit to the decline in our
industrial output, but the whole decline is
not explained by it.
The interest increase and the global
slowdown together accounted for only
2.2% out of 5.3% decline in our industrial
output. The remaining was contributed by
supply bottlenecks such as the shortage of
coal and natural gas; these were
substantial factors, and here investment
was the real issue.
AS PER KELKAR COMMITTEE
• In October 2012 KELKAR COMMITTEE
observed that the economy was in a
situation of crisis due to 1991 economic
crisis ,on the edge of a fiscal cliff and
that if the present trend continued, the
macro economic problems would get
translated into a high fiscal deficit, and
the resulting trends would be
unsustainable.
• Worse, compared to 1991,the economic
disorder of the country currently is
much more dependent on the global
economy.

10. According to CMIE estimates, Gross domestic capital formation in the economy in FY 2012 was at
35.5% of the GDP. (CENTER FOR MONITORING OF INDIAN ECONOMY)
Foreign investment – seems to be returning to the country.FII inflow exceeded $7.16 billion in first 11 months of FY 2012.
As per data released in April 2012 by the IMF, India's GDP in purchasing power parity terms
stood at, $ 4.46 trillion in 2011,higher than Japan’s ,making it the third biggest economy after
the United States and China.
The impact of the euro zone crisis is becoming less severe in India, as the country has been
consistently reducing exposure to European markets, and is leaning more towards other emerging
markets in middle east and Asia.
The IT sector is drawing the benefits of relocating its customer vertical revenue model.
Despite the inflation the various sections of consumer continue with their consumption. The upper
income segment, who were not influenced b the downturns in the economy ,continue their
consumption pattern . Business like education ,entertainment ,travel and holidaying have been
maintaining their tempo all along and they are now set to grow faster.
In the rural market too, the dullness seen in the last three year is moving back, and with the reinforced
social support programmers of the Government ,the lower rung of the rural consumer community will
be purchasing more.

11. Clearing of FDI in multi-brand retail, the partial control of petroleum
products subsidy, and the banking reforms measures are cases in point. Reforms
measures on pension, public distribution ,contract act,labour reforms, and sales
tax plus FDI in other sectors like insurance are on its initial stage. Government
decided to concentrate on coal ,power plants ,roadways ,ports, refineries, and
optic fiber. It seems that even if the country is in no position to immediately
revisit the boom period of 2004-08,but it can at least exit the decline of 2008-12
period and get back to higher growth track.
15.1$ 11.3$ 4.5$ 4.4$
USA CHINA INDIA JAPAN
Government Initiatives By End Of 2012 Give Hopes On Further Reforms

12. • Economic growth over the last two decades has brought in millions of
new consumers. Size of India's “consumer spending” has been estimated
$470 billion in 2011.
• A study by TECHNOPAK says that while in 1991,80% of spending of
middle and upper income consumers was accounted for only six
categories i.e. food & grocery, clothing & footwear, consumer durables &
appliances, furniture, movies & entertainment and eating out. But by
2011,there were 20 categories in the list ,the items includes
coaching,grooming,travel,gifting, kitchen and other home accessories ,
fitness and club membership and computing and communication
devices.

13. • The consumer market is expanding and getting more
dynamic.
• Quantum jump in “consuming class household”.
• Per capita annual income of Indian’s reached $1000 in
2010.(Rs.49,402)
• Favorable shift in consumption pattern.
• Continuing growth of the middle class.
• Midnight’s children (today’s senior citizens) form a new
market.
• The young India expand into a major segment.
• Another powerful segment, I-pad generation in the making.
• Dominance of service continue.
• Growth of IT/e-commerce.
• Rural market becomes game changer.
• Retail grows, organized retail spreads,kiranas too grow.
• Marketing communication scene, back in action mode.
• Social media expands in size ,role and importance.
• Huge mobile connectivity sets up the tone and pace.
• A consumer aggression never before seen ,is emerging.
• The midnight’s children's have also become senior citizens. Unlike their predecessors, this new senior
generation refuses to retire from life! They remain active spenders, suiting their old-cum-new life style,
accounting for a generational shift in consumption pattern in certain categories of products and services.
• The youth segment has expanded into a much bigger segment, they want more growth ,more income ,more
luxuries, they are also ready to work more. As a result, the youth market, whatever be the product/services,
is on the upswing, garments, personal care, restaurants, mobile phones, tablets, PCs, music, gaming,
holidaying have become big businesses.
• Credit is becoming a way of life with a large segment of Indian consumers. According to credit Suisse
Emerging consumer survey 2011,the credit appetite of the Indian consumer keeps growing. In earlier
years, for purchase of house 60% was paid on cash , and the balance on credit ,today the ratio is reversed,
for cars 65% was spent as cash and the balance on credit ,today 60% is on credit. It seems for the modern
day Indian consumers, their future is built on credit.

14. • A class growing in confidence
• Acquires a new political power
• Becomes India’s consumption community
• Acquires new values, new orientation
• Goes through a pattern of shift in outlook on consumption
• Spending pattern undergoes a major shift
• Moves from functional living to lifestyle living.
• Moves from family need based spending to spending for luxurious products.
• Goes after lifestyle product /activities.
• Votes for premium products and international brands.
• Goes for faster replacement of appliances/gadgets.
• Seeks world class shopping experience.
• Goes for modern apartments and gadgets.
• Settle into the fast food culture.
• Patronizes (to make oneself regular customer)the new generation coffee cafes.
• Goes for beauty products.
• Looking good becomes important.

15. Anewgrowthinmiddleand
uppermiddleclassensures
uptradingtopremium
products.
Economicgrowth
leadingtohigher
disposableincome
withayounger
populationisdriving
thistrend
Populationgrowth
Increasing
penetrationincomes
toruralareamove
change
A consequence of the rising disposable incomes with the expanding middle class

16. GDP US $1400 Billion
Public spending &
investment US $616
Billion-44%
Private consumption
US $ 784 billion-56%
NON RETAIL
US $ 314 BILLION-40%
RETAIL
US $470 BILLION-60%
RURAL
US $254 BILLION -54%
URBAN
US $216 BILLION-46%

17. RURAL URBAN
One-room households 39.4 32.1
Tap water 17.9 62.0
Electricity 55.3 92.7
of which piped sewer system 2.2 32.7
of which no drainage 63.2 18.2
Firewood for cooking 62.5 20.1
LPG gas for cooking 11.4 65.0
Availing Banking Services 54.4 67.8
Television 33.4 76.7
Computer(with internet) 0.7 8.3
Computer (without internet) 4.4 10.4
Telephone (landline) 54.3 82.0
Telephone (mobile) 47.9 64.3
Bicycle 46.2 41.9
Scooter/motorcycle/moped 14.3 35.2
Car/jeep/van 2.3 9.7
None of the specified assets 22.9 7.0
Latrine facility in house

18. FMCG Growth

19. • Growth in consumer spending and growth in FMCG industry have close relation.
• According to a study by the CII (confederation of Indian industry),FMCG industry has a growth in the last
decade to Rs. 1300 Billion.
• Growing middle class has been a major driver of this growth.
• (BUSINESS TODAY, 2015) India's economic growth has been driven by domestic consumption.
Consumer Spending Category Wise 2011 Vs 16 (F) In $ Billion
Food and grocery
Apparel
Jewellery and watches
Consumer electronics and IT
Pharmacy
Furniture
Restaurants and food joints
Footwear
Beauty services
Health/fittness
Others
Total
325.0
35.0
25.6
22.7
13.9
9.1
8.8
4.5
1.3
1.0
23.0
470.0
425.0
50.2
44.2
42.8
23.4
17.1
15.8
8.3
3.0
2.5
42.5
675.0
CATEGORY 2011 2016

20.  According to the estimates of Citigroup Investment Research, the size of India's retail industry was around
$214 billion in 2006 and $255 billion in 2010. Modern format retailing with modern format stores- supermarkets,
hypermarkets and shopping malls- is one of the component of the transformation in retail sector in India.
 Changing demographic, including the increasing purchasing power and the change in lifestyle, have been fuelling
the growth and changes in this area.MFS accounts for only 12% of FMCG sales in 2012 and it is expected that
2017 will see 30% contribution by MFS to FMCG. According to Nielson’s shopper trends survey 2011,56% of
modern trade shoppers are becoming modern trade loyalist, it is a group who will allocate most of their budget at
modern trade though they might also shop at the other format to an extent.
 Service sector which has been the dominant contributor to India’s growth story is continuing the growth trend. The share
of service sector in India's GDP ,currently 56% ,is projected to go up further , as industrial sector share currently at 25% is
likely to remain static, agricultural sector currently at 19%, may further dip. There are several areas in service group like
BFSI (Banking,Finance,Service,Insurance),housing,pharma& healthcare,education,hospitality,infrastructure, and organized
retail are projected to experience four to five times growth over next decades.
 Rs. 11,800 crores advertisement revenues for the
television industry in 2011.
 It amounts to 10-12 % growth over previous year.
 13.8 crores homes with television.
 80% satellite penetration.
 Indians spend Rs. 175 each month on paid television
channels.
 Growth of digital broadcasting.
 Small channels become viable as digitization reduces
distribution cost.
 Kids and regional channells are growing.
 30% increase in the number of channels watched in a
home with digital TV.
 Thirty-one million households had direct-to-
home(DTH) service in India by 2011 end.

21.  Technology, especially IT, taking over and transforming many marketing task, is a vital part of the new marketing
landscape. IT spending was $80 billion in 2012 and $65.23 billion in 2010 according to the IT research and
advisory firm Gartner, hardware to be the fastest growing segment with a CAGR of 20.4%
(Compound Annual Growth Rate)
Online Marketing In India :-
 According to a study by the Internet And Mobile Association Of India (IAMAI) and Intelink Advisors,about 150
million people in India,or around 75 million households were ready for e-commerce by the end of 2011. But only
less than 10 million or less than 7% out of those with the capability for e-commerce are engaged in active e-
commerce. The report says the ‘core’ potential for consumer e-commerce is likely to increase to 230 million
households by 2024-25.
 According to a report by the Federation Of Indian Export Organization (FIEO),exports through the e-commerce
route in India have grown to $1.4 billion in three years between 2010 and 2012.
 India is still in the emerging stage in online marketing. It was only around 2010 that marketing on the internet
really acquired a reasonable measure of progress in India. The key enablers of e-commerce –broadband and
credit card penetration ,wireless connectivity ,penetration of computing devices –came together. The current e-
commerce market size is estimated to be around $10 billion and is expected to grow to $200 billion by 2020.
 Flipkart, eBay. In, infibeam.com, SoSasta.com, Indiaplaza.in, Naaptol.com and FutureBazar.com are among the
popular marketing websites in India. Major internet based firms, such as Google, eBay, Yahoo and Facebook , have
a large presence in India and all of them see good prospects of e-commerce in India. Amazon, which is often
reffered to as the wal-mart of the web, has also entered India through junglee.com, the comparison shopping site.
The travel sites have also been multiplying; these includes Yatra.com ,Cleartrip, Ixigo, Make My Trip And Trip
Advisor.
 In India the future of online marketing is kinked more to the internet expansion on the mobile phone. Presently,
600 to 700 million Indians are using mobile phones , only about 9% of users access the internet from mobile
devices. So there is a great scope for raising internet users via mobile phones.

22. • Rural India accounts for 70% of India's population, 56% of national income,64% of the total
expenditure and one third of total savings. The traditional vision of the rural economy as all
agriculture is clearly no longer valid; the share of agriculture in the rural economy dropped from
74% in 1970 to 41% in 1993 to 40 % in 2007-08.
• According to Nielson, more than 80% of FMCG products are growing faster in rural markets than in
urban.
The Rural Market Of FMCG Products is outpacing
urban growth
Rural market is likely to account for about half of the FMCG market by 2020,which is about
one third now.
2 0
1 5
1 0
5
0
- 5
- 1 0
2003 04 05 06 07 08 09
RURAL
URBAN

23. • Mckinsey study, “The Bird Of Gold”, the rise of Indian consumer market will be larger than the
total consumer markets in the countries such as South Korea, Canada, and almost four times the
size of today’s urban Indian market.
• Rural market are becoming the game changer for Indian marketing environment. Many corporate
are applying innovative strategies in rural marketing. As per a study report by Ernst and young,
HUL sells 45% of its household products in rural markets, Hero sells 60% of its two wheelers,
Dabur 40% of its personal care products, Dish TV 33% and TVS 50% of its two wheelers.
India’s rural income grew at a much faster pace between 2010 and 2012 than in the previous
years, according to the provisional results of the 68th round of the consumption expenditure
survey carried out by the NSSO (National Sample Survey Office).
• The increase in income came from several sources:- As per CRISIL report
a) Higher prices of farm products and higher agricultural wages
b) Higher wages in non-farm sectors
c) Remittances from migrants.(urban laborers from rural areas remit 70% of their income to their
homes)
d) Government initiated social welfare programs.
e) Loan write-off
[ C R I S I L - C R E D I T R AT I N G I N F O R M AT I O N S E R V I C E S O F I N D I A L I M I T E D ]

24. a. Based on climate/irrigation level.
b. Demographic segmentation.
c. The SEC (socio economic classification of consumer)
propensity to consume.
d. Income
e. Nearness to town and exposure to urban lifestyles.
a. Specifically designed products
b. Modifying ‘what I have’ must replace to creating ‘what they don’t
have’.
i. The time tested tractor trailer
Ii.Philips Hand Wound Radio.
iii.CTV with battery backup
Iv.Mobile phone with menu in local language, dust cover and torch
V. Washing machine that runs on diesel.
c. Offering the colors that are preferred.
d. Package has to be appropriate
i. pack size
ii. Logos & symbols(nirma girl,the dettol sword & mortein genie)
Pricing may have to rest on a combined price-product-
package strategy
a. chota coke-”panch matlab chota coke
b. payment terms/credit facility
c. special occasion pricing
1.Physical distribution through delivery van.
2.Channel management as rural channel generally needs larger
stock .
3.Selecting a media mix/promotion mix
i. Formal- TV, radio cinema ,print media, wall paintings,
POPs(point of purchase)
ii. Informal-
a. audio visual/publicity vans.
b. puppet shows.
c. promotional programmes like-
P&G - Sangeeta Bhabhi’s ‘KAMYAB JODI’
Dabur Amla - ‘BANKE DIKHAO RANI’ a rural beauty show
HUL – ‘KHUSHIYON KI DOLI’
The NDSSP(NATIONAL DATA SURVEY ON SAVING
PATTERNS) survey reports, IRS(INDIAN READERSHIP
SURVEY) reports and the reports of agencies like
NCAER(NATIONAL COUNCIL FOR APPLIED ECONMIC
RESEARCH),NSSO and the CMIE(Centre For Monitoring
Indian Economy) also form useful sources, these data may
not be in a format matching the requirement of the marketer.
He has to extract the needed insights out of them and use
them. Mudra Institute Of Communication Ahmedabad,
MICA has developed the mica rural market ratings.

25. CHALLENGES POSED BY CURRENT MARKETING ENVIRONMENT OF INDIA
• Meeting the exact demand of ‘the new consumer’
• Pressure on profit margins.
• Erosion of brands
( Brands lose their pricing power)
• Competition fast erases the firm’s
advantages, competing becomes harder.
• They need to be extensive as well as intensive in
distribution.
• Communicating one-to-one and simultaneously
one-to-a billion
• Marketing in a recession.
• It all boils down to a single challenge, answering
the customers questions –
‘Am I Getting My Money’s Worth’
INDIA’S GROWTH STORY WILL BE A CONTINUING ONE
• Explaining India's growth potential ,an affluent society in one generation, a book by a
US-based strategic advisory firm, projects that if certain conditions are observed, India
can be an affluent society in the coming 25 years.
• According to US-based foreign –policy think tank forum, India's GDP will balloon to
$17.8 trillion in 2050,sixteen times its current level.
• David E.Bloom, Professor, Harvard University says, “with right policies, India's
demographics will give it an edge over china. More people working ,more people saving-
that’s a fuel for an economy”.