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Changing Consumer
Behaviour Patterns OfIndian Middle Class
Prof.Sundaram RajagopalanDean Executive Education
SP Jain Center of Management Singapore
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Outline
Evolution of Indian consumer market in growth phase
Consumer markets India vs. China
increasingly affluent Indian Middle class harder to ignore
Indian middle class as a distinctive segment - profile,dimensions, and location
Changing patterns of middle class behavior
How India's rising and unique middle class will reshape
Indian / Global consumer markets ?Implications to companies thru cases
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Over the next two decades , Indiasmiddle class will grow from about 5
percent to more than forty percent
and create the worlds fifth - largest
consumer market
- McKinsey Quarterly 2007
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Indias economy has been growing rapidly
What impact has growth had on Indian
incomes and how quickly will they grow in thefuture?
How is the distribution of income changing?When will its middle class take off?
How is income growth effecting urbanversus rural areas?
How much of rising Indian incomes will be
spent versus saved?
What will Indian consumers spend theirnewfound wealth on?
What does thismean forbusinessand investmentopportunities?
How shouldcompaniescompete for thenew Indian
consumer?
Source : MGI
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India will emerge as the worlds fifth
largest consumer economy
Indian incomes will triple over the next two
decades, significantly reducing povertyRising household incomes will be the keydriver of consumption growth not changes
in savings
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A large urban middle class will develop,but rural areas will benefit too
Urban India will account for more than two-thirdsof Consumption growth over the next 20 years
Middle class households will dominate urban
IndiaLarge cities tend to have highest incomes, butsmall niche cities prospering too.
Per-household consumption in rural India willreach today's urban levels by 2017
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Indian Middle class defined
Source: NCAER The Great Indian Middle Class; McKinsey Global Institute
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Middle Class Consumer Markets
Comparison with China
Capacity to spend in middle class of Chinaand India widely differs.India's consumer driven economy is starklydifferent from China's capital-investment-
dominated one.The differences go beyond the two countries'rising middle classes.Urban consumers in India will likely drive
more global business than their Chinesecounterparts while India's rural developmentfar outpaces China's
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Where is the real
Indian middle class market ?
The Indian urban growth story until nowhas been driven largely by metros
This is now moving beyond metros intosmaller towns.
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Classification of Cities and TownsSource: The Great Indian Middle Class, NCAER; McKinsey Global Institute
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Changing patterns of middle classconsumer behavior Trendy lifestyles
bulk buyingPositive attitude towards western trendsmuch more flexible and experimental in theirapproachesstylish Lifestylesexponential growth of western trend reachingthe Indian consumer by way of the media andIndians working abroad
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Four Key segments
Kids / Family
Mass Niche
Bread winners
Home makers
SEGMENTS
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Values of Home maker middle
class
Want to feel moreproductive ( use
my talents)
Embrace Measuredmodernity ( e.g.Jeans + Kuta or
Salwar )
Embraceconvenience (slowly)
Yearn intimatemoments with
Husbands
Family Provider(through efforts )-money still got by man
Kids my world
Value and Budgetconscious
Some
Changing Somesame
S
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Some unknowns for middle class( usually bread winners)
Yet most+ve andhopeful
of a greatfuture
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CHANGING MIDDLE CLASS PARENTS
Kids have anew
relationshipwith theirparents
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The Niche mass
I Want it Now!
Time poor, cash rich
Moving away from traditional values and focusing on
image and brandingConvenience
Looking for shopping short cuts are also looking forquick fixes for their looks.
Attracted by modern retail environments
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The future .
Banking, electricity, telecommunications, water, white
goods & beauty industry sectors would thrive and push
the middle class into consumerism.
Industries will see higher cost of doing business.
The Urban middle class will always dwarf Urban
Affluent consumers in spending power because of their
sheer size.
Health and Education will be key spending areas and
will even take precedence over consumerism.
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Trends
Product will proliferate, consumer will complain of excesschoice although would love the excess choices.
Consumers will enjoy income levels unmatched by that
of previous generations. (esp in Metros and large towns)Widening income levels, migration (rural to urban) will
create new opportunities.
Most consumers will continue to embrace traditional andmodern values and will be eager for modern products
with Indian tastes.