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<\/i>By Justine Doody\n <\/p>\n
\n <\/i>By Justine Doody\n <\/p>\n
The Indian call centre has become an international cliché. Its employees are young, educated, English-speaking and compared with their compatriots, well-off – and their disposable income, along with that of the rest of India’s fast-growing middle class, is driving extraordinary growth in the country’s consumer goods market. Retail sales in India were worth US$455 billion in 2008, making up 38% of the country’s GDP, which leaves plenty of room for growth when compared with developed markets, and that growth is well under way: in spite of recession troubles in 2008, the retail market grew by an annual average of 11.4% valued in US dollars between 2004 and 2008. By Justine Doody The Indian call centre has become an international cliché. Its employees are young, educated, English-speaking and compared with their compatriots, well-off – and their disposable income, along with that of the rest of India’s fast-growing middle class, is driving extraordinary growth in the country’s consumer goods market. Retail sales in India were […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2713","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n
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\n The people responsible for this boom are a new breed in India. Liberalisation of India’s economy in 1991 gave rise to the economic success story that the world has marvelled at – and as the economy grew, a new middle class grew up alongside. The Indian middle class has more than tripled in size in the last 20 years, and today numbers between 150 and 250 million people. And like the population as a whole, the middle class skews young: around half of India’s population is below 30 years of age.
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\n Thinking global, buying local<\/strong>
\n Raised on Western TV and media, many of them English-speaking, these young up-and-comers should make natural consumers of Western brands. But Synovate’s research shows that instead of aspiring to owning the latest international must-haves, India’s consumers are happy with their home-grown products.
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\n In a Synovate survey, 68% agreed that locally manufactured brands are just as good as international brands, with only 13% thinking that international brands were significantly better than local brands. And for these consumers, buying Indian is not just a matter of quality comparison – 56% of those surveyed said that if a local and international brand were of equal quality and price, they would prefer to take home the local brand. Given the choice of equally good products, only 27% would favour international brands.
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\n It wasn’t always so. Between the exit of most multinationals during India’s self-sufficiency drive in the 1960s and their return after 1991, people looked at Western brands with covetous eyes. Synovate India’s Executive Director Paru Minocha says ‘There used to be a fascination for “west” and “foreign” goods. Fifteen or twenty years ago, one cherished and sparingly used even a shampoo a visiting relative from US would bring. Besides the origin, the feel of the product was very different – right from the packaging, sensorials etc.’
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\n But times have changed. The quality of local offerings has improved, leaving less to make international products stand out. And even as the standard of Indian products has risen, so too has the self-assurance of the Indian buying public.
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\n Gunjan Bagla, Managing Director of Los Angeles based consultancy, Amritt, Inc. and author of Doing Business in 21st Century India, says: ‘In 2009, eighteen years after liberalisation began, Indian consumers no longer carry vestigial prejudices for or against “imported” brands. They want the best product for their needs and desires. Subway sells sandwiches because they are good, not because they are American. Titan sells watches because they are good, not because they are American. Indian consumers will buy a Nokia phone with Reliance service not thinking of Finland or India as opposed to say a Vodafone (UK) service with Samsung (Korea) handsets.’
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\n Poised to play<\/strong>
\n While recession has cut a swathe through the economies of the West, India has come out comparatively well – the country remains the fastest growing major economy in the world after China, and average annual growth is set to be 7.8% between now and 2012. For India’s emerging middle class, many of whom are too young to remember the days before liberalisation brought economic development, the country’s achievements are a fact of life, and the future is something to be cheerful about. As many as 91% of those surveyed by Synovate were proud of what the country has achieved, with 82% agreeing that India has a bright future and 85% considering the country to be innovative.
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\n This national optimism is not rooted in political satisfaction – of all the criteria offered in Synovate’s survey on factors important to Indians’ lifestyles, political stability ranked the lowest with respondents, with family, education and health topping the list. The Indian middle class is largely disengaged from politics. Their personal aspirations are professional, not political, and they see the country’s influence on the world stage coming through its industry; national pride is fuelled not by nuclear testing or by regional dominance but by the success of new Indian multinationals like Tata and Reliance. Incidents like the purchase of British prestige car-maker Jaguar by Tata in 2008 have fed this new economic self-confidence: in this new order, the former colony feels ready to take its place alongside, or even eclipse, the former imperial power.
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\n Paru Minocha says ‘There is a strong sense of pride and a conviction that we are poised to become significant players (if not leaders) on the global map. And this reflects in consumer buying behaviour.’ If today’s Indian cultural pride is based not on political but on economic triumphs, it makes sense that it should be expressed not in political but in economic solidarity. As India begins to see itself as a peer of the other major players in the world economy, its new self-confidence comes out in satisfaction with Indian goods, whose quality, like the country’s, is seen to be a match for any international competitor.
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\n Foreign affairs<\/strong>
\n Some foreign brands have managed to get Indian buyers to take them to heart. In among the local brands that scored highly in Synovate’s studies on brand image, McDonald’s, Pizza Hut, Coca-Cola, Pepsi, Nokia, Sony and Samsung all found favour with Indian consumers. However, counter-intuitive though it might seem, the greater availability of Western goods could possibly have driven desire for them down. Paru Minocha says that the once ubiquitous yearning for Western items ‘has started changing primarily due to access to these products via product launches in India. So the products one desired from abroad, like a Sony in electronics, Pantene in shampoos, Lancôme for cosmetics, Kit Kat in chocolates and so on are now very available in India, and that lust for the West has decreased.’ At the same time, local brands are being measured against the competition and bearing the comparison. Devangshu Dutta, Chief Executive of India based consultancy Third Eyesight, says ‘expressing a desire to buy local brands if the international brands are of equivalent quality and price does have something to do with pride in local manufacturing. But more than pride, there is a fundamental confidence being expressed in the strength of locally manufactured brands.’<\/strong>
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\n While the lure of the West has paled a little, the line between international brands and local brands can sometimes be blurred in local perception. Although Hindustan Unilever is majority-owned by multinational Unilever, it has existed in India since 1933, and its products like Lux and Pears soap are ingrained in the national consciousness, routinely topping lists of the country’s most trusted brands. GlaxoSmithKline’s Horlicks, popular in India since the 1930s, is the country’s leading health food drink, and the country provides the brand with its biggest market worldwide.
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\n Adapt or die<\/strong>
\n But for those Western brands without a long history in India, how can they make headway among the new Indian consumer class? Paru Minocha says ‘it is clear that they cannot just rest on their origin as a selling point. The consumer is clearly seeking value and would demand customisation.’ The Western brands that have met with success in the Indian market mostly have one thing in common – they have adapted their core offering to meet the particular requirements of the Indian consumer. McDonald’s, facing the challenge of making a beef-centred business work in a country that has historically held cows to be sacred, branched out into vegetarian fast food like the McAloo Tikki Burger and the McVeggie. Pizza Hut found a winner with their Tandoori Pizza. But both companies held onto the less tangible elements of their global success: attributes like efficient customer service, air conditioning, cleanliness and quality ingredients are as welcome in Bangalore as they are in Boston.
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\n Synovate’s research shows that customisation is key to getting a foothold in the Indian market. Providing a product for each price point is one way in which companies can take into account the country’s national specificity, and in the country that came up with the ‘one-lakh car’, the US$2500 budget auto launched by Tata in 2008, tapping the low end of the market can open up big opportunities for companies. Nokia, the country’s mobile handset market leader, has launched a range of low-cost mobiles to go along with its high-end offerings, so as to meet the needs of as many of the country’s consumers as possible. Single serving packs of soaps and snack foods are aggressively marketed by companies like Hindustan Unilever and Nestlé, who find the smaller size and cheaper price attracts consumers who would otherwise steer clear of their product lines. Gunjan Bagla says ‘International companies need to appeal to uniquely Indian values and messages to achieve volume in India. You can sell to a few Indians because of Japanese or American appeal. But Levi’s make Spykar jeans for Indian ways of buying. Tropicana sells juices in India for India’s unique needs. The global reach of international brands brings quality, consistency and scale. Local formulation and prices brings sales volume in India.’
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\n To court the Indian consumer, international companies need to embrace flexibility. Devangshu Dutta says ‘global brands that have made themselves relevant to broad segments of their audience have done so not by diluting their international appeal, but by adapting it to the local customer’s needs.’<\/strong> Well aware of their country’s progress, India’s new consumers expect respect and acknowledgement from the world, and from the international companies that want their business. Recognising and adapting to the individual character and requirements of the rising middle class can be seen as a way of paying tribute to the worth of the Indian consumer – and to make progress in a market that by some measures almost equals the entire US population, international companies might find themselves remembering that the customer is always right.<\/p>\n \n","protected":false},"excerpt":{"rendered":"