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Customer needs and behaviour in India

by: Divya Susan Varkey
 

Why should I read this document? 

With a GDP growth of 7.1%, India is one of the fastest growing economies in the world, and a much sought after one for those in search of a sizeable consumer market. With a rapidly increasing middle class and elite-to-affluent consumer category, the consumer needs and behaviour in India are constantly changing and have moved far from those of a traditional and conservative consumer society. This document provides useful guidelines on what the Indian consumer expects from a products and services provider and will be useful for those wanting to sell in India.

Important! 

5 most important things to know about doing business in India (if you only read one thing this is what you should read)
 
  • India is a land of contrasts - rule of thumb: NEVER ASSUME AND ALWAYS RECONFIRM.
  • The two things I always ask my clients to pack in their suitcases while doing business in India: PATIENCE and FLEXIBILITY
  • India is a rapidly changing economy due to a growing middle class and affluent consumer base - keeping oneself ahead of the game will prove vital for long term success
  • Online buying is on the rise in India and consumers cite convenience as the main reason for buying online. Anything from groceries to consumer durables are being increasingly purchased online.
  • Purchase decisions amongst the middle class are as based on “showing status” as much as on usability and need.
With 1.3 bn people whose affluence is growing exponentially, India is an attractive market for consumer goods and services providers the world over. Who is the quintessential Indian consumer and what does he expect when he spends money? What cultural peculiarities does one keep in mind while targeting the Indian consumer? According to a 2017 report by the Boston Consulting Group, companies today need to focus on three aspects of India’s fast-growing consumer market: rising affluence, the country’s continuing and unique pattern of urbanization, and fundamental shifts in family structures. (see: www.bcg.com/en-in/publications/2017/marketing-sales-globalization-new-indian-changing-consumer.aspx)

 

The Boston Consulting Group names five household income categories of India - the elite, the affluent, the aspirers, the next billion and the strugglers. Of these, the first two are the fastest growing and by 2025 are expected to be 16% of the total Indian population. While the report enclosed provides more than enough detail about the specifics of consumer behaviour with expected percentages of change
(www.bcg.com/en-in/publications/2017/marketing-sales-globalization-new-indian-changing-consumer.aspx), this article will focus on the cultural peculiarities involved. The reader is encouraged to rely on the BCG report in detail while looking at this document for general guidelines.
 
Cultural Peculiarities of the Indian Consumer
 
The Indian consumer has seen a dramatic shift in affluence since the 2000’s and with the IT revolution. The affluence has been both in purchasing power as well as (consequently), the availability of products. Those goods that were available only internationally and brought into India by travellers abroad and from Duty Paid shops are now readily available, and more so, affordable to Indians today. This sudden surge in wealth and affordability has resulted in spending behaviours that has previously not been seen in the subcontinent. There are more choices today for the Indian consumer than ever before and he/she is not afraid to exercise the right to choose. Some cultural peculiarities come into play here, of course.

Knowing where your customer stands
 
India being a high Power Distance, medium Masculine society, there is a lot of focus on rising up the socioeconomic ladder, both to gain a place as a power holder as well as to rise in status (thus gaining power). This influences consumer behaviour a great deal, especially amongst the “newly” affluent. The choice of products and brand is equally a show of status, as it is of usability. The affluent Indian consumer buys products that will satisfy his self image as well as his perceived image amongst his larger social circle.
The Indian customer considers himself “king” because of the sudden importance that has been showered on his fattening wallet and expects to be treated such. This is also related with the high Power Distance culture that expects products and services to be provided to individuals while acknowledging their power position in society. This can be seen in the way waiters, shop attendants, and others are treated while customers avail of their services.
 
While marketing your brand, it is important then to keep in mind how your product adds to your customer’s status, along with the other value additions that he/she may gain. Of course, this needs to be subtly marketed, knowing the need for the Indian consumer to show status, but without calling too much attention to it. One not-so-subtle example is that of a television brand, Onida, which used the tagline “Neighbour’s envy, owner’s pride” in their early 90’s advertisements. While this “Masculine” trait is more subdued today, taglines like “Feel like god” (Bajaj) is still used by major brands to sell their products.
 
The Convenience Factor
 
With a faster paced lifestyle, especially in the metropolitan cities, “convenience” has become a key driver in consumer behaviour. Almost everything from consumer durables to groceries can now be ordered online and consumers choose this option to beat unnecessary traffic hassles and save time in an otherwise hectic lifestyle. Amazon and Flipkart are popular online retail portals while Big Basket is used extensively to order groceries. Online apparel stores like Jabong, Zivame, Baby Oye, Clovia Lingerie, etc. sell everything from men’s and women’s apparel to baby clothes and lingerie. Licious is an online portal that delivers fresh meat at their Indian customer’s doorstep.
 
The convenience factor has become so much so that Amazon India has introduced “Prime Wardrobe” which ships an entire wardrobe of clothes of the customer’s choice for them to try on and purchase in the convenience of their home. The option of returning products that are unsatisfactory (also from one’s doorstep) makes online shopping very attractive for the Indian customer.

Changing Tastes
 
It must also be noted that Indian consumers have a dynamic taste when it comes to choices - a lot of the consumers go by the latest “trend” and early adopters are rare. There is also an increasing move towards more natural and eco-friendly choices, especially amongst the elite and the established affluent,  as well as an increasing appreciation for those products that are Indian or made in India. Stores like Fab India, Forest Essentials, Jute Cottage, etc. that sell products made exclusively in India and claim to use only natural raw materials are most popular amongst the Indian elite and affluent. The recent case of the brand “Patanjali”, that claims to sell exclusively organic fast moving consumer durables and food that has taken the Indian market by storm, is worth mentioning here. The company reported a turnover of INR 105. 6 billion (US 1.6 bn) in the financial year 2017, double that of the previous financial year. Business Today, an Indian business magazine cites the following reasons for Patanjali’s success: media attention, smart pricing, retail outlets, variety of products and the “made in India” factor. (See: www.businesstoday.in/current/economy-politics/baba-ramdev-balkrishna-and-patanjali-success-reasons/story/237282.html).
 
In conclusion, according to the BCG report, “companies should change their notion of the market and competition. Widespread digital adoption has allowed many smaller players and unconventional competitors to disrupt sectors and tip the scales to their advantage. Multiple startups that focus on solving specific consumer needs have already emerged, and their digital business models enable them to expand quickly. Companies need to stay ahead of the curve, developing their own innovative offerings for consumers and staying agile enough to change effectively. Second, they should react to the changing nature of the relationship between the consumer and the company. More information, greater transparency, and the amplified voice of the individual through social media mean that consumers are gaining the upper hand when it comes to buying decisions. To stay ahead, companies must continually develop superior propositions and manage consumer advocacy.”

 

Short case study

Studying Indian advertisements of fast moving consumer goods can be a good indicator of changing market trends. For example, the increasing importance of the Indian woman’s role in the economy is evident in laundry detergent ads like Ariel - where they depict the Indian man as being equally responsible for household tasks like washing clothes. Companies can quickly see existing and changing trends through studying some of these product advertisements from over a span of ten years. The Patanjali case study is also worth looking into, especially for those wanting to sell fast moving consumer goods in India. 

 

Last updated: 10.05.2021 - 08:28