Indian Consumers And The Market
The Business World - May 2006
CONSUMER window data on markets is exceedingly useful, since it analyses markets as a collection of people who buy products, and not as a collection of products sold by a set of competitors. Unfortunately, such data is also difficult to come by. So, when such data comes along that is recent, nationally representative, low-priced and high-quality, my advice is to snap it up immediately! The Guide to Indian Markets 2006, by Hansa Research and Media Research Users Council is one such report, based on the Indian Readership Survey (IRS) of 2000 and 2005, an all-India study, with a large and rigorously designed and selected sample of about 1,65,000 households in urban India and about 75,000 in rural India. In each household, the housewife has been interviewed for details of household demographics, FMCG consumption, and ownership of durables, and a randomly selected adult, aged 12 years or above, interviewed for media habits. So, for all those who doubt survey data, this is about as good as it gets - for now.
The best way to use this book, according to me, is for individual businesses to read it and develop their own point of view on the Indian consumer market, as relevant to their business categories and strategy. It is important for businesses to define "my target India", because data on India is usually confusing and contradictory. The uninitiated dismiss it as bad data but, in reality, it is because of the 'glass is half empty/ half full' syndrome of a totally heterogeneous market comprising people simultaneously living in many eras.
Further, I wouldn't waste any time in agonising over whether this data should become the new Holy Grail, replacing all other sources of data currently in use. Many data sources are actually better, for the Indian consumer market is a many-splendoured beast and, for a comprehensive view of it, multiple snapshots from different angles and through different lenses are needed.
One interesting lens used in this report is the consumption lens. The Indian consumer market has been defined and graded entirely on consumption and ownership and not on income. I have said ad nauseum, and beg leave to say again, that consumption data is like maternity - a certainty; while income data is like paternity - often a matter of opinion. The demographic lens provides real numbers not conjecture on critical questions like percentage of women who work outside the home, homes that have a liberalisation generation child, social class A households that live in small towns, etc. Another view is through the brand performance lens. It is a good lens but one that I am less excited with, given that my religion is about consumers and not competitors, about people not products. Understanding consumption structures from the people's point of view does help shape competitive advantage and moves away from the question: "Doesn't everybody know these are the rules of the game in this category?"
Here are some take-aways from the book that I found very interesting.
1. Consumer classes, i.e., stratification of the market based on consumption indicators: The construct of consumer classes was first put forward by Dr. S.L. Rao and I. Natarajan of National Council for Applied Economic Research (NCAER) in 1996, when they created a terrific framework which classified Indian consumers into affluence groups called Rich, Consuming Class, Climber, Aspirant, and Destitutes. However, it was highly opaque and did not say precisely how the classification was made. As a result, it was hard to use as a market segmentation and targeting tool, and for further market research. NCAER has now come full circle, and its new consumer classes are income linked again, which defeats the original objective of laying more emphasis on maternity (certainty - consumption) than paternity (conjecture - income).
The IRS classification of consumers is based on proven consumption behaviour not income. The basis of classification is absolutely clear (see 'The Great Indian Pyramid), though unfortunately, the labels make up for the clarity in their sanskritised opacity! The basis is a construct called HPI (Household Potential - or affluence - Index), which calculates for each household a score based on the consumption or non-consumption of a basket of 50 FMCG and durable products. A higher score is awarded for a less penetrated one (e.g. air conditioner or ketchup) and a lower score to a widely penetrated one (e.g. colour TV or toothpaste). Households with similar HPI scores have been grouped together to create eight consumer classes. Each has been further described in terms of specifics of ownership (see 'Profiling the Consumer Classes of India').