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1. CourseCode306MKT CourseTitle:Consumer
Behavior
2. LearningObjectivesoftheCourse:1)ToUnderstandingIndianconsumer,2)To
studyIndiansocialclassanditsmeasurement.3)Tostudysegmentationin
urbanandruralconsumermarket,BoPanditscharacteristics.
3. TheseNotescoverUnitNumber5,IndianConsumerandSECClassification:
TheIndianconsumermarket:
TheIndianconsumerstoryisonethathascaughttheattentionoftherestof
theworld.Risingincomesinthehandsofayoungpopulation,agrowing
economy,expansionintheavailabilityofproductsandservicesandeasyavail
abilityofcreditallofthishasgivenrisetonewconsumersegmentsanda
risingacceptabilityofdebt.
Whileconsumerismhasseenagradualbuildup,whatiscertaintodayisthat
therehasbeenagenuineuptakeinconsumption.Whetheritismobilephones,
creditcards,apparelororganisedretail,peopleclearlyseemtobespending
more,particularlyondiscretionaryitems.Andtheconsumerseemstobe
everywhere,whetheritbethelargemetros,theemergingnewcities,thesmall
townsandevenruralIndia.
Whathasemergedinthisconsumerstoryisthefactthatthereismuchmore
homogeneityinthemarketthaneverbefore;forthefirsttimesomepatterns
havebeguntoemergeinconsumerbehaviour.
Thereissomuchchoicetodayandpeopledonotacceptpoorservice.We
cannotmakeanyexcusesbutneedtogearupoursystemstoprovidethatlevel
ofservice.NarayananVaghul,Chairman,ICICIBankingCorporation.
Oneofthepatternsthatweareseeingistogiveterrificvalueatareasonable
price,accordingtoIshanRaina,OOHMedia.Itisnolongertruethatapremium
productneedstobeexpensiveandtechnologyisalargecontributortothis
trend.Sowhetheritismobilephones,digitalmusicplayersoreventhenew
TataNano,theprice/valueequationhasforeverbeenaltered.Thishasledtoan
increaseinexpectationsaswellasthedesireforimmediatesatisfaction,which
inturnhasraisedexpectationsforcustomerservice.AsMr.Vaghul,Chairman,
ICICIBankingCorporation,explained:Thereissomuchchoicetodayand
peopledonotacceptpoorservice.Wecannotmakeanyexcusesbutneedto
gearupoursystemstoprovidethatlevelofservice.
Today,everycityhasitspremiumconsumersanditsmiddleclassconsumers
andthishasputcompaniesintoafix.Theynowneedtocraftstrategiesthat
addressthesubtledifferencesbutsatisfyeachgroupequally.Sowhatisthe
Indianconsumermarkettoday?Itisamarketwiththreesegments.Thefirst
comprisesthetopendwiththemindset:Ipaymoretogetmore,wherethe
purchaseisdrivenbytheemotionalsurplusthattheconsumerexperiences.The
secondisthemidlevelwhichthinks:Igetgoodvalueatareasonableprice.
Moreimportant,however,isthelargeblockatthebottomwhichsays:Ipay
lessandIgetlessandistotallysatisfiedwiththat.Thisisprobablyasegment
Prof.PramodSasane UNITNO.2
306MKT:ConsumerBehaviorUnit5:IndividualDeterminantsofConsumerBehavior
thatmanymarketerstendtooverlooksincetheyfeelthatthereisnoexisting
demandthere.Nothingcouldbefurtherfromthetruth.DShivakumar,Nokia,
reiterateditsimportancewhenhesaid:Theproblemwasthatearlier,there
werenogoodsandservicestargetingthislargechunk;itisonlytodaythat
peoplearegoingoutintothesesmalltowns.
Thereisagrowingrealisationtodaythatitiseasiertocompeteinthesmaller
townsbecausemanyofthebigbrandsandtheirmarketingmanagersandsales
teamsdontmaketheefforttotravelthere.Hence,ifonedoesgothere,
marketshareiseasytoachievebecauseeventhoughtheoverallpieissmaller,
thereislesscompetition.
Anothershifthasbeenthechangingdynamicsofruralmigrationtourban
centers.AsAsifAdil,Diageo,pointedout:Ithinkweareincreasinglygoingto
seeareverseshifthappening,wherepeoplearenotgoingtocometotheurban
areasinthesamekindofnumbersthattheyweremigratingbefore
essentiallybecausequalityoflifeandopportunitiesareimprovinginsmaller
towns.
Furthermore,thefactorsbehindpurchasingdecisionsaremerginginurbanand
ruralareas.AsDShivakumarpointedout:Today,thedriversarethesame,
differingonlyinorder.Inurbanmarkets,aspirationiskeyitisallabout
brands,lifestylesandshowoffvalue.Thisisfollowedbyqualityandfinally
price.RuralIndiaisdrivenprimarilybyprice,followedbyaspirationandthen
quality.However,whatisimportanttounderstandisthattheIndianconsumer,
nomatterwhereheorsheisorwhatcategoryheorshebelongsto,stilllooks
foragoodbargain.ThatisauniqueIndiancharacteristic.
Whiletheymaybedrivenbythesamedesires,therearestilldifferencesinthe
waypeopleliveinthenonmetropolitancitieswhencomparedwiththemetro
politancitiesormetrosastheyareusuallycalled.2Adegreeofhomogeneity
mayexistinlargecities,butthereisadisconnectwhencomparedwiththeir
counterpartsinsmallertownswhetheritisregardingtheirphilosophy,their
thoughtsortheirapproachtolife.Thus,marketerstodayalsoneedtothink
aboutcreatingbrandsthataddressthesedifferencesinconsumerslifestyles.
RuralIndia:Wakinguptoopportunity
AnjaliBansalraisedthequestionofwhetherthegrowingruralmarketinIndia
hasalreadybecomeafocusforconsumercompaniesorwhetheritisamarket
ofthefuture.Therewasagreementacrosstheboardonthefactthattherural
marketcannolongerbeignoredbyconsumercompanies.Thereareregionsof
Indiathataregrowingat1530percentintermsofspendingpower.Theaspi
rationsofpopulationsinthesemiurbanandruralareasarealsomuchgreater
thantheirurbancounterparts,especiallybecausetheyarebeingexposedtoa
rangeofproductsandservicesthattheyhaveneverseenbefore.Thistranslates
Prof.PramodSasane UNITNO.2
306MKT:ConsumerBehaviorUnit5:IndividualDeterminantsofConsumerBehavior
intoalargermarketingopportunityforcompanies.
However,Mr.Vaghulalsopointedoutthatpurchasesaresometimestriggered
bysocialpressures,forexampleafarmerwantingtobuythebesttractor,not
becauseheneedsitbutbecausehisneighbourownsone.Thiskindof
behaviourleadstoahighernumberofloandefaultsandoftenhappensbecause
thereisafinelinebetweenintention/desiretopayandabilitytopayinthe
caseoftheaverageruralconsumerasignthatcompaniessometimes
misread.
However,thescenarioischanging.Therewasconsensusacrosstheboardthat
technologyhasgivenruralIndiaanewidentity.Anareawithpotentialisthe
smartcard,whichcanbeusedformultiplepurposeswhetheritbetodraw
cashormakepaymentsforseedsandfertilisers.Thebiggestbenefitisthata
smartcardcanbeusedbyindividualswhomaybeilliterateaswell,sinceit
storescardholderinformationandislinkedtothepurchasecenters.
Theretailexperienceisalsodistinctfornewproductsandservices.Gadgetslike
mobilephonesaresoldthroughkiranas(smallfamilystores)andtelephone
boothssincethosearetheoutletsthathaveelectricity.Thisisthetotal
oppositeofthemallcultureseeninurbanIndiaanditisaneedthatconsumer
companieswillneedtoaddress.
Anothergulfbetweenurbanandruralcommunitiesisconsumereducation.
Whileruralconsumersarebecomingincreasinglycomfortablewithtechnology,
understandingitisstillonaneedtoknowbasisandlearningthebasicsistaken
assufficient.
SocioEconomicClassification:
AcommonclassificationthatisusedbymarketerstodescribetheIndian
populationistheSocioEconomicClassification(SEC).
SECistheclassificationofIndianconsumersonthebasisoftwoparameters:
Occupationandeducationofthechiefwageearner(head)ofthehousehold.
TheSECclassification,createdin1988,wasratifiedbytheMarketResearch
SocietyofIndia(MRSI)andisusedbymostmediaresearchersandbrand
managerstounderstandtheIndianconsumingclass.
AccordingtoSEC,urbanIndianhouseholdsareclassifiedonthebasisofthetwo
parameterseducationandoccupationintoSECA1,A2,B1,B2,C,D,E1,E2.
InurbanhouseholdsSECA1includesthoseindividualswithagraduate/post
graduatequalification,holdingseniorpositions(Clevelandmiddlemanage
ment)andalsoentrepreneurswithacollegeeducationandemployingmore
than10staffmembers.
RuralIndianHouseholdsareclassifiedintoSECR1,R2,R3,R4.Here,the
Prof.PramodSasane UNITNO.2
306MKT:ConsumerBehaviorUnit5:IndividualDeterminantsofConsumerBehavior
parametersaretheeducationofthechiefwageearnerandthehousetype.
TheSECclassificationhelpsthemarketerstoidentifysegmentsthathaveahigh
consumptionpotentialandisalsousedbymediaplannerstodecidethemedia
whichgivestheclientmaximumeffectiveness.
Althoughthisclassificationhasbeenpopularforover18years,ithasits
negativessinceittakesintoaccountonlytwoparameters:educationand
occupation.Themodelisbasedontheassumptionthathighereducationleads
tohigherincomethushigherconsumingpotential.Thismaynotbetrueinall
cases.
HencetheMarketResearchUsersCouncil(MRUC)hasdevisedanother
classificationcalledNewConsumerClassificationSystem(NCCS)which
calculatesaHouseholdPotentialIndex(HPI),whichtakesintoaccount
parameterslikeownershipandconsumptionofmediaservicesandproducts,
alongwithotherdemographics.
Understandingthebottomofthepyramid(BoP)ConsumerIndia:
1)ThesizeoftheBOPmarketis650millionpeople,whoindividuallyearnless
thanadollaraday,butcollectivelyaccountfor30%ofthenationalincome,a
littleover33%ofconsumptionexpenditureanda
littleover20%ofIndiassavings.
2)AdollaradaypercapitaisareasonableincomeinIndia
3)Sensibleinvestmentforthefutureasbrandemotionstendtostickwhenthe
poorgraduatetotherichandsecuringtheloyaltyof400millionconsumers
4)TheBOPisrisingfastintermsofabsolutequantumofincomeearned
5)Favorablechangeinsocialattitudes.Hungerforknowledgeandinformation
isextreme.
CharacteristicsoftheBOPconsumer:
1)Poorbutnotbackward
2)Theyvalueallkindsofproductivitydevicesthathelpthemearnmore
3)Poorconsumersdocomplicatedvalueprocessing
4)Poorconsumersinnovatetomakeproductsvalueright
5)Poorconsumersaretechnologyembracers
Agenericframeworkforunderstandinglowincomeconsumerbetter:
Segmentinglowincomeconsumers:age,educationandoccupationsegments
combinedintoaspelllengthinlowincomevariableorhowlongthehousehold
orindividualislikelytoremaininthelowincomegroup.
2)Understandingspendingpowerandpatternsbeyondannualincome:
example,borrowingpracticeswhichopensupopportunitiesforthriftstoresetc
andunderstandingvalueprocessingandbudgetbalancing.
Prof.PramodSasane UNITNO.2
306MKT:ConsumerBehaviorUnit5:IndividualDeterminantsofConsumerBehavior
4. KeyDefinitions,KeyWordsinthedefinitions:
Today,thedriversinurbanandruralareasarethesameaspiration,quality
andpricedifferingonlyinorder.DShivakumar,Nokia.
IsthegrowingruralmarketinIndiaalreadybecomeafocusforconsumer
companiesorisitamarketofthefuture?AnjaliBansal,SpencerStuart.
5. KeyConcepts:Indianconsumers,SECClassification,MeasurementofSocial
class,BoPandMarketingStrategies.
6. PastQuestionsonthisunit(Eachquestionscarries10marks)
Q1)a)Whatdoyouunderstandbysocialclass.Inwhatcircumstanceswould
youexpectincometobeabetterpredictorofconsumerbehaviourthansocio
economicstatus.(SPPU,May2015)
b)WhatisBoP?ExplaincharacteristicsofBoPconsumers,withthehelpof
suitableexamples.(SPPU,May2015)
Q2)a)WhatdoyouunderstandbyBottomofPyramid(BoP)?Listoutthemajor
characteristicsofBoPindetail.(SPPU,May2014)
b)ExplainindetailsocialclassofIndianconsumersandMeasurementofsocial
class.(SPPU,May2014)
7. QuestionsforPractice(Theorybased,applicationbased):
Whatmarketingstrategiesdoyousuggesttomarketfollowingproductto
IndianConsumer1)HerbalShampoo,2)Refrigerator,3)Healthdrink.
8. LearningResources:RuralMarketbyPradipKashyap
CaseStudy:GodrejChhotakool
Prof.PramodSasane UNITNO.2