Sameer Mathur, PhD (http://smathur.

com)
CONSUMER SEGMENTS IN INDIA

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These presentations are part of Sameer Mathur's teaching portfolio.
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Disclaimer: These teaching materials have been compiled from multiple, non-credited
sources for non-profit, academic use. Copyright is retained by the original content creators.


Sameer Mathur, Ph.D.
Assistant Professor (Marketing)



Web: www.smathur.com
Email: sameer.mathur@mcgill.ca
Twitter: @ProfessorMathur
Facebook: Click Here

BRIC Comparison
Country
Population
Rank
GDP Rank
GDP per Capita
Rank
China 1 3 108
India 2 5 153
Brazil 7 11 97
Russia 10 10 81
USA 4 1 10
Source: The World Factbook 2007, Central Intelligence Agency (2006 Data
Estimates)
BRIC:
Individually poor,
Collectively Rich

Developed
Economies:
Individually and
Collectively rich

Structure of Consumer Demand
Emerging Markets (India)
Many people consume
a little bit each Large
consumption
Developed Markets (USA)
A few people
consuming a lot each
Large consumption
Eg: Organized retailing business (Subhiksha vs Walmart)
Implication: Differing Price Mechanisms,
Cost Structures and Promotional tools
Rich and Poor Consumers
Rich consumers may not necessarily
offer higher market potential than poor
consumers

Example : Two Wheeler Market






Marketing to such a Demand Structure
Market Characteristics:
Large populations with low incomes
Low to moderate penetration levels
Low per-capita consumption levels

Requires innovative strategies by marketers

Example : Shampoo Bottles vs Shampoo Sachets
Led to expanded user base, lower unit price
and additional volume sales


Indian Market Segments (Old)

Three Broad Segments
1. Premium = High Income Consumers
2. Popular = Middle Income Consumers
3. Discount = Low Income Consumers




Segments are equal in terms of value
Differ in number of consumers and income levels
Category
% of Population
by Income
Perccentile
National income
share of each
percentile
Consumption
expenditure
share of each
percentile
GDP per Capita
Indexed
Premium Top 10% 34.1 30 100
Popular Next 30% 36.1 36.6 35
Discount Lowest 60% 29.7 33.4 14
Source: Business World Marketing White Book 2006 Solving the Income Data Puzzle, Bijapurkar and Bhandari
Unorganised segment :
Small scale buyers and small suppliers
Organised Segment:
Large scale buyers and large companies

Unorganised Segment > Organised Segment
Tax subsidies and other cost advantages prevent
supply and demand segments from matching






Industrial and B2B Markets
Changes in market segments
FMCGs Popular segment grew, premium decreased
Down Trading Nature of Indian Consumer: Mean and Stingy

Variation in price-performance combination due to
competition created new segments Mild-premium,
High-end popular, Super-premium, High-end discount




Changes in market segments
Further changes in market segments
Price-Performance rules are breaking
Reason: Popular and Discount manufacturers
upgraded goods quality and have cheaper
imported raw material and better equipment
Example: Automotive Sector
Premium: Small yet well equipped Maruti
Swift
Popular: High performance TVS Victor
Discount: Superior and Stylish Bajaj Boxer






New Market Structure
Five Consumer
Groups

1. The Rich
2. The Consuming Class
3. The Climbers
4. The Aspirants
5. The Destitute

Source: ORG-MARG
The Rich:
Buy luxury goods like cars, PCs and
other premium products

The Consuming Class:
Buy Utility Durables like
motorcycles, refrigerators, washing
machines, regular FMCGs


The Rich and The Consuming Class
The Climbers:
Have at least one major durable
food mixer, television, sewing
machine etc.

The Aspirants:
Have very basic goods like a
watch, radio, table fan

The Destitutes:
Own and consume practically
nothing



The Climbers, The Aspirants and The Destitute
New Market Structure
Five Consumer
Groups

1. The Rich
2. The Consuming Class
3. The Climbers
4. The Aspirants
5. The Destitute


Source: ORG-MARG
Value orientation within segments

1. Benefit-Maximizer class (The rich)
Money for Value belief buy top luxury brands
2. Cost-Benefit optimizers ( The consuming class)
Value for Money belief balance benefit and price
3. Cash-constrained benefit maximizers (The climbers)
Best value with available, limited money Nirma detergent
4. New Entrants into consumption (The aspirants)
Paisa Pack Buy cheap sachets
5. Not yet into consumption (The destitute)
Do not consume anything






Value orientation within segments

Size of Consuming Classes
Largest consumer classes in 1995:
The aspirants and the climbers

Largest consumer classes currently:
The climbers and the consuming class
(~75 million households each)

Urban India: Value-driven market growth

Rural India: Volume-driven market growth

Different growth levels from each class
Not yet into
consumption
The Deep Well
New entrants into
consumption
Value growth via
upgrading
Cash-constrained benefit
maximizers
Volume growth via more per-capita
consumption
Value growth via occasional
consumption of luxuries
Cost benefit optimizers
Value growth via upgrading
Benefit maximizers
Creation of Anywhere in the
world market
The Virtuous
Spiral of Demand
Sources of market growth
Volume Growth :
1. Destitute transforming into Aspirants
2. Climbers increasing their per-capita
consumption

Value Growth
1. Climbers occasionally using superior
products
2. Consuming Class upgrading to better
quality products
3. Creation of a super-premium market for
the rich benefit-maximizer

Implications for Strategy
1. Distribution systems
Consuming class: Higher-margin, higher-service,
fairly demanding
Climbers or Aspirants: Lower margin, high reach,
less demanding

2. Community Consumption Strategy Cyber cafes,
STD/ISD telephone booths

3. Small pack with low unit price Shampoo sachet
Summary
Five Consumer
Groups

1. The Rich
2. The Consuming Class
3. The Climbers
4. The Aspirants
5. The Destitute


Summary

1. Benefit-Maximizer class (The rich)
Money for Value belief -- top luxury brands
2. Cost-Benefit optimizers ( The consuming class)
Value for Money belief balance benefit and price
3. Cash-constrained benefit maximizers (The climbers)
Best overall value with available, limited money Nirma detergent
4. New Entrants into consumption (The aspirants)
Paisa Pack Cheap sachets, biscuits etc
5. Not yet into consumption (The destitute)
Do not consume anything






Background Reading

FREE TEACHING
RESOURCES
ON MARKETING
MANAGEMENT
AT WWW.SMATHUR.COM


OVER 130,000 VIEWS
FROM 96 DIFFERENT COUNTRIES

These presentations are part of Sameer Mathur's teaching portfolio.
They are free to view or download for non-profit, academic use.

Disclaimer: These teaching materials have been compiled from multiple, non-credited
sources for non-profit, academic use. Copyright is retained by the original content creators.


Sameer Mathur, Ph.D.
Assistant Professor (Marketing)



Web: www.smathur.com
Email: sameer.mathur@mcgill.ca
Twitter: @ProfessorMathur
Facebook: Click Here