Product Management Praveen

Product Management
The Indian Market Emerging

Panorama
Prakash Gupta
Praseed Prasannan
Praveen Kumar
1 Rakesh Agarwal
AGENDA
 Industries
 Key Questions
 Market
 Consumers
 Consumer Behavior
 Consumers in rural / semi urban areas
 Conclusion
2
INDUSTRIES
Our presentation pertains to following industries:
 Fast Moving Consumer Goods
 Automobile
 Real Estate
 Retail
 Entertainment
 Tourism & Hospitality
 Aviation
 Telecommunication
 Computers & Internet
 Banking services
 Energy
3
KEY QUESTIONS
Market
 What is a market from business point of view?
 Where are such markets in India?
 How the markets in urban and rural / semi urban areas different?
 Is the difference constant, diminishing or increasing?
Consumers
 Who are the consumers?
 What are they buying?
 How much are they buying? Is there any trend?
Consumer Behavior
 What are the factors that affect consumer behavior?
 What are the variations in these factors over last 20 years?
Consumers in Rural / Semi urban areas
 Are there consumers in rural / semi urban areas?
 Are the findings related to buying pattern and consumer behavior true for consumers in rural
/ semi urban areas? 4
 Can marketers benefit their organizations from these consumers?
MARKET
 Market from business point of view India: Relevant Statistics
 Sustainably growing economy
 Growing population with capacity to 2004 2005 2006 2007 2008 2009
buy GDP (% real growth) 7.7 9 9.6 9.9 6.5 5.7
 Increasing literacy rate Inflation (% change) 3.8 4.2 6.2 6.4 8.3 10.8
Population, mid-year 10,94,5 11,11,3 11,28,00 11,44,4 11,60,6 11,76,8
 Easy outreach ('000) 85.90 96.70 7.80 30.40 90.30 13.50
 Leapfrogging Consumers Population with
employment (%) 34.42 34.81 34.94 35.40 35.81 35.73
 Political stability
Population with
 Does Indian socio-economic outlook income above
Rs …………… a year
reflect these traits?
Adult literacy (%) 64.4 64.5 65.2 66 66.9 67.7
 Challenges: All weather Road (km)
 The absolute number of people Border districts with
railway network
living in abject poverty has barely
moved below 300 million in last 25 Consumer Expenditure
as percentage of annual
years. disposable income 72.63 72.17 73.02 73.8 75.38 75.39
 The market is not uniform across Consumer expenditure
length and breadth of India. on food as percentage
of consumer
expenditure 35.95 35.87 36.05 35.61 34.92 34.49
5
(Source: McKinsey Quarterly & Euromonitor)
MARKET: GEOGRAPHICAL LOCATION
Social Unrest
 Business needs peaceful environment to flourish.
 In India internal social unrest is a considerable threat
to business.
Economic Divide
 Over one third population lives under US $ 1 a day. Put map here to show
 Extreme poverty further increases social divide. areas favorable for
 India’s performance on Millennium Development business
Goals to counter extreme poverty remains dismal.
Areas with social unrest coupled with extreme economic

divide remain outside business purview.
Where different companies are doing business?
6
(Source: McKinsey Quarterly)
STATE BASED SALES REVENUE, CORPORATE TAX AND
POVERTY STATUS
7
WHAT DOES RURAL SIGNIFY
Definitions:
 Indian census: All non-urban is rural. Urban India constitutes places with a population
of more than 5,000, a population density above 400 per square kilometre, all places
with a municipal corporation, municipal board, cantonment board, notified area
council, etc. and with 75% of the male working population engaged in non-agricultural
employment.
 People living a different lifestyle as opposed to that of those who have settled in the
bigger cities and towns and relate their income closely to the lands they till or use to
raise their cattle and livestock.
 Harsh Bijoor (Bijoor Consults): Rural is a mindset. Those who possess it are rural and
those who do not are urban. To that extent, in Bangalore city, just off the old airport
road, are a whole set of people who live by farming on their lands. If you visit their
homes, their lifestyles are totally rural. Similarly, there are people who live in villages,
who have access to the best of it all. These are urban folk.
Rural is not a geography; it is a mindset.
(Source: India knowledge@wharton)

URBAN VS RURAL MARKET
Difference: Mindset
 Diminishing difference in mindset will ensure that companies cross all hurdles to
reach their customers.
What does data reflect?
 Maruti Suzuki, sold 5% of its vehicles in the rural markets (June 2009). The company
expects this number to rise to 15% in the next two years.
"This is not just our wish, but reflects market demand"
- Shuji Oishi (Direct - Marketing & Sales, Maruti Suzuki)
 70% of all new subscribers of new cellular phone services in India will come from
rural areas.
 According to World Gold Council figures, 60% of India's US$15 billion annual
consumption of gold and gold jewelry is from rural and semi-urban areas. The Tatas
have launched a mass-market jewelry brand – GoldPlus to target this market.
 The Chik shampoo sachets sells for 2 cents, the Parle G Tikki biscuit packs at 4 cents
and the Coca-Cola 200 ml glass bottle for 10 cents.
Urban and rural want is largely the same. However, the rural person is
savvier and demands real value for money. The difference is diminishing. 9

IS RURAL MARKET SHORT-LIVED
RENAISSANCE
 Total income in rural India (about 43% of total national income) is expected to increase
from around US$220 billion in 2004-2005 to US$425 billion by 2010-2011, a CAGR
of 12%.
 This is entirely disposable income unlike what it would be in urban India but major
part goes on food.
Other major expenditures (2008-09)
 Fast moving consumer goods:US$17 billion (23% growth over last year)
 Home Durable: US$2.5 billion (15% growth over last year)
 Automobile sectors: US$2.5 billion
 Agri-inputs (including tractors): US$1 billion.
Increase in rural purchasing power:
 Increase in procurement prices farm products
 Monsoon: good from 2005-08, bad in 2009, above average in 2010
 National Rural Employment Guarantee Scheme
 Waiver of agricultural loans to the tune of US$13.9 billion
 Bharat Nirman program with an outlay of US$34.84 billion for improving rural
infrastructure
Major factor in changing mindset: Television 10

CAN COMPANIES MAKE IT PROFITABLE
The shift in companies’ mindset
 In the old days, the weakest people in organizations held the reins of the rural marketing
divisions. Today sharper and sharper brains from within the organization are being diverted
to rural strategy formulation - Harsh Bijoor (Bijoor Consults):
 Design four Ps to achieve four As (Affordability, Awareness, Availability, Acceptability) -
Pankaj Gupta, practice head, consumer & retail, Tata Strategic Management Group
Examples
 Godrej introduced three brands of Cinthol, Fair Glow and Godrej (soap) in 50-gram packs,
priced at 10 cents;
 Adidas and Reebok increased their sales by 50% in rural markets by reducing prices.
 Videocon introduced a washing machine without a drier for US$60;
 Philips launched a low-cost smokeless chulha (stove);
 DCM Shriram developed a low-cost water purifier especially for rural areas.
 LG Electronics developed a customized TV (cheap and capable of picking up low-intensity
signals)
11

REFERENCES
 Tracking the growth of India’s middle class; McKinsey Quarterly August 2007 • Eric
D. Beinhocker, Diana Farrell, and Adil S. Zainulbhai
 Growing up fast: Vietnam discovers the consumer society; McKinsey Quarterly August
2010 Marco Breu, Brian S. Salsberg, and Hà Thanh Tú
 Why Companies See Bright Prospects in Rural India; Published : June 18, 2009 in
India Knowledge@Wharton
 NTT DoCoMo's Tata Deal: Why Global Telecom Firms Want to Dial India; Published :
............. in India Knowledge@Wharton
 Marketing to Rural India: Making the Ends Meet; Published : ............. in India
Knowledge@Wharton
 How Did Nokia Succeed in the Indian Mobile Market, While Its Rivals Got Hung Up?;
Published : ............. in India Knowledge@Wharton
 Euromonitor
12

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Product Management

The Indian Market Emerging

Areas with social unrest coupled with extreme economic

(Source: India knowledge@wharton)

(Source: India knowledge@wharton)

(Source: India knowledge@wharton)

(Source: India knowledge@wharton)

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