Bird Of Gold-Report By Mckinsey

The Indian Consumer Market Ayushi KakwaniNishant Dubey

Experts Speak

• “The Indian consumer is maturing fast, and is upgrading within product segments at a pace

that consumer companies are struggling to keep up with.”

— Subbu Narayanswamy, McKinsey & Company

What is a consumer market ?

• Market dominated by products and services designed for the general consumer, The consumer market excludes business or government purchases, or other non-personal investments.

• The consumer market pertains to buyers who purchase goods and services for consumption rather than resale

• Industries in the consumer markets often have to deal with shifting brand loyalties and uncertainty about the future popularity of products and services

Experts Speak

• “Today, the drivers in urban and rural areas are the same — aspiration, quality and price differing only in order.”

— D Shivakumar, Nokia

Characteristics Of Consumer

• The consumer market pertains to buyers who purchase goods and services, However, not all consumers are alike in their tastes, preferences and buying habits due to different characteristics that can distinguish certain consumers from others

• The characteristics are :1. Demographic Characteristics2. Psychographic Characteristics3. Behavioralistic Characteristics4. Geographic Characteristics

Experts Speak

• “From pester power, kids have changed their role to becoming influencers. In the older age group, they have actually become consultants, whom parents turn to for advice during the decision-making process.”

— Rajat Jain, Mobile2Win

Indian Consumers • India has the youngest population profile

• There are a lot of young people, in different income segments and locations, who are influencing their parents' spending, or spending their own money

• The Indian consumption patterns are slowly converging with the impact of globalisation

• The Indian consumer is now spending more on consumer durables, apparel, entertainment, vacations and lifestyle and other related activities

• The rate of growth of spending on discretionary items has been growing at an average of 9 per cent per year over the past five years.

Indian Consumer Market

• Global corporations view India as one of the key markets from where future growth will emerge.

• The growth in India's consumer market will be primarily driven by a favourable population composition and rising disposable incomes

• India's consumer market till now was broadly defined as a pyramid; This pyramid structure of the Indian market is slowly collapsing and being replaced by a diamond

Experts Speak

• “There is a new normal in the Indian consumer market today.”

— Ishan Raina, OOH Media

Decoding The Empowered Indian Consumer

• The Indian consumer market is drawing global attention not just because of its promise of sheer volumes but also because of the tectonic shift happening in the nature of demand

• The result of this flux is a new Indian consumer who is more discerning than ever, ready to place his money on brand, quality and convenience and eager to explore the organized retail market.

Decoding The Empowered Indian Consumer

• Aspiration for a better life

• Value and innovation

• The brand conscious consumer

• Growth in consumption

• Organized retail

Number Of Households By Annual Income

deprived aspirers seekers strivers globals

101.1 91.1

10.9 2.4 1.2

74.1 106

55.1

5.5 3.3

49.9

93.1

94.9

33.19.5

2005 2015 2025

Share Of Population In Each Income Bracket

1985 1995 2005 2015 20250%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Share of Population in each income bracket

Glbals StriversSeekersAspirersDeprived

Year

2005 2015 20250

10

20

30

40

50

60

70

80

Aggregate disposable income(trillion INR)

globalsstriversseekersaspirers deprived

2005 2015 20250

10

20

30

40

50

60

70

80

90

100

Aggregate consumption (tril-lion INR)

Microwave Ovens Air Conditioners TVs Refrigerators Washing Machines0

20

40

60

80

100

120

4030 27 30 35

Korea's LG Electronics Share of the Indian Appliance Market (2006)

OthersLG

Perc

enta

ge

India Japan China0

10203040506070

61 5735

Personal Consumption as % of GDP (2006)

Personal Consumption

% o

f GD

P

Average Household Disposable Income

1 2 3 4 5 6 7 8 91960

1970

1980

1990

2000

2010

2020

2030

1985

1990

1995

2000

20052010

2015

2020

2025

Household Income

Percentage

Year

3.6%

5.3%

Actual

Forecast

Share of average household consumption

Food,beve

rages a

nd tobacc

o

Apparel

Housing and utiliti

es

Household pro

ducts

Personal p

roducts

and servi

ces

Transp

ortation

Communication

Education and re

creation

Health ca

re0

20

40

60

80

100

120

140

160

180

2025201520051995Pe

rcen

tage

Conclusion

• Indian market undergoes a paradigm shift due to India’s rapid economic growth and favourable demographics

• The upcoming changes in the Indian consumer market will create major opportunities and challenges for Indian and multinational businesses alike

• Growth in Indian incomes and consumption will also deliver extensive societal benefits

• Indian consumer market is becoming increasingly sophisticated and brand conscious

Conclusion

• Rising Incomes will lift 291 million out of poverty and create 583 million-strong middle class

• India will be the 5th largest Consumer Market by 2025

• Middle class growth will spread beyond top tier countries

During the first millennium AD, merchants referred to India as the "Bird of Gold" due to the glittering dynamism of its market. Over the next two decades, that bird may take flight once again.

Bibliography

• India Consumer Report- Mc-Kinsey Report

• Indian Consumer- Roundtable report