Marketing in India

A Market Focus OverviewPrepared by:

Jasjit Singh

Harmandeep Deol

Neha Randhawa

Agenda

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1) Land & Climate 5) Government & Economy

2) Language & Religion 6) Agriculture & other Industries

3) Natural Resources & Hazards 7) Imports & Exports

4) Population 8) Poverty & Corruption

9) Why Invest in India? 12) Cultural & Marketing Value Differences

10) Market Research 13) Ease of Business in India

11) Maslow’s Hierarchy 14) McDonald’s Example

About India

Marketing in India

Fun Facts• Home to Taj Mahal – one of the wonders of the world

• Chess was invented in India

• “Pi” or π was first calculated by Indian mathematician

• Indian’s can eat spicy food!

• World’s largest producer of licit opium for the pharmaceutical trade

• India was one of the richest countries in the world prior to the British invasion in 17th century

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Land & Climate

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• Area: 3.3 mn km2 (compared to Canada, 10.0 mn km2)

• Bordering countries: China, Nepal, Pakistan, Bangladesh, Bhutan and Burma

• Terrain: Upland plain in south, flat to rolling plain along Ganges, desert in west, Himalayas in north

• Climate: Varies from tropical monsoon in south to temperate in north

Language & Religion

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• 15 official languages, 1 unofficial language (English) widely spoken

• Official languages: Hindi (41%), Bengali (8.1%), Telugu (7.2%), Marathi (7%), Tamil (5.9%), Urdu (5%), Guajarati (4.5%), Kannada (3.7%) and others

• Over 200 dialects spoken across nation

• Religion: Hindu (80.5%), Muslim (13.4%), Christian (2.3%), Sikh (1.9%), others (1.9%)

Natural Resources

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• Coal (fourth largest reserves in world)

• Iron ore

• Manganese, mica, bauxite, titanium core, chromite

• Natural gas, petroleum

• Diamonds

• Limestone

• Arable land

Natural Hazards

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• Droughts

• Flash floods

• Monsoons

• Earthquakes

• Recently active volcano (Barren Island in Andaman Sea)

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Population

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• Population of 1.2 billion as of July 2014; 2nd to China… Population of 34.8 million in Canada

• 36.4 population per square km… Very dense!• 3.2 population per square km in Canada

• 31% urban vs 69% rural

• Population growth: 1.25% est.

• Life expectancy:

• Males 66.7 years old (79.1 yrs in Canada)

• Females 69.1 years old (84.4 yrs in Canada)

(Million) Population

New Delhi 22.7

Mumbai 19.7

Kolkata 14.4

Chennai 8.8

Bangalore 8.6

Hyderabad 7.8

Population Distribution

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(Million) Population

< 15 yrs old 28.5%

15-24 yrs old 18.1%

25-54 yrs old 40.6%

55-64 yrs old 7.0%

65+ yrs old 5.7%

Median Age 27 yrs old

People

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• Ethnic groups: Indo-Aryan 72%, Dravidian 25%, Mongoloid and other 3%

• Adult literacy rate: 62.8% (compared to 99% in Canada)

• Major socio-economic issues such as malnutrition, child labour, economic disparity, poverty (30% pop’n below poverty line)

• Children <5yrs underweight: 43.5% (virtually non-existent in Canada)

• Child labour (5-15 yrs): 27.0 mn

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Government

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• 29 States, 7 Union Territories

• Gained Independence from the British in 1947

• Legal system: Common law based on English model• Separate personal law codes apply to Muslims, Christians and

Hindus

• Judicial reviews of legislative acts

Government

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• Chief of State: President & VP

• Government Head: Prime Minister

• Legislature – bicameral

• Council of States (245 seats) and People’s Assembly (545 seats)

• Parties: Multiple (21+)

Prime Minister of India

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• Narendra Modi is new prime minister of India

• Assumed office May 26th, 2014

• Leader of the Bharatiya Janata Party (BJP)

• 2012 Internal BJP documents…• “BJP has opposed FDI (foreign direct investment) in multi-brand

retail right from the beginning”

• “Small businessmen will be forced to down their shutters now”

• After taking over office, he’s soften his stance on FDI

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Economy

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• GDP (real): Y2010 = $1.73tn (USD) – 9th largest

• Compared to Canada Y2010 = $1.58tn (USD)

• GDP/capita (PPP): Y2013 = $5,410 (USD)

• Compared to Canada Y2013 = $43,100 (USD)

• Workforce: 487.3mn (19.1mn in Canada)

• Labour force by occupation:• Agriculture (49%), industry (20%), services (31%)

Agriculture

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Rice Lentils

Wheat Onions

Oil Seed Potatoes

Cotton Dairy Products

Jute Sheep/Goat

Sugar Cane Poultry

Fish

Industries

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Textiles Mining

Chemicals Petroleum

Food Processing Machinery

Steel Software

Cement Pharmaceuticals

Transportation Equipment Labor (Outsourcing)

Services

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IT Services

Engineering, Business Services

Energy and Power

Hotel and Tourism

Retail

Transport Services

Banking and Finance

GDP per Capita based on PPP

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Imports

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• $467.5bn (est. 2013)

• Ranked 12th in the world

• Commodities include crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals

• Import from China (10.7%), UAE (7.8%), Saudi Arabia (6.8%), Switzerland (6.2%), USA (5.1%) (est. 2012)

Exports

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• $313.2bn (est. 2013)

• Ranked 19th in the world

• Commodities include petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel

• Export to UAE (12.3%), USA (12.2%), China (5%), Singapore (4.9%), Hong Kong (4.1%) (est. 2012)

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Income Equality

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• “Rich” households ($35K+ income p.a.) 16 million

• “Middle-class” ($8K to $35K+) 160 million

• “Aspiring middle-class” ($3.5K to $8K) 359 million

• “Deprived” (<$3.5K) 684 million

• 170,000 millionaires and billionaires

Poverty

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• Poverty in India is a systemic problem

• 30% of population living below poverty line

• 68.8% of Indian population living on less than $2 per day (est. 2010)

Corruption

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Lack of Infrastructure

• Expensive Real Estate

• Low spending on Infrastructure

• Very low private sector spending

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Why Invest in India?

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• Underserved market

• Enormous market size

• Small but fast growing middle class

• Many potential consumers in upper-middle income class

• Growing software and electronics industry

• Outsourcing opportunities due to low salaries

• Profits $$$

Market Research is Challenging

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• Lack of secondary data in public domain (gov’t census from 2001)

• Undocumented, outdated, fragmented data

• Digitization of records beginning to occur

• Consumer insights in English are not good enough (recall 15 official languages)

• Businesses and people suspicious of giving interviews or sharing information

… But it Can Be Successful

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• Use multiple data collection sources

• Validate information

• Test and strengthen hypotheses

• Hire locals with experience

• Choose local partners for practical research approaches

Maslow’s Hierarchy

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Relating consumption patterns and levels to basic human need-fulfilling behaviour

Self Actualization

Esteem

Social

Safety

Psychological

Status

Admiration

Affiliation

Safety

Psychological

Maslow’s Hierarchy of Needs Maslow’s Hierarchy: The Asian Equivalent

Cultural Values Differences

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Classic Western Traditional Asian

Nuclear, family, self, or immediate family Extended family, blood /kinship/ work groups

Beliefs in competition, challenge, self-expression Beliefs in harmony, cooperation, avoiding confrontation

Personal responsibility, independence Shared responsibility, interdependence

Doing one’s own thing Public self and “face”

Resentment of authority Respect of authority

Primacy given more to youth and change Age and seniority important, value tradition

Control by “guilt” and conscience Control by “shame” and “loss of face”

Marketing Values Differences

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Classic Western Traditional Asian

Brand segmentation; personal choice and self-expression through brand

Popular famous brands; confidence in brand and corporate names

Presenters/ testimonials important but more to draw attention to brands

Imitation, emulation, use of presenters as role models in ads

Seeding and diffusion from leading edge Rapid adoption of successful brands

Belief in “understatement” of wealth Display of wealth and status

Environmentalism Confidence in technology

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Doing Business Criteria

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Ease of doing Business in India

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Business Registration

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Business Registration - Comparison

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McDonald’s Advertisement

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• http://youtu.be/ErnTTK7zOeU

McDonald’s India Menu

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• http://www.mcdonaldsindia.com/happy-price-menu.html

McDonald’s in India

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• Entered Indian market with two local partners – 50/50 Joint-Venture (first store opened Oct 1996)

• Religious views considered by McDonalds:• Indian’s don’t eat beef, cows sacred animal for Hindus

• Muslims don’t eat Pork

• Menu modification to suit local tastes…. major vegetarian menu play, spices, etc

• Ensuring diversity in product offerings while maintaining core brand image and affordable pricing

• Storefronts, kiosks, drive-thru, McDelivery

Thank you!

Q&A46

Bibliography

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• Maps of India http://www.mapsofindia.com/maps/india/india-political-map.htm#

• CIA World Factbook – Indiahttps://www.cia.gov/library/publications/the-world-factbook/geos/in.html

• CIA World Factbook – Canadahttps://www.cia.gov/library/publications/the-world-factbook/geos/ca.html

• Open magazine wealth report http://www.openthemagazine.com/article/business/the-wealth-report

Bibliography

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• Wikipedia

http://en.wikipedia.org/wiki/Economy_of_India

• World Bankhttp://data.worldbank.org/indicator/SI.POV.2DAY

• Transparency Internationalhttp://www.transparency.org/country#IND

• Global Marketing Management, 8th ed. Keegan, Warren J. pages 133-136, 171-172, 189

• Bharatiya Janata Party. (2012) http://www.bjp.org/images/publications/fdi%20booklet.pdf

Bibliography

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• Price Waterhouse Cooper Indian Infrastructure Report

http://www.pwc.com/gx/en/capital-projects-infrastructure/assets/gridlines-india-article-2013.pdf

• World Bank

http://www.doingbusiness.org/data/exploretopics/starting-a-business

• World Bank

http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD/countries/CA?display=graph

• McDonald’s in India

http://www.mcdonaldsindia.net/key-milestones.aspx

Bibliography

• KPMG

http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/KPMG-CII-Ease-of-doing-business-in-India.pdf

• Doing Business

http://www.doingbusiness.org/data/exploreeconomies/india/~/media/giawb/doing%20business/documents/profiles/country/IND.pdf

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