Page 146 - MYM 2015

This shows that a huge potential exists in India, both urban and even in many rural areas, if one has the right product with all the other three “Ps”.
A census of rural super consumers (obviously well above the poverty line) shows that they are not as ignorant as one may assume. It is found that they already possess:
80% or more of apparel, consumer durables
and electronics are bought from the nearest city. Therefore, companies now do not have to travel
the extra mile, with great difficulty and at great cost, to ensure village penetration. It is only 80% of groceries that rural consumers buy from the village. However, even this is changing and fast, with online marketing from, global Amazon and local Flipkart. Both are operating in top gear, and both have recently expanded into online grocery supply having realized that food and grocery account for 69% of India’s $490 billion retail sector, followed by apparel at only 8%!
Their foray and that of other online sellers has been considerably helped by a 87% internet access through mobile phones. And how is the message about the products communicated? 90% of the purchases were aided by TV, followed by retailers at 44%, print and magazines at 43%and friends at 39%.
A Study of Buying Behavior
Many of us assume that the semi-literate in the rural and semi -urban regions can be easily managed by “smart marketers”. Though this segment may have little formal education, they are savvy and cannot be taken for a ride!
They look for durability, and therefore find branded goods reliable. Branded refrigerators for example
can run despite voltage fluctuations- and they understand that. They know they cannot rely on a steady supply of electricity. They look for ease of use, They will buy branded detergent soap, which will cost more , but will reduce labor and time in washing clothes. They will buy branded cooking oil, which comes sealed, and therefore, will be unadulterated. No longer are the rural customers influenced by the village elders. They are now influenced by the guy,
in the village, who has built the biggest house, or bought the latest motorcycle.
Two New Entrants Look at India
1. Vincent Cobee, the global head of Nissan, says that India is a very complex market to understand. It is a place where customers want everything at the same time! He had great success with the launch of Datsun GO in Russia, Indonesia, and South Africa (three of the BRICS)but the biggest potential market, India, gave a tepid response
and it has not been a smooth ride. Datsun is
now expecting a better response to the recently introduced Datsun GO+. He says that he wants
to give the best in Datsun GO+, “because Datsun customers in India invest 2 years disposable income to buy a Datsun car, unlike customers
of higher priced cars. Such customers want
cost competitiveness, and also attractive cost of ownership; predictability of ownership experience; and ownership cost.“ Cobee says, “where there are 10 boxes to tick, in India you have to tick 11 out of 10, where in other countries you would
tick 8, and be happy.” He adds, “Selling a car in Assam in the North East is not the same as selling a car in Mumbai on the West coast. The mentality of customers in modern cities like Mumbai and Delhi is very different from that of customers in Tier 3 cities. And operating in the mountainous Himalayas is different from hot and humid Kerala. India is more like a continent like Europe, and
not just a country like Italy- and that makes it a complex market to understand.”
2. SCA, Sweden, the paper pulp giant founded in 1929, started operations in India In 2013 with the tissue brand Tempo, followed by Libero (baby care) and then Tena (adult incontinence). Cecilia Edebo, MD of SCA, says that diapers and baby care are a Rs. 40 billion market while tissues is a Rs. 5 billion market . She adds, “Emerging markets are difficult to predict. We are making a big investment here of Rs. 1.1 billion as a sign of long term commitment to India. Given the size of the middle class, and opportunity for growth, this is a home run for us”. Obviously the market for baby diapers will be much larger (India adds the population of Australia every year) than for adult diapers, unlike Japan where it is the reverse –with low birth rate and longer lives there, , and people want to be active even when old. All the time, SCA is focusing on innovation, so that their products do not sink into becoming commodities. They now have bathroom tissues where even the core can be flushed down; and feminine products in single re-sealable bags which can also be used when disposing. And
Ceiling fans 100% Washing machines 31%
Four wheelers 19% Air conditioners 15%
Two wheelers 99% Computers 12%
Color TVs 99% LPG (gas) connections 95%
Refrigerators 72%
146 I October 2015