It has turned into a buyers’ market now—but on the dips
In the previous issue, I had suggested that the Union Budget would provide a direction. Indeed, it did. By the time the finance minister came to the point about widening the slabs when personal income tax gets triggered, the market shot up vertically. From a close of 16,254, pre-Budget day, the Sensex shot up to 16,669, before it gave up...
There are over 4 billion consumers worldwide yet to be served. However, to tap the growing opportunity, marketers need a nuanced understanding of local consumers, say researchers
The centre of gravity, especially from the consumer perspective, is shifting away from North America and Europe. In the decades to come, emerging economies will deliver more growth- and more profits, said the Nielsen Company.
Nielsen's Hany Mwafy, managing director for North Africa and James Russo, vice president for global consumer insights, in a presentation said that by 2030, the developing world's middle class will be larger than the total populations of Europe, Japan and the United States combined.
Nielsen said between 2008 and 2014, Brazil, Russia, India and China (the BRIC nations) are expected to grow 61.3%, compared to only 12.8% growth in the G7 nations-the US, UK, France, Italy, Germany, Canada and Japan.
Back home, the same trend can be seen when we compare mid and small towns with metros. Financial inclusion, improved agriculture markets, industrialisation and media & telecom penetration have meant that satellite and other towns now exceed the overall market size and growth compared to the top six metros in the country.
"Assuming growth differentials of 2% at current levels, these markets, on a combined basis, would be 25% higher versus the top six metro towns," said Ambit Capital Pvt Ltd in a research note.
Led by media, the choice expansion that can be seen in several categories has been substantial. At present, global marketers' combined share of turnover from India is less than 1% compared to 3% contribution to global consumption by India. Nearly two-thirds of the top 100 global marketers are already present in the country and are expected to increase their investments to drive further expansion.
In India, education, social empowerment and rise of the services sector have supported improvement of the status of women significantly. Women are expected to influence more than two-thirds of consumption expenditure in India.
Some areas that are likely to see significant growth because of their changed social and economic status are apparel, food and grocery, consumer electronics and a host of products and services addressing health, beauty and fitness.
As more women enter the workforce, their earning power increases, as does their power within their households. Women now control almost $12 trillion of the $18 trillion in global consumer spending, the Nielsen presentation pointed out.
Mobile phones are proliferating in the developing world, bringing Internet access to consumers who have never had a PC or been online. In line with PC usage growth of about 21%, Internet usage in India has also seen significant increase by about 31% and currently stands at an estimated base of 75 million users in urban markets. The usage is not restricted to merely metros but has spread to remote corners with the smaller towns accounting for higher numbers.
Speaking about the proliferation of the Internet, Ambit Capital said, "In our opinion, the reach of the Internet will have significant influence on consumption of services sectors such as education, music, travel, gaming, news and banking over the next decade. With improved bandwidths we expect that rural India will increasingly become extensive users of this service."
Women along with the youth (aged between 10 years to 25 years) will continue to grab the focus of all marketers. Influence of both these categories is also borne out by the media spend in television and the press, where it is estimated that collectively more than 50% of the spend is exclusively targeted at these segments.
According to a FICCI-KPMG report on media and entertainment, during 2009, advertisements related to food & beverages with an 11% share dominated the small screen while education with a 15% share ruled print ad-spend.
In 2009, average daily TV viewing worldwide was a record 192 minutes. This type of TV viewership can support growing acceptance of multinational brands, said Nielsen.
However, TV viewership in India is divided into about 395 channels. Unlike other markets, the Indian market is significantly heterogeneous which is best epitomised by the fact that there are nearly 122 languages and 234 mother tongues with minimum speaker strength of 10,000, as per the census of 2001. These trends of heterogeneity are expected to continue to drive importance of customisation and reach, as opposed to just superior product and attractive pricing in several markets.
"In our opinion, therefore, not just superior products but supply chains and distribution reach will be extremely critical from the growth perspective. Organisations with robust supply chains and distribution reach in our opinion can enjoy growth rates almost 50% higher the normal growth rates," said Ambit Capital.
Nielsen said that there are over 4 billion consumers worldwide yet to be served, however, to tap these growing opportunities, marketers need a nuanced understanding of local consumers. According to Nielsen, the key lessons for marketers would be to listen and learn, set expectations, not to overreact to political and economic changes and be flexible.
While setting expectations, Nielsen advised global marketers not to assume that they will be able to easily take a leadership position, as there may be strong competition. Citing the example of Coca-Cola, which took 20 years to achieve parity with Pepsi in Egypt, Nielsen said marketers need a global perspective but local expertise. Over time, emerging market innovations will spur change in mature markets, it said.
"Marketers need to be able to tolerate both risk and complexity, and take a long-term view given the uncertain political climate in so many of these countries. For those willing to take the challenge on, the rewards can be enormous," Nielsen added.
On 15 May 2010, Moneylife Foundation held an interactive workshop on banking services.
Mr Kaza Sudhakar talked at length about the rights and responsibilities of a consumer of banking services. He highlighted the numerous ways in which bank customers can be harassed. At the same time, he explained how their grievances can be redressed through the Banking Ombudsman (BO). He also outlined...