change in life-style that leads to preference of branded products

8/3/2019 Change in Life-style That Leads to Preference of Branded Products

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Project on Change in life-style thatleads to preference of brandedproducts

Submitted by:

Name: Rajan ChristianStd.: XI-DRoll No.:09


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ABSTRACT

Brand preferences are usually studied by attempting to profile and understand loyal consumers. This paper

presents a study of changes in brand preferences. Theory and research is used to propose and test a model

based on the proposition that changes in brand preferences and their development are the result of life events

that serve as markers of life transitions. Changes are viewed to be the result of adjustments to new life

conditions and changes in consumption lifestyles that reflect consumer efforts to cope with stressful life changes.

The data support these notions and suggest implications for consumer research.

INTRODUCTION

The question of "why consumers change their brand preferences" has intrigued marketers and consumer

researchers for decades. Early attempts to understand brand-switching behaviour focussed on the effect of past

purchases on current purchase behaviour. More recent studies have shown that brand-switching behaviour is

related to three types of factors consumer characteristics, marketing mix factors, and situational influences.

The purpose of the present research is to present a relatively unexplored approach to understanding changes in

brand preferences. Specifically, it is proposed that changes in brand preferences are the result of life changes

(events) that signify transitions into new roles and create stress, forcing the individual to modify his or her

consumption life styles (including brand preferences) to adapt to new life circumstances. Theoretical

perspectives are presented followed by the results of a large-scale national study.

BACKGROUND

Recent studies have revealed that periods of life transitions are associated with significant changes in consumer

behaviour. Two different theoretical perspectives help us find explanations for these changes: role transition

perspective and stress perspective. The first perspective holds that as people change roles, adopt new roles, or

give up old roles their consumer behaviour also changes. These changes in consumer behaviour are either

because of their need to redefine their self-concepts as a result of the assumption of a new role; or due to role

relinquishment as people attempt to dispose of products relevant to the enactment of a previous role. Previous

research has shown that possessions are integral to the definition of self and the expression and performance of


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roles (Belk 1988); and their disposition is necessary in communicating important changes both to the consumer

and to others.

The second perspective on behavioural changes is based on stress theory and research. Stress refers to

environmental, social, or internal demands which require the individual to readjust his or her usual behaviourpatterns. These demands cause disruptions of previously more or less balanced states. Major life changes and

transitions are often treated as "stressors" that create a generalized demand for readjustment by the individual.

Thus, the assumption of a new role or its anticipation requires major adjustment of ones lifestyle which can be

stressful. People attempt to restore balance and relieve frustrations and tensions accompanying disequilibrium

by initiating or modifying behaviours, which are viewed as coping strategies. Coping refers to actions and

thoughts that enable the individual to handle difficult situations, solve problems, and reduce stress.

Based on these two theoretical perspectives, it is proposed that changes in brand preferences are the result of

life changes (events) that (a) signify transition into new roles and (b) create stress that forces the individual to

modify his or her consumption behaviour. While changes in brand preferences have not been linked empirically

to life transitions or stress, there are reasons to believe that brand-preference change is a consequence of life

changes for at least two reasons: first, product and brand choices are interdependent.

Today, the average consumer is bound to get confused while shopping because of the extensive cutthroat

competition in the market. For every product there are large varieties oftop Indian and international fashion

brand players flooding the fashion world. Out of these distinct popular fashion brands some are indicative of

quality and rich craftsmanship and thus demand a higher price. Side by side to the quality products we have

some brands that follow the designing of hi class products but the quality is compromised. This category is

particularly meant for those who cannot afford expensive quality items but wish to copy the styling.

Some of the popular brand names of fashion world are Nike, Nakshatra, Titan, Levis and Wrangler, Bausch and

Lomb, Tommy Hilfiger and Adidas. Among the other top fashion international brands we have Ralph Lauren,

Marks Spensor and Christian Dior. Bausch and Lomb is a brand eyewear just perfect for eye care. Nike is the

other name for comfort so if you buying shoes for yourself shop something that you feel can take care of your

feet.

In apparel section, we have designer clothes by famous fashion designers that are selling like real hot cakes but


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then they are definitely expensive like Tommy Hilfiger, Marks Spencer, Peter England, Ralph Lauren Polo

brands. These designer funky ensemble collections are expensive but act as a symbol of passion and courage.

They enhance your personality and make you feel more confident about yourself.

Net is a great help in looking out for the major fashion players that have become the pride of this glamour world.

Also it gives a complete knowledge as to which brand caters to what product. If you are looking out for jewellery,

you have many options to choose from like Nakshatra, Sangini and D Damas. In footwear category the popular

names are Adidas, Liberty, Woodland and Nike, etc. Brand choice is highly determined by your purchasing

power and the person you are gifting. If the person in question is very dear to you then you should not

compromise with quality and you should look out for something more precious for your special one.

According Business Week survey, the top 10 brands in India are listed below:

1. Apparel - Denim.2. Sportswear - Planet Sports.3. Air conditioner Hitachi.4. Television Samsung.5. Washing Machine LG.6. 2 Wheelers - Hero Honda.7. 4 Wheelers Ford, Honda and Skoda.8. Refrigerator LG.

9. Coffee Outlets - Cafe Coffee Day.10. Airlines Kingfisher.11. Lifestyle & Fashion Store Westside.


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INTEGRATED LIFESTYLE MARKETING & CONSUMER ENGAGEMENT

Consumer habits, particularly those related to brand selection, brand loyalty and the purchase

decision making process have undergone a significant evolution over the past decade. Just as many agencies and

brands retooled their operations and thinking to effectively market to the changing habits of a new generation of

consumers in terms of both the message itself and the mediums where that message is delivered it, a second

wave of change has already arrived. This second wave calls for a more fundamental change in how that message

is delivered and how brands not just market to, but engage and interact with consumers.

It would be easy to dismiss Gen X and the Millennials as merely another generation with attitudes of their own

for whom marketers simply needs to adjust the message. That simplification however, ignores the greater

changes brought about by these two distinct but very connected generations, the marked differences in how

they live their lives and how we must change our approach to successfully market to them.

The Millennials earn annual income in the U.S. of over $200 billion and spend more than $170

billion each year,1 one of the highest income to spending ratios ever seen in America. They face a greater degree

of direct corporate marketing than any other generation in history and they exert significant influence over much

more than their own spending.

This influential audience of consumers is skeptical about advertising that talks at or is broadcast to them,

shunning the role of a passive consumer and instead wanting to be engaged. Having grown up in the era of

ubiquitous internet availability, they not only expect the whole world to hear them when they speak, they expect

them to listen.

Millennials and todays consumers do not merely seek engagement, they expect it and it is fundamental to their

lifestyle. To effectively market to these generations, marketing must be active, integrated and engaging. The

marketing itself must exist across multiple mediums just as the consumers live their lives, each element not only

effective in its own right, but fully integrated with and feeding into other elements of the campaign. This

approach to marketing is built on a principal of constant engagement - experiential marketing driving online

activity that feeds mobile engagement, instigating online participation, word of mouth promotion, product

discovery, and ultimately, purchasing followed by continued engagement and interaction to build brand loyalty.


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Integrated Lifestyle Marketing campaigns extend beyond any one medium, actively living simultaneously in each

medium and as an integrated part of the consumers lives, each element of the campaign feeding the others.

While Lifestyle Marketing is a category used to describe certain forms of marketing to consumers and the tactics

used to effectively engage those consumers, Integrated Lifestyle Marketing is the strategic combining of these

various tactics into one cohesive marketing campaign. This practice allows the promotion to not only continue,

but to grow after the initial point of contact.

Every Integrated Lifestyle Marketing campaign is unique and can involve various elements of Non-Traditional

Marketing such as Street-Level or Experiential Marketing, Guerrilla Marketing, Interactive Marketing tactics

including Online or Mobile Marketing and tie-ins to traditional media marketing.

The goal with every Integrated Lifestyle Marketing campaign is to actively engage consumers where they work or

play, invoking the emotional association with a brand or event that creates a lasting impression and takes on a

life of its own.

Each element of an effective Integrated Lifestyle Marketing campaign is designed and executed to complement

and reinforce each aspect of the overall campaign, constantly driving the next point of consumer engagement.

With an effective Integrated Lifestyle Marketing campaign, the brand becomes much more than something being

advertised, the promotion and the brand itself become part of the consumers lives, which they are and how

they live as they interact with various elements of the promotion throughout their daily routines.

Integrated Lifestyle Marketing and Consumer Engagement is the core of every campaign we design and is the key

to the most successful campaigns we execute for our clients and the agencies with whom we partner.

With an effective Integrated Lifestyle Marketing campaign, the brand becomes much more than something being

advertised, the promotion and the brand itself become part of the consumers lives

Waves of Change in Marketing Strategy: The Driving Forces


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Consumer habits, particularly those related to brand selection, brand loyalty and the purchase decision making

process have undergone a significant evolution over the past decade. Just as many agencies and brands retooled

their operations and thinking to effectively market to the changing habits of a new generation of consumers in

terms of both the message itself and the mediums where that message is delivered, a second wave of change has

already arrived. This second wave calls for a more fundamental change in how that message is delivered and

how brands not just market to, but engage and interact with consumers.

Lifestyle Marketing

What it is, what it isnt and why it works

Lifestyle Marketing is the practice of seamlessly integrating marketing initiatives into the worlds and lifestyles of

consumers. This style of marketing both engages consumers in a two-way conversation and allows that message

to be seeded to live and grow in the consumers own world. The consumer is encouraged to experience and

take an active part in the life cycle of the product or brand and engaged in the promotion itself beyond merely

watching, reading or hearing a message.

Lifestyle Marketing is not simply about targeting the message so that it reaches a particular lifestyle based

demographic through strategic selection of advertising mediums and channels. Nor is it just about crafting a

message designed to resonate with a particular audience based on their lifestyle through imaging, word choice or

the emotional appeal of the message (though those are critical in the design and execution of each campaign).

While traditional media primarily allows an advertiser to talk or broadcast to consumers through print,

television, radio or outdoor advertising, Lifestyle Marketing campaigns are centered on direct contact and

engagement with the consumer.

Although some use the term Lifestyle Marketing to refer strictly to a variety of street-level promotions such as

experiential marketing and product samplings that are generally conducted by what is broadly referred to as a

Non-Traditional Agency, our Lifestyle Marketing practice also includes some methods that are typically under

the umbrella of Interactive Advertising. These can include online interaction with consumers and mobile phone

promotions that involve a call to action or otherwise engage the consumer to participate.


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It is important to note that while they can be highly effective, not all Non- Traditional or street-level

promotions are necessarily Lifestyle Marketing nor are all forms of web-based marketing. A Street-team

distributing flyers does involve more direct consumer engagement and can be more cost effective than a print or

broadcast message, but that practice itself.

Lifestyle Marketing campaigns are centered on direct contact and engagement with the consumer is not

necessarily Lifestyle Marketing. Similarly, although a web advertisement does provide the opportunity for the

consumer to click through for more information or to make a purchase which does provide a level of

interactivity, absent a greater engagement after the consumer clicks, it would not be considered Lifestyle

Marketing. While traditional media advertising (print, radio, television and billboards) are not in and of

themselves Lifestyle Marketing, they can be utilized to promote other aspects of a campaign that are Lifestyle

Marketing. This can include a billboard, print ad or commercial that calls on consumers to text for more

information, promotes an experiential marketing event or advertises an interactive online activity.

INTEGRATED LIFESTYLE MARKETING

While Lifestyle Marketing is a category used to describe certain forms of marketing to consumers and the tactics

used to effectively engage those consumers, Integrated Lifestyle Marketing is the strategic combination of these

various tactics in one cohesive marketing campaign. This practice allows the promotion to not only continue, but

to grow after the initial point of contact.

In developing this type of campaign, the overall strategy for the promotion is as important as the tactics used to

execute that strategy. Each element of an effective Integrated Lifestyle Marketing campaign should provide the

potential to trigger consumer purchasing decisions but should also be designed and implemented to instigate

and drive further consumer engagement with other elements of the campaign.

Integrated Lifestyle Marketing campaigns extend beyond any one medium, actively living simultaneously in each

medium and as an integrated part of the consumers lives, each element of the campaign feeding the others.

The goal with every Integrated Lifestyle Marketing campaign is to actively engage consumers where they work or

play, invoking the emotional association with a brand or event that creates a lasting impression and takes on a


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life of its own. With an effective Integrated Lifestyle Marketing campaign, the brand becomes much more than

something being advertised, the promotion and the brand itself become part of the consumers lives, who they

are and how they live as they interact with various elements of the promotion throughout their daily routines

and lives.


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Every Integrated Lifestyle Marketing campaign is unique and can involve various elements of Non-Traditional

Marketing such as Street-Level or Experiential Marketing, Guerrilla Marketing, Interactive Marketing tactics

including Online or Mobile Marketing and tie-ins to traditional media marketing.

To maximize messaging continuity, marketing effectiveness and the ability to leverage each aspect of a campaign,

an Integrated Lifestyle Marketing campaign should be developed as part of the overall marketing plan. When this

is not possible, many Lifestyle Marketing efforts and even more traditional advertising can often be easily

adapted or modified to be part of or to support an Integrated Lifestyle Marketing campaign.

The Original Marketing Plan


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The Integrated Lifestyle Marketing Plan

The Integrated Lifestyle Marketing campaign developed addressed the clients goals for

additional stickiness and buzz by enticing consumers to engage with the brand and

certain aspects of the promotion online and through short code marketing. Not only did the

campaign that was developed maintain the marketing targeted to lunch-time impulse

decision making, it also increased the consumer excitement through the use of additional

giveaways which serve to extend branding beyond the point of contact and to develop

customer loyalty. The street-level, online and mobile-based components of the campaign

were all significant expansions of the level of interaction with consumers that created

opportunities for future promotions and ongoing engagement.

While the example above was exactly what one agency and client needed to fit their

marketing goals and budget, no two Integrated Lifestyle Marketing campaigns are exactly

the same. Which elements of Non- Traditional or Interactive marketing and what if any tie-

ins with traditional media are used is determined based on the current market positioning

and the marketing goals, timing and budget of each unique product or brand.


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The key considerations in the development of each campaign are the message or identity of

the brand, product or event and the lifestyle of the target consumer audience. With an

understanding of these two factors, a campaign can be designed that integrates marketing

into the day-to-day lives of the consumers through a variety of Lifestyle Marketing tacticsthat each drive further consumer engagement with the brand and the promotion.

Each element of an effective Integrated Lifestyle Marketing campaign is designed and

executed to complement and reinforce each aspect of the overall campaign, constantly

driving the next point of consumer engagement.

FACTORS AFFECTING CONSUMER BEHAVIOUR

Consumer behaviour refers to the selection, purchase and consumption of goods and services for

the satisfaction of their wants. There are different processes involved in the consumer behaviour.

Initially the consumer tries to find what commodities he would like to consume, then he selects only

those commodities that promise greater utility. After selecting the commodities, the consumer

makes an estimate of the available money which he can spend. Lastly, the consumer analyzes the

prevailing prices of commodities and takes the decision about the commodities he should consume.

Meanwhile, there are various other factors influencing the purchases of consumer such as social,

cultural, personal and psychological. The explanation of these factors is given below.

Cultural Factors

Consumer behaviour is deeply influenced by cultural factors such as: buyer culture, subculture, and

social class.

Culture

Basically, culture is the part of every society and is the important cause of person wants and

behaviour. The influence of culture on buying behaviour varies from country to country therefore

marketers have to be very careful in analyzing the culture of different groups, regions or even

countries.


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Subculture

Each culture contains different subcultures such as religions, nationalities, geographic regions, racial

groups etc. Marketers can use these groups by segmenting the market into various small portions.

For example marketers can design products according to the needs of a particular geographic group.

Social Class

Every society possesses some form of social class which is important to the marketers because the

buying behaviour of people in a given social class is similar. In this way marketing activities could be

tailored according to different social classes. Here we should note that social class is not only

determined by income but there are various other factors as well such as: wealth, education,

occupation etc.

Social Factors

Social factors also impact the buying behaviour of consumers. The important social factors are:

reference groups, family, role and status.

Reference Groups

Reference groups have potential in forming a person attitude or behaviour. The impact of reference

groups varies across products and brands. For example if the product is visible such as dress, shoes,

car etc then the influence of reference groups will be high. Reference groups also include opinion

leader (a person who influences other because of his special skill, knowledge or other

characteristics).

Family

Buyer behaviour is strongly influenced by the member of a family. Therefore marketers are trying to

find the roles and influence of the husband, wife and children. If the buying decision of a particular

product is influenced by wife then the marketers will try to target the women in their advertisement.

Here we should note that buying roles change with change in consumer lifestyles.


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Roles and Status

Each person possesses different roles and status in the society depending upon the groups, clubs,

family, organization etc. to which he belongs. For example a woman is working in an organization as

finance manager. Now she is playing two roles, one of finance manager and other of mother.

Therefore her buying decisions will be influenced by her role and status.

Personal Factors

Personal factors can also affect the consumer behaviour. Some of the important personal factors

that influence the buying behaviour are: lifestyle, economic situation, occupation, age, personality

and self concept.

Age

Age and life-cycle have potential impact on the consumer buying behaviour. It is obvious that the

consumers change the purchase of goods and services with the passage of time. Family life-cycle

consists of different stages such young singles, married couples, unmarried couples etc which help

marketers to develop appropriate products for each stage.

Occupation

The occupation of a person has significant impact on his buying behaviour. For example a marketing

manager of an organization will try to purchase business suits, whereas a low level worker in the

same organization will purchase rugged work clothes.

Economic Situation

Consumer economic situation has great influence on his buying behaviour. If the income and savings

of a customer is high then he will purchase more expensive products. On the other hand, a person

with low income and savings will purchase inexpensive products.

Lifestyle


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Lifestyle of customers is another import factor affecting the consumer buying behaviour. Lifestyle

refers to the way a person lives in a society and is expressed by the things in his/her surroundings. It

is determined by customer interests, opinions, activities etc and shapes his whole pattern of acting

and interacting in the world.

Personality

Personality changes from person to person, time to time and place to place. Therefore it can greatly

influence the buying behaviour of customers. Actually, Personality is not what one wears; rather it is

the totality of behaviour of a man in different circumstances. It has different characteristics such as:

dominance, aggressiveness, self-confidence etc which can be useful to determine the consumer

behaviour for particular product or service.

Psychological Factors

There are four important psychological factors affecting the consumer buying behaviour. These are:

perception, motivation, learning, beliefs and attitudes.

Motivation

The level of motivation also affects the buying behaviour of customers. Every person has different

needs such as physiological needs, biological needs, social needs etc. The nature of the needs is that,

some of them are most pressing while others are least pressing. Therefore a need becomes a motive

when it is more pressing to direct the person to seek satisfaction.

Perception

Selecting, organizing and interpreting information in a way to produce a meaningful experience of

the world is called perception. There are three different perceptual processes which are selective

attention, selective distortion and selective retention. In case of selective attention, marketers try to

attract the customer attention. Whereas, in case of selective distortion, customers try to interpret

the information in a way that will support what the customers already believe. Similarly, in case of

selective retention, marketers try to retain information that supports their beliefs.


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Beliefs and Attitudes

Customer possesses specific belief and attitude towards various products. Since such beliefs and

attitudes make up brand image and affect consumer buying behaviour therefore marketers are

interested in them. Marketers can change the beliefs and attitudes of customers by launching

special campaigns in this regard.

INDIAN CONSUMER MARKET

Indias ascendance as an economic power to reckon with has forced the world to unravel

the mystery called India.

An intriguing element of this mystery is Indias consumer market; characterized by diverse

languages, regions, religions, economic and social status, this market has always been a

tricky proposition to understand.

Now, as the market undergoes a paradigm shift due to Indias rapid economic growth and

favourable demographics, it has also become a market impossible to dismiss.

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

emerge. The growth in Indias consumer market will be primarily driven by a favourable

population composition and rising disposable incomes. A recent study by the McKinsey

Global Institute (MGI) suggests that if India continues to grow at the current pace, average

household incomes will triple over the next two decades and it will become the worlds 5th-

largest consumer economy by 2025, up from 12th now.

Indias consumer market till now was broadly defined as a pyramid; a very small affluent

class with an appetite for luxury and high-end goods and services at the top, a middles-class

at the centre and a huge economically disadvantaged class at the bottom. This pyramid

structure of the Indian market is slowly collapsing and being replaced by a diamond a

relatively large affluent class at the top, a huge middle class at the centre and a small


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economically disadvantaged class at the lower end. The diamond represents increasing

volume and value across all classes of Indian consumer market.

Economic growth and rising disposable incomes

India is growing at an average annual rate of 7.6% for the past five years and it is expected

to continue growing at an equal if not faster rate. The rapid economic growth is increasing

and enhancing employment and business opportunities and in turn increasing disposable

incomes. As the benefits of growth trickle down, an increasing number of people are moving

up from the economically weaker class to join the middle class.

The middle class with its rising numbers and incomes is thus becoming the biggest market

segment. The affluent class too will continue to grow in terms of size and value, albeit, at a

slower pace than the middle class.

MGI study prediction on the effect of economic growth on different classes:

Middle class, defined as households with disposable incomes from Rs 200,000 to

1,000,000 a year comprises about 50 million people, roughly 5% of the population at

present. By 2025 the size of middle class will increase to about 583 million people, or

41% of the population.

Extreme rural poverty has declined from 94% in 1985 to 61% in 2005 and is projected to

drop to 26% by 2025.

Affluent class, defined as earnings above Rs 1,000,000 a year will increase from 0.2% of the

population at present to 2% of the population by 2025. Affluent classs share of national

private consumption will increase from 7% at present to 20% in 2025.

Pro-growth demographics


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The widespread adoption of improved medical care and birth control since the 1970s has

reduced birth rates and increased the proportion of citizens living past their retirement age

in most countries. As these countries have an aging population, they are beginning to face

an acute shortage of working age population, while the proportion of dependent populationis increasing.

India along with a few other countries is an exception to this. In India, the proportion of

citizens of working age is forecast to fall slowly and the overall labor force will continue to

grow. India has a young population, 54% of Indians are under 25 years of age. A rising

productive population fuels growth and drives personal consumption and a lower age

dependency ratio places less strain on public finances. A young, economically empowered

population not only translates into increasing consumer demand but also into a more value-

conscious demand. Thus, pro-growth demographics will expand consumer market in India.

The National Council of Applied Economic Research (NCAER), forecasts that the number of

consumers driving growth will grow from 46 million households in 2003 to 124 million

households in 2012.

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.

Increasing urbanization, increasing incomes and rising aspiration for a better life, especially,

among the lower economic strata are some of the factors reshaping the Indian consumer

market. 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.

Aspiration for a better life

As millions of economically deprived households move into the lower strata of the middle

class segment, they will begin to be able to afford and demand products and servicesbeyond food and clothing. Increasing penetration of media and infrastructure facilities will


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expose the rural India to urbanized lifestyle and fuel the latent desire for improved living

standards. Together the

aspirants from rural and urban areas will push up demand for goods and services at the

lower end of the spectrum.

Value and innovation

The new Indian consumer will be as discerning when buying a product as his previous

avatar. In fact, due to a rise in income, increased awareness about products and

proliferation of choices, he will become pickier with his purchases. Product, positioning and

packaging innovation will be the key for companies to attract this new consumer. For

example, as consumers become increasingly health conscious they will choose a food

product that not only tastes great but is also fortified with health benefits. Similarly, global

products especially in case of food will have to be adapted to suit the local taste as the

Indian consumer while becoming global will continue to be attached to his roots. It is no

wonder, that international fast food chains have had to Indianize their pizzas and burgers to

attract consumers here.

Companies will have to drive innovation differently for different regions and consumer

classes. The sachet or pouch innovation for example, has given a head start to FMCG

companies for penetrating the rural India. The rural India too like the urban area is

beginning to demonstrate a demand for packed goods but their purchasing power limits

their capacity to buy. When products like edible oil and shampoos were made available in

small pouches, they were well received by rural India.

The brand conscious consumer

The Indian consumer market, which is primarily dominated by young generation, is

becoming increasingly sophisticated and brand conscious. A typical upper middle class

young consumer is beginning to look beyond the utility aspect of a product to seek

intangibles like brand and lifestyle statement associated with the product. This modernconsumer wants his purchases to reflect his lifestyle or at least the one he aspires for. As a


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market. However, to assume that the Indian consumer will become an exact replica of his

global counterpart is the biggest fallacy companies can make. While, the Indian consumers

appetite for value and brand dominated goods and services are increasing, the cultural and

regional framework characterizing him is intact.

In fact, the income induced class movement happening across the rural and urban regions is

forcing companies to re-look at their customer segmentation and product positioning.

Consumer companies are thus realizing that the Indian consumer market is a tough nut to

crack but the one they cant do without.

The Indian consumer market landscape

The Indian consumer story is one that has caught the attention of the rest

of the world. Rising incomes in the hands of a young population, a growing economy,

expansion in the availability of products and services and easy availability of credit all of

this has given rise to new consumer segments and a rising acceptability of debt.

While consumerism has seen a gradual build-up, what is certain today is that there has been

a genuine uptake in consumption. Whether it is mobile phones, credit cards, apparel or

organised retail, people clearly seem to be spending more, particularly on discretionary

items. And the consumer seems to be everywhere, whether it is the large metros, the

emerging new cities, the small towns and even rural India.

What has emerged in this consumer story is the fact that there is much more homogeneity

in the market than ever before; for the first time some patterns have begun to emerge in

consumer behaviour.

There is so much choice today and people do not accept poor service. We cannot make any

excuses but need to gear up our systems to provide that level of service.

Narayanan Vaghul, chairman, ICICI banking corporation


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One of the patterns that we are seeing is to give terrific value at a reasonable price,

according to Ishan Raina, OOH Media. It is no longer true that a premium product needs to

be expensive and technology is a large contributor to this trend. So whether it is mobile

phones, digital music players or even the new Tata Nano, the price/value equation hasforever been altered. This has led to an increase in expectations as well as the desire for

immediate satisfaction, which in turn has raised expectations for customer service. As Mr

Vaghul, Chairman, ICICI Banking Corporation, explained: There is so much choice today and

people do not accept poor service. We cannot make any excuses but need to gear up our

systems to provide that level of service.

Today, every city has its premium consumers and its middle class consumers and this has

put companies into a fix. They now need to craft strategies that address the subtle

differences but satisfy each group equally. So what is the Indian consumer market today? It

is a market with three segments. The first comprises the top end with the mindset: I pay

more to get more, where the purchase is driven by the emotional surplus that the

consumer experiences. The second is the mid-level which thinks: I get good value at a

reasonable price. More important, however, is the large block at the bottom which says: I

pay less and I get less and is totally satisfied with that. This is probably a segment that

many marketers tend to overlook since they feel that there is no existing demand there.

Nothing could be further from the truth. D Shivaku- mar, Nokia, reiterated its importance

when he said: The problem was that earlier, there were no goods and services targeting

this large chunk; it is only today that people are going out into these small towns.

Today, the drivers in urban and rural areas are the same aspiration, quality and price

differing only in order. Shivakumar, nokia

There is a growing realisation today that it is easier to compete in the smaller towns

because many of the big brands and their marketing managers and sales teams dont make

the effort to travel there. Hence, if one does go there, market share is easy to achieve

because even though the overall pie is smaller, there is less competition.


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Another shift has been the changing dynamics of rural migration to urban centres. As Asif

Adil, Diageo, pointed out: I think we are increasingly going to see a reverse shift happening,

where people are not going to come to the urban areas in the same kind of numbers that

they were migrating before essentially because quality of life and opportunities areimproving in smaller towns.

Furthermore, the factors behind purchasing decisions are merging in urban and rural areas.

As D Shivakumar pointed out: Today, the drivers are the same, differing only in order. In

urban markets, aspiration is key it is all about brands, lifestyles and show-off value. This is

followed by quality and finally price. Rural India is driven primarily by price, followed by

aspiration and then quality. However, what is important to understand is that the Indian

consumer, no matter where he or she is or what category he or she belongs to, still looks for

a good bargain. That is a unique Indian characteristic.

While they may be driven by the same desires, there are still differences in the way people

live in the non-metropolitan cities when compared with the metropolitan cities or metros

as they are usually called.2 A degree of homogeneity may exist in large cities, but there is a

disconnect when compared with their counterparts in smaller towns whether it is

regarding their philosophy, their thoughts or their approach to life. Thus, marketers today

also need to think about creating brands that address these differences in consumers

lifestyles.

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 Narayans Wamy, Mckinsey & company

The complexity does not end there. Subbu Narayanswamy, McKinsey & Company revealed:

The Indian consumer is also maturing fast and is upgrading within product segments at a

pace that consumer companies are struggling to keep up with. The mobile phone category

is a classic example, where individuals across segments are constantly moving to the next

price level as soon as they master the technology of their current phone. Companies

therefore have to straddle the whole consumer pyramid rather than being focused onone part of it.


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These changes have also raised new challenges for old brands. There is a danger of them

fading if they do not reinvent themselves to satisfy current needs. As a result, there is a

whole new marketing opportunity and challenge for those brands that have to reinventthemselves and try to compete.

There is a new normal in the Indian consumer market today. Ishan Raina, ooh media

Today, some hold the view that predictions for the Indian consumer market are over-

optimistic. However, it is said that any new trend is always overestimated in the short term

but underestimated in the long term. Furthermore, in these changing times, consumer

behaviour patterns are likely to see drastic shifts and it will become critical for marketers to

be cognisant of developments in the present and of the potential for the future. As Ishan

Raina put it: I think there is a new normal in the Indian consumer market today. And

therefore, in consumer marketing, the future will belong to people who can see the storm

through, while others drop out because of over-predictions in the short term.

Emergence of the new consumer

Understanding the Indian consumer market means understanding its individual segments.

Pertinent questions facing Indian marketers today include: Who are the new consumers?

What are they spending their money on? The roundtable provided interesting insights into

these emerging consumer segments and their buying behaviour.

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.

Three major emerging segments were identified: Kids, the Youth (including the young

working singles) and the Urban Indian Woman. These segments have shown a tremendous

increase in influencing and driving purchase decisions and hence are huge drivers of change

in the consumer market. More interestingly, purchases are being driven not by necessity,


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but to satisfy individual needs. A high-potential emerging market is also the vast rural

hinterland, which has its own unique characteristics.

Kids: Getting Older Younger

There are 300 million children aged between 414 years in India a vast market by any

standards. The role that children play in purchase decisions has changed dramatically in the

past 45 years. As Rajat Jain, Mobile2Win described: From pester power; kids have

changed their role to becoming influencers. And this is not only in product categories like

confectionary and toys, but in larger long-term-use categories such as cars, electronics and

even consumer durables like refrigerators and air conditioners, which were, traditionally,

decisions taken by parents. Today the roles are reversed, with kids pointing out the pros and

cons of purchase decisions to their parents. In fact, in the older age group, kids have

actually become consultants, whom parents turn to for advice during the decision-making

process, said Rajat Jain.

One aspect that has contributed to this change is the fact that kids seem to be growing

older younger a 12-year-olds state of mind today is similar to what a 14-year olds would

have been 10 years ago. Due to a higher degree of exposure to the outside world, their

awareness levels are rising and as a result, they are clearer about what they want. Another

driver is their mastery of technology, which is a primary component of a high proportion of

new products in the market. The relative ease with which they are able to grasp

technicalities and understand product features and usability (or lack of) has made them

experts in the eyes of their parents.

Parents are also becoming more indulgent. The relationship between parents and children

has changed, moving from a hierarchical system to one driven by respect for childrens

views and abilities. Jacob Kurian, New Silk Route.

Sachin Rajan, Spencer Stuart, remarked: What is fascinating is that this demographic shift is

being seen across categories and even across cities and is another characteristic of the


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homogeneity trend visible in the Indian consumer market. As in the broader market, while

the values, beliefs and way of life between geographical areas may be different, the shift in

the role of kids in purchase decisions is identical.

This change also reflects social and economic drivers. Jacob Kurian, New Silk Route, revealed

the social facet of this trend when he said: Parents are also becoming more indulgent. The

relationship between parent and child has changed, moving from a hierarchical system to

one driven by respect for childrens views and abilities. Peer pressure for children and the

ever-increasing multitude of choices in products has also added to demand.

The differences are the breadth and depth of the Indian market and the fact that India has

undergone much more social and economic change in the last generation than the US has.

David Daniel, Ceo of Spencer Stuart.

At the same time, double incomes have boosted economic power and parents can afford to

indulge their children. The danger is in over-indulgence and as

a result, many parents are struggling to draw the line between necessary and inappropriate

expenditure on their kids.

David Daniel, CEO of Spencer Stuart, shared his thoughts on the kids market, remarking on

the similarities with the transition and emergence of new consumers and new markets in

the US: The differences are the breadth and depth of the Indian market and the fact that

India has undergone much more social and economic change in the last generation than the

US has. Therefore Indian consumers and marketers are probably facing a far more intense

and highly contrasted situation.

Youth: Charting Their Own Path

With the majority of its population below the age of 25 years, Indias young consumer

market is the primary target of every consumer goods company.


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The trend towards homogeneity is also apparent here, as Shantonu Aditya, UTV explained.

In terms of aspiration between SEC A, B, C, D, E3 there is no difference in the mindset of

the younger demographic. The aspirations of the youth are the same, driven primarily by

the fact that they are all Internet savvy and this has given them equal access to information.

The younger demographic is equally comfortable at home with family and out with friends,

which is very interesting because this means that the marketers can address both these

needs differently. Shantonu Aditya, Utv.

They are also a unique market. Along with the love for brands and gadgets, they are equally

comfortable with Indian values and Indian culture. Life is about visiting religious centres

with their parents and then spending the evening with friends at the local club or a similar

social venue. As Shantonu Aditya said : They are equally comfortable in both situations,

which is very interesting because this means that marketers can address both these needs

differently. Indian youth are also very patriotic, not in the classical, pre- independence

sense but in a modern sense which reflects their pride in being Indian in todays world. As a

segment, they are on the whole sensible, very clear about what they want to achieve in

their lives and not easily carried away by hype and show.

The outsourcing phenomenon in India has been the main driver of this consumer segment.

A larger number of younger people now have cash in hand and this combined with

increasing brand awareness has resulted in a lot of spending on leisure and personal

gratification. This has also brought about a dramatic change in the concept of saving. The

young generation lives for today; the concept of saving for a rainy day is alien to most of

them especially since the majority of them have not experienced shortages in their lives.

This is also a segment constantly on the move mentally and physically. The young do not

want to be at home and are spending twice the amount of time outside the house than they

would have done a couple of years ago. So, whether they are at a multiplex, a mall or a

cyber caf, hanging out with friends is a clear preference. And as Ishan Raina observes:

They practice extreme multi- tasking using a mobile and an iPod as well as surfing theInternet, while chatting with friends. They seem to want to do five things at the same time!


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All of this has raised new challenges for marketers, the basic question being: How does one

actually address such a person and get inside their way of life? This is a segment which has a

short attention span, a limited amount of patience and is already focused on three otherthings at the same time. Direct advertising through mobile phones is one option, but

constant SMSing can actually hurt a brand if it is taken as an intrusion into their privacy.

Further- more, this segment is also very vocal about their feelings and will express their

irritation with a brand to an average of 910 individuals, compared with 23 a decade ago.

The young generation are severely multi-tasking using a mobile and an iPod as well as

surfing the Internet, while chatting with friends. They seem to want to do five things at the

same time! Ishan Raina, Ooh Media.

For urban teenagers, or those in a small town, there may be marginal differences in their

degree of preparedness to pay or their awareness levels, but they all have a similar mindset

driven by the desire for success and the need to enjoy that success. This is why it is such a

great time to be a consumer marketer today, said Jacob Kurian. You are a genius no

matter what you do. You still get 40 per cent growth, so it is a fantastic time for business.

Consumer buying behaviour

India has always been a diverse market, with different consumer segments exhibiting varied

buying behaviour. As Jacob Kurian explained: We have always had consumers across all

social and economic categories and across all towns. The difference is that in the past the

lower SEC consumers did not have the same confidence about the future and therefore, if

he aspired to something, he saved up until he could afford to buy it. Today, the consumer

would rather buy something immediately, even if it means taking credit, rather than save

and buy something tomorrow.


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Thus, there has been a decreasing fear of debt and credit cards have become the new

currency. As Nitin Gupta, Mastercard, pointed out: We are talking about growth in spends

of 100 per cent plus, year on year. Paradoxically, of the 100 million credit and debit cards in

India, 90 per cent have never been used to purchase anything. Total spends on cards inIndia are of the order of USD 15 billion, which sounds like a reasonable number but is

actually only 3 per cent of family consumption expenditure. In other developed markets this

number is around 30 per cent. The interesting point, however, is that this very paradox is

actually a huge opportunity and it remains to be seen how consumer companies will take

advantage of it.

We are talking about growth in spends of 100 per cent plus, year on year. Paradoxically, of

the 100 million credit and debit cards in India, 90 per cent have never been used to

purchase anything. Nitin Gupta, Mastercard

What is important for marketers to understand are the dynamics of this change. What is it

that makes Indian consumers spend their money, especially since it is finite and definitely

lower than the income of their developed country counterparts? A large part of

consumption is currently being driven by emotional discretionary income, enabling people

to spend on things beyond basic necessities such as food, education and shelter. But where

will they make the trade-offs and what will they spend on? Health or education; fashion or

technology? These are the questions that are keeping Indian marketers awake at night.

According to Rajat Jain: The non-discretionary area of spend is going to be education, given

the fact that life is becoming more competitive. School and university fees are rising but

parents are not compromising on the amount they spend on this aspect of their childrens

lives. By comparison, the discretionary part of income that is spent on entertainment and

leisure is still a relatively smaller proportion of the total incremental disposable income an

individual generates in a year. In the past 20 years, expenditure on education has increased

11 per cent, twice as much as anything else.

The non-discretionary area of spend is going to be education; given the fact that life isbecoming more competitive. Rajat Jain, Mobile2win


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Education in India will even take precedence over healthcare, remarked Ishan Raina,

compared to developed markets where it is the reverse. More and more parents are

sending their children overseas for higher education, especially since they want them tobecome global citizens. The price that needs to be paid for that is not an issue.

Within education, vocational training is growing the fastest in India, such as technical

training or even hospitality and air hostess training. Education is seen as a step towards

increasing opportunities for entrepreneurship and for gaining prosperity.

What is amazing is the attitude towards education in rural India. Mr Vaghul shared an

experience of meeting an individual who owned a kiosk, but also ran English language

classes in his village. In spite of the high fees (INR 4000 for a six-month course, quite

expensive for rural India), he had a waiting list simply because he had no more space for

expansion. This is indicative of the changing behaviour of the rural consumer and shows

how even illiterate parents want their children to have a better life.

However, as Jacob Kurian pointed out, what is lacking is a systematic approach to tapping

this opportunity, which is where investors need to step in.

The other area of major consumption is communication, from mobile phones and the

Internet to computer games. The main barrier to this is access to the Internet, broadband

and wireless and the relatively high unit price of personal computers. What we need is the

100 dollar PC, said Subbu Narayanswamy, McKinsey & Co.

David Daniel pointed out the link between the education opportunity and the focus on

communication, especially in light of the constraints of physical infrastructure. There is a

huge opportunity for direct learning or e-learning which could be the answer to reaching out

to the entire Indian population.

The leadership conundrum


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As the consumer market in India grows, niches are developing, raising new challenges for

consumer companies. Foremost is the question of leadership.

As Anjali Bansal put it: What kind of talent will companies need now that they are sellingto a new consumer, an emerging consumer that is not well under- stood? More

importantly, what kind of leadership will be required to manage growth effectively?

These questions gain special importance given that companies are increasingly being led by

individuals very unlike the majority of their consumers. Urban professionals are

hypothesising about rural India and making decisions that affect the lives of the middle class

in the small towns. Is this healthy, or should companies be concerned?

At the operational level, I feel we need diversity. But at a strategic level, we need the ability

to manage diversity, which includes ambiguity. Nitin Gupta, Mastercard.

I think many companies are re-evaluating their talent model, said Subbu Narayanswamy,

as they realise that there are very big implications in the kind of talent that one brings into

ones company. Common questions that have to be tackled in this dynamic environment

are: How does one create more empathy for the woman consumer? For companies, how do

they cultivate empathy for ambiguity in their employees?

Nitin Gupta captured the point when he said, I think the kind of challenges surrounding

talent at the corporate level are different from the challenges for talent at the strategic

level. So, at the operational level I feel we need diversity. But at a strategic level, we need

the ability to manage diversity, which includes ambiguity. In todays fast-paced world,

opportunities are emerging everywhere and therefore a leader needs to deal with and

manage diversity, which includes diversity of ideas, diversity of businesses and diversity of

talent all of which requires flexibility and the ability to shift and turn with every

opportunity.


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India is also in a state of flux. In such a scenario, Asif Adil explained: One of the key things

we need to focus on is an entrepreneurial mindset. Tomorrows leaders need to be able to

pick up the contagious ideas, the next big opportunity. Furthermore, due to the unique

dynamics of the Indian market, they needto be very quick in identifying the threads that are going to work in India.

One of the key things we need to focus on is an entrepreneurial mindset.

Asif Adil, Diageo

It is a fact that companies are facing a talent gap, said Anjali Bansal, and it is going to be a

challenge to train individuals to develop the mindset to understand the new consumer

market. At the same time, there is a general level of optimism that a new crop of leaders

will emerge in the next few years who will have experienced the dynamics of these new

consumer segments and therefore will be well positioned to lead companies through the

uncharted waters.

We are going through a classic boom-time phenomenon. But I am a pessimist on talent

principally because in boom times a lot of mediocrity tends to rise.

Jacob Kurian, New Silk Route

Jacob Kurian, however, raised a note of caution: We are going through a classic boom-time

phenomenon. But I am a pessimist on talent principally because in boom times a lot of

mediocrity tends to rise. In such a high-growth scenario, it is easy to think that everything

one is doing is right the danger is in believing that you have it all figured out. It is

important to keep in mind that India is still a supply-constrained economy and this becomes

apparent when compared with the West, which is full of very mature, saturated economies

where companies are finely positioned and have had to work on building issues of people

and talent identification into their strategy.

A major concern is that the internal processes in many companies are not helping. D

Shivakumar described some of the factors that are impeding the development of leadershipin companies. One is the move from a hierarchical to a matrix organisation, which has


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reduced the time available to senior management to sit back and reflect on the larger

picture of growth. Second, the process of hiring fit for executing growth has companies

mapping people to a profile that leaves no scope for internal recruitment, since every

individual is stretched to the maximum, concentrating only on managing execution forgrowth. All of this has pushed coaching, mentoring and on-the-job-training to the back-

burner. Consequently, no-one has the time or the inclination to think about the larger good

of the organisation or to concentrate on strategy five years down the line. It is all about now

and this short-term thinking will adversely affect the future.

Organisational structures intended to further growth are actually doing the reverse. This is

an issue that todays leaders will have to tackle in order to narrow the talent gap in the

future.

THE INDIAN RETAIL MARKET

Indian market has high complexities in terms of a wide geographic spread and distinct

consumer preferences varying by each region necessitating a need for localization even

within the geographic zones. India has highest number of outlets per person (7 per

thousand) Indian retail space per capita at 2 sq ft (0.19 m2)/ person is lowest in the world

Indian retail density of 6 percent is highest in the world.1.8 million households in India have

an annual income of over 45 lakhs (US$91,260).

Delving further into consumer buying habits, purchase decisions can be separated into two

categories: status-oriented and indulgence-oriented. CTVs/LCDs, refrigerators, washing

machines, dishwashers, microwave ovens and DVD players fall in the status category.

Indulgence-oriented products include plasma TVs, state-of-the-art home theatre systems,

iPods, high-end digital cameras, camcorders, and gaming consoles. Consumers in the status

category buy because they need to maintain a position in their social group. Indulgence-

oriented buying happens with those who want to enjoy life better with products that meet

their requirements. When it comes to the festival shopping season, it is primarily the status-

oriented segment that contributes largely to the retailers cash register.


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While India presents a large market opportunity given the number and increasing

purchasing power of consumers, there are significant challenges as well given that over 90%

of trade is conducted through independent local stores. Challenges include: Geographically

dispersed population, small ticket sizes, complex distribution network, and little use of ITsystems, limitations of mass media and existence of counterfeit goods.

SIZE OF THE INDIAN RETAIL INDUSTRY

In 2007, the total Indian retail industry was valued at Rs 13,300 billion (estimate), and the

organised segment constituted 5.9% of the value at Rs 783 billion. In the segment, the

clothing and accessories sales had a majority share of 38.1% followed by the food and

grocery segment at 11.5% and electronics segment at 9.1%. The organised retail industry

grew at a CAGR of 33% during 2004-2007. Even though the organised retail segment has a

minuscule share in the total industry, it has enormous potential considering the rising

urbanisation, the efficient supply-chain, the readily-available retail space, and modern

technology, which help in reducing consumer prices to a great extent.

Furthermore, with the entry of big foreign players, the Indian organised retail market has

become more competitive in terms of implementing newer business models on the

operational format, and pricing, and in terms of efficiency. The organised retail sector will


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largely benefit in terms of productivity and growth if sectors like agriculture, food

processing, and textile are encouraged further. The above-mentioned sectors would receive

a remarkable boost if they would supply to big Indian and foreign retail players, which will

ensure their growth in tandem with the retail sector. Moreover, the organised retail sectorwill directly and indirectly improve the countrys employment scenario.

Many Indian retail players have already started purchasing supplies directly from farmers

and other suppliers, which has invariably eliminated the supply-chain complexities and

large number of intermediaries, and has resultantly lowered prices for consumers.

Furthermore, the amendment of the Agriculture Product Marketing Act (APMC) has

revamped the farm produce supply chain.

INDUSTRY SEGMENTATION

Organised retail can be segmented in two ways - segmentation by verticals and by channels.

Verticals are segmented on the basis of the type of merchandise offered; similar

merchandise can be clubbed together to form a vertical, for instance food and grocery.

Channels are the means through which retailers sell their merchandise; for example, storechannels of retailing that comprise different formats like hypermarkets, supermarkets and

department stores and non-store formats like online retailing, vending and kiosks.

MAJOR RETAIL SEGMENTS

Food and grocery:

In 2007, the food and grocery segment was valued at Rs 7,920 billion, and it enjoyed a

dominant market share of 62% in the total Indian retail sector; however, there was a

completely opposite scenario in the organised retail segment. The food and grocery

segment is the second-largest in the organised retail and has an 11.5% share that is valued

at Rs 90 billion.

Initially this segment grew at a slow pace due to the presence of an established retailing

system led by kirana stores, a highly-fragmented food supply chain, and the lack of a


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developed food processing industry. Nilgiri was one of the earliest retailers that started a

chain of stores in different parts of the country. However, the growth of Nilgiris stores was

limited as it was challenged by a weak supply chain and an under-developed food

processing industry. Post-liberalisation, organised retailers saw a renewed opportunity inthe food and grocery segment.

Few food and grocery retailers

Food Bazaar: PRIL ventured into food retailing with Food Bazaar in Apr 2002. Initially it was

a part of Big Bazaar but later on it started operating as a standalone outlet in addition to

being a part of Big Bazaar. The store offers a wide range of fruits, vegetables, FMCG

products and ready-to-cook products. It uses a concessionaire model for wet groceries, and

it sources staples from APMC or farmers (where the state permits). Food Bazaar attracts

high footfalls due to innovative initiatives like live-grinding, live bakery, fresh juice corner

etc.

In Aug 2007, the store ventured into another retail format that served the food and grocery

segment called the KB Fair Price shop. This store is modelled on the concept of low-frills

neighbourhood store of 1,000-1,600 square feet. The Fair Price store follows a pricing

model that is 20% lower than the prevailing market price.

More: Aditya Birla Retail Ltd forayed into the retail business in 2006 by acquiring Trinethra

Super Market Ltd, the south-India based retail chain. In May 2007, the company launched

its own brand of stores called more in Pune. The supermarket store has a minimum size of

2,500 square feet and offers fruits, vegetables, staples, personal care, general merchandise,

pharmacy, poultry and dairy products.

Reliance Retail: Reliance Retail Ltd, a subsidiary of Reliance Industries Ltd, has an aggressive

plan to expand its retail network across India. It entered the food and grocery segment in

November 2006 through its convenience store format Reliance Fresh. The store offers a

range of fruits, vegetables, personal care, home care and kitchen utensils. It focuses on

building a strong relationship with the agri-business value chain and sources directly from

wholesalers.


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Fashion and accessories

Fashion and accessories is the largest category in organised retail and had a 38.1% share

valued at Rs 298 bn in 2007. In terms of total retail, this category held the second position

with a 9.5% share valued at Rs 1,313 bn. The segment has driven the retail boom in India

and has opened many opportunities for large as well as global retailers to enter the

segment. Despite the high rental, many global retailers like Gas, Gucci, Levis, Benetton,

Marks and Spencer have opened their stores in India, and also have plans to increase their

presence.

The mens wear segment had the highest share of 40.2% in the Rs 1,313-billion fashion and

accessories market in 2007 while the womens category accounted for 34.8%, followed by

the kids wear and uniform category at 24.9%. Demand in the branded apparel segment is

increasing as consumers are upgrading to premium brands due to changing preferences.

The premium segment has seen the fastest growth in value owing to the rising preference

for formals at Indian workplaces, the new offerings from international brands, and the

increasing willingness on the part of consumers to pay a premium for quality. The apparel

retailers are also pushing themselves to the accessories segment to attract more customers.

Few fashion and accessories retailers

Pantaloons: The first Pantaloon store was opened at Gariahat in 1997 in 8,000-square-feet

area. Over the years, the store has undergone several transitions. When it was launched,

the store mostly sold external brands. Gradually, it started retailing an eclectic mix of

external brands as well as private labels. Initially, it positioned itself as a family store

targeted across age and gender groups but later it shifted its focus towards being a fashion

store and gave more emphasis on the youth. As on Dec 2008, Pantaloons had around 44

stores spread across major cities in India.

Shoppers Stop: Shoppers Stop is one of the largest retailers in India. It primarily caters to

the lifestyle segment and offers customers both domestic and international brands. The

store recently revamped its branding by introducing a new symbol. Shoppers Stop has


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lifestyle retailing as its core housing brand across categories like apparels and accessories.

The store operated at 26 locations in 12 cities as on Dec 2008.

Koutons: Koutons Retail is a leading manufacturer of readymade and fashion wear brand. It

was established as Charlie Creation Pvt Ltd in 1991 for manufacturing and exporting

garments. Later in 1998 Koutons was established to provide affordable mens wear to the

masses. Koutons also entered the womens segment in Apr 2008 by launching its brand Les

Femme, which caters to young women in the 16-34 years age group and includes apparels

like t-shirts, partywear, lycra, semi-formal shirts, denims, capri pants etc. Koutons has also

launched its brand Les femme for women & Koutons Junior for kids. Few renowned brand

of Koutons are: Koutons mens wear, Les Femme, Koutons Junior and Charlie Outlaw.

Footwear

In 2007, the footwear segment had a 1.1% share in the total retail market and was valued at

Rs 160 billion while it had a 9.9% share in the organised market and was valued at Rs 77.5

billion. In the same year the organised footwear market recorded a fantastic growth of 49%

over 2006 while the overall retail market grew by just 16.4%. The changes in consumer

behaviour and attitudes reflected in the increasing demand for newer styles and different

types of footwear. The market currently offers many brands that cater to every target

segment. The Indian footwear market is moving at a brisk pace presently to cater to the

domestic demand. Moreover, the influx of international brands is inducing the otherwise

price-conscious customers to shell out more bucks for their favourite brands.

The footwear market is experiencing a changing consumer preference for casual and

younger style due to media penetration and due to the increasing awareness about

international trends and lifestyle. There already are a large number of players, both

domestic and international, in the semi-formal, formal and casual segment but the casual

segment dominates the Indian footwear market with a 75% share. Branded sportswear is

also growing at a faster rate than the other segments and the key players in this segment

are Adidas, Reebok, Nike, Puma et al.

Few footwear retailers


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Reebok: In 1995, Reebok forayed into the Indian retail market. Today Reebok is one of the

frontrunners in the Indian sportswear industry. Reeboks offerings include apparels,

footwear and fitness equipment and products. Its footwear offerings are mostly in the

trainers and sneakers segment. Reebok recently has introduced its new lifestyle verticalReebok Classic.

Bata: Bata India is one of the most well-known and largest footwear retailers in India. The

retailer manufactures and markets different types of footwear that includes rubber, canvas,

leather, and plastic footwear. It markets footwear under the brand names of North Star,

Power, Ambassador, Marie Claire besides dealing in international brands like Dr Scholl and

Hush Puppies. Bata has a strong distribution network structure of wholesalers and

distributors.

Khadims: Khadims forayed into footwear retailing in 1993 and is one of the most

renowned retailers in east India. Khadims markets its own products besides few others and

specialises in womens and childrens footwear. The retailer has a presence in multi-brand

outlets (MBOs) across the country in addition to its own exclusive outlets.

Home and office improvement

In 2007, the home and office-related retail segment was valued at Rs 455 billion in the total

retail market while it was valued at Rs 50 billion in the organised retail market. In the same

year the segment had a 6.4% share in the organised retail. Home and office improvement is

another important segment of the organised retail as people have started spending more

on discretionary items. Presently the segment is growing at an impressive rate. Due to the

salary hikes and rise in the double-income households, the lifestyle needs of the young and

flourishing India are surging and consequently, consumers are going for renovation of their

homes. The concomitant rise in investments in furniture, home accessories and furnishings,

has added to the segments boom.

Few home and office improvement retailers

Godrej Lifespace: On Apr 1, 2003, Godrej & Boyce Manufacturing Company Ltd launched a

new retail division. The division was established to present a new concept in retailing by


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displaying and selling under one roof the Godrej range of home and office furniture,

appliances, security equipment and locks. Later in 2005, the showrooms were branded as

Godrej Lifespace Stores.

Home Stop: Home Stop is one of the premium home improvement stores that offers a wide

range of merchandise. It stocks various national and international brands that cover all the

home needs like home dcor, furniture, bath accessories, draperies and health equipment.

Home Stop currently operates three Home Stop stores, one each in Mumbai, Bangalore and

New Delhi.

Home Town: Home Solution Retail (India) Ltd (HSRIL), a subsidiary company of Pantaloon

Retail, is designed to cater to the home furnishing and improvement market. The format is

designed as a one-stop destination that offers a complete range in consumer electronics,

furniture and other home products. HSRIL operates five retail formats: Collection-i,

Furniture Bazaar, Electronics Bazaar, Home Town and e-zone.

Electronics In 2007, the electronics segment had a 4% share in the total retail segment and

was valued at Rs 575 billion while it had a 9.1% share in the organised electronic retail

segment valued at Rs 71 billion. The electronics market has seen a proliferation of brands

and product categories in recent years. All international brands from Japan, Korea, the US,

Europe and China have been launched in India and have been trying to build a pan-India

dealer network. The lifestyle category has seen higher growth in India on the back of

changing consumer preferences and a consumption boom.

Few electronic retailers

eZone: eZone is an electronics specialty retail format from HSRIL by Kishore Biyani-led

Future Group. The first eZone store was launched in 2006 in Indore and was followed with a

second one in Bangalore. eZone offers a range of personal products like computers, laptops,

handy cams, MP3 players and mobile phones, entertainment products like plasma/LCD, flat

TVs, home theatre systems, DVD players, and stereosystems, home products like

refrigerators, air conditioners, washing machines and microwave ovens, among other

kitchen appliances.


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Viveks: In 1965, B A Lakshmi Narayana Setty founded Viveks in a 200-square-feet-shop in

Chennai. Today Viveks is one of the largest consumer electronics and home appliances

retail chains in India. Viveks Ltd is a public limited company that runs two retail brands

Viveks and Jainsons. The store was transformed into a public company from a family-runcompany when 14 stores of Jainsons were bought over in 1999. Later on in 2001 two stores

of Premier and in 2002 Spencers Super Store were purchased. Viveks has recently absorbed

Spencers into the Premier brand. Viveks grew from three stores in 1995 to more than 35

stores as on Dec 2008.

Catering services In 2007, the catering service in organised retail showed a tremendous

growth of 44.7% over the previous year. It was valued at Rs 713 billion in the total retail

market and at Rs 57 billion in the organised retail market. The catering services market is

divided into fast food, cafes and restaurants and others. India is a buoyant market for this

segment with over a billion people with different food habits, religious festivals, and various

regions. Each region has its own traditional food, dietary habits and its own food

specialities. In recent times many international food chains have entered India, which has

made this segment more dynamic and its growth, fast-paced. The key growth drivers of the

segment in India are: the changes in Indian demographics, young working population,

nuclear families, rise in double-income household etc.

Few catering service retailers

Yum! Restaurants: Yum! Restaurants is present in India through its brands Pizza Hut and

KFC. In 1995, KFC, which mainly serves chicken products, set foot in India. After taking into

account the vegetarian population of India, KFC recently modified its menu and launched a

vegetarian fare, which now constitutes 40% of the product categories. Pizza Hut entered

India in 1996 and as on Dec 2008, there were 147 Pizza Hut and 45 KFC stores across 35 and

14 cities, respectively.

McDonalds: McDonalds is a 50:50 joint venture partnership in India between McDonalds

Corporation (USA) and two Indian businessmen. Hardcastle Restaurants Pvt Ltd owns and

operates McDonalds restaurants in West India while Connaught Plaza Restaurants Pvt Ltd

owns and operates these food outlets in the North.


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Caf Coffee Day: Caf Coffee Day is a division of Indias largest coffee conglomerate

Amalgamated Bean Coffee Trading Company. Caf Coffee Day sources coffee from 5,000

acres of estates and is the second-largest coffee shop in Asia. It has ventured into formats

such as music cafes, book cafes, highway cafes, lounge cafes, garden cafes and cyber cafes.

Telecom

In 2008 the telecom market in India was worth Rs 272 billion and had a 1.8% share in the

total retail market while it had a 3.4% share in the organised retail segment and was valued

at Rs 27 billion. The mobile and accessories segment exhibited tremendous growth in 2007.

The Indian telecom sector emerged as the second-largest wireless network in the world

after China with the recent spate in number of wireless subscribers.

Few telecom retailers

The Mobile Store: The Mobile Store, promoted by the Essar Group, is one of the countrys

largest mobile retailers. Its a one-stop mobile solution shop that offers telecom products

like mobiles, accessories, mobile connections and recharges, mobile bill payments, handset

repairs, handset exchange, music and gaming devices and DTH, all under one roof, in a

world-class shopping ambience. The shop had more than 1,300 stores spread across 200

cities as on Dec 2008.

MobileNXT: Bangalore-based MobileNXT Teleservices Pvt Ltd has a pan-India presence and

operates in the following three major retail formats: standalone stores, store-within-a-

store, and enterprise stores. This store is eyeing a pan-India network and hence has

initiated a tie-up with Shoppers Stop, Star Bazaar, Mega Mart, and Landmark stores, forsetting up store-withina- store in their outlets across the country. As on Dec 2008, the

company was operating more than 36 stores that were spread across major cities in India.

Pharmaceuticals

In 2007, the pharmaceuticals market had a 3.5% share and was valued at Rs 488 billion in

the total retail market; however, its share in the organised retail market accounted for

merely 2.0% share at Rs 15.4 billion during the same period. The organised pharmaceutical


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retailer is known to implement innovative concepts and global standards to provide

customers with an experience that is completely different from what an unorganised

retailer offers.

Few pharmaceutical retailers

Apollo Pharmacy: In 1983, Apollo Pharmacy, a division of Apollo Hospital Enterprise Ltd,

entered retailing by opening up its first store in Chennai. The retailer also took initiatives to

provide medicines to the rural regions by tying up with ITCs e-choupal and Godrej Aadhaar.

Apollo has also started expanding through the franchise route. It has recently launched a

new concept, NurseStation, at its pharmacy outlets, where the nurses are available to

attend the patients at their houses, or refer them to an Apollo Clinic nearby. As on Dec

2008, Apollo was operating at over 890 outlets across the country.

MedPlus: In 2006, MedPlus Health Services Private Ltd was incorporated in Hyder

change in life-style that leads to preference of branded products

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