3rd generation consumerism in india

7/31/2019 3rd Generation Consumerism in India

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3rd

GENERATION CONSUMERISM IN INDIA

Business or exchange of goods for profit has existed since civilization came about. Owning of

goods more than just their needs was usual behavior. Over the years, however a trend has beenobserved in the changing needs of the society which is attributed to many factors. We can

broadly categorize this change in to three eras.

I. PREINDUSTRIALIZATION ERAThis was an era when a major part of the society belonged to the labor class. Some of the general

characteristics of this time were that purchasing power of the people was low. The working

conditions were tough leaving them little or no time to think about or beyond their needs. Thus,

manufacturers too became complacent in terms of production as they could not find the

economically sound market to sell their goods. This, as a matter of effect gave rose to a vicious

circle between low demand and low consumption. A famous quote would represent the situation

well:

We didn't starve, but we didn't eat chicken unless we were sick, or the chicken was.

II. POST INDUSTRIAL REVOLUTION ERAPost the industrial revolution, there was a general improvement in the standard of living.

Manufacturing industries bought about mass production so there was outstanding quantities of

goods at outstandingly low prices. This led to mass consumption in the consumers. The

consumer now spent on luxurious goods and took delight in the choices offered by producers.There was a winwin situation on both ends.

III. POST 1991This is the era which where Indian policies took a sharp turn, which is what saved the economy

of the country and its people. The policies of Liberalization, Globalization and Privatization

created completely different grounds for market players. There was investment from foreign

markets; global players were proving to be a stiff competition for the domestic players. The

consumers were overwhelmed with choices and effective prices. Downtown shops were being

replaced by shopping malls. The market scenario was changing rapidly.

With this rises the expectations and demand of customers for goods as well as services. Today,consumers are spoilt for choice and fully acknowledge that they rule the market. Manufacturers

cater to their whims and give the consumer complete control of market trends.

Despite India having a low per capita income, it still remains a lucrative market, even for costly

products. One reason is Indias large population. A sizable section of the countrys citizens formsthe working population. As foreign trade grew, it opened up numerous jobs opportunities and


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gave the bulk of the working population significant spending power. This group generally

believe in working hard and spending luxuriously, and are responsible for the current boom inconsumerism.

Factors Affecting Consumer Behavior

Consumer behavior 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 behavior.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 consumeranalyzes 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.

1. Cultural Factors

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

and social class.

a. Culture: Basically, culture is the part of every society and is the important cause of person

wants and behavior. The influence of culture on buying behavior varies from country to countrytherefore marketers have to be very careful in analyzing the culture of different groups, regions

or even countries.

b. Subculture: Each culture contains different subcultures such as religions, nationalities,

geographic regions, racial groups etc. Marketers can use these groups by segmenting the marketinto various small portions. For example marketers can design products according to the needs ofa particular geographic group.

c. Social Class: Every society possesses some form of social class which is important to themarketers because the buying behavior 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 suchas: wealth, education, occupation etc.

2. Social Factors

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

reference groups, family, role and status.

a. Reference Groups: Reference groups have potential in forming a person attitude or behavior.

The impact of reference groups varies across products and brands. For example if the product isvisible such as dress, shoes, car etc then the influence of reference groups will be high.


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Reference groups also include opinion leader (a person who influences other because of his

special skill, knowledge or other characteristics).

b. Family: Buyer behavior 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 intheir advertisement. Here we should note that buying roles change with change in consumer

lifestyles.

c. 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 isworking 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.

3. Personal Factors

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

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

and self concept.

a. Age: Age and life-cycle have potential impact on the consumer buying behavior. It is obvious

that the consumers change the purchase of goods and services with the passage of time. Familylife-cycle consists of different stages such young singles, married couples, unmarried couples etc

which help marketers to develop appropriate products for each stage.

b. Occupation: The occupation of a person has significant impact on his buying behavior. For

example a marketing manager of an organization will try to purchase business suits, whereas alow level worker in the same organization will purchase rugged work clothes.

c. Economic Situation: Consumer economic situation has great influence on his buying behavior.

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.

d. Lifestyle: Lifestyle of customers is another import factor affecting the consumer buyingbehavior. 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.

e. Personality: Personality changes from person to person, time to time and place to place.

Therefore it can greatly influence the buying behavior of customers. Actually, Personality is notwhat one wears; rather it is the totality of behavior 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 behavior for particular product or service.


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From the philosophy of Never Borrow Never Lend to Living for the Day the Indian

consumer has come a long way.

The process of development coupled with increasing globalization and liberalization has changed

the buying behavior and attitude of the consumers today. In a broader sense we say it has

changed from a conservative approach to a more liberated one.

Below discussed are the features of the consumerism prevalent in India today:

1. More and more consumers have become value- centric today. Sky is the limit as far asprices are concerned as long as they get more value from the product bought when

compared to others. High end brands like Gucci, Prada, Versace are looking to tap this

market made primarily of the third generation consumers. The spending limit has

escalated and so has the spending desire.2. Features of a product or the number and variety of services offered have taken a priority

over the brand of a product. Though some amount of brand loyalty still remains the

consumer today has learnt to recognize and own a product/service based on the qualityoffered and not just its past history. Also the trend which saw the higher segment

consumers just going in for high end brands has reversed to a great extent.

3. Our Indian values and cultures go a long way in making us the type of consumer we aretoday. Many big business players have had to change their business strategy beforeentering the Indian markets. Mc Donalds had to indianise the famous mc burger to mc

aloo tikki to suit the Indian way. Indian consumers still end up buying and spending more

on their festivals. Karva chauth is a bigger draw than Valentines Day and the marketfor goods sold is also huge.

4. Credit card culture has grown by leaps and bounds. Consumers are taking loans frombanks and other financial institutions to fuel their demand for the latest products, also the

loans lending institutions are loading these cards with attractive benefits and thus fuellingthe spending habit of the present generation.

5. One of the most important features of Indian consumerism today is the demand for betterservices, better experience and better ambience. Anything that gives the Indian consumerless than these three combined is being rejected. The growth of multi storied shopping

malls have been a runaway success in India; with ambience mall in Gurgaon , InOrbit

mall in Hyderabad and Pune providing world class shopping, entertainment and facilitiesall under one roof and the trend is not just limited to malls.

Hospitals across the country have revamped hospitals that don't resemble hospitals, machines

that were once unheard of in India and services that can match any 5 star in India are all herebecause the consumers in this case the patients are now actively demanding it.

6. Change in the brands is being looked upon very favorably. Rarely do we have a family

buying two cars of the same brand, also more brands means more players in the market

today, increases the competition and hence brings down the prices competitively thus

benefitting the consumer both ways.


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7. Rural consumerism in India is an idea whose time has come. Their purchasing power has

increased manifold mainly due to the price rise in real estate and also due to a substantialnumber shifting towards services and industrial sector. With a lot of modern amenities at

home and the use of electronic gadgets like mobile phones on a rise and the desire to own

even better brands, rural consumerism is poised to grow even further.

From a buyers market to a sellers market India has come a long way and this competition has

brought down prices to a great extent. It has also forced the manufacturers to maintain highstandards in delivering good quality products only then can they sustain themselves.

The media and the Indians working abroad bring back a lot of western trends and help indeveloping a positive attitude and gain wider consumer acceptance towards foreign goods. Also

with the change in the mindset of the consumers the companies have had to change their

marketing strategies to meet the wants and desires. Better after sales service, launching of luxury

goods, and lifetime mobile plans as also rural consumerism (particularly for FMCG companies)they are doing it all.

A new home, a new phone, a new car, a new camera all are being purchased by the third

generation Indian consumer. Loans are easy to get by and hence and the credit card business is

booming.

Prices are being slashed and strategies rewritten to benefit the rural consumer. With the kind ofmindset of the Indian consumer today FMCG companies, hotels, airlines all are poised to grow

drastically. The third generation Indian consumer knows what it wants and then goes all out toget it.

Companies strategies for 3G consumers

The world is changing very fast. Big will not beat small anymore. It will be the fast beating

the slow-- Rupert Murdoch

In order to satisfy the needs of third generation consumers and growth in a fiercely competitivemarket, with change in consumer buying behaviour the companies also made necessary changes

in their strategies. Following are some of the approaches that companies are implementing:

1. Tapping the spending power and brand consciousness of consumersThe spending power of third generation Indian consumers have substantially increased as

compared to the previous generation of consumers and so has the brand consciousness. This hasled to a more liberal purchasing mindset of both upper class and middle class, which form a

major portion of prospects for companies. Statistical data shows that the percentage of upperclass, upper middle class and middle class have increased considerably both in urban as well as

rural areas, thus enabling both national and foreign companies to explore market opportunities in

India. For example, from just one company (Fiat India) in car manufacturing sector in 1900, thefigure rose to six by 1970 and by 2000, there were eighteen car brands in India.


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2. Introduction of product categoriesCompanies today design their products on the basis of market segmentation so that they have

products to suit every pocket and requirements of third generation consumers. While the upper

class go for high value exclusive products, the middle class are cautious in their approach

towards purchase and seek durability and functionality but at the same time are image conscious.The consumer market is divided in to three basic segments:

a. Affluent/Premium segment: This segment includes luxury products, which are targeted at the

consumers who are more brand and quality conscious and less price-sensitive.

b. Middle/Popular segment: This segment includes products that can be afforded by price-

sensitive middle income groups who desire to own value-for-money products which are durable

and have an image associated with them.

c. Lower/Discount segment: This segment, along with popular segment, drives the volume of

products. It includes products which are primarily concentrated on being cost effective andaffordable by lower middle and lower class. The margins for companies from these products are

usually low.

In order to explain the aforementioned market segmentation, consider the Proctor and Gamble

shampoo product range. The premium segment includes shampoo variants under the brand name

Pantene (Pantene Amino Pro-V, Pantene Smooth and Shine etc.); the popular segment includesshampoo variants under the brand name Head and Shoulders (Head and Shoulders Refreshing

Menthol etc.); the discount segment includes shampoo variants under the brand name Rejoice

(Rejoice Rich, Rejoice Silky etc.).

3.

Market Oriented Approach

To sustain in the dynamic environment, where the consumers needs are constantly changing, thecompanies have shifted their focus on being market oriented rather than sales oriented, where

understanding and analysis of consumer wants and habits, research and development of product,after-sales services and feedback of the consumer is more important than just selling. This

improves the companys credibility and helps to build its customer base. For example, car

manufacturing companies such as Maruti Udyog Ltd. provide Maruti On-Road Services wherethey have provisions to send their technicians to repair the cars struck at highways or other outer

locations due to technical failure or in case of a mishap.

Another example could be the products offered by McDonalds. When McDonald's opened itsfirst outlet in 1996, it had to toss out much of its standard menu; Hindus consider a cow sacred

and won't eat beef. It tried introducing India-friendly alternatives. In place of the classic Big

Mac, McDonalds offered a burger with mutton patties, christening it the Maharaja Mac afterIndia's princely historic rulers.


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4. Corporate Social ResponsibilityMore and more companies have started to realise that the third generation Indian consumer has

grown to be more responsible and sensitive towards society and environment. So, they are more

inclined to buy the products, the purchase of which they think would help in contributing their

little bit towards society or environment. Hence, the companies are implementing variousmeasures, technology and strategies to be more ethical, eco-friendly and encouraging through

their activities. For example, Classmate product under ITC brand promises to donate Re. 1 forpurchase of every four paper notebooks towards rural development initiatives that supports

primary education in villages. Also, the product uses eco-friendly elemental chlorine free paper

for its production.

5. Focus on rural marketingWith the urban markets having been reached maturity level, the growth prospects for companies

to grow have become saturated. Also, with purchasing power of rural citizens increasing

considerably, the companies have started shifting their focus towards rural India to captureuntapped rural market. However, the requirements and needs of rural consumers are different

than that of urban consumers with availability, affordability and acceptability being the major

concerns, companies such as Coca-Cola has been successful in addressing the same effectively

and efficiently, and thereby, increasing their market share.

6. Use of technology both in advertising and sellingThe purview of third generation Indian consumers has grown wider and they have grown to be

technology savvy. Hence, they have widely accepted the concept of online marketplaces and

advertisements. The businesses and companies view this as an opportunity and through various

online advertising campaigns and shopping options, they are striving to lure consumers in orderto capture online markets.


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CONCLUSION

From above analysis it is very clear that Indian consumers buying behaviourand their attitude

have changed drastically in the recent past. With changing economic situation of India, its notthat only the rich are spending more and more but in fact its the great Indian middle class that'sthrown caution to the winds and enjoying themselves like never before and are on a spending

juggernaut. Brand India is riding high. Its a new mindset at play. Living for the day is the new

motto. The change is drastic compared to a generation back where saving for a rainy day was theusual practice. There was a clear line drawn between necessities, which could be counted on the

fingertips of one hand, and luxuries. The face of changing India is reflected as Airlines, hotels,

FMCG companies, auto giants, retail chains, mobile phone companies are all reworking

strategies and slashing prices to reach the low-end consumer in rural areas. In such a competitiveenvironment, companies are not ready to lose even a single opportunity and are using different

approaches to satisfy ever-changing consumers demands. The future prospects look good for

Indian consumer market as there are still many opportunities left to be untapped and manymarkets, especially rural, are yet to be penetrated.

3rd generation consumerism in india

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