A look at India’s macro-economic dynamics, recent consumption learnings & future consumer potential
2014 has been a challenging year for the Indian economy and most businesses as real consumption growth slowed substantially over previous years. But things are changing and the mood is turning buoyant. Through a careful observation of past consumption patterns, macro-economic trends, consumer sentiment and behaviour, this report attempts to offer a glimpse into how India is well positioned to emerge as an economic super power in the next few years, how consumption will grow in India in the coming few quarters, and how marketers can tap into India’s immense potential by drawing upon consumer learnings from the past. India’s party is just getting started and everyone is invited.
India’s Strongest Economy In Decades
The Indian economy is stronger than it has been in decades. Since the 1990s, which saw the country’s economy open up under a wave of economic reforms, various macro-economic parameters have seen steady progress.
The biggest barometer of an economy’s strength lies in how its consumption shapes up over time. In robust economies, increased spending and saving sustain growth; similarly, even during a slowdown, we see that consumers only modify their shopping habits, keeping overall consumption steady.
But how do you measure an economy’s health? Keen understanding of how consumers think and act during various economic conditions can help marketing organizations respond appropriately and build strategies that ensure consumption consistently expands. Nielsen’s Global Survey of Consumer Confidence uses consumer sentiments to measure confidence around the world thereby uncovering typical consumer behaviour during economic ups and downs. When analysed over a longer period—during 2009’s boom period and 2013’s gloomier time—it reveals some interesting and even some counterintuitive insights on Indian consumption habits in urban markets.
SMART SHOPPING: Shrinking wallet growth and inflation has triggered smarter shopping behaviour. Consumers’ searches for deals and promotions climbed significantly during 2013’s gloom time. However, growth in promotions across all sectors and industries has now made this behaviour routine.
SELECTIVE PREMIUMIZATION: Almost all companies are joining the premiumization bandwagon—by offering premium products, many are gaining from consumers’ increased willingness to pay more. Consumers, however, display brutal intelligence in paying not only for those products with a higher price tag but also those that offer better value for money, more benefits and have clear and distinct proposition.
INDULGENCE REMAINS INDULGING: One could usually presume that recessionary sentiments may lead people to first cut down on indulgence products and instead resort to a more controlled lifestyle. Interestingly, people don’t significantly reduce their spending on indulgences like smoking or using a car, nor do they downgrade from their favourite alcohol brand.
FAMILY FIRST: Despite tightening wallets in gloom times, consumers do not deprioritize togetherness and instead creatively rebalance spends for family.
SMART SAVING: When the economy contracts and Indian consumers look to reduce expenses like gas and electricity and opt for cheaper grocery, they are just as likely to seek deals on financial instruments. On the other hand, expenses like new clothes, mobiles and telephones, replacing major household items do not get reduced in gloom times as much as they would get cut in boom times.
JUDICIOUS SPENDING: Amidst spending and consumption, Indians’ intentions to save remain a priority, and during gloomy times, safe pastures get the better of risky avenues like stock market, etc. Consumers exercise visible judiciousness in their spending and acknowledge saving as a continued necessity.
These trends can help marketers orient their approach to connect with consumers in a slightly different manner that will suit consumers’ changing lifestyles during economic constrictions.
Decoding consumption behaviour has never been easy, and it gets more complicated today, as technology becomes all pervasive. However, amid all the dots that behavioural scientists continue to connect—some even using neuro technology—hard data can drive certain clear outcomes.
For more details download the full report (top right).