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The Indian consumer market is not secular in nature. Rural markets are growing at a much faster than urban markets and rural consumers are largely value for money customers. Markets are growing but mainly for low-value items.
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A study conducted by The National Centre for Applied Economic Research (NCAER) divides Indian households into five categories based on income, consumption, asset ownership and education level. The key assumption for such a classification is that consumption, and not income alone differentiates consumer segments. The five categories are as given below
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The very rich account for a miniscule 0.065 m households. This segment is very comparable to consumers in the developed world and is willing to spend more for greater benefits. They are consumer of premium category products
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The consuming class comprises 30 m households. This class consumes most products, but rarely expensive, high-end items that offer extra features. This segment also seeks a judicious balance between categories between benefits and costs with affair amount of elasticity. Consumers in this class mainly demand mid-price and low-price products, but occasionally indulges in the premium product.
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The climbers comprising of 50 m householder on the bottom rug of the consumption ladder. This segment consists of cash-constrained benefit-maximizes, mainly consuming low-priced and unbranded products.
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The aspirants category consumers comprising of another 50 m households aspire to greater consumption but need money to achieve their goal. This class too focuses mainly on unbranded goods.
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The destitute consumers accounting for 35 m households lead a hand-to-mouth existence. Households in this segment are below the poverty line and their basic housing and food and clothing, rather than consumer goods.
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Consumer profile
India has a huge population base of around 952 m - almost 3.7X that of the US and around 16% of the woirld's population, growing at around 2% annually. The average per capitra income in India is around US$ 350 or US$ 1,500 in purchasing power parity (PPP) terms.
Around 70% of India is in rural areas. Urbanisation is reducing this proportion, but is projected to rise from 29% currently to 31% in FY2001. The large rural population makes up roughly 50% of consumer spending. More important, the average rural per capita income is about US$ 1,100 in PPP terms.
Around 67% of urban India and 35% of rural India watches television, which influences consumer patterns. The only true national channel is Doordarshan with a penetration of 50%. Private channels have a predominantly urban viewer base.
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