In a recent IBEF report, India was ranked second in the global consumer confidence index in the quarter ending in June 2016, only marginally behind Philippines in the pole position. The report went on to predict that consumer spending in the country will increase to $3.6 trillion by 2020, as the country’s share of global consumption grows by more than twice to 5.8 percent of the total. The assertion was built on a 2007 study conducted by McKinsey Global Institute (MGI), which had suggested that the average income for Indian households will triple between 2007 and 2027. If these projections are accurate, then India, by 2025, will become the fifth largest consumer economy in the world.
But India, with its 1.3 billion strong consumer base, is also a market which is very different in nature from other global markets. Despite being home to nearly 292 million smartphone owners and having an internet user base of 460 million+ users, the internet penetration and digital adoption in the country is still very low. Offline channels are still the major mode of commerce in the country, while the recent demonetisation drive has only underlined how heavily the Indian economy depended on cash-based transactions. This dissimilarity also means that marketing strategies which might have been successful in more developed economies are not guaranteed to generate similar impact in the Indian context. So what does that mean for global brands looking to tap into the Indian consumer’s mindshare?
The answer to all marketing concerns faced by international businesses venturing into India lies in one word – evolution. Given how different Indian consumers are from their global counterparts, there is a need for international brands to alter their approach in order to connect with them. Analysis of the demographic being tapped becomes vital here, as it helps brands in creating the right messaging for the right consumer and identifying the right channel to deliver that message. A marketing initiative aimed at low income groups and socio-economic classes C, D, and E is more likely to succeed by using traditional channels such as radio, retail partnerships and banners/hoardings than by leveraging social media platforms. Similarly, a campaign aimed to get the eyeballs of the digital-first youth is more likely to succeed if it involves social media and ‘viral’ content which speaks of issues relevant to them.
However, without an in-depth knowledge of what the consumer wants and – more importantly – why, any marketing endeavour undertaken will only be partially successful at best. Brands therefore need to identify the right audience to target for their marketing initiatives; pitching a high-end, costly smartphone to a low income consumer will be highly ineffective and inefficient, to say the least. This identification and segmentation of the consumer base serves as a starting point for brands to build their communication strategies for any product or service. The focus here should be on creating a brand positioning that resonates with the target audience.
This is where product localisation comes into picture. By modifying their products/services to meet the needs of their target audience, international brands can very well position themselves as global solution providers for local problems. For example, considering that several parts of India still do not get electricity for more than a few hours, mobile phones with longer battery life will be more preferred by consumers in these regions. If a mobile brand additionally offers higher quality camera and better features along with a long battery life in a similar price range as its competitors, it is more likely to appeal to the value-driven mindset of the Indian buyer and gain greater consumer mindshare in these geographies. Such localisation is a win-win situation for both brands and consumers; not only will it allow international brands to provide more consumer-centric products and services, but will also allow them to capture larger share of the regional market.
That India today has emerged as an extremely lucrative market for global brands looking to tap into its massive business potential is no secret. The country’s online retail sector – which currently comprises less than 1 percent of the total retail business in India – is alone expected to be worth $1 trillion by the end of this decade. The number of smartphone owners in the country is projected to cross 700 million by 2020, while the same timeframe is also expected to witness an influx of 50 million new internet users every year. This greater digital adoption and internet penetration will further unlock a plethora of business opportunities for both local and global players. In such a dynamic business landscape, only those brands which successfully add a localised flavour to their global appeal will eventually be able to find acceptance with the Indian consumer and successfully tap into the endless opportunities that the country’s market offers.