Deepti, a college lecturer in Delhi has a three-member family comprising a husband who is a government employee and a school-going daughter. A part of India’s swarming middle class, she is careful with money and doesn’t own a credit card. However, companies, especially those in the fast-moving consumer goods (FMCG) sector, are very interested in her. And they should be, for, she is just the kind of consumer they are trying to figure out.
Her washroom shelf displays three different shampoo brands and two different toothpaste variants. “Each one of us has a different requirement,” she says, explaining the presence of the anti-dandruff Clinic shampoo, Dove’s formula for damaged hair and a protein shampoo from Himalaya.
Last fortnight, at least two large events—one organized by industry body Confederation of Indian Industry (CII) and the other by market research agency The Nielsen Co.—trained their eyes on you, the evolving Indian consumer. The CII FMCG Forum included a session on the Indian consumer 10 years down the line and attempted to flesh out the new socio-economic order and the likely changes in consumption and behaviour patterns.
Clearly, consumers are sending the companies in a tizzy as they get increasingly complex and demanding. Little surprise then that brands across product categories, especially in the personal care and food and beverage sector, need to strategize accordingly.
One of the key takeaways was that there is an increased willingness on your part to up-trade or pay more for a quality product, something that Booz and Co. Inc. (Booz&Co.) has described as “accelerating premiumization”. So if you used to buy cookies which cost Rs50 a kg, you may have moved to higher priced goodies costing Rs90 a kg, according to Chitranjan Dar, CEO of ITC Ltd’s food division, who spoke at the CII event.
It’s not known if Deepti has switched to higher priced edible oil or biscuit brand, but she has definitely moved from a lower-priced hair colour to the premium L’Oreal Excellence Crème. That’s hardly a surprise as Booz&Co.’s analysis on consumer trends notes the growth seen by L’Oreal’s premium cosmetics, haircare and personalcare brands. In the hair colour category, L’Oreal has won 20% share of the Rs1,200 crore market with premium brands such as L’Oreal Excellence Crème and Garnier, the study says. Olay, the premium anti-aging cream from Procter and Gamble has also done well even as Dove shampoo from Hindustan Unilever Ltd has captured significant market share in the last three years.
The shampoo is priced at least 30% higher than any other regular shampoo brand, according to Kannan Sitaram, an FMCG sector expert.
Consumers move up the value chain for several reasons, including larger disposable incomes and the desire to emulate their affluent counterparts. Besides, price is associated with quality “real” or “perceived”.
Consumers would switch to premium products as more and more women join the workforce in the coming decade and the young earning population swells. But even if you are inclined to pay more, the task for brands will get more complex as you become less brand loyal and have shorter attention spans.
Going forward, product variety and customization will also emerge as a major trend. Earlier, companies sliced the market in terms of urban and rural, young and old, male and female. The over simplification has been replaced by integration, that is, putting customers with similar needs together for mass customization. So you now have FMCG companies profiling people on the basis of personal attributes, skin types, ethnic backgrounds or even professional choices. Sitaram says that brands cannot “individualize” beyond a point. In his view, customization means that niche markets are becoming profitable. Clearly, product complexity will increase as we evolve and one product will not target all of us at one go.
The Nielsen Co.’s event—Consumer 360—also focused on changing habits. Among other things, it talked about the “crossover” shopper, who is no longer loyal to any one shop but buys stuff across different stores. For instance, you may pick the deodorant from a chemist, chocolates and salty snacks from a paan shop and liquid soaps from, say, a retail chain.
While the consumption habits of city dwellers will change, the rural consumers will undergo a bigger transformation. Already, the lines between them and us are blurring. A recent study from The Nielsen Co. says that one in every six rural consumers buys a hair colour that is not black to indulge and experiment akin to the metro consumer. Even the premium skincare brands or instant noodles, typically associated with urban markets, are growing nearly twice as fast in rural areas.
While they are consuming the same brands and products, they want them at price points that suit them. So while Deepti’s daughter savours Cadbury Dairy Milk priced at Rs30, a child residing in a village enjoys Dairy Milk Shots from the same company priced at Rs2.
To read all of Shuchi Bansal’s earlier columns, go to www.livemint.com/whatwebuy
Shuchi Bansal is marketing and media editor with Mint. Comment at firstname.lastname@example.org