Decoding: The millennial consumer
A look at what consumer companies are doing to capture the heart, mind and wallets of India’s millennial consumers
New Delhi: Sulagna Dasgupta, 26, does not remember when she last visited a brick-and-mortar retail store. Definitely not for the past two years, when she moved from Kolkata to New Delhi to work with one of the country’s top publishing firms. Indeed, Dasgupta prefers to buy everything—from clothes to cosmetics—online, because “it’s convenient and cheaper”.
Dasgupta shares a flat with a friend to save money. She is health conscious, visits the gym regularly, but also orders in at least thrice a week, besides going out. Like many of her friends, she has no immediate plans to buy a house or a car. She prefers shared Uber or Ola rides for commuting. She saves about 10% of her monthly salary to invest in mutual funds. She does not own a television. Instead she enjoys her daily dose of entertainment, typically Netflix and Amazon Prime, and information, on her mobile screen. Before buying a product online, Dasgupta checks brand promotions, especially on YouTube, and checks with friends if someone has already used the product. “Both help me decide,” she adds.
And, Indian marketers are keeping a close watch on just about everything that influences her buying decisions. Dasgupta is after all a millennial— someone born between 1981 and 1996 (aged 22 to 37 in 2018), according to Pew Research. She belongs to a category of consumers, considered the Holy Grail for marketers, globally.
According to a Morgan Stanley report of April 2017, India will have 410 million millennials, who will spend $330 billion annually, by 2020. That’s more than the total population of the US, and more than the total number of millennials (400 million) that China has today. Naturally, every brand owner wants a slice of this pie.
Some would say targeting the younger generation as potential customers is hardly a new thing. It has been happening for ages, simply because it makes sense for marketers: the younger the consumer, the longer the business cycle. So, then, what is so different about the millennial generation? And what makes it so tricky for marketers to reach out to this segment?
Digital in the bloodstream
“The medium to reach them,” answers Nitin Gupta, professor of marketing at Institute of Management Technology (IMT), Hyderabad. Today’s youth is always connected to the internet, via smartphones, seeking instant gratification for almost everything—from information to entertainment to shopping needs. Millennials spend an average 17 hours online every week, finds a February 2018 study, Trend-setting Millennials: Redefining the Consumer Story, conducted jointly by the Retailers Association of India (RAI) and consulting firm Deloitte.
Marketers are aware of this shift in medium. According to a January 2017 report by advertising firm Dentsu Aegis Network, the digital advertising industry in India will reach ₹ 18,986 crore by 2020, growing at a compounded annual rate of 32%, from ₹ 8,202 crore in 2016. By 2020, companies will spend more than 24% of annual advertisement spend on digital media, up from around 15% in 2016, the report added.
Social media accounts for 28% of the digital advertising market in India—thanks to the 241 million active users on Facebook.
Also, with 59 million active monthly users, India is the third-largest market for Instagram—a fast growing advertising medium for companies. E-commerce companies spend the most (19%), thanks to the online shopping habits of the millennials, with 43% of all digital advertisements tailored for hand-held devices.
They are complicated
Indian marketers hardly understand the millennial psychology, probably because most of them are doing what might have worked in the US, argues Ishaarth Dalmia, 24, an early-career advertising professional based in Bengaluru. Like Dasgupta, Dalmia shops online, but he believes in buying from brick-and-mortar stores. Dalmia also prefers clubbing everyday purchases into a one-time visit to the mall. “I usually hunt for best deals online for big-ticket individual purchases from the brands I know would fit me well, like a pair of sneakers.”
While discounts and convenience are two big drivers for online shopping, Dalmia says he is quite immune to the mainline advertising and discounting model. Most of his product research is done online. He believes in brands that deliver value. “Every two years I invest in an iPhone because it plays a key role in getting most of the work done. No amount of promotions by other smartphone firms can change my decision.”
Clearly, the millennial is complicated—that’s why a one-size-fits-all marketing strategy does not work. Complicating matters even further is the differentiated nature of the millennial segment. For instance, the younger millennials, in their early 20s, are not yet financially independent and the buying decisions get influenced by parents who are bankrolling them. As B. Sumant, president (FMCG businesses), ITC Ltd, the cigarette-to-shampoo maker, puts it: the millennial is “extremely opinionated and desire authentic conversations”. That’s why companies are realizing that reaching millennials through advertisements and brand marketing is not enough.
For instance, Coca-Cola India Pvt. Ltd had formed a special team to have live conversations with ‘millennial consumers’ online in seven Indian languages and in English, during the Indian Premier League, as part of its ‘Share a Coke’ campaign. “It’s not about what a company may want to do, it’s now about what the consumers want,” says a Coca-Cola India spokesperson.
Sample this: Last year, before it launched ‘masala’ versions of its popular Maggi instant noodles, Nestle India did a poll on Google. Without revealing the name of the brand, Nestle asked millennial consumers, which of the eight flavours they feel would go with instant noodles. Finally, based on the result, Nestle launched four flavours.
Not loyal to brands
Millennials, says Minoo Phakey, head of marketing services, Dabur India Ltd, are restless and loyalty is not in their DNA. Not just they are hard to catch, they are even harder to keep. American food and beverage maker PepsiCo Inc. found that out when it had to discontinue the energy drink SoBe from the Indian market a few months after its launch in 2008. Its premium cola brand Pepsi Max (launched in 2010) also had the same fate. Both products were targeted at the young, affluent market segments, but did not give the desired results.
“Millennials do not believe in brand loyalty, and they are not brand conscious either. If a brand matches their lifestyle and helps them to look different, they’ll try it,” says Anisha Motwani, managing partner at marketing firm StormTheNorm Ventures. If brands break millennial consumers’ trust, she adds, chances are likely they will never give that brand a second chance.
Who would know the risk better than condom brand Durex? At present, millennials contribute to about 40% of its sales. By 2021, says Pankaj Duhan, chief marketing officer, RB South Asia Health, the number will increase to 75%. He says the firm is “constantly working with millennials to develop new products (like Durex Air, which was launched in March 2018, marketed as the ‘thinnest-possible’ condom) to overcome barriers to great sex”.
They are used to change
Besides changing its medium for communication from TV to over-the-top media services and social media platforms, most marketers are engaging with millennial influencers, like bloggers; changing portfolios with products more suited to the millennials’ lifestyle; and increasing presence on online. “Millennials have everything, but time. And the little time is crucial to spend correctly. Hence, subscription models are key ways to build a loyal consumer base,” says Sunil Kataria, business head (India and SAARC), Godrej Consumer Products Ltd.
Similarly, Kolkata-based ITC has created its entire personal care portfolio keeping in mind millennials. “While Fiama is positioned as an everyday mood lifter, Vivel and Engage cater to sub-segments of millennials, which has wide and varied choices,” says Sumant, adding the firms has also been changing its food and beverage portfolio to target millennials. Such portfolio changes apply to all major packaged goods firms. Across the board, the need to be present on e-commerce segments is also palpable, even though online retailing accounts for just around 2% of India’s $670 billion retail market.
The good news is that most Indian consumer firms are trying a combination or all of these strategies. A look at the numbers for India also shows that with the exception of mobile phones, the millennial market remains largely untapped. That said, it’s not going to be an easy ride for marketing firms. “The sheer access to almost limitless information, communication and entertainment is rewiring their brains and changing their responses to marketing stimuli,” says Samit Sinha, managing partner, Alchemist Brand Consulting. Only those who quickly respond to these young minds will survive.
Sapna Agarwal in Mumbai, and Saumya Tewari and Prasannata Patwa in New Delhi contributed to this story.