This year, it’s about you
A more aspirational, informed and confident consumer is making demands in the marketplace that brands are scrambling to satisfy. Persuasion, not sales pitches are the order of the day. Anita Sharan and Rachit Vats report.Consumption DriversTV Ad-venturesMobile SubscriberProjections: Media & Entertainmentindia Updated: Jan 03, 2011 02:07 IST
A more aspirational, informed and confident consumer is making demands in the marketplace that brands are scrambling to satisfy. Persuasion, not sales pitches are the order of the day, find Anita Sharan and Rachit Vats
Have money, will choose: Consumers
As we transit from the century’s first decade to its second, the Indian consumer is firmly in the spotlight. Everything else in the marketplace is governed by his or her behaviour and how to best monetise that. Increasingly, it is the consumer who’s calling the shots.
The Indian consumer of 2010, coming into 2011, is far more confident as a citizen of a country everyone’s looking at for its immense growth potential. As most marketers and their propositions look beyond the metros and tier 1 cities to smaller towns and rural India for future growth, the one thing that’s beginning to cut across all consumer classes is “aspiration” — to be more, to have more, and the confidence that this is possible now, quickly.
Access to better information about what the consumer can buy, thanks to the growth in internet access, now being expanded manifold with the proliferation of internet-enabled smart phones, and the government determined to speed up the broadband penetration, is creating consumers who already know more about what they want to buy than ever before. Their demands are backed by a lot of information.
At the first level, this has already begun to change how brands talk to consumers — no more hard sell in their communication. Advice or seduction are more like it.
As consumer aspirations rise, the marketplace is responding with all possible propositions and combinations of propositions. So even as major brands launch lifestyle products at the top end of the product spectrum, they often also come up with similar propositions at lower price points. So flat screen TVs come at different price points . Smart phones in the sub-Rs 10,000 price band are a reality. Practically all car brands are set to launch more than 30 car models priced at less than Rs 10 lakh.
Be it travel, lifestyle, leisure, apparel, FMCGs, consumer durables, the middle order consumers are valuable today. As marketers expand their offerings to small towns and rural markets, the way they address their consumers will need to become far more connected at the ground level.
A Technopak-Cushman Wakefield consumer report, ‘Opportunity India’, stated: “It is evident that the Indian consumer is no longer satisfied with stopping at what was considered ‘sufficient’ even a decade ago. And this is just the beginning of the changing face of the Indian consumer. With social networking, online shopping, e-gaming and rise of the virtual world, there are bound to be newer aspects coming up in future that will keep redefining the consumer.”
According to Nielsen’s Consumer Confidence Index released in late 2010, in the third quarter of 2010, Indian consumers had expressed a stable level of confidence, after expressing a steady increase in the first two quarters.
Ninety one per cent of Indians are optimistic about their job prospects in the next twelve months, the report said. This translates into optimism on the financial front, with 83% Indians being optimistic about their state of personal finances in the next 12 months, which is the highest percentage globally. Job and personal finance optimism translate to higher spending. Fifty-nine per cent of Indians were optimistic that it is a good time to buy the things they want and need over the next 12 months.
“Indians appear to have loosened their purse strings compared to previous quarters. While some of this propensity to purchase can be attributed to the advent of the festive season, a combination of factors will lead to greater spending and more enthusiastic buying behavior as marketers tap into the confidence that Indian consumer seems to be exuding,” said Justin Sargent, MD – consumer, The Nielsen Company.
After meeting their essential living expenses, 65% Indians put their discretionary income into savings, then into stock shares and mutual funds, followed by the purchase of new technology, new clothes, holidays/vacations, home improvements/decorating, payment of debts/credit card bills/loans, and out-of-home entertainment.
Getting in 2011, the Indian consumer expects to buy more, better. It’s up to brands to find the opportunity to fulfill their aspirations.
No more hard-sell : Advertising
Nothing big, distinct or earth shaking happened in advertising in 2010, but, as Madhukar Sabnavis, country head - discovery and planning, Ogilvy and Mather, India, observed, “It was a good, positive year for advertising agencies and their clients. Both did well. And there was some noticeable advertising — Dove’s ambush advertising on Pantene’s teaser ad campaign, and the campaigns for Blackberry, Vodafone, Asian Paints.com, Tanishq and Airtel’s new 3G campaign.”
Airtel’s new logo puzzled many, but was noticed, nonetheless, by all. Other new logos came from Dhanalaxmi Bank, HDFC Life, FICCI, STAR Plus, TLC, PricewaterhouseCoopers and Balaji Telefilms, among others. So many new logos reflect the waking up of organisations to the new challenges in connecting with a far more aware and demanding consumer.
Lynn D’Souza, chairperson and CEO, Lintas Media Group, happy with the ad industry’s 22% growth in 2010 and positive about the expected 15% growth in 2011, observed: “It’s about consumer catchment. What is he saying? That ‘I will look at you if you empower me.’ In this scenario, telecom, education and government, all advertising heavily, are big ad growth areas. A Micromax, bringing in China-made smartphones at low prices, stands to transform consumer lives far more than any personal care product. Today’s challenge is: how do you keep your consumer catchment going? Hard sell doesn’t work any more.”
Miles Young, CEO, Ogilvy & Mather Worldwide, described the challenge as one “where brand communication must be more advisory, guiding consumers through a maze of choices.”
Jude Fernandes, CEO, Mudra India and ED, Mudra Group, predicted: “We are going to see increase in rural demand and in bought-outs from smaller towns. The FMCG sector will continue to remain solid as rural demand picks up, and important for advertising as it provides good reimbursement and decent tenure to them. Telecom will be in the spotlight and financial services and real estate could re-emerge strongly for advertising. The future is about engagement, riding on technology.”
Demand economy: Marketing
Consumer confidence in 2010 was high. This confidence and spending promises to continue.
Consumer electronics sales surged in 2010, specially in flat panel, plasma and 3D TVs; premium frost-free refrigerators; and split ACs. According to the Consumer Electronics Manufacturing Association, sales of flat panel displays rose by 45%, of air-conditioners by 12%, and home appliances by 23% in 2010. “The Indian consumer is updated about the latest trends. More Indian families are going for multiple gadget purchases,” said Yasho Verma, COO, LG Electronics India.
Domestic brands Videocon, Voltas, Godrej and Boyce and Onida are raising presence and market share; the Japanese Panasonic and Toshiba, and American brand Whirlpool are more aggressive. Bosch Siemens has joined the game.
In automobiles, 2010 saw the Nano’s launch. After its teething problems, it picked up sales in December through loan schemes and warranty offers.
In 2010, youngsters also preferred sedans — C instead of B segment cars — and in the B segment, premium cars such as the Hyundai i-20 or the Volkswagen Polo.
According to Protiviti Consulting, the top three growth segments in cars in 2010 were B and C, and multi-utility vehicles. India car sales are expected to be 2.2 million in 2010-11 (1.9 million in 2009-10). B segment cars — Wagon R, Alto, Santro, i-10, i-20, Indica, Spark, Fabia — have a market share of 65-70%.
2011 is expected to see greater focus on the C and D sedan cars — City, Accord, Altis, SX4, Octavia, Laura and proposed new launches. Annualised growth rate is expected at 12-14%.
“Easy and affordable finance, and the general growth in the Indian economy will be growth drivers,” said Adithya Bhat, MD, Protiviti Consulting.
Sandeep Singh, deputy MD (marketing), Toyota Kirloskar Motors, added, “First-time buyers for hatchbacks are 30% and for sedans, 25%.”
For higher end luxury cars — BMW, Mercedes, Jaguar, Land Rover, Audi — with structured finance such as personal loans for initial payments, combined with car loans, the upper middle class is attracted.
The mobile handset market in 2010 saw emerging players gaining market share, while Nokia slipped. According to IDC’s India Quarterly Mobile Handsets Tracker, 2010 was expected to end with handset sales of 155.9 million units.
“The handset market got even more crowded in the lower- and mid-market segments, with the entry of newer players offering innovative models at attractive prices,” said Anirban Banerjee, AVP, research, IDC India. 3G device sales are expected to account for 16.7% of total sales in 2010, up from 9.2% in 2009.
Plugging in, reaching out: Media
2010 has triggered off a number of media developments that, going into 2011 and beyond, will impact what is consumed on media and how media are themselves consumed.
Media expansion beyond large cities, the growth of regional media (including print), and for television the growth of DTH beyond the cable geographies and the flexing of network power were all in evidence.
Ronnie Screwvala, MD and founder-CEO, UTV Software Communications, said, “DTH is a constructive story. Anywhere else in the world, it is an exclusive, premium proposition. In India, it has become a substitute for cable.”
Uday Shankar, CEO, Star India, agreed that there would be an increase in network efforts from broadcasting companies. However, he cautioned, network power was not just about creating a bunch of channels, but about creating quality and geographical impact. “Differentiation is also becoming very important for TV, in the content, commercial, talent management and brand positioning spaces,” he added
Acknowledging the importance of network, Rajesh Kamat, CEO, Colors and group COO, Viacom18, said that with Colors established, the network will launch a movie channel this year and is evaluating the launch of regional channels.
“In the niche segment, we have MTV, Nick, Vh1. We might add on DTH-based pay channels. Our Sun 18 alliance has taken off well too,” he said.
The media space is getting to be about what consumers want. “It’s the biggest media challenge,” Shankar said. “All efforts are centred around reflecting society and its aspirations.” And so we see more non-metro, small-town stories in TV soaps and more reality shows that younger viewers prefer to soaps.
And so we saw MTV’s recent re-positioning, with its new expression: “Stay Raw”. Aditya Swamy, channel head – MTV India, said, “Today’s youth are real, brash and unmixed. It is this side that MTV taps into with its new philosophy of ‘Stay Raw’.”
Side by side, digital media continued to expand their impact. Neeraj Roy, MD and CEO, Hungama Digital Media Entertainment, said, “We are poised for a media consumerism of a different kind, thanks to digital media. We will see the creation of an entirely new ecosystem of applications that will deliver content to consumers at the location they are in. The two key drivers here are device and connectivity. The advent of 3G and 4G will further enhance the pace.” He said we would first see the digitisation of existing content, followed by creation of new content.
Screwvala believes that content especially created for digital media is the way to go. “Digital delivery of content at affordable rates is going to become a game changer. Younger consumers who don’t control the TV remote and don’t watch soaps, will be the main consumers of content that they can control and consume in their space and time,” he stated. UTV and Hungama are creating such apps and content.