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Young & restless

Tech-savvy professionals with large incomes are influencing consumption patterns of the older generation and rural youth. Nabankur Gupta writes. HT-C fore Survey

india Updated: Oct 23, 2011 02:09 IST

Indian consuming patterns have shifted towards the young and restless. We felt the first impact of this in urban areas five years ago. This is because urban areas have tech-oriented jobs that give youngsters high disposable incomes. They are also highly tech-savvy. Crucially, they influence rural migrants, who work lower down the value chain.

Partly because of this, the consumption patterns of the young, urban professional have moved to rural areas, the SEC B and C regions. Indeed, the very concept of SEC A, B, C is changing because in terms of consumption "rural" is blurring into "urban" and there is more integration of the rural market with the urban.

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These young, urban consumers want to lead a life of comfort and luxury. They want to live in the present, and this is a huge change in mindset from the previous generation.

As a result, EMIs have boomed. They wants to borrow money to buy everything from consumer durables to automobiles, houses and jewellery, while using plastic money for luxury items and in lifestyle areas such as entertainment and impulse-buying. This young group is influencing the debt-averse older generation, encouraging their members to also consume on credit.

But as you move across the different levels of disposable income within this group, the concept of luxury changes. At the bottom, it could just be more diverse food and clothing, in the middle it could be two wheelers and colour TVs. It is not a homogeneous group. In terms of markets, India can actually be thought of as 30 to 40 countries. In each of these, the definition of "living better" changes.

For instance, in the south and east, till recently, people didn't like eating food or even vegetables that were anything but a day old and so they didn't buy the larger refrigerators. Even families with high disposable incomes stuck to 165-litre refrigerators. They wanted to store only what absolutely needed refrigeration. This is gradually changing.

In the north, people have a tendency to make a loud statement of "having arrived". There is a trend to spend disproportionately on products that connote status, such as large cars, big white goods, branded accessories and top-end mobile phones.

In the west, people are quieter and more careful about displaying their wealth. They will invest their money carefully and in a need-based manner. Their desire to move up across product categories stems from a desire for quality and performance rather than loud display.

In the south, people make even more informed decisions, propelled by value and a longer term view.

In Mumbai, for example, consumption in Dharavi resembles that in rural markets in some ways. At the same time, upwardly mobility is a huge force because the slum is located in the larger environment of Mumbai. Upward mobility is actually happening uniformly across these 30 to 40 consuming countries.

People constantly want to move to bigger homes with more bedrooms, funding this through loans. This trend is moving downwards to tertiary markets, such as Akola and Amravati districts in Maharashtra.

The sociological impact of this is that in non-urban markets borrowing from banks is losing its stigma. This is an influence of urban consuming patterns.

TV is the biggest catalyst of aspirations. Soap operas are depicting lifestyles and influencing the way people live every day. The second catalyst is word-of-mouth, through which dormant wants start becoming desires to own things. Today, because credit is available easily, people can satisfy these desires quickly.

Another example is the way people are changing mobile phones every one or two years. But decisions are being driven by the phone's specifications, not the brand. This is one reason why the market leader Nokia has perhaps lost market share.

A village shopkeeper, for instance, might want a mobile phone that has a battery life of two days' talk time, a torch and makes texting easy. If it doesn't, he will change brands.

This is leading to shifting market shares based on changing consumer behaviour. Consequently, brands are being pushed to re-invent and listen more intently to the consumer, with their ears to the ground.

Nabankur "Nobby" Gupta is the Mumbai-based founder and CEO of Nobby Brand Architects and Strategic Marketing Consultants