Journal of the Asia Pacic Economy Vol. 13, No.

2, May 2008, 204226

Psychographic segmentation of Indian urban consumers

Rohit Vishal Kumara, and Amitava Sarkarb
a Department of Marketing & Finance, Xavier Institute of Social Service, Ranchi, Jharkhand, India; b West Bengal University of Technology, Salt Lake City, Kolkata, West Bengal, India

Since 1991, India is emerging as a key destination for marketers from across the globe. However, little work of relevance has been undertaken to understand the Indian Consumers. It is believed that the Indian metropolitan consumers are fairly homogeneous in nature. In this paper, we report the results of a survey conducted amongst 560 respondents in the ve metropolises. The objective was to segment the metropolitan consumers on behavioral aspects and to understand their consumption pattern. The study, designed on the basis of VALS, uses cluster analysis to segment the Indian metropolitan consumers into six behavioral categories, namely Well Settled, Strugglers, Enjoyers, Conservatives, Self Concerned and Realist. The segments have been proled in terms of their product ownership, Activities and Interests, Financial Investment avenues and Media habits. Implications for marketing and government policy have been discussed. Keywords: segmentation; marketing; India psychographics; cluster analysis; lifestyle;

JEL Classications: R11, M31, C49, O53

Introduction With the introduction of the New Economic Policy in 1991 and the adoption of liberalization, privatization and globalization as the key drivers of the Indian Economic Policy, a slew of economic reforms were undertaken by the Government of India. These reforms have far-reaching implications on how the Indian economy evolved over the next 15 years. A major thrust was on opening up of the Indian markets to competition from abroad. The offshoot was that the Indian consumer, who was until then, protected from the developments of the rest of the world, now suddenly found himself being courted by companies from around the globe. The steady growth of consumer nance options, lowering of interest rates and curtailment of ination at reasonable levels over the past decade and a half has

Corresponding author. Email: rohitvishalkumar@yahoo.com

ISSN: 1354-7860 print / 1469-9648 online C 2008 Taylor & Francis DOI: 10.1080/13547860801923590 http://www.tandf.co.uk/journals

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resulted in general increase of income levels of the middle and the rich classes in India. This can be amply understood by the fact that India had about 20,000 crorepati1 households in 2004, as opposed to only 5000 crorepati households in 199596 (Agnihotri 2004). The rapid increase in income levels in the hands on ordinary Indians meant that over a short period of time, the Indian economy changed from a socialist oriented economy to a consumption-led economy. The changes can be aptly understood in the words of Kishore Biyani, the CEO of Pantaloons Retail India Limited (Biyani and Baishya 2007). The changing demographic proles, increasing income levels, urbanization, technology, globalization and a free ow of ideas from within and outside the country, has brought about a dramatic shift in consumer taste and preferences. Consumer segments [in India] are maturing faster than ever. The rapid change in the Indian consumers attitudes and proles, made it difcult for organizations to cater to the consumer needs. Indian companies more used to licensing policies and under-production during the pre-liberalization period faced the uphill task of catering to the changing consumer taste and preferences. This lead to a rash of research to understand the Indian consumer. Unfortunately most of the work undertaken in the Indian context remained in the domain of commercial marketing research agencies and was focused on specic organizational and brand requirements. For example, the now defunct magazine Advertising & Marketing carried out various researches on proling consumer behavior in the Indian context (Jacob 1997; Prabhakaran 1996; Shirali and Singh, 1997). MTV, in collaboration with IMRB International, conducted a study on 1834 years old in India and segmented the Indian youth into six segments Cultural Mists, Style Bhais, Middle Class Majnus, Main Bhi NRI, Rich Brats and Nerdy Nandus (Businessworld Editorial Team 2005). Similarly, the Outlook news magazine, in collaboration with NFO Research, carried out a research on the sexual orientation of Indian women and classied the modern Indian women into ve segments (Deb 2003). Pantaloons Retail classied India into three segments India I, India II and India III (Biyani and Baishya 2007) for its own internal usage etc. All such researches, mentioned above, suffered from the limitation that they were conducted to meet the marketing requirement(s) of a particular organization. Academically, India lacked a major study which proled the Indian consumers. Some work of note had taken place in the Indian context; but except for the study of National Council of Applied and Economic Research (NCAER), the other studies have been more region-specic in nature. As such, a growing need was felt to conduct an academic study of the Indian consumers and to provide a prole of the Indian consumers that could be used irrespective of the brand or the organization concerned. The current study attempts to ll in the gap amongst the urban consumers of India. In this paper we propose to study the metropolitan urban consumers of India with the following objectives: (1) to segment the metropolitan urban consumers into distinct behavioral groups, and (2) to understand the lifestyle pattern of the

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identied behavioral groups and to understand the implications for marketing of product and services. This paper is organized as follows: in the next section we review the existing literature. We do not propose to give an exhaustive review of literature but provide a brief overview of international studies and concentrate in some detail on the Indian literature. In the third section we provide an outline of the methodology followed and in the fourth section we prole the identied segments. In the fth section we take a look at the consumption pattern of the various segments in terms of product ownership, computer and internet usage, avenues of investment and media habits. In the sixth section we provide our observations and discuss some marketing implications for companies operating in India. Review of literature In order to understand the consumers and their preferences, various demographic and lifestyle studies have been carried out across the world. For example, significant studies have been carried out try and understand the correlation between social class income and buying behavior (Slocum and Mathews 1970) and social class and lifestyle as a predictor of shopping behavior (Rich and Jain 1968). Studies have also been carried out to understand the importance of Life Status and Consumer Preference (Andreason 1984) and the importance of consumer behavior and cultural values (Henry 1976). In addition, there are studies relating to the inuences of reference groups on consumer brand purchase (Stafford 1966) and on the inuence of the reference group on product and brand purchase (Beardon and Etzel 1982). Studies have also been conducted to understand the impact of role of sex on purchase decisions (Qualls 1987); on working wives and expenditure on service (Bellanti and Foster 1984) and the use of advertising for making purchase decisions (Eighmey 1997). Similarly, studies have been conducted to understand consumer proles for various products. Notable amongst them are studies on credit card usage and lifestyle (Plummer, 1971; Slocum and Mathews, 1969), VCR ownership and lifestyle (Potter et al. 1988), drinking and driving amongst young males (Lastovick et al. 1987), heterogeneity between the senior citizens market (Day et al. 1987) etc. Research has also been carried out to understand the prole the women in the USA, UK and France (Doughlas and Urban 1997). Lifestyle research has also been extended to the new medium of the Internet (Eighmey 1997). In the Indian context, the studies have been comparatively fewer in number. Deepa Kapoor studied the interrelationship between religiosity, caste prejudices, and conservatism and life styles among the four major faith groups: Hinduism, Islam, Sikh and Christianity. The research was carried out under the assumption that the individuals stable and persistent beliefs and ideologies social, economic, political and region determined the lifestyle of the individual. It concluded that religiosity had a lasting impact on all the other aspects and was a major inuence on maintaining the caste prejudices and conservative outlook; which in turn inuenced

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the lifestyle pattern of an Indian consumer. The study was carried out in the city of New Delhi (Kapoor 1985). One of the most comprehensive studies conducted in India to date has been the study of National Council of Applied Economic Research (NCAER) conducted in 199394. The study had a sample size of 2.81 lakh (1 lakh = 1 105 ) households (65% urban and 35% rural) and covered 410 districts across the length and breath of the country. It mapped the ownership and purchasing patterns of 281,768 consumer durables and 18,730 consumer non-durables. The study classied the consumption behavior by using real disposable income corrected for regional imbalances. Factor and Cluster analysis was used to segregate the Indian population into ve major groups based on the real disposable income and the ownership of durables and consumption of non-durables: Very Rich (6 million), Consuming Classes (150 million), Climbers (275 million), Aspirants (275 million) and Destitute (210 million). According to the study, Indian population would blossom into an inverted pyramid with the Very Rich and the Consuming Classes driving the Indian market (Rao and Natarajan 1996). The population projections by the study match the Government of Indias population estimates by age classes. Seema Kapur (1995) tried to understand the linkages between the ownership of two-wheelers and the behavior of their owners. Adite Chatterjee (1995) conducted a study to understand the brand association of Denim brands with lifestyle attributes. The study was qualitative in nature and used only focus groups to arrive at its ndings. Another study, by the same author, was conducted to provide an understanding of changes in personality traits, family relationships, personal goals, attitude toward advertising and favored products among Indian consumers aged between 1545 years. The study (again based solely on focus groups) concluded that Indian consumers were different and could not be classied into any known norms (Chatterjee 1996). Shirali and Singh (1997) carried out a study on status symbols for Indian males and tried to identify similar lifestyle segments based on the classication of the status symbol. The study surveyed 623 respondents in the top four metropolitan centers in the country all with at least one car at their disposal. The study found that there was concordance amongst the males in the top four metros as regards what they considered as status symbols and classied Indian Males into four different segments Yuppies, Already Arrived, Getting There and Wont Be. Some other studies have also been carried out in the Indian context. Sharma and Chaubey (2004) carried out a study with the aim of assessing the consumers awareness and their attitude towards different mobile service providers in the city of Lucknow. Another study attempted to segment the consumers in Kolkata market using their brand preferences for toothpaste brands. The study concluded that the consumers in the Kolkata market could be segmented into ve groups based on their toothpaste brand choices (Kumar and Mitra 2004). Similarly, studies have also been taken up to understand the effect of psychographics on the purchase frequency amongst college goers in Kolkata (Roy and Goswami 2007). Studies have also been carried out to study various aspects of disease and substance abuse

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(Medhi et al. 2006) and for identifying means of better governance in rural and urban areas (Bhagat 2005). Biases present in the Indian society have also been studied (Sudha and Rajan 1999). Thus, it can be clearly seen that there is a signicant lack of work of a pan-India nature. This paper, based on the study of urban metropolitan consumers in the top ve metropolis of India, is an attempt to ll the lacunae to some extent. Outline of the study The present study is based on the premise that the metropolitan urban consumers in India can to treated as a fairly homogeneous segment. This claim is not without foundation as researches conducted in the USA have shown that there does exist a high degree of integration between the urban youths of various countries (Hawkins et al. 2002; Tully 1994). In the Indian context, we are not aware of any work that has been undertaken to either prove or disprove the claim; but it can be safely assumed that the growth of communication technologies, travel and transport and opening up of new job opportunities in various services sectors has led to an intermingling of the Indian urban population leading to more homogeneous views and opinions. This claim is also augmented by the fact that the work was conducted on SEC A and B households. It is widely believed in marketing circles that SEC A and B households have a higher propensity to consume high value items (McDonald and Dunbar 2004) and thereby would be more aware and integrated with fashion, fads and trends in domestic and international markets. It must be mentioned here that the SEC A and B segments have been treated as a single homogeneous mass, and such city level analysis has not been conducted on the data. In traditional economic literature, consumption is looked upon in terms of product and price. A product is conceived of as a bundle of attributes that yield a particular benet on consumption and is purchasable at a given price. Given that all the consumers in a particular market face the same product, it is but obvious that economists tend to take price as the differentiating variable. However, marketing practitioners generally believe that price is one of the many factors that inuences consumption. For example, marketers believe that even though a blue collar and a white collar worker may earn the same level of income, differences of social class will compel them to spend the income in different ways (Schiffman and Kanuk 1997). The identication of the attitudinally afuent consumers consumers who do not have the income needed to be considered afuent yet desire to have the best proves the inability of income or price to be a causative factor. These consumers buy less, but buy better quality and they achieve this by assigning priorities to the object of desire and gradually working their way towards possession of the desired product (Rodkin 1990). In marketing literature, various methods have been proposed to study consumer segments and behavior. However, the most unique of these is psychographics in which the notion of lifestyle is embedded. The term stands for psychological traits that a marketer ties to consumption. Psychographics is measured by questionnaires

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resembling personality interviews along with a wide range of items measuring attitudes and issues related to lifestyle preferences. It is generally believed that psychographics tends to give a greater insight into why products and services are purchased (Wells 1975). As the objective of our study was to segment the urban metropolitan population into distinct behavioral groups and to understand their lifestyles for marketing purposes; we decided to use the psychographic approach to segmentation. Within the psychographic domain, Values and Lifestyles (VALS) (Mitchell 1984) and Attitudes, Interest and Opinions (AIO) (Wells and Tigert 1971) are the two predominant approaches. Our study is based on the VALS methodology in principle, to study the urban metropolitan consumers. The methodology The study focused on the metropolitan population of India residing in the cities of Mumbai, Kolkata, Delhi, Chennai and Bangalore, thereby covering 19.10% of the total urban population of India and 50.51% of the population residing in metropolitan cities as per the census of India 2001. The target respondents for the study were individuals belonging to SEC A and B households, between 21 to 70 years of age. A total of 560 interviews were conducted in the ve metropolises. To maintain randomness, the sampling frame was determined using a mix of pin code area and the Electoral Registers. At the rst level, each metropolis was dened in terms of the pin code area and subsequently the desired numbers of pin code areas were selected randomly. For each of the selected areas, the electoral registers were procured and used as a sampling frame. In case the pin code area was bifurcated by more than one electoral zone, the electoral zone with the largest coverage was used. Not more than ten completed interviews were conducted in a single pin code area. The interviews were conducted using the in-home interviewing technique (Robertson and Conway 2003) using a structured questionnaire. The questionnaire contained 60 statements on attitudes, opinions and interests on various aspects of Indian economy and culture. In the rst iteration, a list of about 100 statements was drawn up by the authors by consulting the statements of the VALS framework (Mitchell 1984) and other sources, such as newspapers and magazines. This list of 100 statements was given to senior professors of marketing at the University of Calcutta and other management institutes in and around Calcutta. They were asked to identify independently all those statements they thought would be of relevance to the urban metropolitan consumer in the current Indian context. From this list, 65 statements were chosen. Care was taken to include all those statements on which the majority of experts were in agreement. In the second iteration, a small pre-test questionnaire was developed and was administered to 35 people in Calcutta chosen at random. Out of the 65 statements it was found that three statements were giving completely skewed data and, as such, were dropped from the study. Of the remaining 62 statements a few statements were found to be difcult to understand because of wording-related issues. The

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wordings of such statements were simplied and a total of 60 statements retained for nal input. The breakup of the statements and the broad grouping is as follows: Indian Business (seven statements), Culture (ve statements), Education (eight statements), Politics (ve statements), Products (ve statements), Social Issues (six statements), Self Belief (12 statements), Womens Dignity (ve statements) and Future Prospect (seven statements). Each statement was rated on a six-point scale Disagree Strongly (1), Disagree Mostly (2), Disagree Somewhat (3), Agree Somewhat (4), Agree Mostly (5) and Agree Strongly (6). A DK/CS point was also provided to record non-response or refusals. However, the respondents were not made aware of the DK/CS point. Segmenting the dataset In a bid to segment the urban consumers we decided to use cluster analysis on the statements. There has been much discussion in the literature of cluster analysis regarding choice of variables in cluster analysis however three broad areas of practice can be outlined. Some researchers prefer to use the entire battery of individual items. Others tend to transform the data to principal components or other factor scores. Still others prefer to choose a subset of the original dataset and run cluster analysis on the subset of individual items. However, it has been shown that using all the variables in cluster analysis tends to provide sharper betweencluster differences, internal reproducibility and external discrimination (Fiedler and McDonald 1993). Thus, it was decided to use the all-variable approach for cluster analysis. As such, 52 statements which had less than 10% DK/CS were used in the nal k-means cluster analysis. However, one of the biggest drawbacks of cluster analysis still remained that is, determining the actual number of clusters (Dunham 2005). The problem of deciding on the number of clusters has been of great signicance in the literature of cluster analysis. Intuitively, the problem of deciding on the number of clusters can be looked upon as a problem of maximizing the dispersion of cluster centers (between cluster distances) and minimizing the dispersion within cluster members (within cluster distances). The earliest work can be attributed to Ball and Hall (1965) and continues even today. Various rules known as the cluster index have been proposed by various authors to decide on the nal number of clusters (Ball and Hall 1965; Calinski and Harabasz 1974; Friedman and Rubin 1967; Fukunaga and Koontz 1970; Ratkowsky and Lance 1978; Scott and Symons 1971; Wedel and Kamakura 1998) . Studies have been carried out to measure the ability of the cluster indexes to predict accurately the number of clusters. For example, Milligan (1981) carried out a Monte Carlo simulation of 30 cluster indexes and concluded that Calinski Harabasz index to have the best predictive power. Subsequently Weingessel et al. (1999) carried out an exhaustive review of 14 cluster indexes on datasets known to have a given number of longitudinal and elliptical clusters. Following the study

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of Weingessel et al. (1999) we decided to use the following ve cluster indexes, namely Calinski and Harabasz (1974), Ratkowsky and Lance (1978), Scott and Symons (1971), TraceW (Edwards and Cavalli-Sforza 1965) and the Likelihood Index (Wedel and Kamakura 1998) to identify the number of clusters in our dataset. The cluster indexes were computed using the R Software for Statistical Computing (R Development Core Team, 2005) using the cclust package (Dimitriadou 2005). The likelihood ratio was computed using WEKA (Witten and Frank 2005). A detailed analysis of the cluster indexes suggested that there may be ve to seven clusters in the dataset. However, that still left us with a wide variety of choices. To decide on the nal number of segments the data were analyzed using the outputs of the cluster analysis on 5, 6, and 7 segments respectively. The analysis suggested that the six-segment solution provided the best overall segmentation in terms of identiability, substantiality, accessibility, stability, responsiveness and actionability (Vriens 2001). As such, the six-segment solution was selected for further understanding the urban metropolitan consumers.

The urban segments After deciding on the number of segments, the next task was to study the segments and provide a descriptive name to these segments based on the manifest demographics and psychographic characteristics. Table 1 provides the demographic prole of the segments and Table 2 provides the mean scores on the overall statement groups. In order to identify the signicant means, Tukeys Honest Signicance Difference Test at 5% level of signicance was computed for Age, number of job changes and family size. It is the preferred choice of post-hoc comparison because it has greater power than other similar tests and is readily available for computation

Table 1. Demographic proles of the segments.

Well Settled Strugglers Enjoyers Conservative Self-Concerned Realist (Segment 1) (Segment 2) (Segment 3) (Segment 4) (Segment 5) (Segment 6) 1. Average Age (years) 2. Family Size (nos) 3. MHI (Rs. pm) 4. Job Changes (Nos) 5. Marital Status (%age) Married Bachelor Widower Divorced 6. Occupation (%age) Private Sector Public Sector Self Employed 7. Working for (years) 8. Percent of Population 41.32 3.14 16,859 0.99 72.22 19.75 6.17 1.95 21.62 20.27 56.76 15.84 28.93 37.10 3.10 14,289 1.79 53.17 36.15 7.94 2.38 25.00 9.62 63.46 10.36 22.50 37.57 3.22 23,587 1.31 61.48 35.25 1.69 1.14 39.13 23.19 34.74 12.83 21.79 44.60 3.74 14,550 2.61 70.00 20.00 10.00 26.32 10.53 57.89 19.82 8.93 33.31 1.84 21,977 3.39 28.89 66.67 4.44 4.44 42.86 10.71 42.86 8.18 8.03 35.96 2.71 19,769 3.00 41.82 36.36 9.09 12.73 35.90 10.26 53.85 12.62 9.82

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Table 2. Mean scores on psychographic statements (overall).

Well Settled Strugglers Enjoyers Conservatives Self-Concerned Realist (Segment 1) (Segment 2) (Segment 3) (Segment 4) (Segment 5) (Segment 6) Women Issues Social Issues Products Future Education Culture Business Themselves 5.43 5.44 4.88 4.96 4.83 4.86 4.75 4.73 4.81 4.91 4.47 4.47 4.40 4.36 4.44 4.46 5.12 5.39 4.80 4.67 3.95 4.51 4.45 4.34 5.48 5.54 4.98 4.43 5.21 4.66 4.82 4.39 4.25 4.04 4.07 4.04 3.75 3.69 3.77 3.59 5.19 5.25 5.09 4.31 3.51 3.39 4.11 3.65

(Keppel and Wickens 2004). Table 3 shows the computed probability values of the signicance difference test along with the means, which are different. As can be seen from the table, segments seemed well separated in terms of Age, number of job changes and family size. A review of the demographic prole of the segments reveals that Segment 4 is the oldest segment in terms of age and has one of the lowest monthly household incomes. It also has the largest family size and has been in the workforce for about 20 years. Segment 5, on the other hand, is the youngest in terms of age, smallest in terms of family size and has the one of the highest monthly household
Table 3. Tukeys HSD probabilities.
Well Settled Strugglers Enjoyers Conservatives Bachelors Realist Mean (Segment 1) (Segment 2) (Segment 3) (Segment 4) (Segment 5) (Segment 6) Age Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6 Job Change Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6 Family Size Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6 41.320 37.100 37.560 44.600 33.310 35.960 0.990 1.790 1.310 2.610 3.390 3.000 3.140 3.100 3.220 3.740 1.840 2.710 0.060 0.137 0.605 0.003* 0.076 0.226 0.927 0.024* 0.000* 0.000* 1.000 0.993 0.036* 0.000* 0.253

1.000 0.006* 0.523 0.994

0.013* 0.393 0.972

0.000* 0.007*

0.906

0.790 0.658 0.008* 0.047*

0.138 0.001* 0.000*

0.786 0.984

0.968

0.977 0.030* 0.000* 0.381

0.139* 0.000* 0.124

0.000* 0.000*

0.009*

The gures marked with * are signicant at 5% level of signicance.

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incomes. The number of job changes is high with roughly four job changes in about 8 years of work experience. This segment is also dominated by bachelors, with about 67% of the people in the segment having not married to date. Segment 6, which is the next youngest segment, has a moderate family size and a fairly large monthly household income. It has been in the workforce for about 12 years and has had about three job changes. This is the only segment that has a sizable divorced population. Segment 1 is a fairly old segment with a well to do monthly household income. The characteristics of the members of Segment 1 are that they have the least number of job changes and the highest number of married people. They also constitute the largest segment of the population. In this segment, it is also seen that about one in every ve people are in the government sector. Segment 3 has fairly old people with the largest monthly household income. It should be noted that Segment 5 and Segment 3 have a sizable percentage of people employed in the private sector. Segment 2 is the segment with the lowest monthly household income and the majority of its members are self-employed. Based on the demographic proles and the analysis of their responses to the psychographic statements, the segments were classied under the following nomenclature. Segment 1 This segment has been named the Well Settled segment. This segment could be thought of as comprising people who have established themselves in their respective elds. They are slightly older and have been in employment for the past decade and a half. They are not keen to change jobs, they normally have one kid and have a decent monthly household income. They have moderate to strong opinions on various issues, are happy with the outcome of their lives, and they are slightly conventional in nature but are open to various other inuences. Segment 2 This segment has been named the Strugglers segment. This segment could be thought of as comprising people who could not quite make it in life and are now struggling to make ends meet. With an average family size of three and the lowest income per month, this segment is mostly self-employed and has been working for about a decade. They are not willing to speak up on various issues and tend to play safe. Slightly conservative in nature, not too condent, nor willing to take risks, they tend to spend more than they would like to save and often feel left out of the things going around them. Segment 3 This segment has been named the Enjoyers segment. This segment could be thought of as the apex segment in terms of urban consumers. They have the

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highest monthly household income and are employed mostly in the private sector. They have a liberal attitude and have strong to moderate opinions on various issues. They are happy with the outcome of life and are willing to take risks and want to live life to the fullest. They are satised with themselves and try to enrich their lives. They believe in consumer rights and protection of the environment and are strong believers in modern technology. Segment 4 This segment has been named the Conservative segment. This segment could be looked upon as people who have given in to the fates of life. The oldest of the lot, they earn the least in terms of income. The family size is the largest. They are mostly self-employed or engaged in the private sector. Conservative in nature, they do not prefer to take any kind of risk in terms of work and life. Financially, they like to save money. Somewhat condent, they dont see a bright future for themselves. They believe in government participation in the economy. Segment 5 This segment has been named as the Self Concerned segment. This segment is the youngest segment identied by the study. Dominated by bachelors, they have among the highest incomes, and the smallest families to support. This segment is characterized by the highest number of job changes approximately 3.4 job changes in the short employment career. This segment is characterized by a strange reluctance to voice opinions. They showed a marked indifference to the various issues. Segment 6 This segment has been named as the Realist segment. This segment had a sizable presence of divorced people. It has the second highest number of job changes, and earns a sizeable income This segment is mostly employed in the private sector or is self-employed. This segment has liberal views. Financially, it likes to save money. Social Status is an important part of this segment. These people believe in conservation of natural resources and environment friendly policies. Responses on various statements were more on the practical side; hence the nomenclature. In subsequent sections, we shall use the segment nomenclature to identify the segments. Patterns of consumption In this section, we undertake to look at the impact on consumption of products and services by these segments in a bid to better prole these segments. This section reports the differences between the various segments on the following aspects:

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Ownership of Products, Activities and Interests, Financial Products and Services and Media Consumption habits.

Ownership of consumer durables In terms of consumer durables, an interesting picture emerged. Table 4 shows the ownership pattern of major household consumer durable goods. Color Television, Fridge, Gas Stove and Water Filter seemed to be the consumer durables that were common across households in the segments. In the Conservative segment, there seems to be an absence of any communicating device, such as the Mobile Phone and the Telephone. The decline of the telephone as a preferred medium of communication can be seen from the table as, in the Self Concerned
Table 4. Ownership of consumer durables. Well Settled (Segment 1) Color TV (93) Music System (82) Telephones (71) Fridge (69) Food Processor (63) Gas Stove (62) Mobile Phone (59) Washing Machine (51) Microwave (37) Water Filter (31) Air Conditioner (20) Conservative (Segment 4) Gas Stove (98) Color TV (94) Fridge (94) Water Filter (46) DVD / VCD (40) Food Processor (38) Washing Machine (36) Music System (30) Microwave (26) VCR / VCP (20) Strugglers (Segment 2) Color TV (91) Gas Stove (76) Fridge (70) Music System (69) Water Filter (53) Washing Machine (36) Telephone (34) Mobile Phone (33) DVD / VCD (27) Food Processor (23) Self Concerned (Segment 5) Mobile Phones (82) Music System (80) Color TV (77) Gas Stove (72) Fridge (64) Food Processor (50) Washing Machine (45) Water Filter (41) DVD / VCD (34) Microwave (34) Telephone (32) Air Conditioner (35) Digi-cam (25) Enjoyers (Segment 3) Color TV (89) Gas Stove (87) Fridge (84) Food Processor (79) Telephone (73) Mobile Phone (73) Water Filter (71) Music System (63) Washing Machine (52) DVD / VCD (45) Computer (40) Microwave (36) Walkman (35) Geyser (34) Air Conditioner (34) Realist (Segment 6) Music System (81) Color TV (78) Gas Stove (78) Fridge (71) Mobile Phone (65) Water Filter (64) Food Processor (58) DVD / VCD (40) Telephone (31) Microwave (29) Air Conditioner (27) Computer (27)

(Figures in parenthesis represent percent of ownership)

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and the Realist segments roughly 30% had access to telephones, and the use of mobile phones was dominant in these two segments. Music Systems fared fairly high on the durables list of all segments except the Conservatives. The presence of Air-Conditioners, Microwaves, DVD Players, Washing Machines etc featured prominently in the hands of the well-to-do segments. Their presence was also seen in the Conservative and the Strugglers segments, but in fairly low numbers The Enjoyers segment had the maximum durable ownership. It also was the largest owner of exercising equipments, answering machines, electronic cooking ranges etc. The Self-Concerned segment showed a preference for ownership for DVD players, digital cameras, camcorders, microwave ovens, computers etc. The Realist segment showed a similar ownership pattern. The Conservative and the Struggler segments seemed to have much fewer consumer durables.

Computer and internet usage Another interesting aspect was the usage of computers as reported by the study (Table 5). Seventy-nine percent of the Enjoyers said that they used computers regularly, followed by the Realist (46%), Self-Concerned (29%) and the WellSettled (28%) segments. The hours per week spent on computers and the internet were again quite good. The least amount of time spent on computers was reported by the Conservative segment (7.9 hours/week) and the highest was reported by the Realist segment (43.9 hours/week). Spending time on the internet is seen to be a fast emerging activity. The Strugglers segment spent the least amount of time on the net (4.4 hours/week), while the highest time was reported by the Self-Concerned segment. Email, chatting, computer games and web browsing emerged as the most conducted activities on the internet across the segments. The gures regarding regularly use of computers are an eye opener. It has been reported that roughly 2.9% of all Indians regularly use computers as opposed to 35.5% in Europe and 68.8% in America. It can be seen that some of the segments rival European countries in terms of usage; thereby breaking a myth that Indian consumers are not adept at computer usage. The growth of computer and internet usage amongst the urban segments can well be attributed to the growth
Table 5. Usage of computer and internet amongst segments. Segment 1. Well Settled 2. Strugglers 3. Enjoyers 4.Conservative 5. Self Concerned 6. Realist Regularly Using Computer (%age) 21.60 16.80 44.30 14.00 22.20 31.50 Computer Usage (hours/week) 18.50 8.10 17.00 7.90 33.00 43.90 Internet Usage (hours/week) 9.20 4.40 10.00 5.80 20.50 16.10

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of cyber-caf s, where the charge for using a computer or the internet is low e roughly Rs. 10 per hour and the facilities are available throughout the major part of the day (Haseloff 2005).

Activities and interests Table 6 presents the top 10 activities undertaken by the different segments. The Indian urban consumers showed a marked disinterest in taking part in any kind of physical activity; especially in participation in sports and games. Walking was the only physical activity that was common across the various segments. Except for the Self-Concerned, Enjoyers and Realist segments, waking as an activity does not gure prominently in other segments. Other sports that seemed to gure in the segments were playing cricket, badminton, and football. In the Indian context, it must be kept in mind that cricket, badminton and football are common activities and can also be played in a disorganized and ad-hoc fashion. As such, it is highly unlikely that these activities contribute signicantly to the health of the segments. Playing basketball and going to gym for a workout were some of the new activities that were seen in the Realist and the Self Concerned segments. Other
Table 6. Games and other activities undertaken by the segments. Well Settled (Segment 1) Listening to Music (69) Walking (43) Gardening (32) Cooking Activity (29) Playing Football (24) Eating Out (23) Playing Cricket (19) Visiting Stores (16) Going to Theatre (15) Visiting Amusement Parks (14) Conservative (Segment 4) Eating Out (98) Listening to Music (86) Walking (45) Cooking Activity (20 Playing Cricket (20) Gardening (18) Playing Cards (16) Visiting Stores (12) Swimming (12) Playing Badminton (10) Strugglers (Segment 2) Listening to Music (79) Eating Out (54) Walking (37) Cooking Activity (34) Playing Cards (26) Visiting Stores (20) Badminton (20) Gardening (16) Swimming (13) Playing Chess (13) Enjoyers (Segment 3) Walking (67) Listening to Music (59) Eating Out (56) Computer Games (40) Visiting Amusement Parks (38) Going to Theatre (31) Visiting Stores (29) Cooking Activity (25) Practicing Yoga / Reiki (22) Playing Cards (21)

Self Concerned (Segment 5) Realist (Segment 6) Walking (93) Eating Out (93) Listening to Music (73) Cooking Activity (45) Visiting Shopping Malls (30) Backpacking / Trekking (23) Computer Games (17) Practicing Yoga / Reiki (16) Giving Dinner Parties (11) Going to Gym (11) Listening to Music (86) Walking (73) Eating Out (59) Cooking Activities (41) Playing Board Games (30) Visiting Shopping Malls (29) Swimming (23) Computer Games (20) Going to Gym (14) Playing Basketball (14)

(Figures in parenthesis represent percent of ownership).

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common activities were mostly indoor activities, such as playing cards, cooking, playing computer games etc which are mostly sedentary in nature. Gardening was an important activity in the Well Settled, Strugglers and the Conservative segments. In terms of Hobbies and Interests, it was seen that listening to music, shopping and baking or cooking were universal across segments. Visiting the theatre was an option in the Well Settled and the Enjoyers segments. Going to the gym, practicing reiki or yoga were some of the newer activities which were seen in the Self Concerned and the Realist segments. Visiting an amusement park was a common activity amongst the Strugglers, Enjoyers and the Realist segments. The analysis of the activities and hobbies showed that the segments have distinct and diverse activities, which helps in demarcating the segments in a better manner.

Avenues of investment In the aspect of investing, the Indian urban consumer seems to be a risk averse person (Table 7). The traditional mode of savings, such as Fixed Deposits or Term Deposits with banks, National Savings Certicates (NSC), Kisan Vikas Patra (KVP), Post Ofce Savings Schemes and Jewelry were some of the most preferred avenues of investments. It should be noted that all the investment schemes mentioned above are schemes launched by the Government of India to encourage savings by providing a guaranteed rate of return; this rate is much lower that what an investor will get from investing into various market-based funds or stocks and shares. Stocks and shares are, however, mainly seen in the Realist, Self
Table 7. Investment avenues amongst the segments. Well Settled (Segment 1) Fixed Deposit (78) Jewelry (18) NSC KVP (15) Real Estate (10) Post Ofce Savings (9) Conservative (Segment 4) Fixed Deposit (68) NSC KVP (24) Stocks & Shares (16) Public PF (12) Post Ofce Savings (10) Infrastructure Bonds (10) Strugglers (Segment 2) Fixed Deposit (69) Jewelry (16) NSC KVP (14) Post Ofce Savings (13) Stocks & Shares (6) Self Concerned (Segment 5) Fixed Deposit (67) NSC KVP (44) Jewelry (24) Stocks & Shares (18) Enjoyers (Segment 3) Fixed Deposit (89) Jewelry (42) Post Ofce Savings (31) NSC KVP (26) Public PF (15) Stocks & Shares (15) Realist (Segment 6) Fixed Deposit (98) NSC KVP (56) Jewelry (50) Stocks & Shares (40) Post Ofce Savings (23)

(Figures in parenthesis represent percent of use).

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Table 8. Insurance coverage amongst the segments.
Insurance Category Life Insurance Medical Insurance General Insurance Automobile Insurance Individual Pension Plan

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Well Settled Strugglers Enjoyers Conservative Self-Concerned Realist (Segment 1) (Segment 2) (Segment 3) (Segment 4) (Segment 5) (Segment 6) 70.20 9.30 3.10 6.20 0.60 56.80 8.00 8.00 1.60 82.80 36.10 19.70 9.00 6.60 62.00 6.00 2.00 4.00 4.00 84.40 44.40 4.40 33.30 2.20 100.00 65.45 3.60 41.80 3.60

(All gures are in percentages).

Concerned and the Enjoyers segments. The emergence of infrastructure bonds oated and guaranteed by the Government of India again reects the risk-averse attitude of the conservative segment. It is not surprising that jewelry constitutes a major form of investment for an Indian the idea of procuring gold as a safeguard during bad times being the motivation behind the tendency to hoard gold in form of jewelry. Investments into real estate are an emerging option amongst the Well Settled segment. If we take a look at Loans from Financial Institutions we see an interesting picture emerge. Home Loans have been taken by the Well Settled (5%), Enjoyers (8%) and the Realist (4%) segments. The Strugglers and the Conservative show a negligible presence of home loans. This is a reection of the real estate boom in the Indian economy owing to the lowering of rates of interest by the Government of India during the early part of the decade. The increase in home loans can also partly be attributed to the generous income tax benets provided by the Government. The two-wheeler loans (for the purchase of motorbikes and scooters) were a maximum in the Realist segment (9%), followed by the Well Settled (3%) and the Self-concerned (2%) segments. The Enjoyers segment has the maximum car loan (8%) followed by the realist (7%). A DEMAT Account (for transacting in shares and stocks) was present with about 15% of the Realist segment. In terms of insurance products and services, Life Insurance was the most coveted insurance product with the Enjoyers, Self-Concerned and the Realist segments (Table 8). It was also present in the other segments but to a lesser degree. A similar pattern was seen for medical insurance. Insurance against theft and natural calamities was seen only in the Enjoyers segment to any signicant degree. Investment into pension plans for post retirement benets was again negligible. It is hypothesized that this is because of the low exposure of the Indian market to insurance concepts and that as the market grows so will the penetration of insurance products and services.

Media habits The study found interesting media habits amongst the urban consumers (Table 9). In the case of print media, newspapers tended to dominate the Indian media

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Table 9. Media consumption pattern of the urban segments.

Media Category Newspaper Periodicals Television FM Radio Newspapers English Newspapers Vernacular Newspapers Magazines English (General) English (Business) Vernacular Well Settled Strugglers Enjoyers Conservative Self-Concerned Realist (Segment 1) (Segment 2) (Segment 3) (Segment 4) (Segment 5) (Segment 6) 91.40 33.30 97.50 24.10 59.30 52.70 81.00 34.10 99.20 46.00 53.60 70.10 98.40 79.50 98.40 59.00 100.00 100.00 72.00 30.00 100.00 16.00 38.90 69.40 93.30 48.90 73.30 26.70 73.80 42.90 92.70 32.70 85.50 40.00 76.90 73.10

72.2 11.1 37.0

53.50 9.30 55.80

91.80 15.50 100.00

26.70 6.70 73.3

81.80 36.40

61.10 16.70 72.20

(All gures in percentages of regular readers).

scenario. Similarly, in the case of non-print media, television viewership was almost universal. It was also found that approximately one third of all the segments, except the Enjoyers segment, preferred to read some kind of magazine or periodical. The Enjoyers segment showed an exceptionally high periodical readership. The Enjoyers and the Realist segments preferred to read both English and vernacular newspapers. The Self-Concerned prefer English newspapers whereas the Conservative and the Strugglers prefer to read vernacular newspapers. Similar trends can be found between English and vernacular magazines. In the non-print segment, television viewership is universal; whereas FM Radio listenership showed some interesting patterns. For example, FM radio listenership was low amongst the Well Settled, Self-Concerned and the Conservative segments. However, it was high in the Enjoyers segment followed by the Strugglers segment. The high presence of FM radio listenership amongst the Strugglers segment does not come as a surprise. The low cost of FM radio sets, coupled with the fact that most FM stations in India play popular movie songs, make them a perfect entertainment product for this low-income segment. To understand better the television viewership, the various television channels were segregated into seven groups Sports, News, Music, Movies, Knowledge, Religious and General. It was found that knowledge, news and movie channels tend to dominate the Well Settled and Enjoyers segment. The Realist and Self Concerned segment prefer watching the news, movies and knowledge channels. Movie channels were popular in the Strugglers and Conservative segments. The growth of religious channels was a phenomenon that was particularly interesting, with the Strugglers dominating the viewership. It is hypothesized that religious channels viewership will only grow in the future as demonstrated by the increase of religious channels from nil to over ve in the last half a decade (Rajshekhar 2006).

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Discussion The research raises several interesting points about the Indian urban consumer. The survey started out with the assumption that the urban consumers are homogeneous in nature. To maintain this homogeneity, SEC classication was used to identify the appropriate respondent. SEC, which is based on the highest level of education and occupation of the chief wage earner, inherently assumes that a person belonging to a particular SEC would have a similar behavioral pattern. However, this does not seem to hold true in the Indian context, as we discovered six new behavioral segments. If, on the vertical axis, we plot the monthly household income, and on the horizontal axis we plot the age (Figure 1), it can be seen that the Indian urban consumer is blossoming into an hourglass gure. It can be seen that the top of the hourglass is dominated by the Enjoyers and the Self Concerned segments. These segments have the highest disposable income on their hands but demonstrate different behavioral traits. Even though they are extremely lucrative to the marketers, the strategies the marketers need to follow would be quite different. Even though both segments would be interested in hedonic purchases, their buying behaviors may differ signicantly. The Enjoyers

Figure 1.

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could be more involved in hedonic purchases of products and services; whereas the Self Concerned would be more willing to purchase products and services that t in with their style of life. These two segments have shown an increasing interest in new age sports, such as back-packing, outdoor adventure etc. The consumption patterns regarding the media seem to suggest that these segments would be well targeted by newspapers and television. Low readership of magazines in the Self Concerned segment may well hamper effective marketing campaigns. These two segments could aptly be called the Hedonic Consumption Class of the Indian economy. At the neck of the hourglass could be found the Realist and the Well Settled segments. These segments have signicant disposable income on their hands but have different family size characteristics, which could affect their consumption pattern of products and services. For example, the Realist segment has a smaller family size (2.71) compared with the Well Settled segment (3.14); however, the percentage of married to singles differs signicantly amongst these segments. The Well Settled class is mostly married while the Realist class is mostly single, either by choice or compulsion. Both the segments have signicant possession of consumer durables and almost similar investment patterns. However, the Realist segment seems to be a more risk taking segment, as it has a signicant exposure in stocks and shares; which is conspicuously absent in the Well Settled segment. The insurance portfolio between the two segments differ signicantly, with 100% life insurance in the Realist segment but only 70% in the Well Settled segment. In terms of a marketing strategy, these segments would be looking for hedonic products and services but would weigh their decisions on practical aspects. Hence, these two segments could aptly be called the Hedonic-cum-Utilitarian Consumption Class of the Indian urban consumers. The bottom of the hourglass is dominated by the Strugglers and the Conservatives. Both segments have a similar income but tend to differ in terms of age, with the Conservative segment being the oldest of the lot. Both the Conservative and the Strugglers segments have a low possession of consumer durables. These segments have a large family size and, as such, their purchase patterns would be driven by bargains and value for money. Thus, these segments could be called the Utilitarian Consumption Class of the urban consumers. From the perspective of marketing, opportunities seem to exist in almost all avenues. For example, in the Insurance sector, we see a much lower presence of general insurance and medical insurance. Similarly, the urban market has yet to wake up to the benets of pension plans. In terms of savings, we have seen that the majority of the savings are in risk adverse areas such as government bonds, xed deposits, public provident funds etc. Stocks and shares, and investments into real estate and mutual funds are some of the avenues that a marketer can hope to tap. Computer and internet usage seems to be higher than the rest of India in the urban sector; however, there is scope for growth as the economy expands. In the consumer durables market, color televisions, refrigerators, telephones, and mobile phones seem to have reached saturating proportions. Other consumer durables

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have also penetrated signicantly into the urban markets. This seems to suggest that the consumer durable manufacturers need to look towards newer markets, for example in the rural sector. Scope however remains in the urban sector for high end electronic items, such as DVDs, camcorders, laptops etc, and other such items that may be considered as a luxury by the people in the lower half of the hourglass. However, all does not seem to be well with the urban class. Besides the above, the research also provides some implications that may be a cause for social concern in the coming decade. The Indian government has always assumed that the urban consumers belonging to SEC A and B would be the drivers of Indian economic growth. This is the class that has been christened the Great Indian Middle Class and on which lies the burden of fuelling demand and industrial growth in the country. However, the picture that emerges is somewhat different. Roughly, the urban consumers could be broken into a 3:4:3 ratio, with the top 30% of the population being comfortably well off, the middle 40% being fairly well off, but the bottom 30% are struggling to stay aoat. The bottom 30% consists of the Conservatives and the Strugglers. The conservatives, already in their mid 40s and early 50s may soon be out of employment and, unless they have managed to secure the future of their children or earnings, may soon slid off into poverty. The Strugglers, in their late 30s, are already at the bottom of the heap: how long can they sustain their struggle is anybodys guess. These two segments may well be headed for urban poverty and add to the ever-growing woes of the government. The general belief that Indian seem to be earning more than before is also contradicted. Even if we consider the highest earning segment, the monthly household income is close to Rs. 22,000. Given the increasing cost of living in the urban cities, the income may just insufcient to meet the expenses of living. In terms of limitations, we would like to stress the point that the study has concentrated only on SEC A and B; and as such cannot be taken to be a generalized model of all people residing in urban towns and cities in India. More so, the study cannot say much about the SEC C, D and E classes, as they were not included in the study. The authors are aware that a segmentation study, without the ability to classify a new respondent, is of limited use for practical implementation. The authors hope to rectify the situation shortly. Nevertheless, within the limitations of the study, it has achieved a signicant milestone by identifying new behavioral segments amongst the Indian urban consumers; thereby providing new insights into the consumption patterns of these segments and (possibly) suggesting more efcient ways and means for effective marketing and focused policy development.

Acknowledgment
Crorepati in Hindi refers to an individual or household that has Rs. 1 crore or more as disposable income; where a crore is equal to Rs. 10 million (1 crore = 107 ).

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