CONSUMER BEHAVIOUR IN THE 21ST

CENTURY IN THE INDIAN BACKDROP

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 Table of Contents

Sr. No. Contents Page No.

I. Consumer Behaviour 3
II. Consumer Behaviour in India 3–4
III. Different Segments of the Indian Consumer 4

IV. The Rural Consumer of India 5

V. Differences in Buyer Behaviour 5

VI. Increasing Awareness of Indian Consumers 5

VII. Analysis of the 21st Century Indian Consumer 6

VIII. Change at a Glance 7

XI. Changing Trends in Indian Consumer Behaviour 7–8

X. Marketing Strategies to cater to the 21st Century Indian 8–9

Consumer
XI. Future Trends in Indian Consumer Behaviour 9 – 10
X. Conclusion 10

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I. Consumer Behaviour
Consumer behaviour involves the psychological processes that consumers go through in
recognizing needs, finding ways to solve these needs, making purchase decisions (e.g.,
whether or not to purchase a product and, if so, which brand and where), interpret
information, make plans, and implement these plans (e.g., by engaging in comparison
shopping or actually purchasing a product).

One official definition of consumer behavior is "The study of individuals, groups, or

organizations and the processes they use to select, secure, use, and dispose of products,
services, experiences, or ideas to satisfy needs and the impacts that these processes have
on the consumer and society." A few points noteworthy here are:

• Behavior occurs either for the individual, or in the context of a group (e.g., friends
influence what kinds of clothes a person wears) or an organization (people on the
job make decisions as to which products the firm should use).

• Consumer behavior involves the use and disposal of products as well as the study
of how they are purchased. Product use is often of great interest to the marketer,
because this may influence how a product is best positioned or how we can
encourage increased consumption. Since many environmental problems result
from product disposal (e.g., motor oil being sent into sewage systems to save the
recycling fee, or garbage piling up at landfills) this is also an area of interest.

• Consumer behavior involves services and ideas as well as tangible products.

• The impact of consumer behavior on society is also of relevance. For example,

aggressive marketing of high fat foods, or aggressive marketing of easy credit,
may have serious repercussions for the national health and economy.

II. Consumer Behaviour In India

The attitude of Indian consumers has undergone a major transformation over the last few
years. The Indian consumer today wants to lead a life full of luxury and comfort. An
important and recent development in India’s consumerism is the emergence of the rural
market for several basic consumer goods. The Indian middle class has also provided a big
boost to the consumer culture during the recent past. Due to the fast growth of the
services sector, the per capita income of the people of India is also increasing. The
number of middle class is also on the rise because of the shifting of people from the
agriculture to the services and industry sector, where growth prospects are reasonably
high as compared to the agriculture sector, where growth is slow.

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Another major factor that has led to increased consumerism in the growth of credit
culture in India. The Indian consumer does not feel shy to purchase products on credit
and pay for it at a later date. This tendency has resulted in a tremendous increase in the
purchase of homes, cars, two-wheelers and consumer goods. The market for luxury
products in India is also climbing at an astonishing rate as compared to a decade ago,
when it was almost negligible. The reason behind this is the steady rise in the purchasing
power of the people in this country. The Indian consumer today is well aware of the
products, prices, quality and options available to him and his purchasing is done keeping
these factors in mind.

III. Different Segments of the Indian Consumer

1. The Socialites – They belong to the upper class and prefer to shop in specialty
stores, go to clubs on weekends and spend a good amount on luxury goods. The
go for high value, exclusive products. Socialites are known to be very brand
conscious and usually go for the best known in the market.

2. The Conservatives – They belong to the middle class and are a reflection of true
Indian culture. They are more traditional in their outlook, cautious in their
approach towards purchase and focus more on savings than spending. They tend
to seek a lot of information before purchase and while they look for durability and
functionality, they are also image conscious.

3. The Working Women – This segment has opened floodgates for the retailers of
today. The working woman today has grown out of her long-standing image of
being the homemaker. Today, she is rubbing shoulders with men, proving herself
to be equally good.

4. Youth Segment – The rise of ‘Generation Next’ has been increasingly written
and talked about based on the coming of age of liberalization children. They are
global in their worldwide view and have been exposed to enormous amounts of
information having been raised amidst a consumption-friendly and consumption-
encouraging social discourse.

5. The New Indian Consumer Market Structure – There are five types of
consumer groups based on what they consume:

• The Rich – They have most of the luxury goods like cars, PCs, air
conditioners and are generally the consumers of premium products.

• The Consuming Class – Consumers who have 70% of the ‘utility’

durables like two wheelers, refrigerators, washing machines and the bulk
of regular FMCGs.

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 • The Climbers – Consumers having at least one major durable in their
homes – either a mixer or a sewing machine or perhaps a television set.

• The Aspirants – Consumers who are just entering consumption and have
the very basics; goods here would include a watch, a bicycle, a radio or a
table fan.

• The Destitute – Consumers who own and consume practically nothing.

IV. The Rural Consumer of India

Rural consumers majorly look into the value that the product offers. They associate value
with benefits that the product offers, its availability and its cost. When talking of benefits,
they look at the features of the product as well as the packaging and attractiveness,
availability, whether or not the products are available at retail shops and haats, cost,
whether or not the product is reasonably priced.

V. Differences in Buyer Behaviour

Rural Urban

• Conservative • Innovative

• Values, aspirations, needs – • Follow trends (including

traditional and based on culture, international)
social customs, beliefs
• Eldest Male Member • Varies

• Collective Sanction • Unheard of

VI. Increasing Awareness Of Indian Consumers

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Over the years, as a result of the increasing literacy in the country, exposure to the west,
satellite television, foreign magazines and newspapers, there is a significant increase of
consumer awareness among the Indians.

Today more and more consumers are selective on the quality of the products/services.

This awareness has made the Indian consumers seek more and more reliable sources for
purchases such as organized retail chains that have a corporate background and where the
accountability is more pronounced. The consumer also seeks to purchase from a place
where his/her feedback is more valued.

Indian consumers are now more aware and discerning, and are knowledgeable about
technology, products and the market and are beginning to demand benefits beyond just
availability of a range of products that came from ‘trusted’ manufacturers. The Indian
consumers are price sensitive and prefer to buy value for money products.

VII. Analysis of the 21st Century Indian Consumer

The Indian consumers of today are unique in the following aspects:

1. Indian consumers have become value sensitive and are not much price sensitive as
was the case earlier. If they feel that a particular product offers them more value
and its price is high, they will still be willing to buy the product.

2. The Indian consumers strictly follow their culture, tradition and values, as a result
of which foreign companies were forced to give an Indian touch to them in order
to succeed in India. McDonalds, MTV, Pepsi, Star TV, Coca Cola India and many
more had to indianise themselves to flourish in India.

3. The Indian consumer of today gives preferences to features of a product rather

than its brand name. The trend that higher segment consumers only buy the top
brands has also come to an end.

4. Even after liberalization, Indian companies and brands are doing very well. It is
clearly evident from the fact that despite many foreign brand being sold in India,
Raymond is still India’s largest textile company and Haldiram is doing well
despite the presence of McDonalds and Pizza Hut.

5. The consumers today are not confined to a single brand and prefer to change
brands every now and then instead of sticking to the same one. Not often do we
see any home with cars of the same brand or household products of the same
brand.

6. The use of credit card for shopping is a new emerging trend in India. Also,
consumers are availing credit or loan from banks and other financial institutions
to fulfill their needs and wants.

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 7. The Indian consumers have shown another major change in their buying
behaviour in that they don’t want just the availability of products; they also want
better experience, services and ambience. This has led to the growth of shopping
malls where shopping, entertainment and other miscellaneous facilities are all
available under one roof.

8. The rural Indian consumers are also showing signs of change. They have all the
modern amenities at their home and their standard of living is fast improving. The
rural households have earned huge money due to price rise in real estate. They are
also shifting towards the industrial and services sector and hence their purchasing
power is also increasing. It is reflected in their living standard and possession of
all electronic gadgets and luxury cars.

9. There is stiff competition in the Indian market today and it has become a buyer’s
market from what used to be a seller’s market. Customers are the ultimate
beneficiaries of the fierce competition in the market. Competition has reduced
prices to a great extent and has forced the manufacturer to maintain product
quality in order to sustain him in this competitive market.

VIII. Change at a Glance

Many remarkable changes have taken place in Indian consumer buying behaviour over
the last five years. Some of them are:

• Television penetration rose to 50% of the total population in 2005 as compared to

35% in 2000.

• Refrigerator penetration rose to 12% in 2005 as compared to 9.4% in 2000.

• 12% of the total population had telephone connections in 2005 as compared to

6.5% in 2000.

• Average age of homeowners has come down to 28-30 years in 2005 as compared
to 40 years in 2000.

• Number of mobile phone users in India is 120 million and the number of Internet
users is 40 million.

• Credit card penetration has grown to 10 times between 2001 and 2005.

• Indian consumers now prefer multiplexes as compared to traditional cinema halls,

although multiplexes are costlier than traditional cinema halls.

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 • Consumers today prefer products like expensive watches, sunglasses, mobile
phones, antique jewellery etc.

• Consumers are shifting focus to LCD and plasma TV from normal TV, to laptop
from PCs, to luxurious cars from small cars.

• Consumers now want better hospitality and this has led to the growth of the
tourism and hotel industry.

• Customers today also want better housing facilities, which are giving greater
impetus to builders and construction companies.

IX. Changing Trends In Indian Consumer Behaviour

1. Bulk Purchasing – Urbanization is taking place in India at a dramatic pace and is
influencing the life style and buying behaviour of the consumers. The working urbanites
are depending more on fast and ready-to-serve food, they take less pain in traditional
method of cooking and cleaning. Bulk purchases from hyper stores seem to be the trend
these days with purchasing becoming more of a once-a-week affair, rather than frequent
visits to the neighbourhood market/store/vendor. The popular growing shopping trend
among urbanities is purchasing from super markets to hyper stores.

2. Trendy Lifestyles – The current urban middle and upper class Indian consumer
buying behaviour to a large extent has western influence. There is an increase in positive
attitude towards western trends. The Indian consumer has become much more open-
minded and experimental in his/her perspective. There is now an exponential growth of
western trend reaching the Indian consumer by way of the media and Indians working
abroad.

Foreign brands have gained wide consumer acceptance in India; they include items such
as:

• Beverages

• Packed food

• Ready to eat food

• Pre-cooked food

• Canned food

• Personal care products

• Audio/video products

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• Garment and apparel

• Footwear

• Sportswear

• Toys

• Gift items

Indian consumers have also developed lifestyles, which have emerged from changing
attitudes and mindsets; exposure to western influences and a need for self-gratification.
Beauty parlours in cities, eateries, designer wear, watches, and hi-tech products are a few
instances which reflect these changes.

3. Buyers’ Market In The Making – The sellers’ market is slowly moving towards
becoming the buyers’ market. Since, India’s economic liberalization policies were
initiated in 1991, many new product offerings have entered the Indian market and product
variety has also increased manifold. Import licensing restrictions are being eliminated and
tariffs significantly reduced and this has led to large range of consumer goods made
available in India. Indian consumers have always preferred foreign goods and with the
liberalization, they now have a choice of foreign products vis-à-vis the local products.

X. Marketing Strategies to cater to the 21st Century Indian Consumer

Online Marketing – Currently, the products Indian consumers are buying through online
are greeting cards, clothes, CDs/VCDs/DVDs, cassettes, books, magazines, medicine and
educational material.

The popular online shops in India include:

• www.ebay.in

• www.shopping.rediff.com

• www.reliablegreetings.com

• www.shopping.expomarkets.com

Celebrity Influence – This is an important tool which is able to influence consumer

buying behaviour. In India, marketers, to lend personality to their products, are
increasingly using celebrities in marketing communication. Indians always love their
heroes and heroines. Consumers like advertisements more if celebrities are present. When
a consumer likes the celebrity in the advertisement, he or she is more likely to accept
what the celebrity says about the advertised product and will therefore develop more
positive feelings toward the advertisement and brand itself.

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Eco-Friendly Products – The environmental awareness in India has started affecting the
marketing of products. In general, Indian consumers are likely to buy environmentally
responsible products and packs. The future key for marketing could be to select more
ethical and ecologically responsible products and packaging, which is also convenient for
consumers, thus balancing environmental concerns with commercial considerations.

Quality Oriented Outlets – Indian consumers looking for quality choose expensive
brands as they feel that price is an indicator of quality. However, in the absence of well-
known brands in selected product range, consumers are likely to take cues from well-
established retail outlets hoping that these outlets carry quality products.

Freebies – Freebies influence Indian consumer buying behaviour. Freebies are consumer
products given free of charge as gifts to purchases of selected products above a certain
value. TVs, washing machines, refrigerators, and ready-made clothes are some of the
product categories in which freebies are given to Indian consumers. Freebies generally
comprise toothpaste, soaps, detergent, cooking oil etc.

XI. Future Trends in Indian Consumer Behaviour

1. The new generation will prefer brands that are launched during their growing up
years. They will not opt for brands that are outdated. This will make it easier for
new brands to cement their place in the market and run successfully.

2. The new generation will possess more risk-taking capability than their previous
generations. They will be willing to try out new careers, new ideas and new ways
of doing things.

3. Indian consumers will be more logical in their thinking and foreign brands will
not be considered as the standard of quality.

4. The middle and lower class consumers’ buying behaviour will change and they
may behave as if they are rich.

5. The contribution of women in decision-making will increase with the growing

number of nuclear families, educated and working women. The number of middle
class working women will rise sharply. This will lead to introduction of women-
oriented products that may range from insurance products to vocational education.

6. Tomorrow’s consumer will focus more on technology and credit purchase.

7. The number of nuclear families will increase.

8. Health care will become very important in the coming years.

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XII. Conclusion
With the changing economic situation in India, it’s not only the rich that are spending
more, but it is the Indian middle class that has thrown caution to the wind and have been
enjoying themselves like never before. Brand India is riding high. The change is drastic
when compared to a generation back where saving for a rainy day was the usual practice.
The face of changing India is reflected as airlines, hotels, FMCG companies, auto giants,
retail chains, mobile phone companies are all reworking strategies and slashing prices to
reach the low-end consumer in rural areas.

The success-driven Indians don’t have to wait for opportunity to knock at their doors. It is
all around them and in plentiful numbers. With a job scene that is booming, a host of
avenues are open to even college students. A slew of industries that had almost no
presence in the country a few years back are now dishing out jobs in plenty. Call centers,
retail chains, mobile phone companies, data processing firms have all contributed to the
job explosion.

But that’s not the whole story. Even as high-tech gadgets have invaded the Indian
consumer market with the liberalization of the economy, finding two square meals a day
is a daunting task for some. It is this broad spectrum of people perhaps that makes India
keep its head on its shoulders.

One thing is for sure, though – That the pace of change in needs, desires and wants of
Indian consumers will be even steeper and will further change drastically in the near
future.

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