Markets: Consumer

Indesign, a product design engineering company started in 1996 by a group of engineers from Lucent Technologies
Consumer Products, has a wide range of expertise in consumer electronic device design. Our engineers have helped
numerous companies get their ideas and concepts into production.

We can assist you with our product design engineering services in every phase, including developing product
concepts, defining specifications, creating architectures, completing detailed designs, passing compliance testing,
and moving products into production.

Our product design engineering team stays abreast of new technologies as they become available and knows how to
apply these latest technologies using cost-effective methods of implementation. Our clients demand short design
cycles. We respond by utilizing a proven design process that helps you achieve a quick time to market with an easily
manufactured product.

We have designed numerous kinds of consumer product devices including, but not limited to:

 Digital audio consumer products

 Wireless products
 Consumer medical devices
 Video game controller products
 Set top boxes
 Internet appliances
 PC peripheral consumer products
 Multimedia products
 Consumer telephony products
 Consumer communication devices

To contact our Business Development team or request more information about product design engineering, product
engineering services or consumer electronic device design services, click here.

Non-durable goods are any type of manufactured items that are not intended to last for an extended length of time. While
there is some difference of opinion on how long a good can last and still be classified as non-durable, the general consensus
is that any good that is not intended to last any longer than three years does fall into this category. Under the broad scope of
non-durable goods, there are subclasses, such as perishable goods, semi-durable goods, and soft goods.

Within the non-durable goods family, soft goods includes most textile products. Clothing, bedding, towels, and similar items
are generally considered to have a useful life of less than three years. While it is certainly true that some of these goods can
and do last longer, there is an expectation of constant wear and tear on most forms of textiles, assuming they are used for
their intended purposes on a continuing basis.

Perishable goods are another sub-category of non-durable goods. Food is easily the best example. Most types of foods,
even frozen foods, are designed for use within three years of production. This includes canned goods, fresh produce, any
type of meat product, and packages of frozen foods. As with other sub-categories, there are exceptions to this three-year
standard, such as foods that are vacuum-packed and considered safe for consumption for up to five years.

Semi-durable goods are also part of the non-durable goods family. Of all the sub-categories, goods of this type are expected
to last the longest. Items in this group would include many types of electronic devices, like cell phones, stereo equipment,
television sets, and most other types of consumer electronic gadgets.

Durable Goods
 
Consumer Packaged Goods
 
Non-durable Goods
 
 Capital Goods
 
Consumer Goods Industry
Examples Of Non Durable Goods
 
Non Economic Goods
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Party Goods
Consumer Research
Home Goods
Consumer Law

Classing products as non-durable goods does not in any way imply they are of inferior quality. In fact, many semi-durable
goods are manufactured to provide the highest quality and performance possible with that particular type of product. The
classification has more to do with the anticipated life of the product in general, based on such factors as frequency of usage,
ease of maintenance, and the life of the individual components that are used to construct the product.

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It is important to note that a number of non-durable goods can and do have a useful life that exceeds the generally accepted
three-year limit. For example, a small radio or DVD player can easily last for five to seven years, even though the device is
thought of as non-durable. For this reason, referring to any product as non-durable is more of a means of
managing industrial organization, since a given non-durable product may last ten years for one consumer, while providing no
more than a couple of years of service to a different consumer.

India's growing market for consumer goods, already in the top ten (Exhibit 1), could reach $400
billion by 2010—making it one of the five largest in the world. Add the fact that during the next few
decades India will likely surpass China as the world's most populous country, and it is clear that
multinational consumer goods companies seeking faster growth must begin to focus on the subcontinent.
Multinationals in the grocery, durable-goods, and packaged-goods sectors have been entering India since
1991, when restrictions on foreign investment were relaxed. Some companies have adopted a specialty-
player strategy, catering to a small segment of "global Indians" and marketing products much as they
would be marketed to any such customer around the world. These companies concentrate on a few big
cities. Their business model is low risk and easily rolled out, can often be sustained initially through
imports, and requires a limited distribution network. Although businesses of this kind can be profitable,
their sales volumes are typically modest and will grow only as fast as the segment does. In many ways, this
strategy misses the point of entering a market as large as...

 Data on income distribution of households is insufficient in determining market size

for different consumer products in India. This is because of the lack of homogeneity
 of the consuming class and the varying prices of a single product in different parts of
India. For example, vegetables generally cost more in Mumbai than in Calcutta,
hence vegetable-purchasing power for identical income groups would be different in
the two places even though they are the two biggest cities in India with comparable
populations. In other words, purchasing power is location-specific, not income
specific. Consumption habits of households are therefore better determinants of
consumer market size than income distribution. Of course, other factors are also to
be considered and they are detailed below.

 While determining market size for a consumer product, the structure of the

consuming class as seen in Table II above, can be both revealing as well as
misleading depending on the kind of product. For example, any specific consuming
class would be fit to be a market for consumer products like tea or soap, but a
product such as vacuum cleaners would find market largely only in the "consumers"
and "rich" segments of the market as defined in Table II above. Furthermore, even
this may not be correct, because a taste for a vacuum cleaner is not necessarily a
function of purchasing power but of culture and/or taste as well.

 Identifying a plausible market size for a consumer product is therefore a hazardous

task in a heterogeneous country like India. Yet, the marketer needs some data to
come as close to the real picture as possible. For this purpose, it can be cautiously
assumed that purchasing power is proportional to income despite variables such as
location, taste etc. Companies are therefore advised to plan their consumer product
marketing strategies on an area-by-area basis, rather than on an all-India basis.

 Income data is insufficient. Therefore, it must be supplemented by product-specific

information regarding its existing stock in the marketplace (in the case of consumer
durables) and existing rate of purchases.

 It is also advisable to further refine the plausible market size by taking into account
details based on social, cultural and demographic factors.

 Marketing a super-premium product such as a Rolex watch is relatively easy. Just go

for the income class above Rs. 106,000 per annum (in 1995-96) as per Table I
above. This class, Table I shows, comprises 5.8 million households. But the problem
lies in the fact that the 5.8 million households are spread all over India.

 The prime market for consumer products in India is aware of the cost-benefit, or
value for money, aspect. Their convept of value incorporates socio-cultural benefits
in addition to product utility. For example, many households in the "consumers" class
and the "rich" class (as defined Table II) may have two television sets, but both the
sets may not be top-of-the-line. Thus, while they may be demand for an additional
TV set in many households in the two mentioned classes, it must not be mistaken as
demand for the higher priced TV models. The prime consumer market in India
therefore is not a market for absolute premium products, but for something between
the "high end popular brands" to the "premium brands."

 The class described in the previous paragraph is actually the "consumers" class
defined in  Table II. This class comprises 33.5 million households as at 1995-96 and
 it owned and 'consumed' most of the expensive consumer products such as
refrigerators and washing machines as well as premium expendables. At 1994-95
prices, their annual household incomes ranged between Rs. 45,000 and Rs. 215,000
(to calculate the latest income statistics, use an annual inflator of 5 per cent). In
addition to this class, the "climbers" and "aspirant" classes (defined in the Table II)
totaling 23.9 million households in urban India, also have the socio-cultural traits of
the "consumers" class and, with time, will join the consumers class. Medium-to-long-
term marketing strategy must therefore aim at the aspirants and the climbers as
well. This is based on the safe assumption that, except for the destitute class as
defined in Table II, the other classes are on the way to the next higher class. For
companies with long-term marketing plans in India, the "consumers" (urban +
rural), "climbers" (urban only) and "aspirants" (urban only) classes can be clubbed
together to give a market size of around 57 million households which can be said to
be the "prime segment" of the Indian consumer market. This becomes even more
true as consumer financing and the credit card culture picks up. Fine-tuning between
the classes is of course important, as explained in the next paragraph.

 Suppose you are marketing washing machines. Go for two broad types: fully
automatic and semi-automatic. Target the fully automatic machines at the
"consumers" class and the semi-automatic at the "aspirant" class; the "climbers"
class will then overlap the market for both the types of washing machines.

 All of the above may be confusing, but the marketing strategist has to live with it
because that's how the Indian consumer market is in reality. There is hardly a
characteristic that applies across the market. Hence, the term "Indian consumer
market" is a misnomer: it would be more accurate to describe it as a collection of
different consumer markets.
 Heads didn't turn when Coca-Cola (KO) and Pepsi (PEP) hiked prices on some of their most popular

beverages in India last fall. Even in the downturn, both companies have enjoyed double-digit volume growth.

And despite projections that the world's second-fastest-growing economy will watch its 9% growth rate slow

to 5.5% to 6% in 2009, India's makers of fast-moving consumer goods (FMCG) such as beverages, biscuits,

and beauty aids historically have been somewhat insulated from economic slowdowns. Indeed, the FMCG
industry in India is expected to register close to 15% growth in the financial year ended March 2009. But that

doesn't mean FMCG companies in India—both multinational and domestic—can afford to be overconfident.

The fact is, now is the time for them to keep their eyes on the ball.
 How is the slowdown in the Indian economy affecting consumer-goods companies in India? For one thing, it

is forcing them to focus on traditional retail channels like small mom-and-pop stores. It's no secret that

India's modern-trade retailers are aggressively closing stores or curbing expansion plans. For

example, Subhiksha, once the poster child for India's fledgling modern retail industry, shut down nearly all of

its 1,600 stores this year in response to a crippling cash crisis. The 12-year-old retail chain says it is left

today with just 50 employees on its rolls, compared with the 5,000 it had in September. As modern trade

slows its expansion, it will be traditional retail and distribution networks—lower tech, lower cost, and smaller

than their modern counterparts—that will become more important to consumer-products companies. This is
 especially true in rural areas, where consumer spending has remained particularly strong. In 2008, rural and

semi-urban markets contributed almost 80% to FMCG growth.

 Another distinct trend: Demand for high-end products is dropping. Indian consumers are still buying; it's just

that they're avoiding the most expensive brands. That's why companies will need to become more sensitive

to price by offering price reductions on existing products and introducing innovative new products at low

price points for mainstream consumers. Hindustan Unilever realized in November 2008 that consumers are

not seeing value in its Red Label 1-kilogram tea carton pack and moved to a pouch format, passing on a

significant reduction in packaging costs to consumers.

 AN OPPORTUNITY TO BUILD AND INNOVATE
 FMCG companies in India can use these trends to their advantage—and as a foundation for overtaking their

competitors in the recession. Downturns provide opportunities to reorder industries; to come out ahead of
the pack requires using recessionary trends to build and innovate. But it's important to have a clear and

comprehensive strategy. For example, passing along cost reductions in anticipation of weakening demand

may be little more than stopgap measures unless it's part of a broader plan.
 FMCG companies in India are winning by systematically targeting four key areas to spur growth.

 Customers: Focusing on only the right products

Mainstream consumers in India are still buying, but their needs are changing. So winning consumer-

products companies are delivering innovative products aimed at addressing those changes. Consumers

tend to eat out less frequently during economic slowdowns. McDonalds's (MCD) is trying to counter that by

introducing a wider range of value meals and increasing what it spends to advertise its low-price menus.

Loreal –

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Garnier has been very active and upfront in adopting new promotional techniques to market its products. The company
follows a very popular technique to advertise and market its products that is the Viral Marketing policy. Viral marketing is a
term coined to define the productive ways a marketing message is made available. And corporate are using the medium to
circulate brands and brand messages. The idea has caught on like a virus, as efficiently as Information Technology has
entered households and businesses.

Firms are now structuring their businesses in a way that allows them to grow like a virus and lock out the existing brick and
mortar competitors through innovative pricing and exploitation of competitors’ distribution channels. The beauty of this
marketing technique is that none of it requires any marketing. Customers, who have caught the virus, do the selling. Viral
marketing describes any strategy that encourages individuals to pass on a marketing message to others, creating the
potential for exponential growth in the message’s exposure and influence. Like viruses, such strategies take advantage of
rapid multiplication to explode the message to thousands, to millions.
Off the Internet, viral marketing has been referred to as “word-of-mouth”, “creating a buzz”, “leveraging the media” and even
“network marketing.” It’s a deceptively simple concept: Create a message, send it via e-mail, and make it so compelling that
recipients want to pass it on to everyone in their address book. Advertisers are hot on the tactic, and the idea of putting
consumers to work spreading the word about a brand or service seems sound.
What is unique about the concept is that where brands or brand ideas are exchanged within communities, they are idea-led,
not advertising-led. There are some high-profile viral success stories. Like Hotmail. By simply sending an e-mail, consumers
hawked the service because every message contained a Hotmail ad that helped it grow to 12 million accounts in its first
year, way back in 1996. The 1999-hit film ‘The Blair Witch Project’ also benefited from a similar contagion. On web sites and
in chat rooms, the film’s promoters hinted that the fictional tale was really a documentary and let the bug run wild. In most
cases, the consumers were bitten.
When Garnier launched its Fructis shampoo, they latched on to the idea. The firm had to introduce the aspect of five times
stronger hair and the firm had a braid competition whereby consumers could register on a site and create a knot on the
Fructis brand, as part of their entry into the contest. The knot creation was actually created (visually presented on the site)
and as a next step, consumers were expected to invite their friends to visit the braid and add to their score. A record 76,000
consumers created their own knot on the braid and forwarded the link to more than 82,000 of their friends, a survey report
indicated. Viral marketers practice delayed gratification. They may not profit today, or tomorrow, but if they can generate a
groundswell of interest from something free, they know they will profit soon and for the rest of their lives. Since ‘Free’
happens to be the most powerful word in a marketer’s vocabulary, most viral marketing programmes have attached
themselves to it. The idea is to give away valuable products or services to attract attention. And, more importantly, someone
else’s resources are depleted rather than our own. Garnier has positioned itself as a lifestyle product mainly targeting
teenagers and young girls. This is very evident from Garnier ads be it for Garnier fructis shampoos or for hair color. In a
recent advertisement of Garnier hair color, a daughter advises her mother to try the product and thus makes an attempt to
promote product among middle-aged women. Hence, expanding the base of the target segment gives a whole new market
to marketers, provided they are successful in convincing the customers of the second-rung segment.
Companies need to be very strategic in presenting the product and its features to attract another segment. At the same time,
companies need to be sensitive about the impact of targeting other segments on the existing target segment. It may be
damaging, especially, if in a process of expanding its customer base, a premier brand is targeted at the aspiring middle-
class also. In case of any signals of lowering demand with the existing target group, companies should adopt line extensions
by bringing suitable changes in the products.
Advertising and marketing specialists are aiming at young, urban Indian women, who are earning their own money
and are potential customers for a host of products, including name-brand clothes, cosmetics and new cars.
Increasing its ad spend for the launch of its new products, L’Oreal has been relying more on its international campaigns to
make an impact in the Indian market. McCann Erickson in Mumbai handles the L’Oreal and Maybelline account while
Publicis India is in charge of Garnier. “The ad accounts have been aligned according to our international affiliations with
these agencies and we try to have a mix of both the Indian and international ads,” says Mr. Rajgopal.
L’Oreal India currently has three brands in its consumer products portfolio and there are product overlaps between its hair
care, skin care and color cosmetics brands. Garnier, L’Oreal and Maybelline have been defined by their price segments and
positioning.