Indian Consumer Pyramid - what Pyramid, it’s a Beaker!

I differ from the categorisation of the Indian market, by many, as a pyramid with a wide base, tapering evenly to the top, neatly cut into segments. Most things in India defy falling into neat slots, like the sambar on the plantain leaf that I had to control at a recent wedding. Much has been written about the segmentation of the Indian market which is one more of our interesting conundrums!

Consumer Pyramid

I feel that the Indian market has more of a beaker shape - a long very narrow neck and a few expansion points where it widens at a faster rate lower down. Let me try to draw this for you:


There are two differences in the Beaker view -  

One, of course, is that the premium consumer is a very very lean segment and that the rate at which the market consumption opens out is much higher as you go down the value/price chain.

Secondly, from a consumer angle (from which the beaker view is made), Indians traditionally both up and down trades. They will pay a premium (relative to their income position) for some goods and demand value/strong discounts on certain products and services. Therefore, there is a lot of crossover of buying behaviour (relatively) from premium right to mass by the same consumer.

Regarding point one, I believe that most Brands, both in the premium and upper moderate sector have willy nilly focused their selling on that very lean upper segment, believing they are covering the premium and moderate parts of the pyramid. What is a moderate brand in another country becomes positioned as premium in India. This is either because the product is imported, or high retail costs or high management/corporate costs, disproportionate to the price that can be commanded from the market is incurred. This is usually under the illusion that there is a large enough premium consumer base for that product. I believe this is one of the reasons for high amount of discount sales in the premium/upper moderate end of the apparel market in particular. The market seems to be regularly fixing the price below the Brands price realisation requirements. For me, apparel is becoming more commoditised and with the prices of fuel/transport and food/essentials getting higher, the consumer is willing to pay/buy less of apparel.

On point 2, I always like to say that I have seen people drive up in swanky Mercedes cars and still haggle for a 5-rupee discount from (normally small) vendors. We are willing to pay through our noses for things that our dear to us, like the big fat Indian wedding. At the same time, to coin a phrase, we pay through our toes for certain products/services. My feel is that apparel, for the most part, is becoming in the pay through your toes category! I use the wedding example in particular because throughout the country I hear retailers telling me that sales are mainly peaking during the wedding seasons. Previously, this peak used to be more at Diwali and other festivals; but, now, wallets are opening up more for wedding purchases of apparel and less for other occasions/day to day wear.

I hope you will agree to this understanding of the Indian consumer segmentation. We need to peg our product features and prices in the Indian consumers' preferred trading zone. The Indian consumer pegs certain items in the down trade zone, whether we like it or not and one has to build a model suitable to that or if you are brave, try to move the product/service upward, from the consumers trading zone. Either way - Best of luck.

About the author: Johnny John - An apparel professional with 25 years experience in Indian and Asian markets. Has worked for Coats Viyella, Liz Claiborne, Reebok- India and Asia, LMG Brands and currently in SKNL as COO- World Player. Views expressed are his own