Changing habits to boost brands in India

26 April 2010

NEW DELHI: The "fundamental change" in Indian consumer behaviour is set to drive up levels of demand in categories varying from personal care to apparel.

Gopal Vittal, executive director of home and personal care at Hindustan Unilever, the FMCG giant, argued that 100 million consumers have joined the "consumption pool" in India over the last decade.

There are also now 65 million high-income shoppers in the country, which provide a potentially lucrative audience for premium brand owners.

In many sectors, the 67 biggest cities in India deliver more than 50% of urban sales, while the largest 25 villages also generate something in the region 50% of rural revenues.

More broadly, generational turnover is encouraging a revolution in popular purchase habits that is only likely to further accelerate in future.

"Older consumers in India have always felt guilty about both debt and consumption, particularly for categories such as high-end durables, eating out, personal care and apparel," Vittal said.

"There is a fundamental change in the attitudes of consumers below the age of 25 leading to high levels of trial and experimentation. The result has been explosive growth in such categories."

Another consequence of the trends is that trading conditions are now more competitive and complex, a development that has been exacerbated by low levels of brand loyalty among many shoppers.

For example, 1,200 products and brand extensions have been launched in the Indian skincare category in the last five years, with 800 new soap offerings hitting store shelves in the same period.

"This increase in competitive intensity can be seen consistently across several sectors including insurance, mobile telephony, financial services, durables and many others," said Vittal.

Such a "fragmentation", he continued, will require marketers to reconsider their approach to portfolio management and innovation, and to heighten the advertising expenditure behind their brands.

"All these changes call for a coherent organisational response in terms of business models and strategy. Most important, it calls for a mindset of passion, paranoia, curiosity and accountability," added Vittal.

However, one major obstacle is the "enormous scarcity of the right talent" in India.

This is due both to fierce competition between firms to secure the best employees and the constant need to "learn and unlearn skills".

Data sourced from Business Standard; additional content by Warc staff