Case Study: Relevance of Demographics

Today, the general consensus seems to be that a deeper understanding of the Indian consumer base will not
add much value to the process of developing marketing strategy. Changing the mind set is the need of the
hour. Gary Hamel and C.K. Prahlad observed, “The future is to be found in the intersection of changes in
technology, lifestyle, regulations, demographics, and geopolitics”.

It is time to re-visit demographics and take a zero-base look at them creatively and with strategic perspective.
What does the data show is not the correct question. The right question is what can it mean for the business? In
response, the following few hypotheses emerge:
1) Rural Market is Attractive: Urban consumers are considered as the main event and the rural consumer
as the bonus. In recent years, there has been an intellectual acceptance that the rural market is potentially
a great contributor to business growth than the urban market, and the share of time and money spent in
understanding the rural market is far lower than the volume that it already contributes to the fast moving
consumer goods business. The NCAER summary document shows that even for categories like lipstick,
shampoo, and coffee more than one-third of the volume comes from rural India. It also drives home the
point that the income growth at the top end has been faster in rural India than in urban India.
2) Tomorrow’s Consuming Base Comes from those who are Today on the Border Line of Consumption:
There is no real feel yet about the threshold income above, whether consumption takes-off, and for what
kind of products. Analysis by income groups for products like soaps and bars is close to 60 per cent, while
one-third to half of the volume of biscuits, tea, coffee, oil, and bulbs comes from the lowest income group.
Is it market for the unorganized? Are the consumers not interested in brands of organized sector? It is time
we looked at tailoring sensible value propositions and setting-up, appropriate business systems to leverage
this opportunity, instead of waiting for the ugly ducklings to grow-up and become swans. If business
agenda is to convert these consumers to the propositions that companies already have, it is like Levitt’s
marketing myopia-focusing on drills rather than holes. And while the haves of today are definitely more
urban than rural, those who are just past the threshold of consumption are also equally urban and rural; and
those near to haves of today are definitely more rural in number than urban.
3) Growing Silver Market is a Strategic Opportunity: As the number of nuclear family grows, so too
presumably, will the number of older house wives grow, as mothers-in-law with no one to hand over the
keys of the household. The over 60s age group is expected to contribute about 8 per cent of the population
by the year 2011. With a retired husband, the ability to watch TV all day long and children who do not live
at home any more, she certainly is a sitting duck for certain kinds of value propositions that nobody is
offering her.
4) Age Cohorts – An Important Avenue: Beyond the obvious (fast) that India has a large proportion of
younger people than older one, not much is talked about the opportunities offered by the demographics of
age represented. The multitude present in the 45-55 age group represents very interesting target, with
unique value systems and aspirations, being at the prime of their earning potential. What kind of value
proposition that consumer durables marketer can think of?

Rena Bartos in her path breaking book ‘New Consumer Demographics’ talks of the ‘just a job’ working
woman and the ‘career’ woman, arguing that they represent very different opportunities. In India, by combining
income, age, nature of occupation, and husband’s income/occupation, it is possible to uncover segments like the
‘forced to work’ woman (who hands over salary to mother-in-law) and the ‘discretionary’ worker who is
pitching in for a better standard of living, as well as the classical marketing person’s stereotype of the ‘today
woman’ who is venturing further a field, to express her own identity. Each segment will offer very different
kind of opportunity in all probability.

Questions:
1) What are the new identifications of consumers discussed above? To what extent can they be converted into
opportunities by marketers of consumer durables and cosmetics?
2) Do you advocate demographics for market segmentation?
3) As a rural marketer, what kind of strategies do you suggest to gain from the opportunities?