Youth Consumerism

Discussion in 'CAT / MBA INDIA Forum' started by Guest, Feb 17, 2007.

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    A decade ago, India didn't have a single mall. A year ago, there were less than a half-dozen. But within two years, more than 250 are expected to be operational.

    It's an enormous shift in a nation that for decades proclaimed itself a socialist state. After independence in 1947, India celebrated ``swadeshi,'' or locally produced goods, and Mohandas Gandhi dreamed of a nation of small villages earning their living through cotton spinning and farming.

    So not everyone is happy about the new consumerism. Rights activists worry that the poor are being abandoned and nationalists wonder if India's native industries are being swallowed by global behemoths.

    A new face of youth consumerism

    "At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom."-Jawaharlal Nehru, on the eve of India's Independence India's latest tryst with destiny, BPO, is equally connected to the midnight hour. This tryst is also about independence: the independence of the Indian youth, whose time, talent and skills are suddenly valued in the employment marketplace. "A moment comes, which comes but rarely in history, when an age ends, and when the soul of a nation, long suppressed, finds utterance." This is that moment. And the utterances are music to the ears of consumer marketers, especially lifestyle brands. The 'youth' market they've been chasing all these years finally has a credit card with no supervised spending limit. The impact of consumerism by 'indies' - financially independent young people - is clearly visible. "We have tripled our sales in Bangalore city in the last three years," says Shumone Chatterjee, marketing director, Levi Strauss India. And he believes this is largely due to the effect of disposable income coming into the hands of the 18-22 age group employed in BPO jobs. Vishu Ramachandran, regional head (consumer banking), Standard Chartered Bank, India, estimates that India adds around 3 million young earners in the age group 20-24 annually. These first-time earners account for 7-8% of its credit card base of 1.4 million - a figure that is expected to more than double in the next few years. StanChart is targeting this segment with specially designed products like the Visa 'mini', which is 43% smaller than the regular card and being positioned as a 'cool accessory'. The MTV Citibank MasterCard, too, has gone in for a more exciting new look, a variant of its global 'mc2' design. Both cards offer discounts at popular retail outlets and hangouts frequented by young people.

    BPO, with its ever-expanding demand for freshers, is fuelling the charge of he 'indie' brigade. According to Nasscom, BPO firms employed 245,500 people in 2003-04. Assuming 90% of this workforce is below the age of 25 and earns Rs 10,000 a month on an average, the purchasing power of Indies is no less than Rs 2,200 crore annually.

    The important thing is that this is basically 'pocket money'. Many Indies live at home, so rent and food is taken care of. 'Live for today, hope for tomorrow, splurge tonight' is their mantra - enter the new and potent consumer.

    Reebok is one company that's sitting up and taking notice. It is looking at the spending habits and disposable incomes of youth in BPO firms. "We are in the process of setting up an internal study to understand how to target these youth," said a company spokesperson.

    But BPO is just one example. From retail to insurance to banking, entry-level jobs are aplenty. IT firms added 55,000 employees this year, mostly engineering graduates. Infosys alone recruited 10,000. "The role a good young person can play in an organization is huge," says Sarang Panchal, executive director (customized research), ACNielsen. "Their steep learning curve compensates for any lack of experience."

    Interestingly, the young person's influence in family purchase decisions is high. Anything to do with technology? He is God. The decision of which brand of mobile phone, flat-screen TV or two-wheeler to buy can be swayed by the resident youth in the family (although there may be a difference in opinion on what is a 'reasonable' amount to spend).

    Media onslaught

    INDIA today is an exciting land in an exciting age: the first winds of change blew not when the economy opened up as we think in the early 1990s, but when India was exposed to color television. It is ironic that it took a sporting event (the Asiad) to unleash for Indians a new way of looking beyond their windows into the world at large. Media intrusion had begun in right earnest.

    Color television in itself was a statement of status: it distinguished the wealthy from the not-so-wealthy. Color television was the new consumer discriminator in a country, which had just two brands of cars, and a near single-brand monopoly in the two-wheeler segment. Indian consumers were bored and dulled into buying brands. They had to pay more and wait longer for brands they today reject with ease.

    Monopolistic regimes were at their peak in the early 1980s: words like conspicuous consumption were relevant only in a few pockets. In the 1980s, there were only 8,700 credit-card holders: the same number in perhaps one or two affluent colonies in South Delhi today. The media scene in terms of choice was not so very different either. Consumers were just beginning to relish quality journalism in India Today and admire the panache of investigative journalism that News-track had unleashed. But given the times that we lived in, most cities had just a couple of newspapers in English and a single vernacular newspaper.

    Television, though in color, was state-controlled: the influences of Hum Log and Buniyaad were more in the arena of commenting on the Indian family than in creating bridges between the West and us as we see it today. Television then, as it does today, had a huge component of film-based entertainment, which was what captured the Indian imagination. Chitrahaar and the weekly Hindi film on television became opportunities for family bonding and reunion. Many Indian families happily altered their meal timings to adjust to programming schedules and perhaps, in the subconscious, they were also ushering in a wave of consumerism that would one day sweep us all.

    Convenience products had just emerged and Maggi's 2-minute noodles were perhaps a sign of things to come. Remember that was also the time when our politicians were much younger and better looking: television made a John Kennedy out of young Rajiv Gandhi, and his boyish good looks and youth full innocence were reflected so ably through television. The Indian consumer had begun to derive first blood from advertising that talked to him and with him. Thanks to the increasing influence of television, he saw an increase in advertising in the form of television commercials or in the form of promotions, which captured the flavor of the moment. It was television, which helped create a slot for Hinglish: the language of today's India, be it in the music we hear or the brand communications we receive.

    Television and a surfeit of magazines became the passport for the Indian to explore the world, as it were. With markets prizing open consumerism, it was now the turn of brands to leverage this media intrusion and this they did with gay abandon. Aided by the fact that India, being the cricket-loving nation it is, had cricket matches that became the ultimate media aphrodisiac. Both the channels as well as the marketers used this newfound medium to great advantage and suddenly there were endorsements for products, matches being sponsored and the return of the cola to India. It was Pepsi, which changed the face of media-led consumerism in 1986. Given the kind of market expanse it was seeking and the depth of its brand reach, Pepsi used television as the ideal conversion vehicle: from brand salience to brand purchase, it traveled the full distance.

    But while media can certainly be lauded for the role that it played in harnessing consumerism in India, we must pause and examine the evolution of the Indian consumer. The Indian consumer was shaking off the shackles of monopolistic regimes: these regimes were crumbling not just because of media but also owing to a real need for India to develop and make itself a global player. Politics had a role to play in this evolution as much as media did: for every additional television programme which added value to the Indian consumer movement we also have Manmohan Singh to thank. He began the era of reforms on the instructions of the International Monetary Fund but quickly realized that in this lay India's future of becoming a relevant world-economy.

    It was against this backdrop of a new school of thought that we saw, for the first time, choice becoming a relevant issue in the Indian marketplace - a word that had earlier been made redundant with trite licensing norms. It is true of any market that it can only be relevant and throbbing if the players in it are relevant and successful as well.

    In India, consumerism had always been looked down upon. This was a social imperative and not just an economic one. The Indian was encouraged to save rather than spend, given the history of India and the fact that many many Indians were on the brink of poverty and penury either because of businesses failing or relocation (refugees) the habit of saving had certainly cramped consumerism. What was required was the unlocking of this potential. It was critical to rid the Indian consumer of this feeling of guilt whenever he or she spent any money, which is why communication in the earlier days always focused on family health (almost like insurance advertising) and never promoted the joys of buying per se.

    India had to transcend from that mindset but the journey was painful and tormenting because while on the one hand markets did open up, so did poverty, thereby increasing the chasm between the haves and have-nots. It was a paradox that most marketers would have been scared of. Add to this the fact that there was no one India. Both in terms of purchase-behavior or linguistic unity you had a deadly mixture that communication had to swallow whenever it attempted to reach consumers. And, this paradox no communication vehicle could cover.

    This is why we saw the birth of language channels: at this time, the entry of the Star TV Network also brought India on a global media platform like never before. I have often believed there were two India's as far as consumerism is concerned: the India before and the India after Star TV. It is not as if Star TV was doing anything dramatic but for the first time the Indian was exposed to global programming in the truest sense. What Star TV also brought to the table was a bouquet of channels, which included the enfant terrible of all channels: MTV.

    Many people were up in arms over the MTVisation of India and blamed corroding values on MTV. While some thought they were just using the channels as a flogging horse, my own belief is there was some truth. Media has a strange way of influencing human behavior. Media is the art of creating habits and it is this art form that can be most devastating in shaping consumer behavior and consumer opinion. This is what MTV did at that time in India. Music was no longer restricted to Lata Mangeshkar or R.D. Burman. The Springs teens of the world was what India was looking at and for.

    It was this borderless world that media created for the Indian consumer. Almost simultaneously, to some divine design as it were, more and more companies were entering India. The classification of homes switched from television owning homes to cable and satellite homes and today's figure of 70 million C&S homes is only an indication of the kind of media fragmentation we are about to experience.

    I will not suggest that it was media which changed the Indian consumer or which made him the consumer that he is today because just like everything else there was a rejection of media as well. Not all TV channels were successful; not all TV programmes had great TRPs. Slowly the bugbear of the South being forced to watch Hindi programming was eliminated in the form of regional channels such as Sun, Udaya and Gemini. Not to mention the fact that our very own state television went the regional way as well, with almost state-wise specifications.

    It was an India that was rapidly embracing change. But in this entire hullabaloo, the Indian consumer was conveniently forgotten. Marketers forced their global understanding on him and that once again caused the consumer to reject them. Coca Cola's early failure in the Indian market is a testimony to how horribly they got their consumer insights wrong. But Coca Cola was not alone. India's largest car manufacturer was caught napping too when the Korean chaebols unleashed competitive advertising for their cars.

    Surprisingly it was Korea's Daewoo that first advertised cars in India despite Maruti being around for more than a decade. What was this a reflection of? In my mind it represented marketer apathy for consumers: relationship marketing was never top-of-mind at any Indian company and suddenly these MNCs began wooing the Indian consumer. The same consumer who had learnt to live with neglect and a poor post-purchase scenario was being emboldened to say his piece. At the same time India was also witnessing a spate of activism.

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