PRESENTS MARKETING TO THE AFFLUENT Brands are leaving no stone unturned in their quest to attract this consumer group. An analysis. A SPECIAL REPORT BY AFAQS! REPORTER 41 IMAGE COURTESY PHOTOLIBRARY INDIAÊS AFFLUENT SPECIAL REPORT DISCOVERING THE AFFLUENT PHOTOGRAPH COURTESY: IMAGESBAZAAR.COM They come in varied shapes, sizes and style quotients. Successful entrepreneurs, senior executives, rich farmers or generations of rich families. How do marketers view the affluent consumer? By Narayan Iyer onsumers in India have Spendings reveal that, for the first CHANGING COLOURS dramatically. always been pretty tricky time, Indian households with high he affluent Indian consumers If earlier, the notion of these Cto double-guess. And incomes outnumbered those in the Thave evolved over the years. consumers was that of the scions of business continues to struggle low category at the end of 2009-10. They are those who have a large the royalty, old Indian business with defining target markets Today, India has 46.7 million high amount of wealth and spending families or film stars; the list now based on the most logical meas- income households compared to 41 power, which is most likely to be also includes entrepreneurs, farmers, ure - household income. million in the low income category. reflected in their high-income pro- employees in large organisations, Experts have their own definition In another study (Capgemini- file. In 2006, when The Knowledge and they qualify this with labels like Merrill Lynch World Wealth Report Company (a division of Technopak super-rich, rich, middle, lower 2010), there are 1.3 lakh dollar-high- Advisors) produced the first compre- middle or strivers, consuming class, net-worth individuals in India hensive study on trends in Indian aspirers or affluent, top end of the compared to less than 25,000 a luxury, it pegged 1.6 million market or mid-market and so on. decade ago. These are individuals affluent/rich households in These labels, instead of reassuring, who have in excess of $1 million as India. In 2009, the Nielsen often leave one feeling even more investible surplus annually. UMAR (upper middle and anxious. Such classifications are However, the NCAER findings rich) report put a figure of 2.6 hotly debated or accepted with a classifies households earning over Rs million to households with Unlike affluence, sceptical shrug. 1.8 lakh a year (under 2001-2 base monthly incomes of over Rs luxury is more of an The prime reason leading to price) in the high income category. It 40,000. guesses about the consumer’s class is is in this paradox that the Indian “When we set out on indulgence than a that private wealth creation in India affluent reside. estimating the number of new necessity. Though luxury has accelerated rapidly. If the Says Santosh Desai, managing super-rich households, we economic reforms of the ’90s director and CEO, Futurebrands defined households with an has never been easy to unleashed the pent-up energy of India, “The heterogeneity of the annual income of Rs 40 lakh define, the elusiveness India’s entrepreneurs, the past Indian consumer makes it difficult or more,” says Arvind decade has seen rapid growth of the for marketers to slot a single group as Singhal, chairman, and concept of mystery is affluent class. affluent. A farmer buying a high-end Technopak Advisors. In a The recent National Council of truck is perhaps more affluent than a span of less than five years highly desired amongst Applied Economic Research city slick senior management staff in the stereotype of the affluent luxury consumers. (NCAER) report on Earnings and a large organisation.” class has changed 42 afaqs! Reporter, August 16-31, 2010 SPECIAL REPORT PRESENTS traders - both retail and wholesale, education, geography or health, but THE NEW MARKET DYNAMICS agricultural commodity traders, the ability to splurge good money contractors and professionals such as over good and bad products alike, lawyers and doctors. distinguishes them,” says Harish Geographically too, the Indian Bijoor, CEO, Harish Bijoor urban growth story that until now Consults. Mumbai, Û Metros was driven largely by metros, is now To some, it also means lavishness, Kolkata, Delhi, moving beyond, into smaller towns comfort, opulence, sumptuousness, Chennai, Bengaluru, where the affluent profile is fast or even extravagance. It is these Hyderabad emerging. “The growing affluence varying factors that are making levels, increased awareness due to marketers, advertisers and brand Û Key Urban Towns media penetration, improved managers alike warm up and reach Pune, Chandigarh, Jaipur, connectivity and significant changes out to this consumer class. Ahmedabad, Lucknow, Ludhiana, in consumption patterns with high Cochin, Vijayawada, Visakhapatnam, Nagpur, aspiration levels of small-town India FINDING THE AFFLUENT Patna, Surat, Coimbatore, Jamshedpur, Amritsar, Trivandrum, Nasik, Bhopal, Indore, are compelling marketers to take here has been a gradual Vadodara, Kanpur, Madurai notice of a new affluent class,” says Tincrease in spending power Ashok Rajgopal, partner, media and which has moved from the metros Û Rest of urban entertainment, Ernst & Young. to the satellite towns around them, Aurangabad, Allahabad, Gwalior, Jodhpur, Raipur, India: Urban The one commonality, across the over the years. Now it is going fur- Bhubaneshwar, Goa, Pondicherry, Aligarh, Moradabad, cities other class of affluent, that emerges is that ther, and the demands of Rohtak, Rourkela, Udaipur, Anand, Faizabad, Hassan, than rural these are people who are financially consumers here are different. “The Shimla, Roorkee, Shillong India well-enabled. “They may have sale of luxury goods beyond the lacunae in many other areas such as top 15 cities including the metros Source: Ernst & Young, The New Market Shehers Report RICH PICKINGS THE HIGH INCOME FAMILIES “To be affluent in today’s world is Figures in Â000 Figures in Rs not to indulge; it is 150 150 to do with living better, convenient, smart 120 and realising years of aspirations.” 100 SANTOSH DESAI, 90 MD AND CEO, FUTUREBRANDS INDIA 60 50 30 Below 40,000 to Above 84 126.7 “The high end of affluent are forever 40,000 1,80,000 1,80,000 0 0 peripatetic souls who travel a lot, buy a lot, 2008 2009 eat very little, savour the best things of life Û In India, the HNWI population grew Û In 2001-02, the number of high and do most of their eating with their eyes 50.9% in 2009. income families was only 13.8 million Û India also has a relatively high Û 62% of Indian households belong to rather than with their mouths.” market-cap-to-GDP ratio raising the the middle class that comprises the HARISH BIJOOR, HNI population affluent at the top end CEO, HARISH BIJOOR CONSULTS Source: Capgemini-Merrill Lynch, World Wealth Report 2010 Source: NCAER, Earnings and Spendings report, 2010 is an indicator of the shift in afflu- those places, is creating the spurt in ent buyer destination,” feels Desai. consumption. “Marketers should stimulate desire Consider Aurangabad, the city in About 22 key urban towns are the ‘backward’ region of growing and getting bigger and more and capture the now rapidly increasing Marathwada, better known for its affluent according to the Indian spending potential of the affluent in India poverty, acute water shortage and Consumer Spectrum of Urban India with a sharper focus across segments.” lack of industrial development. In Report by Indicus Analytics, a April this year, it managed to make research firm. ARVIND SINGHAL, many marketers take note of the Marketers are chasing the CHAIRMAN, TECHNOPAK ADVISORS city when 115 individuals placed growing number of affluent in the orders for new Mercedes cars. rest of India because of the potential “From a marketer’s standpoint, and the need to tap this segment. “A various things are happening. study of 100 cities’ consumption “Growing affluence levels and increased Affluence levels are going up, spending by us shows that metros awareness is due to media penetration, connectivity to smaller towns has constitute about 30 per cent of the become better, logistics are total consumption market,” says improved physical connectivity and significant improving and organised retail is Laveesh Bhandari, director of changes in consumption patterns.” growing much faster in key urban Indicus. This indicates that the key ASHOK RAJGOPAL, towns and smaller towns,” says urban towns, the rest of urban India Rajgopal. This has led to a situation and rural India together garner PARTNER, MEDIA AND ENTERTAINMENT, where affluence combined with the almost 70 per cent. Given the large ERNST & YOUNG availability of products or at least a consumer base of these markets, an means to get those products out to increase in share of relevant afaqs! Reporter, August 16-31, 2010 4 3 PRESENTS consumers would imply larger the target market, as it will allow In India, the diversity was target audience. While the realities of SPECIAL REPORT numbers being added in these them to communicate better with astounding. In Bhopal, they found the affluent beyond the metros may markets than in the metros. what is fast emerging as the new 213 types and in Vijayawada 171 be different from the urban or metro future market. They also need to types. “This is why marketing in consumer, his expectations and A COMPELLING CASE understand the psychographics of India is regarded much more aspirations are the same. he affluent tend to be very this target class and their attitudes difficult than fighting for pieces of “A marketer has to aim at Tdifferent