Indian consumers

Ringing the changes: how Vodafone rebranded its business in the world’s second biggest mobile market
http://www.warc.com/Tracking/ArticleLink.asp?ID=88183&M=WARC-Free-June08
Extracts: It was probably India’s largest ever rebranding, and arguably one of the biggest in any country. After completing its $10.9 billion cash acquisition of Hutchison Essar - then India’s fourth biggest mobile operator by connections - in May 2007, Vodafone moved quickly to bring its brand to one of the world’s fastest growing mobile markets. This encompassed changes to marketing at thousands of consumer-facing retail points, communications with staff, dealers and other partners, and across the media. The programme was executed rapidly but escaped the criticisms such high-profile corporate makeovers often attract.

How did Vodafone tackle the exercise, and what have been the results?

The scale of the challenge should not be underestimated. India has overtaken the US as the world’s second largest mobile market by connections, with only China representing a bigger volume market. By 2010, mobile is expected to account for almost two-thirds of total telecommunications revenue in India.

In March 2008, Vodafone estimated it was adding more than 1.5 million Indian customers a month, and in the company’s 2007/08 financial year, Vodafone’s Indian operations grew by 50% more than three times the average 14% growth rate across the group. As a percentage, Indian mobile penetration in mid-2008 is however still low by major economy standards at 23% of the population, compared to an estimated 80% mobile penetration in the US or 104% in Germany.

India ARPU (average revenue per user) is also low. On a proforma basis, which measured performance as if Vodafone had owned Hutch for a full year, Vodafone estimated its Indian ARPU was $9.3 a month in the first quarter of its 2007/08 financial year. By contrast in the UK, Vodafone typically has ARPU of about £23 ($43) a month and Verizon, the US operator part-owned by Vodafone, has ARPU of about $61 (£32) a month.

With 44 million Indian users out of the group’s total base of 260 million consumers, almost one in five of Vodafone’s customers today is from the sub-continent. Notwithstanding the logistics involved, therefore, the reality was that the group was unlikely to keep its core brand image and messaging out of the Indian market for very long.

Speaking in September 2007, Vodafone’s Marketing and New Business Director, Harit Nagpal,: “It (the rebranding) is even larger than our own previous brand transitions as it touches over 35 million customers, across 400,000 shops and thousands of our own and our business associates' employees."

Tracking the growth of India’s middle class
http://www.mckinseyquarterly.com/Retail_Consumer_Goods/Tracking_the_growth_of_Indias_middle_class_2032
Extract: India’s rapid economic growth has set the stage for fundamental change among the country’s consumers. The same energy that has lifted hundreds of millions of Indians out of desperate poverty is creating a massive middle class centered in the cities. A new study by the McKinsey Global Institute (MGI) suggests that if India continues its recent growth, average household incomes will triple over the next two decades and it will become the world’s 5th-largest consumer economy by 2025, up from 12th now. (The full report, The ‘Bird of Gold’: The Rise of India’s Consumer Market, is available free of charge online.) Along the way, spending patterns will shift significantly as discretionary purchases capture a majority of consumer spending. India’s potential should make it a high priority for most consumer goods businesses, but to succeed in this complex market they must overcome major challenges.

Private consumption has already played a much larger role in India’s growth than it has in that of other developing countries. In 2005 private spending reached about 17 trillion Indian rupees1 ($372 billion), accounting for more than 60 percent of India’s GDP, so in this respect the country is closer to developed economies such as Japan and the United States than are China and other fast-growing emerging markets in Asia (Exhibit 1). Our study shows that aggregate consumer spending could more than quadruple in coming years, reaching 70 trillion rupees by 2025. Higher private incomes and, to a lesser extent, population growth will encourage this rise in consumption. Changes in savings behavior will play only a minor role.

One Billion into One Won't Always Go - How Regional and National Brands Vie for India's FMCG Shoppers
http://www.warc.com/Tracking/ArticleLink.asp?ID=87969&M=WARC-Free-May08
Abstract: When India first emerged as one of the test grounds for globalization of consumer markets, Fast Moving Consumer Goods (FMCG) executives tended to focus on a "one size fits all" strategy and believed pan-Indian brands would quickly come to rule the roost. Few anticipated how India's regional brands would hit back with innovation on cost and sharper targeting. In a nation with 62 socio-cultural regions, 23 languages and a diverse geography, the realization that pan-Indian brands alone cannot cater to 1.1bn Indians has dawned on national and multinational groups. This has profound implications for investment in new product development, marketing strategy and choice of media across India. If ignored or tackled badly, these issues can cause serious repercussions for the businesses in question. Indeed, in the closely-related sector of retail, the pan-national ambitions of Indian groups such as Reliance or overseas investors including Wal-Mart and Carrefour have sparked public suspicion and even riots.