Page 289 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Retail Business Environment

Notes Negative Affect of Culture

Table 14.2: India’s Consuming Class

Table I Table II
Estimated Households by Annual Structure of the Indian
Income Consumer Market (1995-96)
Annual income No. of Annual income Number of households
(in `) at 1994-95 Households (in `) at (in million)
prices (in million) 1994-95 Prices
Classification Urban Rural Total
_I
<25,000 80.7 <16,000 Destitutes 5.3I 27.7 133.0
25,001-50,000 50.4 16 ' 0 0 -22.0 Aspirants 7.1 36.9
50,001-77,000 19.7 22 "4 -45 ' 0 Climbers 16.8 37.3 54.1
77,001-106,000 8.2 45 % 215 ' Consumers 16.6 15.9 32.5
>106,000 5.8 I >215,000 IThe rich 0.8 0.4 I1.2
Total no. of households 46.6 118.2 164.8

Data on income distribution of households is insufficient in determining market size for different
consumer products in India. This is because of the lack of homogeneity of the consuming class
and the varying prices of a single product in different parts of India.

Example: Vegetables generally cost more in Mumbai than in Calcutta, hence vegetable-
purchasing power for identical income groups would be different in the two places even though
they are the two biggest cities in India with comparable populations.

Did u know? Purchasing power is location-specific, not income specific.
Consumption habits of households are therefore better determinants of consumer market size
than income distribution. Of course, other factors are also to be considered and they are detailed
below:
While determining market size for a consumer product, the structure of the consuming
class as seen in Table II above, can be both revealing as well as misleading depending on
the kind of product. For example, any specific consuming class would be fit to be a market
for consumer products like tea or soap, but a product such as vacuum cleaners would find
market largely only in the “consumers” and “rich” segments of the market as defined in
Table II above. Furthermore, even this may not be correct, because a taste for a vacuum
cleaner is not necessarily a function of purchasing power but of culture and/or taste as
well.

Identifying a plausible market size for a consumer product is therefore a hazardous task in
a heterogeneous country like India. Yet, the marketer needs some data to come as close to
the real picture as possible. For this purpose, it can be cautiously assumed that purchasing
power is proportional to income despite variables such as location, taste etc. Companies
are therefore advised to plan their consumer product marketing strategies on an area-by-
area basis, rather than on an all-India basis.It is also advisable to further refine the plausible
market size by taking into account details based on social, cultural and demographic
factors.

284 LOVELY PROFESSIONAL UNIVERSITY