Consumer Discretionary

<p>The Indian market has its dynamics. This is because India is a nation of pluralistic culture, taste, language, religion, choice, etc. Here you will find that in a single state, customers ask for products of different choices, colors, etc.</p><p>Many MNCs who have ventured into India in the last decade have found the market complex and, in the process, have either quit or still struggling because they thought that with superior technology and dominating marketing skills, they would rule the hearts of Indian customers, the way they have been doing in most parts of the world.</p><p>They had failed to realize the Indian psyche, and top marketing genius from top management and engineering institutes were forced to bite the dust as all their ideas deflated.</p><p>However, some MNCs were smart enough to dive deep into the markets and came out with <a href="https://www.pwc.in/assets/pdfs/consulting/technology/emerging-technologies/iot/future-of-consumer-durables-and-electronics-in-india-the-changing-landscape.pdf" target="_blank" rel="noopener">brilliant ideas</a> and products which matched the wavelength of Indian customers, and their business flourished in leaps and bounds.</p><p>Now the question arises: What is the enigma of Indian consumer durable markets- that some perished and some flourished?</p><p>In this article, I have tried to decode this mystery.</p><p>&nbsp;</p><h2><span style="font-size: 14pt;">Strong Service Networks</span></h2><p>We have to understand that India believes in "Use and Maintain ". This is because, in India, there are many goods like television, refrigerator, washing machine, air cooler, or brown goods like mixer grinders, microwave ovens, and OTGs, which the whole family purchases in a shop.The purchase gets associated with their emotions and sentiments; they do not want to throw it away easily and prefer to maintain it through service.</p><p>A classic example is "a wristwatch" or "a moulded luggage ". A wristwatch is generally given to a person by someone elder in a family when they graduate from high school level, or a pair of watch is given to a couple during their wedding. They generally preserve these gifts as a special memory even if they buy a new or latest one. So, companies with strong service networks have been able to survive.</p><p>For example, LG, Samsung, Philips, Maruti, Bajaj, and TITAN, to name some, whereas companies with superior technology and product features have almost been wiped away or merely survived among a few elite clients for whom neither money nor memory counts.</p><p>&nbsp;</p><h2><span style="font-size: 14pt;">Rural Market</span></h2><p>Mahatma Gandhi said that "Real India Lies In Villages "&ndash; the words are so true that it has almost become scripture in today's corporate world.</p><p>Today bulk of the sale in consumer durable and fast moving consumer durable come from rural India &ndash; villages. Here again, companies striving to reach the remotest places are all the more successful.</p><p>The path to reach or penetrate these places lie in smart and strategic thinking. It could be through appointing Superstockist, a few direct dealers in strategic villages, or set up makeshift stalls in wholesale mandi, etc.</p><p>Many successful companies have devised a separate vertical for reaching the rural market by coining the term- GTM( Go-To-Market) and RMP (Rural Market Penetration) so that they focus their strategy on prices, products, and promotion as per the rural trade.</p><p>With metros, tier 1 and tier 2 cities face stagnation because of the setting up of a retail chain of shops and the onslaught of e-commerce. It is the rural market that is driving growth for these companies.</p><p>Again at the cost of repetition, companies, irrespective of their stature in domestic or international markets, who have realized this are flourishing while others are on the verge of extinction from consumer mind share.</p><p>&nbsp;</p><h2><span style="font-size: 14pt;">Creating a Niche Segment</span></h2><p>Consumer durable companies who have succeeded in creating a niche segment for themselves are doing business with ease.</p><p>Today, a company must create a niche for itself to register in customer mind. It has to be either super premium, premium, mass premium, or economy. No company in today's world can cater to all the above segments, given the inventories and competition they have to face.</p><p>Companies that have tried to be in all the above segments have burnt their balance sheets. Their huge effort of positioning themselves in all the segments by advertising heavily has yet to yield positive results, and gradually, it is a particular segment that brings them revenue. So consolidation of their strengths and holding onto the market share should remain the first motto of these companies.</p><p>&nbsp;</p><h2><span style="font-size: 14pt;">Net Profit</span></h2><p>A company can run provided it makes a Net profit. Gone are the days when there were MNCs and a few Indian companies who went on sustaining losses year after year with the expectation that, in due course, they would make a profit.</p><p>But in today's world, when the world is changing so fast, customer tastes and technology are changing faster than the seasons, no company can afford to make a loss in the first three years, then break even and start making profits.</p><p>Ideally, maximum, the first year should be in loss as it takes time to set up infrastructure, 2nd year should be break-even, and the 3rd year should make profits. The existing companies should find ways and means to reduce costs, which can happen through digital acceptance of the system.</p><p>Inventories have to be reduced, and supply chain efficiency has to be increased so that it does not put pressure on working capital.</p><p>Reduction of manpower should be the last and least option as it gives a bad name and shakes the company's stability. HR should always adopt "Once Bitten Twice Shy, "a cautious approach to taking additional manpower.</p><p>Today in India, most companies, during the first 2 to 3 years of growth, start taking manpower, throwing caution to the winds without forseeing the future risks, and when the growth plateaus, then the attrition process starts.</p><p>Having mentioned the above points, I feel India has a huge growth opportunity for consumer durables markets and if companies can think of "Sales As Science "and" Not As Art "anymore, then they will flourish.</p><p>&nbsp;</p><p>&nbsp;</p><p><span style="font-size: 10pt;"><em>This article was contributed by our expert <a href="linkedin.com/in/sabyasachi-chakraborty-11a65355">Sabyasachi Chakraborty</a></em></span></p><p>&nbsp;</p><p>&nbsp;</p><h3><span style="font-size: 14pt;">Frequently Asked Questions Answered by Sabyasachi Chakraborty</span></h3><p>&nbsp;</p><h2><span style="font-size: 12pt;">1. Which is a suitable marketing strategy for the rural market? </span></h2><p>In rural markets, community participation is very high. The village headman, or the so-called sarpanch, plays an important role among the village residents. So participation in local fairs, weekly Haats (markets), or honoring the top 10 girl students by sponsoring some events makes a great impact among the rural folks.&nbsp;</p><p>The villagers remember the brand or company who gets associated with this type of local activity. They start to connect themselves emotionally with the brand. Service at the doorstep is one such step.&nbsp;</p><p>So to summarise- affordability, awareness, availability, and acceptability - these 4 encapsulate the segmentation of the rural market, product strategy, pricing strategy, communication strategy, distribution strategy, and competition strategy.</p><p>&nbsp;</p><h2><span style="font-size: 12pt;">2. What is the growth of the consumer durables industry in India?&nbsp;</span></h2><p>The growth of the consumer durable industry in India depends on the target audience a company focuses on. It depends on the penetration level a product has made in India. However, on average, the consumer durable industry is growing CAGR of 15% to 20% per annum.</p><p>&nbsp;</p><h2><span style="font-size: 12pt;">3. What are the four influential factors that attract customers?&nbsp;</span></h2><p>They are:</p><ul><li style="list-style-type: none;"><ul><li>Cultural&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; (Culture, subculture, social class system)</li><li>Personal&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;(age, lifestyle, occupation, economic status)</li><li>Social&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; (Family, peer groups, social status)</li><li>Psychological&nbsp; &nbsp;(motivation, perception, beliefs, learning)</li></ul></li></ul><p>&nbsp;</p><h2><span style="font-size: 12pt;">4. What makes the Indian consumer durable market quite attractive?</span></h2><p>With rising disposable incomes among the MIG (Middle Income Groups), with husbands working and scarcity of maids, the demand for brown goods (small home appliances) and white goods is on the rise (e.g., dishwashers).</p><p>The government taking care of social security, like free healthcare and distribution of essential items among the poor, also leaves this population with some money to buy brown and white goods.&nbsp;</p><p>The growth for all companies comes from tier 2 and tier 3 towns &mdash; easy access to credit like no-cost EMI in all big retail outlets. The big day sales of Amazon, Flipkart, and Jio mart at least five times a year, where they offer huge deals, have made customers more prone to buying these goods. With competition in all the segments, the manufacturers are walking extra steps to woo customers like exchange offers.</p><p>&nbsp;</p><p>&nbsp;</p><p>&nbsp;</p>