India, being the fourth largest economy in the world; by GDP in terms of purchasing power parity (PPP) - and donning second largest human conglomeration exceeding one billion by number, certainly offers the potential of a colossal potential market. Even by conventional market exchange rates, the Indian economy is poised to become the fourth largest in the world within the next two decades. The incremental demand for industrial products could be the second largest. Concomitantly, the market (or markets) will explode in size.
In the post-liberalisation era since the onset of the 1990s, the expanding demand for industrial products of capital goods, intermediates and consumer durables and non-durables has emerged as the most powerful stimulant to India's economic development and international capital inflows. The size of the middle class estimated variously to be of different dimensions, has been the lure. During the closing years of the last decade and the early years of the new millennium, the access to the critical mass of a billion people, the middle class has, nonetheless, remained a fascinating phenomenon.
Factors Affecting the Influencing Indian Market
· Technology and Fast Changing Products: There is an astonishing technology upgradation taking place. Some style it as a technology wonderland. The new elements can be seen in some of the commonly used products. Take cameras, refrigerators, air conditioners, even kitchenware, watches, writing instruments, personal care products like perfumes and fragrances and cosmetics. The fast growing change in medical instruments, technologies and processes is unprecedented. It could, no doubt, be a strain to absorb these by a developing economy but the Indian market, nevertheless, is absorbing these new symbols with facile acceptance and adaptability. In fact, India is becoming a tourist hub in diverse areas for fellow beings in other countries.
· Overwhelming the Market with Models and Brands: To create USP (unique selling proposition) and to acquire a competitive edge, the players are introducing designer products. Watches, garments, furniture, cars, two-wheelers, white goods, all are fast shifting to designer products.
If the product is one in which competition must hot up, there is no way but to create product differentiation. Product differentiation is basically needed to segregate and usurp market segments and consumer values. Often, the USP is manifest only in terms of packaging but in the process it creates brand equity - intrinsic or perceived. Brands are born and reborn with new USPs and often USPs are the product of the fertile minds of the marketer - not necessarily of the product producer. Not a few products are being marketed by global players by outsourcing the total product from a competitor and selling it under its own brand name. One might say it is a market paradox. But nothing is paradoxical in this world of marketing fantasy. Outsourcing is not limited to IT; it is getting increasingly assimilated in other service areas and in the manufacturing itself.
· IT Injection: A major change in the market place is the adoption of IT in different phases of marketing operations. Let alone large companies, the infusion is penetrating deeper and deeper. The IT injection takes two forms: as product innovation and as a market mode (tool). Imagine, the traditional Ludhiana hosiery and knitwear industry has turned IT savvy with four firms having bought a knitwear software 'Uniknit'. Knit Solutions' software is used by firms having Universal Knitting Machines. The machine facilitates online transfer of design and eliminates the use of cassettes and recorders, which were adopted some time ago.
· Promotion and Advertising: Promotion programmes as indicated earlier have assumed new proportions as a marketing tool, in particular, through the electronic media. TV and radio are reinforced by the individualised audio visual devices and personal hard-selling. High cost ads in daily newspapers with full page space and miniscule messages are a frequent sight. Obviously, in the clutter, one could not hope to get the needed attention unless irrationally large space is usurped. If one brand occupies half-a-page, the other must have a full-page spread; and some others multi-pages. Media will continue to get large revenues - if new brands, products, producers, sellers wish to enter and survive. Use of paper - with hundreds of thousands of copies - and the time space on the magnetic and electronic media - is not anybody's concern since, in the ultimate analysis, it is the consumer who pays for the survival of the advertiser - or the seller. And the consumer remains oblivious with the illusion that competition ensures the best price.
· Foreign Brands in the Indian Market: In the meantime, lured by the Indian consumer market, a large number of foreign - including global brands - are entering India. LVMH owns brands like Louis Vuitton, Tag Heuer, Christian Dior, which are already in the Indian market. The government allowed up to 51% foreign direct investment (FDI) in single-brand retail ventures. It already has a couple of outlets in Mumbai and Delhi managed by a local partner. Moja Shoes Ltd, has applied for permission to float a new company in which it proposes to infuse 20% foreign direct investment. Moja has a manufacturing tie-up with global footwear brands Nike and Reebok, which again are very much present in the Indian market.
A significant qualitative change is the concern for the consumer who was a non-entity in many a (corporate or marketing) model. In the state-centred economic planning model, the consumer did not exist. With marketisation, the consumer has become the principal target and a prime force.
Focused on a consumer delight', the ambience is changing in facets more than one. The present exercise has discovered a few. On the pricing front, while competition is having its own impact on tradable prices, the market is flooded with freebies, prizes, smaller packs and newer brands, or brand extensions. The price cutting strategies cover a wide spectrum of products and market players.
Meanwhile, in the midst of these innovative transactions, globalisation manifests itself in many ways. The multi-billion credit card industry in India, with a base of over 5 million card-holders, is growing at 30% a year. Some 10 major credit card brands are vying with one another. In the US, nearly 12% of all transactions take place through credit cards. In India, the figure is less than 1% - but is growing rapidly.