For virtually all categories of international marketer, 2011 was a somber year. The shake-out from the global financial crisis continued to be felt in developed economies. Perhaps even more alarming, progress was stuttering in those emerging markets that many rely on as engines of growth. While still extremely high by most countries’ standards, China’s GDP growth slowed as it started its momentous turn from an export- to a consumer-led economy.
And what of the other Asian economic giant, and the world’s second most populous country – India?
GDP growth slowed in the second half of 2011. The slowdown was also coupled with an upturn in inflation and questions about the political will to develop the domestic economy. A widely reported U-turn on allowing overseas retailers to set up shop in India raised concerns about how comfortable the government was with the opening-up of the Indian economy. Meanwhile, household consumption across the country hit its weakest level in the third quarter of 2011 and the cost of living has continued to outpace domestic growth.
Despite this backdrop of gloomy economic statistics, marketers can take heart. According to a recent white paper on consumer behaviour in India, consumers remain optimistic about their economic prospects. This positive outlook is borne out by a higher inclination towards credit card use and a relatively strong bias towards status spending. These findings suggest that the macro statistics obscure many reasons for marketers to be upbeat about doing business in India.
The white paper is based on the findings of a large-scale consumer attitudes survey carried out by Epsilon, in conjunction with Colloquyand LoyaltyOne. The research spans six major economies (India, China, the US, Canada, Australia and Brazil) and covers areas such as brand loyalty, attitudes to commercial communications and the shopping experience.
‘From Love to Loyalty: Engaging India’s Consumers for Long-term Profitable Relationships’ summarises the key findings of the India research and benchmarks it against China and the US, as appropriate.
A clear message from the large-scale survey was the greater sense of economic optimism among the three emerging economies compared to the developed ones. Thirty-four per cent of Indians are optimistic about their economic prospects – double the rate of the US. What is also striking is how strongly India emerges as a society that views money as a means of conferring power and status. As is the case with China, Indian consumers see brands as powerful social signifiers.
There are a number of important points for marketers to consider in this study. Indians enjoy shopping as a leisure activity, which is not always the case in other emerging economies (it is even seen as a chore in markets such as Australia). Twenty-five per cent of Indians in socio-economic categories A/B also believe it makes sense to stick to a well-known, trusted brand, compared to 12 per cent in the US. Indians are particularly well-disposed to global brands. Fifty-six per cent feel global brands are more trustworthy than local ones, contrasting with just 16 per cent in the US. However, these very strong preferences don’t translate into brand loyalty when actual shopping behaviour is studied. It seems that Indians have almost, but not quite, bought into the idea of being loyal shoppers.
Of all the countries studied, consumers in India have most keenly embraced social media. They have the highest usage rates for Facebook and Twitter in the survey (China excluded for their unavailability in the country) and welcome marketing messages by email (again, in stark contrast to markets such as the US and Australia). Thirty-five per cent of Indians prefer to receive marketing messages via Facebook, compared to 11 per cent in the US.
There is a strongly-held view that money is power in India. As with a number of other indicators in the research, this view becomes much more pronounced when we separate those surveyed into socio-economic categories A (20 per cent), B (28 per cent) and C (34 per cent). Fifty-seven per cent of SEC A respondents most strongly agree with the proposition that money can help you reach your goals and dreams. This slides to 19 per cent of SEC C.
While US consumers are far more skeptical about marketing in general, they display significantly higher levels of brand loyalty than Indians in most retail categories. Indians enjoy shopping as a social occasion far more than Americans and are more prepared to splash out on luxury brands. However, when asked about whether they are loyal to brands in particular categories, Americans score more highly than Indians in all categories except clothing and travel.
While Indians are enthusiastic consumers of innovative marketing messages, they still show a strong reliance on traditional, word-of-mouth (WOM) recommendations. Marketers will need a multi-pronged approach when reaching out to consumers in this market, but social media is likely to be crucial. There also appears to be considerable scope for loyalty programmes to convince Indian consumers to walk the talk on brand loyalty.
(Adrian Hoon is Vice President - Sales, Asia Pacific Epsilon International.)