CONSUMERS |Overview: Confidence remains steady despite year of disruptions
Shoppers seek authenticity and value
Indian consumers exhibited confidence, but sentiment varied by income and geography, depending on the impact of local disruptions and global events. And even as the gaps between rich and poor, and urban and rural narrowed, the extremes became more exaggerated.
India consumers endured a year of successive domestic, government-induce shocks intended to reform the financial system and increase national revenue. Introduced virtually overnight in November, demonetization eliminated certain paper currency to encourage a shift from cash to digital transactions. A national goods and services tax (GTS), implemented in July, replaced a complicated system of state and local levies. These disruptions impacted spending. (Please see disruption story)
Shocks from abroad, like Brexit and the Trump election, resonated quickly because of broad internet access, and stirred anxieties. The American First policies of the Trump administration disturbed consumers working in India’s vast IT sector, for example, resulting in regional variations in spending, according to the Kantar IMRB Shopper Barometer. (Please see related story)
India also experienced its own version of populism with a nationalist movement that embraced Indian heritage, but without rejecting globalization, which has impacted India in positive ways. While most Indians avoided the more extreme expressions of nationalism, they expressed a desire for products and brands that best understood their particularly Indian sensibilities and tastes. This inclination drove a rise in local brands, put pressure on multinationals, especially in fast moving consumer goods (FMCG) and personal care, and fostered a nostalgia trend.
The accelerated interest in local brands is best illustrated by the rise of Patanjali, which in the decade since it launched has expanded from a narrow focus on Ayurvedic products to a wide FMCG range that challenges established multinationals. Current research by Kantar Millward Brown quantifies the disruptive impact of emerging Indian brands, particularly Patanjali, in FMCG.
In its analysis of Brand Power, the BrandZ™ metric of brand equity, in the India Top 50 2017, Kantar Millward Brown discovered that Patanjali increased 64 percentage points, while multinationals grew by less than half that rate, and Indian FMCG brands declined. New Kantar Worldpanel research explains Patanjali’s impact in detail. The Kantar Worldpanel research also identifies an emerging classification of “Elite” consumers who spend significantly more on FMCG than other relatively wealthy households. (Please see related story)
Trust and “Indianness”
In this context of disruptive events, greater access to online information, and a desire for authenticity, consumers scrutinized brands more closely. In the past, when consumers received a brand message they were likely to believe it. Today, they are more likely to ask questions and search the internet for answers.
Living in a communal society, Indians consumers typically have shared information before making a purchase. Today, social media has replaced—or at least greatly supplements—word-of-mouth. The circle of influencers is much wider, and includes bloggers, especially for urban and other educated consumers who are active online.
To get into the consumer’s consideration set, brands need to earn the trust of Indians who have been impacted by the overall global decline in trust and disappointed by some trusted Indian brands. Indian consumers want to trust. Many were patient with the inconveniences of demonetization because it symbolized the possibility of reducing corruption and elevating the importance of honesty and trust, according to Kantar IMRB.
™nce Indian consumers trust a brand, they primarily look for the best offer of value for money. But a brand’s “Indianness” has also become an important determinant in brand selection. Being made in India is especially relevant in categories such as health and wellness and Ayurveda, where Indian heritage implies high levels of quality and distinctiveness.
Patanjali is the most prominent example of brand that emphasizes “Indianness.” Recently, Patajali has more aggressively promoted its “Indianness” as proof of authenticity when compared with multinational brands. Other brands that promote their Indian provenance include Dabur, a brand of Ayurvedic and wellness products, and Forest Essentials, a premium brand that has reinterpreted and updated Ayurvedic and other Indian personal care and beauty traditions.
The consumer desire for brands that authentically capture Indian tastes and heritage has pressured the multinationals and many have responded. Hindustan Unilever, a consumer products giant present in India since 1933, has introduced a new brand of Ayurvedic products, called Ayush, and intends to leverage its extensive distribution system, which reaches even the most remote parts of India.
Colgate has introduced a toothpaste with Ayurvedic properties. Maggi, a Nestlé brand, recovered from recent food safety issues by changing its product formulation and benefitting from a reservoir of brand equity built up over time. Maggi rose 66 percent in brand value this year, making it one of the Top Risers in the BrandZ™ India Top 50.
Only a few years ago, multinational brands came primarily from the West and enjoyed a reputational edge over Indian brands. Today, when multinationals in India come from the West and the East, including China, Japan, and Korea, consumers are likely to make purchase decisions in most categories based on product, price and service—rather than on provenance.
In durable goods, like large appliances, for example, multinationals still dominate. But the multinationals create product designed specifically for Indian needs. Samsung, for example, markets an air conditioner that repels mosquitoes. India brands, such as Voltas, also successfully market air conditioners.
Reaching today’s more knowledgeable and skeptical Indian consumers requires communicating with real-life, relatable situations. Young people, particularly, are unimpressed with celebrity brand ambassadors who project an unattainable level of perfection. Expansive romantic stories may work for Bollywood movies, but they generally are less effective for selling products.
The detergent powder Ghari appealed emotionally in a commercial aired during the Muslim holiday of Eid-ul-Fitr, a time of purification at the end of Ramadan. The commercial showed friends reconciling differences and gathered for an Eid feast, and it treated the theme of cleansing in spiritual terms, using an Indian word that means wash away.
To differentiate and strengthen their emotional engagement with consumers, many brands connect with relevant progressive social issues, in an expressional of nationalism aimed at supporting India’s development. A campaign from the jewelry brand Tanishq promotes empowerment of women. Parachute, a body lotion brand, also advocates for the empowerment of women, with the strapline, “Be confident in your own skin.”
Indian consumers respond to brands that go beyond their transactional relationship with consumers and create an emotional bond, according to Kantar IMRB. When consumers felt stressed immediately after demonetization, brands had an opportunity to respond in empathetic and relevant ways, but few brands met the challenge, Kantar IMRB found. In rapidly transforming India, however, demonetization is only one of many disruptions and brand opportunities.