Cut to 1994, to a nation that had only recently opened its arms to embrace liberalization and globalization. The winds of change swept through the economy while foreign investment and foreign brands started hitting the market. The liberalization of the Indian economy by erstwhile Finance Minister Manmohan Singh in 1991 changed the country for good.
Cable and satellite television provided an alternative to a nation tired of watching poorly produced programming primarily developed by a government organization. New cultures and lifestyles were brought into Indian homes through television, kindling new aspirations and opening minds to a wholly different way of life. There was now a whole new set of things to hanker after. Brand owners had an audience with new aspirations, consuming new media and influenced by new experiences.
The influx of foreign brands meant more jobs, better salaries, better value for money for customers and more competition. Slowly a few key characteristics of thinking were changing. The Indian aversion to taking loans was diminishing and the idea of being in manageable debt was more acceptable, even though it was still difficult to get a loan because of the bureaucracy involved. Savvy brands created finance companies to enable speedier and easier processing of loans; in doing so they carved out a larger market share for themselves by financing customers’ purchases.
But the market was still fairly stagnant because most people were satisfied with what they had and never retired old goods, choosing to repair them if they got spoiled. A watch could last a lifetime and never need replacement. In a country with such high poverty levels, thrift came naturally. Brands across categories slowly but surely changed this mindset by offering exchange schemes to help customers get rid of current product and aided the purchase of new products by offering loans with no interest and low monthly payments.
Having succeeded in this task, brand owners set out for the multiple purchase—a second car for one’s spouse, multiple watches that could be worn on different occasions, a television for the bedroom to complement the one in the living room.
Even the tumultuous dot com days contributed. As the nation watched, riches created by some and lost by others with great rapidity demonstrated that there was lots of money to be made if one had initiative and passion. The benefits of affluence became apparent and there was a new openness about money.
Working in fast food joints as delivery boys and waiters is now no longer something that youngsters feel is below their dignity, it’s a sign of being independent. Bargaining to get the lowest price is no longer seen as cheap but a sign of being smart. Self consciousness and shyness has been left behind as a new tougher focused consumer has stepped forward demanding huge value for money from brands; this customer has no hesitation to switch brands if he’s not treated well.
Brand owners find themselves fighting greater competition within their category and outside their category. This means fighting tougher battles with lower costs, better product features, better customer service, providing relevance and differentiation in one breath and recommitting to the customer every minute because that’s the simple pure focus required and that’s the only way to survive.
The shift in mindset has been huge especially for brands that used to bully customers and pass on all their inefficiencies to the customer in the form of high prices, knowing that the customer did not have an option. It’s not easy with immense competition and higher stakes. As the Indian customer changes so will the task of brands and their custodians. What will drive change next is the question.