Sam Balsara on the 3 pillars that are radically changing the Indian Consumption Story

Adgully’s CMOs’ Charcha - Kolkata Chapter commenced on a great note today (June 30, 2023) morning at The LaLiT, Great Eastern, Kolkata. The day-long event has brought together a diverse group of industry leaders, who are discussing the great potential that the East markets offer, the changing expectations and aspirations of consumers, brands’ strategy to win over a complex and somewhat remote markets, and much more.

CMOs’ Charcha - Kolkata Chapter saw a special keynote address by Sam Balsara, Chairman, Madison World, who shared his insights on ‘New Imperatives in Changing India’, where he provided several valuable perspectives on the evolving landscape of marketing and advertising in the country.

At the outset, Balsara pointed out that it is said that people overestimate the impact of change in the short term, but underestimate its impact in the long term, and that is something that we have witnessed in India in the case of marketing, consumer habits, etc. “Until recently, India was considered a poor country, but look where we are today,” he said.

Continuing further, he said, “There are so many visible changes in consumption that are taking place in India,” and added, “It stands to reason that we in Marketing and Advertising, too, need to recognise these changes, whilst conceptualising our strategy to reach today’s Indians.”

Elaborating on, what he called – the Indian Consumption Story – Balsara noted that Indian consumers are earning and spending like never before. This change in consumption, according to him, has happened on the back of 3 pillars:

Rising share of the Middle Class

In 2005, the middle class was only 14% of the total population, now it is 31%, and in 20 years, it will be half above this. So today, out of three billion homes, we have a hundred billion homes that are consuming homes. Economists believe that growth in the middle class drives consumption and the GDP.

Growing share of Younger People

The higher the working age population in the country, the more it benefits the Demographic Dividend, and that is what marketers in India are benefiting from. China grew aggressively in the last two decades when its working population hit 73%, and that is sharply rising now. India’s growing market will continue to grow for at least the next 40 years.

Rapid growth in Digital Penetration in India

There has been a dramatic increase in Internet penetration in India since 2000. Until 2015, our Internet pace was relatively low, but then it grew rapidly from 10 million to 25 million to 46 million, every 5 years. From 2015-2020, we grew from 46 million to 692 million and it is expected to grow to 900 million by 2025. Low cost broadband has brought about this revolution.

It’s these three factors that have completely and radically changed India, Balsara noted. According to him, “Adopting the Western Marketing Playbook is unlikely to deliver dramatic results in today’s India. We need to create a new India-specific Playbook to cater to today’s India.”

While highlighting the 3 key ingredients that marketers in India should adopt to capitalise on this country, Balsara said, “First, identify the addressable markets beyond Traditional Demographics of age and sex, but by newer cohorts that are now available in media terms.” He felt that the Traditional SEC definition doesn’t serve marketers and ad agencies well today.

He reminisced, “In the days gone by, broadcasting was indeed the name of the game and with ‘Ramayan’ and ‘Mahabharat’ on the single channel then available – Doordarshan – you could capture the entire country. When I launched Cinthol Lime in 1990 with four double spots on ‘Mahabharat’, it created nothing short of magic and Cinthol Lime reached a market share of 5.3% of the premium soap market in the very first month that the retail audit featured it.”

The second ingredient that he talked about is Regionalisation, that is unique to India. He said, “It’s true that we have a different India every 100 km. Not only are there a sharp difference in customs, habits and attitudes as one travels from place to place in India, the nominal per capita GDP also varies widely and so does consumption intensity by State. And the variation is not small – ranging from $7,000 in the tiny state of Goa to as low as $1,600 in Jammu & Kashmir. Generally speaking, West and South and Delhi, Punjab and Haryana are far more prosperous compared to the rest of India.”

The third ingredient that Balsara spoke about is the smart allocation of media monies based on media consumption. “A significant development is that the younger our target audience is, the more mediums they consume. 41% of those over 50 years consume only one medium, but only 22% of the young between the age group of 16 and 26 years consume one medium. Only 4% of the old consume four mediums. But as many as 15% of the young consume four mediums.”

Thus, multimedia becomes necessary when marketers want to target the young audiences, he emphasised.

These are edited excerpts of Sam Balsara’s keynote address. For the complete address, watch below: