Aspirational Appeal Vs. Localised Bliss: Banking The Indian Consumer..!
by Mr. Shajai
Jacob, JLL India & Sri Lanka
McDonald’s,
known the world over for its hamburgers, does not serve beef and pork
in India. The global chain’s signature dish here
is the McAloo Tikki burger, accounting for
25% of total sales. A good 70% of McDonald’s menu has been locally
developed to suit the Indian palate. The quick service restaurant (QSR)
player even made headlines
across the globe in 2012 when it opened its first vegetarian outlet
near a religious site in India.
Not
only McDonald’s menu but also its pricing has been adapted to the
Indian market. It is not alone, however, when it comes to need-based
customisation. Late last year, India also emerged as Domino’s biggest
market outside US.
The pizza maker delivered about twice the number of
burgers McDonald’s sold. In fast moving consumer goods (FMCG), Unilever
has an edge in the country thanks to its strategy
of allowing local markets to build their own innovation capabilities
over the years. P&G, on the other hand, relied on superior products
developed for sophisticated markets for a long time.
Driving Mr. India..!
Sometimes,
the key to success could be market positioning too. Car manufacturers
like Suzuki and Tata Motors have come to be known
for their small-sized and affordable cars.
However, when Tata Motors
launched the cheapest car in the world – the
Nano – with the objective of having the two-wheeler junta
upgrade to four-wheelers and drive safely, Maruti Suzuki was in a fix.
Perhaps finding it challenging to sell their big-sized or
top-of-the-line models, the company has established
a new chain of premium stores to sell such models.
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| Shajai Jacob, JLL India & Sri Lanka |
Similarly,
while certain models of Mercedes Benz are popular with taxi fleets in
the developed world, only a few luxury hotel chains
in India use them in their fleets. Foreign brands in India come with an
aspirational value attached, not only in cars but also in something as
trivial as coffee.
For example, Starbucks positions itself as a premium
coffee brand in India with stores showcasing
the local culture and history, unlike in the US where most of its sales
come from takeaways as people prefer to take their coffee to work. This
underscores the fact that foreign brands must necessarily localise if
they hope to succeed in emerging markets.
Housing The Indian HNI..!
In
real estate too, local developers having international partners/
architects command a higher premium. As
the number of ultra-high-net individuals (UHNIs) in India increases,
branded residences are also gaining popularity. In this segment,
developers
join hands with globally reputed luxury hospitality or
lifestyle brands to create unique
and highly differentiated luxury residences.
Branded residences
obviously bring with them the advantages of these designer labels, along
with highly aspirational addresses. In fact, the concept of branded
residences now works like Swiss clocks in India.
Thanks
to the influence of the partnering brands, which take their
production values very seriously, such homes boast of professionally
designed interiors and exteriors, top-in-class facilities management,
concierge and valet parking services, and state-of-the-art electronic
safety features.
Such features have extremely high
appeal value for affluent Indian home buyers who respond both to the
status value and advanced conveniences of branded homes designed,
marketed and often managed by international hospitality or signature
designer brands.
Latching On To The India Story
With
their international brand following and aspirational appeal, foreign
brands can continue to succeed in India with localisation
and capture market share, especially in the premium products and
services’ space. However, they need to realise that while the psyche of
Indian consumers turns aspirational, it will continue to remain
domesticated.
People love to have Indian food even when they go on a Europe tour. They would prefer to eat a Gujarati
thali in an Indian restaurant in New Jersey. Closer home, you may easily find a modular kitchen by
Hettich in many a home, but it will be hard to miss the
pressure cooker being used for cooking. Interestingly, this is the
reason why dishwashers haven’t met the expectations their manufacturers
had for the Indian market.
To succeed
in markets like India, foreign brands will need to follow the mantra of
‘think global, act local’ diligently.
Indians
will continue to consume international brands at a fast rate, sometimes
even beating the growth of local and national brands.
Already, a report by British Bank Stanchart confirms that
India’s economic growth in FY’17 is expected to be driven by consumption
increasing on the heels of government employees’ revision in salaries.
This would reverse the trend
of FY’16, in which growth has been largely investment driven.
Indian brands too will see more ‘acche din’ ahead as they continue with their highly-localised offerings
and package age-old favourites in new ways.
Today, an Indian Yoga Guru's consumer products brand ‘Patanjali’ is making global and domestic rivals sweat.
Patanjali products are selling like hot cakes, with some
news reports saying its 20 billion-rupee revenues this year could pose a
threat to established, age-old Indian consumer brands. Home-grown
retailer Future Group has aggressive
plans to become a FMCG player.
Today, with domestic brands like
Haldiram’s leading the Indian snack market and surpassing
the combined sales of McDonald’s and Domino’s, it is a case study in
itself for students of business schools.
Moreover, Indian brands
dominate the 2015 edition of ‘Brand Footprint’,
a ranking of India’s most chosen consumer brands by IMRB Kantar
Worldpanel. This shows how local brands are on a strong footing
that matches their foreign counterparts.
With the right moves, both
foreign and Indian brands can maximise profits on the burgeoning Indian
market and a growing aspirational middle class.
About the author.
Mr. Shajai Jacob, is Director & Head – Marketing at JLL India & Sri Lanka
For media contact
Arun Chitnis
Head – Corporate Communications & Media Relations
JLL India
Pune 411001.
Tel: (020) 30930441 Fax: (020) 40196101
Mob: +91 9657129999
Website: www.joneslanglasalle.
Twitter: @JLLIndia
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