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How big is India’s middle class? Will India be a big market for air conditioners? Is there a potential for packaged foods in India? And why are multinationals finding it so difficult to crack the code?
The last question plagued me when I came across the news about that US major ConAgra was planning to sell their shareholding in AgroTech Foods Ltd. I would have imagined with brands like Sundrop [full disclosure, it was one of the brands I had the good fortune of working on] and Act II, the company should be on a phenomenal growth path. Unfortunately it looks as if ConAgra is yet another US multinational to pull out of India.
I think for companies looking at India, Rama Bijapurkar’s latest book Lilliput Land is a must read. Rama is a veteran consumer expert who has provided business strategy advice to numerous companies, served on the boards of the best of best companies and taught a specially curated Consumer-Focussed Business Strategy course at leading business schools. This is her fourth book and this diminutive looking book packs a lot of learning.
Rama has presented the Lilliput Land concept in three broad sections that she has labelled Consumer India Structure Story, Consumer Behaviour Story and Supply Side Story. The big premise the book presents is that India should be seen as a country of millions of small consumers who add up to a big number, hence the title Lilliput Land. Each of the sections provide us valuable lessons to take home to help craft better strategies.
The first part of the book, ‘Consumer India Structure Story’, is full of numbers. Rama argues that only 18 per cent of household income is in top nine metros with a population of 5 million while 50 per cent is in rural India consisting of 600,000 villages. The much-bandied myth is around the metro focused affluent India; Rama throws water on that. Only around 10 per cent of Indian households earned ₹21.6 lakh per annum or more in 2021.
The number of households in this bracket would be around 30.8 million, a big number no doubt. But if you look at their annual income numbers they don’t compare favourably with even the middle class of developed countries. It is erroneous to assume that there are tens of millions of households earning ₹1 crore per annum [just based on some B School reports on starting salaries]. In this section Rama presents data pulled out of various surveys including IRS / MRUC, Kantar World Panel, NCAER and ICE 360 with which she was involved with for many years. Rama’s argument is that lazy marketers tend to equate India’s consumer market to the easily accessible metro and mini-metro markets, while in reality the market is spread out into smaller towns and villages of India.
Consumer behaviour
The second part of the book looks at how consumers in India are behaving. In her first section Rama shows us that consumer India is ‘…. a fragmented and complex hydra-headed monster, based on just its economy, demographics and living conditions’. In the second section she takes us into the minds of the Indian consumer. One thing that unites all consumers, urban/rural, upper class/middle class is the desire to want more, the aspirational quotient is probably highest among Indians. A Maruti Alto is no longer aspirational, it has to be a Suzuki Swift or a compact SUV. Indians are also finding new comfort in the concept of being Indian and embracing the new Indian identity; ‘Imported is no longer automatically better, Indian is not automatically worse’. If the first section was full of numbers, the second section compensates by offering consumer insights and consumer behaviour observations.
The third section is a call out to marketers. Rama maintains that ‘Demand Leads, Supply Lags’. She argues that for a country of India’s size we don’t have many large consumer product companies. In her book we should be having at least a dozen or more companies of the size of Hindustan Unilever and Amul. She points out that Jio opened up the smartphone and mobile internet revolution. UPI opened up the digital payment ecosystem so rapidly that it has become commonplace even in temples in remote areas of India to accept payments through UPI. Why is that we don’t have a ‘ready to heat and eat’ chappatis? Why don’t we have economical cars [Nano too finds mention], she laments.
Powerful arguments
Taken together the three sections present powerful arguments on how to look at the numbers behind consumer India, how to understand the changing behaviour of Indian consumers and what is needed to boldly tap the potential that exists across the country.
This book should be a must read for all MNCs looking at India. There is vast potential here but it is not concentrated in one city or two cities [unlike say Thailand]. Indian consumers are not all that wealthy as you think and are careful with their money. But if you can give them the reason, give them a product that they see value in, they will flock to you in large numbers. You will not make big margins, but the sheer numbers will more than make up for the slim margins.
Lilliput Land is a must read if you want to become a Goliath in the large Indian consumer market.
The reviewer, Ambi Parameswaran, is a best-selling author of eleven books covering topics like personal branding, consumer behaviour, advertising and self-development.
Check out the book on Amazon.
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