The two-minute world

Remember the recent ads from e-commerce sites? In select areas of major metros of India, e-commerce firms are promising same-day deliveries. As if next day delivery was not good enough. “But the new-age e-commerce business model is constantly re-inventing itself to push the boundaries, this time with same-day delivery services,” says Anisha Motwani, Director & CMO, Max Life Insurance.

What seems like a minor development is a major reflection of the story of our times. Consumers are not ready to wait for anything. A new, eternally shrinking definition of ‘instant’ is changing the way consumers behave and make buying decisions.

Impatience, a virtue

The consumer of today has made impatience a virtue. “A three-second gap in downloading stuff from the internet seems unbearable,” says Santosh Desai, MD & CEO, Futurebrands India. How has this impatience affected marketing? Look around stores and you will find that the nature of promotions has changed. “It used to be about saving money, now it’s about buying more, getting more — as in the ‘buy this, get one free’ kind,” says Desai. There is the urge to offer the consumer rewards all the time, in more and more categories. This is not just about small-ticket items but also items that require significant spends where consumers opt for loans. A recent study by Nielsen points out that nearly 30 per cent of consumers avail of loans earlier than planned because of promotional offerings.

“The rise in impulse purchasing can be directly linked to the reduction of friction to sales,” says Jessie Paul, CEO, marketing and branding consultancy Paul Writer. She adds that if consumers can buy something at the click of a button on a smartphone using stored credit card information, there would be little resistance. Earlier, there was a chance that you would think better of your purchase by the time you reached the shop, scanned the merchandise, saw the price tag and actually paid out cash. You could abandon the purchase process at any of these ‘gating’ points. Even in the early days of e-commerce, purchases dropped between the stages of putting the goodies in your shopping cart and check-out. “But what if there are no gates between you and the purchase?” she asks.

Gratification forever

Motwani says, “We always lived in a world of instant gratification, at least mentally. Issues of availability, affordability and information kept the Indian consumer back, putting a pause to aspirations and delaying sense of gratification.” But triggers such as digital media have only accelerated that behaviour.

The digital phenomenon has bombarded consumer behaviour by providing never-before access: the ‘same day delivery’ promise on certain e-commerce sites has seeded expectations and behaviour that have scant regard for the conventional patience for fulfilment of our desires. Motwani says consumers’ decision-making cycles are faster with the accessibility of multiple sources of information and reviews.

And this has spurred shorter product replacement cycles. Rapid technological advancement and planned obsolescence by manufacturers, which ‘un-sells’ the previous model create a desire among consumers to be among the first to buy the next big thing. “This obsolescence, which was conventionally restricted to fashion trends, has now spread to consumer electronics and even big-ticket items such as auto, albeit with a slightly longer lifecycle. Supported by affluence and easy credit, all of this is nursing the ecosystem of instant gratification,” says Motwani.

“With increased purchasing power, what is available is no longer exclusive to a few. Hence, the satisfaction derived is sometimes close to nil; the only thing that remains is consumption of the thrill, the experience, and the new. Yes, today we are living in a society where patience is no longer a virtue, we need instant gratification for everything,” says I Rahumathullah, MD, Maui Jim India.

Psychiatrist Thara Srinivasan, Director, SCARF, compares the current consumer behaviour with that of a child. “We outgrew this tendency, with mothers teaching us that we had to wait for some things — not everything would be handed to us on a platter the instant we asked for it. But in today’s digital era, rules of yore don’t hold. First, there is the availability of products that make for instant gratification. All we need to do is go online and press a button. Second, many more options are now available to the consumer.”

Gush of liquidity

Further, easy availability of credit has changed the consumption pattern of the new generation of consumers. For expensive items, households used to accumulate a corpus which meant that most of these consumer durables used to become a part of the household by the time the breadwinner entered his late thirties or forties. Credit has reduced the time gap between desire and its fulfilment. A young class of new consumers — powered by purchasing power — is ready to splurge and stay ahead of the curve. Its potential, especially in personal grooming as well as designer clothes and accessories, is waiting to be exploited through the availability of credit, be it a car or a pair of Levi’s jeans.

Paul points out that in the past consumers would put off buying a cell-phone by a year if they were convinced that it was worth the wait — either because they would save a lot of money or because a much better phone was going to be available. Now marketers are changing the product mix very often and increasing the perceived benefit of having the ‘in’ products through smart marketing, and by reducing the risk of spending today.

The other factor gently nudging consumers to keep buying is the maturing of the online secondary market. The consumer now has access at his fingertips and the vigour with which sites such as OLX and Quikr are promoting this phenomenon is feeding the frenzy to get rid of old stuff. “Consumers have a convenient means to get rid of the guilt of the old to make space for the new, feeding the impatience to acquire the latest,” says Motwani.

Pain points

But in this world of instant gratification, while consumers might gravitate towards must-haves such as cars, jewellery, beauty products and so on, they are also shedding a few categories. “Products that are difficult to explain or which have less immediate ‘therapy’ value — such as insurance, preventive health programmes, education savings schemes, magazine subscriptions — cannot benefit from impulse purchases unless they are able to offer an immediate benefit in addition to the long-term one,” says Paul.

For example, many people in India buy insurance for the immediate tax benefits rather than the long-term benefit of the scheme. Employees do health check-ups only because employers refuse to employ them without one. Magazines offer ‘gifts’ on subscription.

The insurance sector has been feeling the heat for some time. “We are seeing massive outflows happening now. Our surrenders have shot up, especially in unit linked products because people are using the time to lock in a return,” says one industry executive. According to Insurance Regulatory and Development Authority (IRDA) data, in fiscal year 2013, life insurers paid ₹1,05,822 crore on closure of all types of policies against ₹71,155 crore the previous fiscal year. These numbers are likely to shoot up in FY14 in the midst of a decline in new business premium collection. “The sharp rally in equity market has seen a flood of surrenders from policy holders of unit-linked products,” says Amitabh Chaudhry, MD and CEO of HDFC Life. Sandeep Batra, Executive Director at ICICI Prudential Life insurance, says “There are some consumers who are seeing some money now after holding onto their product and they want to get out. But if they are going to put the money in another fund and pay charges again, and invest again when the market hits another high, then they will lose out.”

Motwani adds that financial products such as life insurance, by design, are long-term in nature. While innovation in distribution will create the initial acquisition, customers still need to invest at regular intervals to create a benefit package of any significance. Paul feels that marketers who have a longer-term view of their customers can build trust by helping them understand their finances. For example, ICICI Bank has launched a service for around ₹300 a month where users can track their debit card spends per category and also set caps for spends in them.

Online grocer BigBasket.com allows customers to see spend trends across time and across categories. Compare this with, say, Flipkart and Amazon, which do not show spend history or allow its analysis. She says using game theory — where you accumulate points or levels for doing the right thing — with your personal finances may be the next big breakthrough.

(With inputs from Mythili Rajkumar and Deepa Nair)

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