CB Session 15 06/02/13

More than 100 million people will attend the 2013 Kumbha Mela

Harvard Students to research about Maha Kumbh Mela 2013

Maha Kumbh Mela, considered the largest public gathering in the world, will be the subject of a case study at Harvard University, which will study the logistics and economics behind it and the pop-up mega-city that comes to life in Allahabad during the religious event. A team of faculty and students from Harvards Faculty of Arts and Sciences (FAS), School of Design, Harvard Business School, School of Public Health, Harvard Medical School, Harvard Divinity School and Harvard Global Health Institute would travel to Allahabad for the project Mapping Indias Kumbh Mela. They would undertake different researches at the Maha Kumbh, which draws millions of pilgrims from across the world every 12 years. Harvard said a temporary pop-up mega-city is created for the Kumbh Mela that would house pilgrims and tourists for the over month-long duration of the religious gathering. This city, laid out on a grid, is constructed and deconstructed within a matter of weeks, it said. Creating this huge encampment entails multiple aspects of contemporary urbanism, including city planning and management, engineering and spatial zoning, an electricity grid, water lines and sanitation systems, food and water distribution plans, hospitals and vaccination centres, police and fire stations, public gathering spaces, and stages for entertainments and plays, the university said. This is probably the first time that Harvard is doing something like this, where weve pulled together different disciplines in a way that all faculty and students are going to be together to look at a phenomenon, Associate Director of Harvards South Asia Institute, Meena Hewett, said in a statement. The Harvard team would seek answers to the question of How on earth is an event of this size possible, city-based writer Logan Plaster, who would be part of the team visiting the Kumbh Mela, said. To fully grapple with this question, the scale of the Kumbh needs to be put in perspective.

Psychological Influences Perception Attitudes Learning Motivation Marketing Mix Promotion Place Product Price

Sociocultural Influences Reference Grps Family Social class Culture

Situational Influences Type of purchase Social surrounding Physical surrounding Previous Experience

Dimensions of Cultural Diversity in India

Language Rural vs. Urban India Rich vs. Poor Geographical diversity Liberal vs. Conservative

 28 states, 22 languages and numerous dialects spoken by people Religious customs, rituals and beliefs vary Different identities, ideologies, interests Implication for Marketers Communication & packaging in local language Products need to be aligned with culture There is a right way and wrong way for everything, but that can change from place to place.

Diversity in Language, Religious Customs, Beliefs

 30% of the population live in urban areas. 70% live in rural areas this means the majority of the market is spread across the country. Different income levels in rural and urban India. Rural customers attach more importance to functionality while urban consumers give importance to aesthetics/ service parameters. Implication for Marketers Implication for Marketers Different marketing mix for both the markets Mode of distribution/channels differs

Rural vs. Urban India

India Geographic Diversity

 China -> Opening up Russia -> Collapse of the Soviet Union Europe -> Formation of EU

Liberalizations Impact On Indian Culture

From Towards

Genteel poverty Contentment and stability

Swadeshi

Self-reliance (no matter what the price to be paid) Isolation/Aloofness Ideology/Emotion Soft opinions(doing the popular thing) Obeying authority(eg government dictates)

Learning to earn more Striving to keep up with others(Korea, China) International ( Make world class goods which can find export markets) Efficiency ( if its cheaper to buy, dont make it) Exposure to interaction with the rest of the world Pragmatism/Rationality Biting the bullet(doing what has to be done) Freedom of choice ( eg a free market economy)

From Punishment, Guilt, Control(eg Curbing consumption through massive taxes on luxury goods)

Towards Motivation/Positive incentivization(eg stimulating demand by cutting duties and lowering interest rates)

Aiming for the lowest common denominator (Garibi Hatao)

Protection (of the weak) Scepticism about technology(may not be suitable in our conditions)

Aiming for the highest factor( eg Take India to the 21st century- Rajiv Gandhis signature tune Enabling people to become more competitive) Seeking and embracing technology( We can lead the world)

Culture
Culture is learned rather than being born with Culture is manifested within boundaries of acceptable behaviour Transmitted from generation to generation. Rituals practiced

Culture
Consumer India is a federation of different cultures that just happen to be sharing the same geography and, to some extent, the same history EU

Culture
Culture -> A set of basic values, perceptions and behaviours adopted by a member of the society from family and other institutions Cultural values are deep rooted India, because of its diversity has many sub cultures Multiplicity of languages and custom, differing geographical features, different religions and faith

Culture
Manifestations of Indian culture ; Modern lifestyles -> but values and beliefs remain unchanged Consumption patterns are heavily influenced by our traditions and cultural diversity Indian a land of people with lots of aspirations, achievements and independent feeling

Culture
Traditional values in India : Respecting elders, honouring heroes, cherishing love. Hospitality, tolerance, patience, adaptability Accommodate differing beliefs, religions, rituals

Culture
Patriarchal society -> Patrilineal Matriarchy -> Matrilineal

Culture
Personal soap? Family toothpaste?

Culture
Popularity of family packs? Toilet and detergent soaps come in packs of 3 Parle G -> pack of fives Maggie Noodles -> pack of two/four Coke/Pepsi -> Two liter packs Mineral water -> Five/Ten liters

Culture
Popularity of family packs Toilet and detergent soaps come in packs of 3 Parle G -> pack of fives Maggie Noodles -> pack of two/four Coke/Pepsi -> Two liter packs Mineral water -> Five/Ten liters

Contrasting palates
Bengali sweets Rossogullas, Sandesh Andhra spicyness of food -> extra chilly powder, green chillies and pickles

Subcultures
Sub-cultures consist of ethnic groups such as regional, linguistic, rural vs. urban, family composition, economic strata etc. Variations seen within a culture. These groups have common traditions, heritage, beliefs, customs and experiences that would differentiate different sub-cultures. There are certain common aspects in the Indian culture but almost each state in the country reflects a sub-culture. Dress, eating habits, customs etc. are somewhat unique in different parts of India and also, the life style pattern varies.

Subcultures
Due to the many subcultures, consumer behaviour varies in different parts of India

Impact of culture on product acceptance

Food market Mc Donalds Kelloggs Maggi Starbucks

 McDonalds uses 'Astrix and Oblix' in France, a very famous historical cartoon. In China, the Chinese restaurants all have big tables and it's very difficult to go on a date. McDonalds make tables for two, so the couple has some privacy. In India, where McDonalds is the typical 'family restaurant -> it provides large tables. In Taiwan, they made VIP rooms, because the people like privacy. The local touch of the brand is also very remarkable: McDonalds sells the Kiwi Burger inNew Zealand Prosperity Burger in Malaysia McKroket in the Netherlands Croque McDo in France.

Global vs Glocal

Mc Donalds India
Entered India in 1996 Included many vegetarian items in their menu Culture also had an impact on carefully choosing the non-vegetarian menu Adapted the menu to Indian palate by adding spices and ingredients Mc Aloo Tikki burger

Mc Donalds India
McDonalds also appreciated the consumption style of the Indian consumers and their mindset of having a maximum price limit when they buy certain food items

McD Family Restaurant

Mc Donalds India What next?

Next for McDonald's: Vegetarian-Only Restaurant AMRITSAR & JAMMU

Kelloggs India
Kelloggs 1994 Entry into India Indian consumption pattern for breakfast: India has a diverse pattern of consumption ofbreakfast Idli , Dosa , Roti , Puri , Parantha , Bread Butter Traditional delicacies -> More filling than a bowl of cereals Cereals are more sweet in taste Cereals are consumed with cold milk Combining milk with cereals made them soggy and spoilt the taste

 Maggi 2 minute noodles

Success of Maggi???? Failure of Kelloggs????

 Starbucks

Products as gift items

Godrej Storwel Reliance Mobile Vicco Turmeric Vanishing Cream Titan

Ads catching up with new trends

Valentines Day cards Bacardi -> Spirit of enjoyment Close Up smile -> positioned towards teenagers

 Rage among young smokers because the positioning was in consonance with the changing values The spirit of freedom. Charms is the way you are . Symbolizing Adventure, independence and a nonconformist attitude. The jeans-like packaging added to this attitude.

 The emotional bond between the mother and the son : Vicks Vaporub Clinic Plus New Lifebuoy Trupti Atta Bharat Gas Kent RO

 28 states Every state has its own identity Every community has a cultural DNA

Mini India Pockets of communities Connaught Place -> Melting Pot Food Method of shopping: Emergence of shopping malls, redesigning of traditional shops to give them a modern look.

 Marwaris -> Method of shopping An uncommon buying behaviour Women do not indulge in any kind of shopping or acquisition Even home furnishings, fabrics which are the responsibility of women are purchased by men. Wedding dresses, dowry -> decisions taken by the paternal heads with minimal participation by women

Hindus 52% Muslims 24% Christians 24% 91% literacy Prosperous lifestyle Transformed from agrarian to one of the leading consumer states Larger disposable incomes

 Christians are a prosperous and influential community as they manage a large number of educational institutions schools, colleges, management and engineering institutions, hospitals and publishing houses( Malayala Manorama is owned by a Christian family)

 Lifestyle -> The trait of spending too much is not a trait of Malyalees, but with increasing prosperity, the money is spent mainly on construction activity Average man in Kerala is better off and has higher purchasing power Inequality between rich and poor in many parts of India is not found in Kerala Marketers target -> both affluent and MIG

 TN Brahmins is a monolith in their consumption pattern vis--vis cuisines, dressing and shopping behaviour Middle class -> professional class Saving mentality is highly prevalent, hence luxurious items do not come under their consumption purview

Choice

Characteristics

Motivations

Dress

Veg, Rice, Idli, Dosa, Tamarind, Coconut, Chutneys, Sambar, Curd 9 yard sari(preferably cotton), silk for occasions Flat-footed sandals(leather or rubber) Appeal for gold and diamond jewellery
Prefer local shops to malls. Malls for high-value items

Predominantly rice-growing, hence staple diet is rice and rice-based food products Climate hot, humid hence cotton provides relief and gives comfort Sandals go with cotton, while heels would be a mismatch Iyengar brahmins Risk averse people. Gold is considered a safe investment with assured returns
Relationship building with the shopkeeper is the main reason for this type of behaviour

Food Footwear

Durable

Method of shopping Lifestyle

God-fearing, orthodox. Old Traditional occupation priests. Hence generation does not prefer rituals and customs have been transferred eating outside. Do not spend culturally from generation to generation lavishly. Prefer bargainshopping at local shops

 Gujarati community owns the most motels in US Entrepreneurial spirit Women are in sync with the stock market even if with little formal education Travel all over the world with their own cooks Ensure they get their own vegetarian food exactly the way they like it Food is very important to them Buy and store in bulk commodities like oil and rice and while they will spend in the kitchen, they are not ready to spend on beautification of their house

 North Indians -> Flamboyant Family living quarters are spartan -> but food served to the guests and the drawing room decor always make a statement Adept at achieving high show-off value at minimal cost

 11.3 lakh employees Bengaluru, Chennai, Hyderabad, Mumbai, Kolkata, Gurgaon High disposable incomes, willingness to spend a large proportion of earnings, High amount of impulse buying Heavy credit card usage

 Weekend chill out Spend substantial sum on food Though many are in staying alone category -> ready to eat products are not popular Burger, sandwiches, Lays, Bingo, Juices, CSD

Gadgets Ipod Iphone Mobile phone with camera MP3 This segment is always looking trendy, hip and happening

 Shopping for clothes seen as a leisure time activity Clothes -> style statement Daring styles and premium brands Allen Solly, Van Heusen, Louis Phillippe, Color Plus, Arrow, Levis, Lee, Raymond.

 Shopping and acquisition methods Culture of visiting a mall as almost a weekend ritual Mall not only a place to shop but a place to hang out and to socialize High impulse buying due to increased use of CC and the necessity to show a cool attitude in front of friends Stalls put up near hang-out places like pizza outlets and coffee shops to advertise products like a Mac laptop

 Internet buying -> Mainly because of convenience and choices Party culture -> Promoted and encouraged by employers -> led to a greater acceptance of drinking as a lifestyle Pubs and discotheques -> Popular places to hang out on weekends and they account for a significant amount of money spent

 Western teenagers Grew up in relative economic stability. Confronted by new realities: drugs, AIDs, pollution, teenage pregnancy, divorce, etc. Less sheltered home environment and unstable family life. From young age itself learn to be independent and make their own choices in life. More independent and self-sufficient. Focus early on things they believe would provide for a secure and happy life, like earning money, spending culture or material possession and acquisition. A more stressful life as self-esteem is vested in doing well in multi-faceted roles.

Indian Teenagers in contrast to Western Teenagers

Indian Teenagers in contrast to Western Teenagers

Indian teenagers Grew up in period of fast economic growth with good prospects. Confronted by new realities through the mass media but with few real-life experiences. Have more sheltered home environment and stable family life. Youth live with family of origin until their marriage. Are less independent and self-sufficient. Are idealistic in their expectations and tend to deal only with issues that touch them personally. Lead a less stressful life as achievement in studies is paramount and other matters appear secondary.

Western influences
Exposure to Western lifestyle Mall culture New medium of communication Internet shopping Effect of liberalization

Changing shapes of income distribution

Changes in shape herald changes in consumption pattern Centre of gravity or the reference point of average consumer behavior also changes

 Urban income pyramid Rural income pyramid Lower < 1.5 lakhs Lower Middle 1.5 3.4 lakhs Middle 3.4 to 8 lakhs Upper Middle 8 17 lakhs Upper > 17 lakhs

Urban Income distribution

Triangle Or Pyramid: Traditional poor country Diamond : Less people at bottom and top more in the middle Cylinder standing on a narrow base : Equal numbers in top four income groups and very few at the lowest income group

Rural Income distribution

1995 96 to 2002 03 : Change from a very bottom-heavy triangle to a better proportioned triangle. 2005 06 : Dimensions of a diamond 2009 10 : Distinct diamond-shaped income distribution Rural India : 1% = 6 mn

Change in consumption comfort and aspiration levels

Actual visible consumption increase 1995-96 to 2002-03 sales of two-wheelers and four-wheelers has more than doubled Cellphones have multiplied by more than five times

 Actual visible consumption increase Best combination of functionality and status enhancement Cellphone + Two wheeler Nokia and Hero Honda have dropped price thresholds offer real value propositions

Change in consumption comfort and aspiration levels

Visible consumption breeds more consumption Nothing breeds the desire to consume more than consumption itself For someone who has not taken to the road of consumption, there is less desire and aspiration to consume Urban India has increased its ownership of durables quite significantly

Change in consumption comfort and aspiration levels

A large enough consumption base now exists to create a springboard for more consumption Urban India has a sufficiently large consumption base

Change in consumption comfort and aspiration levels

Current level of product penetration influences pace of future penetration Market penetration is not linear It accelerates as base penetration increases, upto a point when saturation sets in

 Adoption curve

Springboard ----------- Not Saturation

Change in consumption comfort and aspiration levels

Step Change in consumer confidence Belief that tomorrows income will be more than todays Rapid change in standard of living in just under one generation Visible steady progress in their homes and homes around them -> Consumer and Consumption confidence Step change for a billion consumers

Change in consumption comfort and aspiration levels

Affordability growth greater than income growth Increased pressure of competition -> increase in performance and drop in prices + falling interest rates and easier consumer credit Low-cost business learning improves

Change in consumption comfort and aspiration levels

Increased comfort with borrowing Being in debt has always been an area of high discomfort -> How did this change? 1. Confidence, past experience : Tomorrow will be better than today 2. Low interest rates 3. Popular concept of EMI -> Magically legitimizes borrowing Live within your means -> Live beyond your means

 Average age of home loan takers has reduced by 10 years in last 5 years Increased comfort of lenders and borrowers

 Rampant rise in Aspiration : Three factors that drive aspiration -> Connectivity, Communication and Education

 Decline of the poverty effect : Poverty -> abstemiousness -> Discomfort in consumption -> consumption increase lags behind income increase -> Consumption comfort One other factor required for consumption comfort : Supply Explosion

 Arjun Appadurai : Imagination is not about individual escape. It is a collective social activity. Informational sources are needed for people to imagine a possible life, weave a story and a script around themselves and place products in emerging sequences. Imagination may not always lead to action, but it is a prelude to action.

 Sophistication of middle class : In the past five years performance of the midprice or popular segment products has improved dramatically, almost beyond recognition. MNCs and Indian businesses -> A message that volumes lie middle income urban and rural India.

 Realization that lower margins are more than compensated by increased volumes. Rubbish at low prices MI -> Reject adequate quality for the price Moped category, chunky cellphones - Losers Premium styles, popular price points Winners Budget hotels,airlines,apparel brands,prepaid card for budget cellphone users,low price basic handsets

Middle majority of sophisticated customers who are joining the consumerism game

 Striving, Not Resigned : A nation of the self-employed A phenomena of huge entrepreneurial energy that exists at the grassroots Organized sector < 10% jobs Self-employed -> Striver and struggler Demanding social justice to grabbing economic opportunity 90% Rural , 60% Urban HH are headed by SelfEmployed HIG -> 45% , LIG -> 80%

 Rural India beyond Agriculture : Dependence on agriculture, dependence on monsoons Boom-and-bust cycles -> Fragile sentiments In rural India Agricultural activity = Nonagricultural activity Non-agricultural HH have higher incomes Dual-sector HH

 Comfort with Technology Extensive use of internet kiosks in Maha Kumbh 2013 - > 4G internet facility Cyber grandmas

Understanding Indias demand structure

One of Indias leading scientists once said The advantage of having such a large population is that even if an infinitesimally small percentage of Indians are good scientists, it is still a larger number of scientists than most smaller countries with better education systems can boast of

Analysing the two wheeler reach

HIG 07mn HH 42% 3.8mn UM 18mn HH 25% 4.5mn LM 63mn HH 10% 6.4mn Low 66mn HH 2.7% 1.8mn SUNSILK and Diapers

Indian market structure -> Premium-Popular-Discount

Premium-Popular-Discount Rich-Middle-Low
% of population National income Consumption by Income share % Expenditure share % Top 10% 34.1 30 Next 30% Last 60% 36.1 29.7 36.6 33.4

Premium-Popular-Discount are Equal in number

 Initial assumption was that a large part of the popular market would migrate to the premium end -> Popular segment manufacturers would die a slow and natural death

Super Premium Premium

Price

Mild Premium
High-End Popular Popular High-End Discount Discount

Performance

Rich Consuming Class Climbers Aspirants Destitute

Rich vs. Poor: Different needs to fulfill

Rich vs. Poor: Different needs to fulfill

 Rich : Benefit maximizer class -> Money for Value Willing to pay more for better services and more benefits Anywhere in the world consumers

Rich vs. Poor: Different needs to fulfill

 Consumer class : Value for Money Judiciously balance benefit and price all the time, -> make value-optimizing decisions Cost benefit optimizers High-end popular products hard to seduce on imagery-oriented brand benefits

Rich vs. Poor: Different needs to fulfill

 Climbers : cash constrained benefit maximizers Look for the best within a confined budget Price-point buyers Nirma Adequate quality at affordable prices

Rich vs. Poor: Different needs to fulfill

 Aspirants : new entrants into the consumption arena Low-price shampoo sachets, loose glucose biscuits They are occasional consumers, party packers

Rich vs. Poor: Different needs to fulfill

 Destitute : not yet into consumption of anything Living hand to mouth

 Indian Consumers -> Under-dosers

The Woman consumer of India

 Popular theory is that changes in HH consumption behaviour are happening rapidly because women are working outside home More financially independent More assertive and driving the consumption revolution

Working women facts

23% of housewives in urban India have a job outside home 42% of housewives in urban India have a job outside home -> working in the fields As HH get richer, proportion of women in workforce falls

Conservative working women

More women working outside the home does not have the expected impact on consumption -> this as well as that Working women continue to play the traditional role at home WW -> Successful outside does not change practices inside the home Personal spending patterns undergo dramatic changes not the HH behaviour

Home Entrepreneur
Micro entrepreneurs -> Home business Stay at home -> tailoring, cooking, catering, tuitions, beauty parlours 25% already doing some work from home Another 30% intended to start a home business The desire to be productive and to improve their self-worth by turning talent into money is huge, and this trend will only accelerate

The changing housewife

All working women are not the same Working Woman -> Just a job OR Career Stay at home -> Housewives with a working woman mindset Or Housewives Housewives with a working woman mindset Driving change in India CEOS of HH, Primary coaches of children, ensuring their success in the competitive world

 Woman are changing from being doormats o being equals. Women see themselves as the intelligent nurturer Cooking continues to occupy an important place in the portfolio Deemphasis of traditional roles of washing, cleaning no longer creates guilt

Indian Woman - The Forces of change

Education : Increase in education especially urban women Overall statistics of women education are poor. 12% of urban housewives are graduate, 20% have completed school,30% are illiterate and remaining 40% have studied upto a maximum of IX grade. But total Education capital is much higher

Indian Woman - The Forces of change

Outdoor work : Nuclear family + Absence of elders -> Brought the onus of outdoor chores like paying utility bills, school meetings, bank visits on the housewife This has lead to a new found confidence

Indian Woman - The Forces of change

Role Models : Reservation of seats for women in Panchayats -> forefront of public decision making domain 20000 women gram pradhans in UP alone All sectors offer role models and generations are growing up with a clear focus on education and careers

Indian Woman - The Forces of change

Television A source of tremendous change

Final assessment
Groups -> Predecided Articles/Case study -> Predecided 40% -> Weightage presentation 60% -> Weightage Question & Answer Every person would be asked one question Presentation sequence -> 1 8 Date -> 15/03/13

Final assessment
Presentation -> Format of your choice Should capture the message of the cs/article Not more than 10 mins Question and Answers -> 10 mins

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