Into India1 Apr, 2008 By: Doug McPherson Response
When it comes to Asia, China is far from the only game in town. In fact, some say India is the new hub of growth, and that it's giving China a run for its money as the place to do DRTV business.
Talk about market potential. Go grab your world map and stick a big red pin on top of India. Call it a goal. Call it a strategy. Whatever you call it, just make sure to mark it down as one heck of a future market.
Analysts are tapping India as the next new big thing when it comes to places to sell. That's because during the past five years, the country has — by just about any measure — become brilliant at getting its economic house in order.
Just 20 years ago, 90-plus percent of Indians got by on less than a dollar a day. But now the country is transforming itself into a land of middle-class spenders.
New research from the McKinsey Global Institute, the economic research division of business consulting giant McKinsey & Co., expects that within a couple of decades, India will pass Germany as the world's fifth-largest consumer market.
McKinsey reports that today there are 50 million Indians earning between $4,376 and $21,882 annually in U.S. dollars (that may sound paltry, but the cost of living is much lower in India, so in U.S. terms that range is $23,000 to $118,000), clearly a middle class with TVs, mobile phones and yes, disposable income. Indians are also growing accustomed to using credit cards — use has quadrupled since 2001.
Sales for TELEBrands — in India, a telemarketing, mail order and wholesale company — have increased five times over during the past seven years. Much of the growth coincides with the increase in India s disposable income.
What's more, McKinsey predicts India's shift to a consumer society will only accelerate as cell phones, the Internet, TVs and all of the associated advertising flood the country.
Not surprisingly, more disposable income is changing India's habits and attitudes about shopping. That's something Hitesh Israni has witnessed first hand. He heads up TELEBrands India, a telemarketing, mail order and wholesale company that has grown steadily in the country during the past 10 years. TELEBrands reports its sales have increased five times over during the past seven years.
"This shows that the customer is ready to buy via the DRTV medium," Israni says. "The number of [DRTV] companies has increased from just a few to about 10 in the past five years."
Israni admits that stability of these new companies "is still of concern," but adds the larger picture is "still positive."
Driving some of that positive outlook is that new welcoming attitude of consumerism among Indians. According to ICMR, a business research firm that focuses on Asia, consumer spending in the past 10 years in India reveals a jump in sales of many different kinds of goods.
Can You Hear Me Now?
ICMR says the factors influencing that consumer spending are: growing income levels, changing attitudes towards consumption, changes in prices, introduction of new products, availability of credit, rising aspiration levels, increased literacy, growing brand consciousness and rapid urbanization.