IHI MIDDLI PATHIhe underserved and growinq middle class is alive with opportunities forcompanies nimble enough to deal with its diversity

Indians eat, pray andlove in different ways,

and the differencesare growing. lt is a

breathtakingly diversemass market, unlike the

almo$ homogeneousclass market of a few

decades ago

f or some t ime, India 's economic

I pro8ress has been schematically char-

I acterised by a triangle morphing intoI a diamond. This represents the emer-

gence of a large middle class, growingdepth of consumption across categories,and the increasing share of discretionaryspending in the cDP, among other things.A monolithic structure now has a 'middle'.

This phenomenon is less than a decade old.Our focus has shifted from identifyingtrends to understandingwhy they are happening. Over more than three years ofanalysing this exciting space, my col-leagues and I have noticed patterns ofconsumption, entrepreneurs who havebenefited from being in the right place atthe right time, and capital struggling tochase such success.

Indians eat, pray and love in dilferentways, and the dillerences are growing. tt isa breathtal<ingly diverse mass market, asopposed to the almost homogeneous classmarket of a constrained economy a fewdecades ago. A conlluence ofseveral bendsis generating business opportunities inareas and ways that did not exist earlier.

Middle hrdia, as I call this space, is likea diamond with many facets that give itthe refractory complexity of 'India

Shining'. Rural markets, the growth ofTier-tr and Tier-III towns, and consump-tion in lower socio-economic strata inmetros contribute to the bulge in the mid-dle. Thsi middle India is underserved, withmany trends and challenges in the offing.

One, segmenting will need to focus onthe consumption opportunity and not onthe consumer. TWo, there are no "cheap"brands; there are better value propositionsfor a large, diverse mass of consumers.Three, the aspiring consuming class ismotivated by price rather than brand.Advertising creates saliency for the cate-

gory and for the lead brand, but purchaseis greatly inlluenced by price and shop-keeper recommendations.

Four, middle India has become flatterwith the possibility of sourcing interna-tional quality packaging, ingredients andeven the product from, say, China or third-parby manufacturers with no on cost. Sodevelopment costs have been reducedthanks to more sourcing options.

. Five, middle India is about choice, interms of price, Iook, variants, package size,availability and freshness, among otherthings. It is important to appeal to a con-sumer who is easily bored and wants toexperiment. If it looks and smells good, heor she will go for it - if the price is right.

Six, more intensive operations canexpected, with businesses focused oncreasing width and depth ofthrough servicing tuade with betterincluding credit and increasingSuch strategies will create shelf-brands rather than brands built onsion. (Nirma is the archetypal middle-brand of a bygone era, built on avalue-for-money proposition and apressure strategy uncommon for its ti

The GDP oflarge Indian states atchasing power parity matches thatmidsize developed countries. Beingfined to a region in India no longerforgoing economies of scale.

Media fragmentation has madeIndia st rategies extremely coNationwide players depend more onuct innovation, category developmentbig-ticket advertising, whereas the bigportunities are in customising theing mix to highly localised requi

The ever-changing landscapebusinesses to shake offthe status ouo.

The author is aPartner atCapital, and Director, Y

48 BUSINESS TODAY Iune 10 2012