Understanding the Low Income Consumer
The Economic Times - November 2000
Improving the marketing exchange: Existing retail environments extract more from poor customers (poor neighbourhoods have less competitive retail environments pushing up prices, low income consumers are dependant on the retailer for credit, they end up paying more as they buy in small quantities, and getting poorer service). There is a case for opening a set of thrift stores, offering credit and relevant merchandise to lower income consumers, who will reward this empowerment with loyalty. Another interesting suggestion is the creation of 'buying groups', modelled after the borrowing circles set up by Dr Yunus of Grameen bank. Vitual stores!
Understanding value processing and budget balancing: Durables are obviously the far more attractive items for low income consumers than FMCG. The Indian low income consumer is struggling to 'uptrade' on durables and is downtrading on FMCG. While they carefully look at ways to stretch budgets with 'no frills' FMCG products, there is occasional gratification purchases - for children, around festival time, and occasional treats for the family. Sylvester Research says " it isn't practicable [for them] to buy houses and cars [and the big stuff] , so how do you flaunt new disposable income?" Their answer is "labels". Perhaps the low end branding game has latent potential - maybe store brands?
The changing low income consumer: Question assumptions about low income consumers. The traditional view marketers tend to have about the Indian low income consumer is "will settle for less', "technology sceptical", "intimidated by better surroundings". But recent market experiences and consumer research studies suggest that it's time to take a fresh look, especially at the younger lower income consumer. (See Box)
CHANGING LOWER INCOME CONSUMER
| FROM |
TO |
| Settle for less |
Stretch for more |
| Technology intimidation |
Technology curiosity |
| Fear of authority |
Decreasing 'power distance' |
| Reactance, avoidance |
Experience seeking |
| Self denial |
Affordable indulgence |
| Destiny driven |
Destination seeking |
|
