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Project on Change in life-style that leads to preference of branded products

Submitted by:

Name: Rajan Christian Std.: XI-D Roll No.:09

ABSTRACT
Brand preferences are usually studied by attempting to profile and understand loyal consumers. This paper presents a study of changes in brand preferences. Theory and research is used to propose and test a model based on the proposition that changes in brand preferences and their development are the result of life events that serve as markers of life transitions. Changes are viewed to be the result of adjustments to new life conditions and changes in consumption lifestyles that reflect consumer efforts to cope with stressful life changes. The data support these notions and suggest implications for consumer research.

INTRODUCTION
The question of "why consumers change their brand preferences" has intrigued marketers and consumer researchers for decades. Early attempts to understand brand-switching behaviour focussed on the effect of past purchases on current purchase behaviour. More recent studies have shown that brand-switching behaviour is related to three types of factors consumer characteristics, marketing mix factors, and situational influences. The purpose of the present research is to present a relatively unexplored approach to understanding changes in brand preferences. Specifically, it is proposed that changes in brand preferences are the result of life changes (events) that signify transitions into new roles and create stress, forcing the individual to modify his or her consumption life styles (including brand preferences) to adapt to new life circumstances. Theoretical perspectives are presented followed by the results of a large-scale national study.

BACKGROUND
Recent studies have revealed that periods of life transitions are associated with significant changes in consumer behaviour. Two different theoretical perspectives help us find explanations for these changes: role transition perspective and stress perspective. The first perspective holds that as people change roles, adopt new roles, or give up old roles their consumer behaviour also changes. These changes in consumer behaviour are either because of their need to redefine their self-concepts as a result of the assumption of a new role; or due to role relinquishment as people attempt to dispose of products relevant to the enactment of a previous role. Previous research has shown that possessions are integral to the definition of self and the expression and performance of
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roles (Belk 1988); and their disposition is necessary in communicating important changes both to the consumer and to others. The second perspective on behavioural changes is based on stress theory and research. Stress refers to environmental, social, or internal demands which require the individual to readjust his or her usual behaviour patterns. These demands cause disruptions of previously more or less balanced states. Major life changes and transitions are often treated as "stressors" that create a generalized demand for readjustment by the individual. Thus, the assumption of a new role or its anticipation requires major adjustment of ones lifestyle which can be stressful. People attempt to restore balance and relieve frustrations and tensions accompanying disequilibrium by initiating or modifying behaviours, which are viewed as coping strategies. Coping refers to actions and thoughts that enable the individual to handle difficult situations, solve problems, and reduce stress. Based on these two theoretical perspectives, it is proposed that changes in brand preferences are the result of life changes (events) that (a) signify transition into new roles and (b) create stress that forces the individual to modify his or her consumption behaviour. While changes in brand preferences have not been linked empirically to life transitions or stress, there are reasons to believe that brand-preference change is a consequence of life changes for at least two reasons: first, product and brand choices are interdependent. Today, the average consumer is bound to get confused while shopping because of the extensive cutthroat competition in the market. For every product there are large varieties of top Indian and international fashion brand players flooding the fashion world. Out of these distinct popular fashion brands some are indicative of quality and rich craftsmanship and thus demand a higher price. Side by side to the quality products we have some brands that follow the designing of hi class products but the quality is compromised. This category is particularly meant for those who cannot afford expensive quality items but wish to copy the styling. Some of the popular brand names of fashion world are Nike, Nakshatra, Titan, Levis and Wrangler, Bausch and Lomb, Tommy Hilfiger and Adidas. Among the other top fashion international brands we have Ralph Lauren, Marks Spensor and Christian Dior. Bausch and Lomb is a brand eyewear just perfect for eye care. Nike is the other name for comfort so if you buying shoes for yourself shop something that you feel can take care of your feet. In apparel section, we have designer clothes by famous fashion designers that are selling like real hot cakes but
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then they are definitely expensive like Tommy Hilfiger, Marks Spencer, Peter England, Ralph Lauren Polo brands. These designer funky ensemble collections are expensive but act as a symbol of passion and courage. They enhance your personality and make you feel more confident about yourself. Net is a great help in looking out for the major fashion players that have become the pride of this glamour world. Also it gives a complete knowledge as to which brand caters to what product. If you are looking out for jewellery, you have many options to choose from like Nakshatra, Sangini and D Damas. In footwear category the popular names are Adidas, Liberty, Woodland and Nike, etc. Brand choice is highly determined by your purchasing power and the person you are gifting. If the person in question is very dear to you then you should not compromise with quality and you should look out for something more precious for your special one. According Business Week survey, the top 10 brands in India are listed below: 1. Apparel - Denim. 2. Sportswear - Planet Sports. 3. Air conditioner Hitachi. 4. Television Samsung. 5. Washing Machine LG. 6. 2 Wheelers - Hero Honda. 7. 4 Wheelers Ford, Honda and Skoda. 8. Refrigerator LG. 9. Coffee Outlets - Cafe Coffee Day. 10. Airlines Kingfisher. 11. Lifestyle & Fashion Store Westside.

INTEGRATED LIFESTYLE MARKETING & CONSUMER ENGAGEMENT


Consumer habits, particularly those related to brand selection, brand loyalty and the purchase decision making process have undergone a significant evolution over the past decade. Just as many agencies and brands retooled their operations and thinking to effectively market to the changing habits of a new generation of consumers in terms of both the message itself and the mediums where that message is delivered it, a second wave of change has already arrived. This second wave calls for a more fundamental change in how that message is delivered and how brands not just market to, but engage and interact with consumers. It would be easy to dismiss Gen X and the Millennials as merely another generation with attitudes of their own for whom marketers simply needs to adjust the message. That simplification however, ignores the greater changes brought about by these two distinct but very connected generations, the marked differences in how they live their lives and how we must change our approach to successfully market to them. The Millennials earn annual income in the U.S. of over $200 billion and spend more than $170 billion each year,1 one of the highest income to spending ratios ever seen in America. They face a greater degree of direct corporate marketing than any other generation in history and they exert significant influence over much more than their own spending. This influential audience of consumers is skeptical about advertising that talks at or is broadcast to them, shunning the role of a passive consumer and instead wanting to be engaged. Having grown up in the era of ubiquitous internet availability, they not only expect the whole world to hear them when they speak, they expect them to listen. Millennials and todays consumers do not merely seek engagement, they expect it and it is fundamental to their lifestyle. To effectively market to these generations, marketing must be active, integrated and engaging. The marketing itself must exist across multiple mediums just as the consumers live their lives, each element not only effective in its own right, but fully integrated with and feeding into other elements of the campaign. This approach to marketing is built on a principal of constant engagement - experiential marketing driving online activity that feeds mobile engagement, instigating online participation, word of mouth promotion, product discovery, and ultimately, purchasing followed by continued engagement and interaction to build brand loyalty.
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Integrated Lifestyle Marketing campaigns extend beyond any one medium, actively living simultaneously in each medium and as an integrated part of the consumers lives, each element of the campaign feeding the others. While Lifestyle Marketing is a category used to describe certain forms of marketing to consumers and the tactics used to effectively engage those consumers, Integrated Lifestyle Marketing is the strategic combining of these various tactics into one cohesive marketing campaign. This practice allows the promotion to not only continue, but to grow after the initial point of contact. Every Integrated Lifestyle Marketing campaign is unique and can involve various elements of Non-Traditional Marketing such as Street-Level or Experiential Marketing, Guerrilla Marketing, Interactive Marketing tactics including Online or Mobile Marketing and tie-ins to traditional media marketing. The goal with every Integrated Lifestyle Marketing campaign is to actively engage consumers where they work or play, invoking the emotional association with a brand or event that creates a lasting impression and takes on a life of its own. Each element of an effective Integrated Lifestyle Marketing campaign is designed and executed to complement and reinforce each aspect of the overall campaign, constantly driving the next point of consumer engagement. With an effective Integrated Lifestyle Marketing campaign, the brand becomes much more than something being advertised, the promotion and the brand itself become part of the consumers lives, which they are and how they live as they interact with various elements of the promotion throughout their daily routines. Integrated Lifestyle Marketing and Consumer Engagement is the core of every campaign we design and is the key to the most successful campaigns we execute for our clients and the agencies with whom we partner. With an effective Integrated Lifestyle Marketing campaign, the brand becomes much more than something being advertised, the promotion and the brand itself become part of the consumers lives

Waves of Change in Marketing Strategy: The Driving Forces

Consumer habits, particularly those related to brand selection, brand loyalty and the purchase decision making process have undergone a significant evolution over the past decade. Just as many agencies and brands retooled their operations and thinking to effectively market to the changing habits of a new generation of consumers in terms of both the message itself and the mediums where that message is delivered, a second wave of change has already arrived. This second wave calls for a more fundamental change in how that message is delivered and how brands not just market to, but engage and interact with consumers.

Lifestyle Marketing
What it is, what it isnt and why it works Lifestyle Marketing is the practice of seamlessly integrating marketing initiatives into the worlds and lifestyles of consumers. This style of marketing both engages consumers in a two-way conversation and allows that message to be seeded to live and grow in the consumers own world. The consumer is encouraged to experience and take an active part in the life cycle of the product or brand and engaged in the promotion itself beyond merely watching, reading or hearing a message. Lifestyle Marketing is not simply about targeting the message so that it reaches a particular lifestyle based demographic through strategic selection of advertising mediums and channels. Nor is it just about crafting a message designed to resonate with a particular audience based on their lifestyle through imaging, word choice or the emotional appeal of the message (though those are critical in the design and execution of each campaign). While traditional media primarily allows an advertiser to talk or broadcast to consumers through print, television, radio or outdoor advertising, Lifestyle Marketing campaigns are centered on direct contact and engagement with the consumer. Although some use the term Lifestyle Marketing to refer strictly to a variety of street-level promotions such as experiential marketing and product samplings that are generally conducted by what is broadly referred to as a Non-Traditional Agency, our Lifestyle Marketing practice also includes some methods that are typically under the umbrella of Interactive Advertising. These can include online interaction with consumers and mobile phone promotions that involve a call to action or otherwise engage the consumer to participate.

It is important to note that while they can be highly effective, not all Non- Traditional or street-level promotions are necessarily Lifestyle Marketing nor are all forms of web-based marketing. A Street-team distributing flyers does involve more direct consumer engagement and can be more cost effective than a print or broadcast message, but that practice itself. Lifestyle Marketing campaigns are centered on direct contact and engagement with the consumer is not necessarily Lifestyle Marketing. Similarly, although a web advertisement does provide the opportunity for the consumer to click through for more information or to make a purchase which does provide a level of interactivity, absent a greater engagement after the consumer clicks, it would not be considered Lifestyle Marketing. While traditional media advertising (print, radio, television and billboards) are not in and of themselves Lifestyle Marketing, they can be utilized to promote other aspects of a campaign that are Lifestyle Marketing. This can include a billboard, print ad or commercial that calls on consumers to text for more information, promotes an experiential marketing event or advertises an interactive online activity.

INTEGRATED LIFESTYLE MARKETING


While Lifestyle Marketing is a category used to describe certain forms of marketing to consumers and the tactics used to effectively engage those consumers, Integrated Lifestyle Marketing is the strategic combination of these various tactics in one cohesive marketing campaign. This practice allows the promotion to not only continue, but to grow after the initial point of contact. In developing this type of campaign, the overall strategy for the promotion is as important as the tactics used to execute that strategy. Each element of an effective Integrated Lifestyle Marketing campaign should provide the potential to trigger consumer purchasing decisions but should also be designed and implemented to instigate and drive further consumer engagement with other elements of the campaign. Integrated Lifestyle Marketing campaigns extend beyond any one medium, actively living simultaneously in each medium and as an integrated part of the consumers lives, each element of the campaign feeding the others. The goal with every Integrated Lifestyle Marketing campaign is to actively engage consumers where they work or play, invoking the emotional association with a brand or event that creates a lasting impression and takes on a
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life of its own. With an effective Integrated Lifestyle Marketing campaign, the brand becomes much more than something being advertised, the promotion and the brand itself become part of the consumers lives, who they are and how they live as they interact with various elements of the promotion throughout their daily routines and lives.

Every Integrated Lifestyle Marketing campaign is unique and can involve various elements of Non-Traditional Marketing such as Street-Level or Experiential Marketing, Guerrilla Marketing, Interactive Marketing tactics including Online or Mobile Marketing and tie-ins to traditional media marketing. To maximize messaging continuity, marketing effectiveness and the ability to leverage each aspect of a campaign, an Integrated Lifestyle Marketing campaign should be developed as part of the overall marketing plan. When this is not possible, many Lifestyle Marketing efforts and even more traditional advertising can often be easily adapted or modified to be part of or to support an Integrated Lifestyle Marketing campaign.

The Original Marketing Plan

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The Integrated Lifestyle Marketing Plan

The Integrated Lifestyle Marketing campaign developed addressed the clients goals for additional stickiness and buzz by enticing consumers to engage with the brand and certain aspects of the promotion online and through short code marketing. Not only did the campaign that was developed maintain the marketing targeted to lunch-time impulse decision making, it also increased the consumer excitement through the use of additional giveaways which serve to extend branding beyond the point of contact and to develop customer loyalty. The street-level, online and mobile-based components of the campaign were all significant expansions of the level of interaction with consumers that created opportunities for future promotions and ongoing engagement. While the example above was exactly what one agency and client needed to fit their marketing goals and budget, no two Integrated Lifestyle Marketing campaigns are exactly the same. Which elements of Non- Traditional or Interactive marketing and what if any tieins with traditional media are used is determined based on the current market positioning and the marketing goals, timing and budget of each unique product or brand.

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The key considerations in the development of each campaign are the message or identity of the brand, product or event and the lifestyle of the target consumer audience. With an understanding of these two factors, a campaign can be designed that integrates marketing into the day-to-day lives of the consumers through a variety of Lifestyle Marketing tactics that each drive further consumer engagement with the brand and the promotion. Each element of an effective Integrated Lifestyle Marketing campaign is designed and executed to complement and reinforce each aspect of the overall campaign, constantly driving the next point of consumer engagement.

FACTORS AFFECTING CONSUMER BEHAVIOUR


Consumer behaviour refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants. There are different processes involved in the consumer behaviour. Initially the consumer tries to find what commodities he would like to consume, then he selects only those commodities that promise greater utility. After selecting the commodities, the consumer makes an estimate of the available money which he can spend. Lastly, the consumer analyzes the prevailing prices of commodities and takes the decision about the commodities he should consume. Meanwhile, there are various other factors influencing the purchases of consumer such as social, cultural, personal and psychological. The explanation of these factors is given below. Cultural Factors Consumer behaviour is deeply influenced by cultural factors such as: buyer culture, subculture, and social class. Culture Basically, culture is the part of every society and is the important cause of person wants and behaviour. The influence of culture on buying behaviour varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries.

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Subculture Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. Marketers can use these groups by segmenting the market into various small portions. For example marketers can design products according to the needs of a particular geographic group. Social Class Every society possesses some form of social class which is important to the marketers because the buying behaviour of people in a given social class is similar. In this way marketing activities could be tailored according to different social classes. Here we should note that social class is not only determined by income but there are various other factors as well such as: wealth, education, occupation etc. Social Factors Social factors also impact the buying behaviour of consumers. The important social factors are: reference groups, family, role and status. Reference Groups Reference groups have potential in forming a person attitude or behaviour. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc then the influence of reference groups will be high. Reference groups also include opinion leader (a person who influences other because of his special skill, knowledge or other characteristics). Family Buyer behaviour is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children. If the buying decision of a particular product is influenced by wife then the marketers will try to target the women in their advertisement. Here we should note that buying roles change with change in consumer lifestyles.

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Roles and Status Each person possesses different roles and status in the society depending upon the groups, clubs, family, organization etc. to which he belongs. For example a woman is working in an organization as finance manager. Now she is playing two roles, one of finance manager and other of mother. Therefore her buying decisions will be influenced by her role and status. Personal Factors Personal factors can also affect the consumer behaviour. Some of the important personal factors that influence the buying behaviour are: lifestyle, economic situation, occupation, age, personality and self concept. Age Age and life-cycle have potential impact on the consumer buying behaviour. It is obvious that the consumers change the purchase of goods and services with the passage of time. Family life-cycle consists of different stages such young singles, married couples, unmarried couples etc which help marketers to develop appropriate products for each stage. Occupation The occupation of a person has significant impact on his buying behaviour. For example a marketing manager of an organization will try to purchase business suits, whereas a low level worker in the same organization will purchase rugged work clothes. Economic Situation Consumer economic situation has great influence on his buying behaviour. If the income and savings of a customer is high then he will purchase more expensive products. On the other hand, a person with low income and savings will purchase inexpensive products. Lifestyle

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Lifestyle of customers is another import factor affecting the consumer buying behaviour. Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her surroundings. It is determined by customer interests, opinions, activities etc and shapes his whole pattern of acting and interacting in the world. Personality Personality changes from person to person, time to time and place to place. Therefore it can greatly influence the buying behaviour of customers. Actually, Personality is not what one wears; rather it is the totality of behaviour of a man in different circumstances. It has different characteristics such as: dominance, aggressiveness, self-confidence etc which can be useful to determine the consumer behaviour for particular product or service. Psychological Factors There are four important psychological factors affecting the consumer buying behaviour. These are: perception, motivation, learning, beliefs and attitudes. Motivation The level of motivation also affects the buying behaviour of customers. Every person has different needs such as physiological needs, biological needs, social needs etc. The nature of the needs is that, some of them are most pressing while others are least pressing. Therefore a need becomes a motive when it is more pressing to direct the person to seek satisfaction. Perception Selecting, organizing and interpreting information in a way to produce a meaningful experience of the world is called perception. There are three different perceptual processes which are selective attention, selective distortion and selective retention. In case of selective attention, marketers try to attract the customer attention. Whereas, in case of selective distortion, customers try to interpret the information in a way that will support what the customers already believe. Similarly, in case of selective retention, marketers try to retain information that supports their beliefs.

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Beliefs and Attitudes Customer possesses specific belief and attitude towards various products. Since such beliefs and attitudes make up brand image and affect consumer buying behaviour therefore marketers are interested in them. Marketers can change the beliefs and attitudes of customers by launching special campaigns in this regard.

INDIAN CONSUMER MARKET


Indias ascendance as an economic power to reckon with has forced the world to unravel the mystery called India. An intriguing element of this mystery is Indias consumer market; characterized by diverse languages, regions, religions, economic and social status, this market has always been a tricky proposition to understand. Now, as the market undergoes a paradigm shift due to Indias rapid economic growth and favourable demographics, it has also become a market impossible to dismiss. Global corporations view India as one of the key markets from where future growth will emerge. The growth in Indias consumer market will be primarily driven by a favourable population composition and rising disposable incomes. A recent study by the McKinsey Global Institute (MGI) suggests that if India continues to grow at the current pace, average household incomes will triple over the next two decades and it will become the worlds 5thlargest consumer economy by 2025, up from 12th now. Indias consumer market till now was broadly defined as a pyramid; a very small affluent class with an appetite for luxury and high-end goods and services at the top, a middles-class at the centre and a huge economically disadvantaged class at the bottom. This pyramid structure of the Indian market is slowly collapsing and being replaced by a diamond a relatively large affluent class at the top, a huge middle class at the centre and a small
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economically disadvantaged class at the lower end. The diamond represents increasing volume and value across all classes of Indian consumer market. Economic growth and rising disposable incomes India is growing at an average annual rate of 7.6% for the past five years and it is expected to continue growing at an equal if not faster rate. The rapid economic growth is increasing and enhancing employment and business opportunities and in turn increasing disposable incomes. As the benefits of growth trickle down, an increasing number of people are moving up from the economically weaker class to join the middle class.

The middle class with its rising numbers and incomes is thus becoming the biggest market segment. The affluent class too will continue to grow in terms of size and value, albeit, at a slower pace than the middle class. MGI study prediction on the effect of economic growth on different classes: Middle class, defined as households with disposable incomes from Rs 200,000 to 1,000,000 a year comprises about 50 million people, roughly 5% of the population at present. By 2025 the size of middle class will increase to about 583 million people, or 41% of the population. Extreme rural poverty has declined from 94% in 1985 to 61% in 2005 and is projected to drop to 26% by 2025. Affluent class, defined as earnings above Rs 1,000,000 a year will increase from 0.2% of the population at present to 2% of the population by 2025. Affluent classs share of national private consumption will increase from 7% at present to 20% in 2025. Pro-growth demographics

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The widespread adoption of improved medical care and birth control since the 1970s has reduced birth rates and increased the proportion of citizens living past their retirement age in most countries. As these countries have an aging population, they are beginning to face an acute shortage of working age population, while the proportion of dependent population is increasing. India along with a few other countries is an exception to this. In India, the proportion of citizens of working age is forecast to fall slowly and the overall labor force will continue to grow. India has a young population, 54% of Indians are under 25 years of age. A rising productive population fuels growth and drives personal consumption and a lower age dependency ratio places less strain on public finances. A young, economically empowered population not only translates into increasing consumer demand but also into a more valueconscious demand. Thus, pro-growth demographics will expand consumer market in India. The National Council of Applied Economic Research (NCAER), forecasts that the number of consumers driving growth will grow from 46 million households in 2003 to 124 million households in 2012. Decoding the empowered Indian consumer The Indian consumer market is drawing global attention not just because of its promise of sheer volumes but also because of the tectonic shift happening in the nature of demand. Increasing urbanization, increasing incomes and rising aspiration for a better life, especially, among the lower economic strata are some of the factors reshaping the Indian consumer market. The result of this flux is a new Indian consumer who is more discerning than ever, ready to place his money on brand, quality and convenience and eager to explore the organized retail market. Aspiration for a better life As millions of economically deprived households move into the lower strata of the middle class segment, they will begin to be able to afford and demand products and services beyond food and clothing. Increasing penetration of media and infrastructure facilities will
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expose the rural India to urbanized lifestyle and fuel the latent desire for improved living standards. Together the aspirants from rural and urban areas will push up demand for goods and services at the lower end of the spectrum. Value and innovation The new Indian consumer will be as discerning when buying a product as his previous avatar. In fact, due to a rise in income, increased awareness about products and proliferation of choices, he will become pickier with his purchases. Product, positioning and packaging innovation will be the key for companies to attract this new consumer. For example, as consumers become increasingly health conscious they will choose a food product that not only tastes great but is also fortified with health benefits. Similarly, global products especially in case of food will have to be adapted to suit the local taste as the Indian consumer while becoming global will continue to be attached to his roots. It is no wonder, that international fast food chains have had to Indianize their pizzas and burgers to attract consumers here. Companies will have to drive innovation differently for different regions and consumer classes. The sachet or pouch innovation for example, has given a head start to FMCG companies for penetrating the rural India. The rural India too like the urban area is beginning to demonstrate a demand for packed goods but their purchasing power limits their capacity to buy. When products like edible oil and shampoos were made available in small pouches, they were well received by rural India. The brand conscious consumer The Indian consumer market, which is primarily dominated by young generation, is becoming increasingly sophisticated and brand conscious. A typical upper middle class young consumer is beginning to look beyond the utility aspect of a product to seek intangibles like brand and lifestyle statement associated with the product. This modern consumer wants his purchases to reflect his lifestyle or at least the one he aspires for. As a
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result of this brand consciousness, the food and beverage segment of the FMCG sector is already witnessing a significant shift in demand from loose to branded products. The Indian affluent class has always had a penchant for premium branded goods and this fetish will continue. A recent luxury brands survey conducted by The Nielsen Company, a global information and media research company, has ranked India third after Greece and Hong Kong in the list of most brand conscious countries in the world. Over 35% of Indian respondents said they spend money on luxury brands. Food, Beverages and more As several first time consumers enter the market, demand for food and beverages will continue to increase. The MGI study estimates that growth in consumption will accelerate to 4.5% annually by 2025, from 3% witnessed over the past 20 years. Rise in income and increasing social and economic awareness will fuel expenditure on health, education, communication, transport and entertainment. Thus, electronic goods, personal care, health care, automobiles sectors are expected to receive a significant boost in the coming years. Organized retail Indian consumer purchasing is largely through the unorganized sector or through the kirana stores. Organized retail constitutes a small percentage of the Indian retail market. However, with urbanization and increasing value-consciousness among consumers, the organized retail format is beginning to take root. The organized retail format promises consumers better quality and better shelf-life for products due to their excellent storage facilities and anti-tampering checks. An important factor attracting consumers towards formal retailing mechanisms such as hypermarts and departmental stores is the shopping experience. These shopping outlets allow consumers to explore their choices and touch and feel products in the comfort of a glitzy and energetic environment, something a kirana or mom and pop stores have never been able to offer. The Indian consumer market is thus on a cusp of metamorphosis. The upbeat mood of the economy, the youthful exuberance of the population and its increasing integration with globalized lifestyle and consumption patterns will drive growth in the Indian consumer
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market. However, to assume that the Indian consumer will become an exact replica of his global counterpart is the biggest fallacy companies can make. While, the Indian consumers appetite for value and brand dominated goods and services are increasing, the cultural and regional framework characterizing him is intact. In fact, the income induced class movement happening across the rural and urban regions is forcing companies to re-look at their customer segmentation and product positioning. Consumer companies are thus realizing that the Indian consumer market is a tough nut to crack but the one they cant do without. The Indian consumer market landscape The Indian consumer story is one that has caught the attention of the rest of the world. Rising incomes in the hands of a young population, a growing economy, expansion in the availability of products and services and easy avail- ability of credit all of this has given rise to new consumer segments and a rising acceptability of debt. While consumerism has seen a gradual build-up, what is certain today is that there has been a genuine uptake in consumption. Whether it is mobile phones, credit cards, apparel or organised retail, people clearly seem to be spending more, particularly on discretionary items. And the consumer seems to be everywhere, whether it is the large metros, the emerging new cities, the small towns and even rural India. What has emerged in this consumer story is the fact that there is much more homogeneity in the market than ever before; for the first time some patterns have begun to emerge in consumer behaviour. There is so much choice today and people do not accept poor service. We cannot make any excuses but need to gear up our systems to provide that level of service. Narayanan Vaghul, chairman, ICICI banking corporation

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One of the patterns that we are seeing is to give terrific value at a reasonable price, according to Ishan Raina, OOH Media. It is no longer true that a premium product needs to be expensive and technology is a large contributor to this trend. So whether it is mobile phones, digital music players or even the new Tata Nano, the price/value equation has forever been altered. This has led to an increase in expectations as well as the desire for immediate satisfac- tion, which in turn has raised expectations for customer service. As Mr Vaghul, Chairman, ICICI Banking Corporation, explained: There is so much choice today and people do not accept poor service. We cannot make any excuses but need to gear up our systems to provide that level of service. Today, every city has its premium consumers and its middle class consumers and this has put companies into a fix. They now need to craft strategies that address the subtle differences but satisfy each group equally. So what is the Indian consumer market today? It is a market with three segments. The first comprises the top end with the mindset: I pay more to get more, where the purchase is driven by the emotional surplus that the consumer experiences. The second is the mid-level which thinks: I get good value at a reasonable price. More important, however, is the large block at the bottom which says: I pay less and I get less and is totally satisfied with that. This is probably a segment that many marketers tend to overlook since they feel that there is no existing demand there. Nothing could be further from the truth. D Shivaku- mar, Nokia, reiterated its importance when he said: The problem was that earlier, there were no goods and services targeting this large chunk; it is only today that people are going out into these small towns. Today, the drivers in urban and rural areas are the same aspiration, quality and price differing only in order. Shivakumar, nokia There is a growing realisation today that it is easier to compete in the smaller towns because many of the big brands and their marketing managers and sales teams dont make the effort to travel there. Hence, if one does go there, market share is easy to achieve because even though the overall pie is smaller, there is less competition.

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Another shift has been the changing dynamics of rural migration to urban centres. As Asif Adil, Diageo, pointed out: I think we are increasingly going to see a reverse shift happening, where people are not going to come to the urban areas in the same kind of numbers that they were migrating before essentially because quality of life and opportunities are improving in smaller towns. Furthermore, the factors behind purchasing decisions are merging in urban and rural areas. As D Shivakumar pointed out: Today, the drivers are the same, differing only in order. In urban markets, aspiration is key it is all about brands, lifestyles and show-off value. This is followed by quality and finally price. Rural India is driven primarily by price, followed by aspiration and then quality. However, what is important to understand is that the Indian consumer, no matter where he or she is or what category he or she belongs to, still looks for a good bargain. That is a unique Indian characteristic. While they may be driven by the same desires, there are still differences in the way people live in the non-metropolitan cities when compared with the metropolitan cities or metros as they are usually called.2 A degree of homogeneity may exist in large cities, but there is a disconnect when compared with their counterparts in smaller towns whether it is regarding their philosophy, their thoughts or their approach to life. Thus, marketers today also need to think about creating brands that address these differences in consumers lifestyles. The Indian consumer is maturing fast, and is upgrading within product segments at a pace that consumer companies are struggling to keep up with. Subbu Narayans Wamy, Mckinsey & company The complexity does not end there. Subbu Narayanswamy, McKinsey & Company revealed: The Indian consumer is also maturing fast and is upgrading within product segments at a pace that consumer companies are struggling to keep up with. The mobile phone category is a classic example, where individuals across segments are constantly moving to the next price level as soon as they master the technology of their current phone. Companies therefore have to straddle the whole consumer pyramid rather than being focused on one part of it.
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These changes have also raised new challenges for old brands. There is a danger of them fading if they do not reinvent themselves to satisfy current needs. As a result, there is a whole new marketing opportunity and challenge for those brands that have to reinvent themselves and try to compete. There is a new normal in the Indian consumer market today. Ishan Raina, ooh media Today, some hold the view that predictions for the Indian consumer market are overoptimistic. However, it is said that any new trend is always overestimated in the short term but underestimated in the long term. Furthermore, in these changing times, consumer behaviour patterns are likely to see drastic shifts and it will become critical for marketers to be cognisant of developments in the present and of the potential for the future. As Ishan Raina put it: I think there is a new normal in the Indian consumer market today. And therefore, in consumer marketing, the future will belong to people who can see the storm through, while others drop out because of over-predictions in the short term. Emergence of the new consumer Understanding the Indian consumer market means understanding its individual segments. Pertinent questions facing Indian marketers today include: Who are the new consumers? What are they spending their money on? The roundtable provided interesting insights into these emerging consumer segments and their buying behaviour. From pester power; kids have changed their role to becoming influencers. In the older age group, they have actually become consultants, whom parents turn to for advice during the decision-making process. Rajat Jain, Mobile2win. Three major emerging segments were identified: Kids, the Youth (including the young working singles) and the Urban Indian Woman. These segments have shown a tremendous increase in influencing and driving purchase decisions and hence are huge drivers of change in the consumer market. More interestingly, purchases are being driven not by necessity,

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but to satisfy individual needs. A high-potential emerging market is also the vast rural hinterland, which has its own unique characteristics.

Kids: Getting Older Younger


There are 300 million children aged between 414 years in India a vast market by any standards. The role that children play in purchase decisions has changed dramatically in the past 45 years. As Rajat Jain, Mobile2Win described: From pester power; kids have changed their role to becoming influencers. And this is not only in product categories like confectionary and toys, but in larger long-term-use categories such as cars, electronics and even consumer durables like refrigerators and air conditioners, which were, traditionally, decisions taken by parents. Today the roles are reversed, with kids pointing out the pros and cons of purchase decisions to their parents. In fact, in the older age group, kids have actually become consultants, whom parents turn to for advice during the decision-making process, said Rajat Jain. One aspect that has contributed to this change is the fact that kids seem to be growing older younger a 12-year-olds state of mind today is similar to what a 14-year olds would have been 10 years ago. Due to a higher degree of exposure to the outside world, their awareness levels are rising and as a result, they are clearer about what they want. Another driver is their mastery of technology, which is a primary component of a high proportion of new products in the market. The relative ease with which they are able to grasp technicalities and understand product features and usability (or lack of) has made them experts in the eyes of their parents. Parents are also becoming more indulgent. The relationship between parents and children has changed, moving from a hierarchical system to one driven by respect for childrens views and abilities. Jacob Kurian, New Silk Route. Sachin Rajan, Spencer Stuart, remarked: What is fascinating is that this demographic shift is being seen across categories and even across cities and is another characteristic of the
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homogeneity trend visible in the Indian consumer market. As in the broader market, while the values, beliefs and way of life between geographical areas may be different, the shift in the role of kids in purchase decisions is identical. This change also reflects social and economic drivers. Jacob Kurian, New Silk Route, revealed the social facet of this trend when he said: Parents are also becoming more indulgent. The relationship between parent and child has changed, moving from a hierarchical system to one driven by respect for childrens views and abilities. Peer pressure for children and the ever-increasing multitude of choices in products has also added to demand. The differences are the breadth and depth of the Indian market and the fact that India has undergone much more social and economic change in the last generation than the US has. David Daniel, Ceo of Spencer Stuart. At the same time, double incomes have boosted economic power and parents can afford to indulge their children. The danger is in over-indulgence and as a result, many parents are struggling to draw the line between necessary and inappropriate expenditure on their kids. David Daniel, CEO of Spencer Stuart, shared his thoughts on the kids market, remarking on the similarities with the transition and emergence of new consumers and new markets in the US: The differences are the breadth and depth of the Indian market and the fact that India has undergone much more social and economic change in the last generation than the US has. Therefore Indian consumers and marketers are probably facing a far more intense and highly contrasted situation.

Youth: Charting Their Own Path


With the majority of its population below the age of 25 years, Indias young consumer market is the primary target of every consumer goods company.

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The trend towards homogeneity is also apparent here, as Shantonu Aditya, UTV explained. In terms of aspiration between SEC A, B, C, D, E3 there is no difference in the mindset of the younger demographic. The aspirations of the youth are the same, driven primarily by the fact that they are all Internet savvy and this has given them equal access to information. The younger demographic is equally comfortable at home with family and out with friends, which is very interesting because this means that the marketers can address both these needs differently. Shantonu Aditya, Utv. They are also a unique market. Along with the love for brands and gadgets, they are equally comfortable with Indian values and Indian culture. Life is about visiting religious centres with their parents and then spending the evening with friends at the local club or a similar social venue. As Shantonu Aditya said : They are equally comfortable in both situations, which is very interesting because this means that marketers can address both these needs differently. Indian youth are also very patriotic, not in the classical, pre- independence sense but in a modern sense which reflects their pride in being Indian in todays world. As a segment, they are on the whole sensible, very clear about what they want to achieve in their lives and not easily carried away by hype and show. The outsourcing phenomenon in India has been the main driver of this consumer segment. A larger number of younger people now have cash in hand and this combined with increasing brand awareness has resulted in a lot of spending on leisure and personal gratification. This has also brought about a dramatic change in the concept of saving. The young generation lives for today; the concept of saving for a rainy day is alien to most of them especially since the majority of them have not experienced shortages in their lives. This is also a segment constantly on the move mentally and physically. The young do not want to be at home and are spending twice the amount of time outside the house than they would have done a couple of years ago. So, whether they are at a multiplex, a mall or a cyber caf, hanging out with friends is a clear preference. And as Ishan Raina observes: They practice extreme multi- tasking using a mobile and an iPod as well as surfing the Internet, while chatting with friends. They seem to want to do five things at the same time!
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All of this has raised new challenges for marketers, the basic question being: How does one actually address such a person and get inside their way of life? This is a segment which has a short attention span, a limited amount of patience and is already focused on three other things at the same time. Direct advertising through mobile phones is one option, but constant SMSing can actually hurt a brand if it is taken as an intrusion into their privacy. Further- more, this segment is also very vocal about their feelings and will express their irritation with a brand to an average of 910 individuals, compared with 23 a decade ago. The young generation are severely multi-tasking using a mobile and an iPod as well as surfing the Internet, while chatting with friends. They seem to want to do five things at the same time! Ishan Raina, Ooh Media. For urban teenagers, or those in a small town, there may be marginal differences in their degree of preparedness to pay or their awareness levels, but they all have a similar mindset driven by the desire for success and the need to enjoy that success. This is why it is such a great time to be a consumer marketer today, said Jacob Kurian. You are a genius no matter what you do. You still get 40 per cent growth, so it is a fantastic time for business.

Consumer buying behaviour


India has always been a diverse market, with different consumer segments exhibiting varied buying behaviour. As Jacob Kurian explained: We have always had consumers across all social and economic categories and across all towns. The difference is that in the past the lower SEC consumers did not have the same confidence about the future and therefore, if he aspired to something, he saved up until he could afford to buy it. Today, the consumer would rather buy something immediately, even if it means taking credit, rather than save and buy something tomorrow.

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Thus, there has been a decreasing fear of debt and credit cards have become the new currency. As Nitin Gupta, Mastercard, pointed out: We are talking about growth in spends of 100 per cent plus, year on year. Paradoxically, of the 100 million credit and debit cards in India, 90 per cent have never been used to purchase anything. Total spends on cards in India are of the order of USD 15 billion, which sounds like a reasonable number but is actually only 3 per cent of family consumption expenditure. In other developed markets this number is around 30 per cent. The interesting point, however, is that this very paradox is actually a huge opportunity and it remains to be seen how consumer companies will take advantage of it. We are talking about growth in spends of 100 per cent plus, year on year. Paradoxically, of the 100 million credit and debit cards in India, 90 per cent have never been used to purchase anything. Nitin Gupta, Mastercard What is important for marketers to understand are the dynamics of this change. What is it that makes Indian consumers spend their money, especially since it is finite and definitely lower than the income of their developed country counterparts? A large part of consumption is currently being driven by emotional discretionary income, enabling people to spend on things beyond basic necessities such as food, education and shelter. But where will they make the trade-offs and what will they spend on? Health or education; fashion or technology? These are the questions that are keeping Indian marketers awake at night. According to Rajat Jain: The non-discretionary area of spend is going to be education, given the fact that life is becoming more competitive. School and university fees are rising but parents are not compromising on the amount they spend on this aspect of their childrens lives. By comparison, the discretionary part of income that is spent on entertainment and leisure is still a relatively smaller proportion of the total incremental disposable income an individual generates in a year. In the past 20 years, expenditure on education has increased 11 per cent, twice as much as anything else. The non-discretionary area of spend is going to be education; given the fact that life is becoming more competitive. Rajat Jain, Mobile2win
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Education in India will even take precedence over healthcare, remarked Ishan Raina, compared to developed markets where it is the reverse. More and more parents are sending their children overseas for higher education, especially since they want them to become global citizens. The price that needs to be paid for that is not an issue. Within education, vocational training is growing the fastest in India, such as technical training or even hospitality and air hostess training. Education is seen as a step towards increasing opportunities for entrepreneurship and for gaining prosperity. What is amazing is the attitude towards education in rural India. Mr Vaghul shared an experience of meeting an individual who owned a kiosk, but also ran English language classes in his village. In spite of the high fees (INR 4000 for a six-month course, quite expensive for rural India), he had a waiting list simply because he had no more space for expansion. This is indicative of the changing behaviour of the rural consumer and shows how even illiterate parents want their children to have a better life. However, as Jacob Kurian pointed out, what is lacking is a systematic approach to tapping this opportunity, which is where investors need to step in. The other area of major consumption is communication, from mobile phones and the Internet to computer games. The main barrier to this is access to the Internet, broadband and wireless and the relatively high unit price of personal computers. What we need is the 100 dollar PC, said Subbu Narayanswamy, McKinsey & Co. David Daniel pointed out the link between the education opportunity and the focus on communication, especially in light of the constraints of physical infrastructure. There is a huge opportunity for direct learning or e-learning which could be the answer to reaching out to the entire Indian population.

The leadership conundrum


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As the consumer market in India grows, niches are developing, raising new challenges for consumer companies. Foremost is the question of leadership. As Anjali Bansal put it: What kind of talent will companies need now that they are selling to a new consumer, an emerging consumer that is not well under- stood? More importantly, what kind of leadership will be required to manage growth effectively? These questions gain special importance given that companies are increasingly being led by individuals very unlike the majority of their consumers. Urban professionals are hypothesising about rural India and making decisions that affect the lives of the middle class in the small towns. Is this healthy, or should companies be concerned?

At the operational level, I feel we need diversity. But at a strategic level, we need the ability to manage diversity, which includes ambiguity. Nitin Gupta, Mastercard. I think many companies are re-evaluating their talent model, said Subbu Narayanswamy, as they realise that there are very big implications in the kind of talent that one brings into ones company. Common questions that have to be tackled in this dynamic environment are: How does one create more empathy for the woman consumer? For companies, how do they cultivate empathy for ambiguity in their employees? Nitin Gupta captured the point when he said, I think the kind of challenges surrounding talent at the corporate level are different from the challenges for talent at the strategic level. So, at the operational level I feel we need diversity. But at a strategic level, we need the ability to manage diversity, which includes ambiguity. In todays fast-paced world, opportunities are emerging everywhere and therefore a leader needs to deal with and manage diversity, which includes diversity of ideas, diversity of businesses and diversity of talent all of which requires flexibility and the ability to shift and turn with every opportunity.

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India is also in a state of flux. In such a scenario, Asif Adil explained: One of the key things we need to focus on is an entrepreneurial mindset. Tomorrows leaders need to be able to pick up the contagious ideas, the next big opportunity. Furthermore, due to the unique dynamics of the Indian market, they need to be very quick in identifying the threads that are going to work in India. One of the key things we need to focus on is an entrepreneurial mindset. Asif Adil, Diageo It is a fact that companies are facing a talent gap, said Anjali Bansal, and it is going to be a challenge to train individuals to develop the mindset to under- stand the new consumer market. At the same time, there is a general level of optimism that a new crop of leaders will emerge in the next few years who will have experienced the dynamics of these new consumer segments and there- fore will be well positioned to lead companies through the uncharted waters. We are going through a classic boom-time phenomenon. But I am a pessimist on talent principally because in boom times a lot of mediocrity tends to rise. Jacob Kurian, New Silk Route Jacob Kurian, however, raised a note of caution: We are going through a classic boom-time phenomenon. But I am a pessimist on talent principally because in boom times a lot of mediocrity tends to rise. In such a high-growth scenario, it is easy to think that everything one is doing is right the danger is in believing that you have it all figured out. It is important to keep in mind that India is still a supply-constrained economy and this becomes apparent when compared with the West, which is full of very mature, saturated economies where companies are finely positioned and have had to work on building issues of people and talent identification into their strategy. A major concern is that the internal processes in many companies are not helping. D Shivakumar described some of the factors that are impeding the development of leadership in companies. One is the move from a hierarchical to a matrix organisation, which has
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reduced the time available to senior management to sit back and reflect on the larger picture of growth. Second, the process of hiring fit for executing growth has companies mapping people to a profile that leaves no scope for internal recruitment, since every individual is stretched to the maximum, concentrating only on managing execution for growth. All of this has pushed coaching, mentoring and on-the-job-training to the backburner. Consequently, no-one has the time or the inclination to think about the larger good of the organisation or to concentrate on strategy five years down the line. It is all about now and this short-term thinking will adversely affect the future. Organisational structures intended to further growth are actually doing the reverse. This is an issue that todays leaders will have to tackle in order to narrow the talent gap in the future.

THE INDIAN RETAIL MARKET


Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m2)/ person is lowest in the world Indian retail density of 6 percent is highest in the world.1.8 million households in India have an annual income of over 45 lakhs (US$91,260). Delving further into consumer buying habits, purchase decisions can be separated into two categories: status-oriented and indulgence-oriented. CTVs/LCDs, refrigerators, washing machines, dishwashers, microwave ovens and DVD players fall in the status category. Indulgence-oriented products include plasma TVs, state-of-the-art home theatre systems, iPods, high-end digital cameras, camcorders, and gaming consoles. Consumers in the status category buy because they need to maintain a position in their social group. Indulgenceoriented buying happens with those who want to enjoy life better with products that meet their requirements. When it comes to the festival shopping season, it is primarily the statusoriented segment that contributes largely to the retailers cash register.

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While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are significant challenges as well given that over 90% of trade is conducted through independent local stores. Challenges include: Geographically dispersed population, small ticket sizes, complex distribution network, and little use of IT systems, limitations of mass media and existence of counterfeit goods.

SIZE OF THE INDIAN RETAIL INDUSTRY


In 2007, the total Indian retail industry was valued at Rs 13,300 billion (estimate), and the organised segment constituted 5.9% of the value at Rs 783 billion. In the segment, the clothing and accessories sales had a majority share of 38.1% followed by the food and grocery segment at 11.5% and electronics segment at 9.1%. The organised retail industry grew at a CAGR of 33% during 2004-2007. Even though the organised retail segment has a minuscule share in the total industry, it has enormous potential considering the rising urbanisation, the efficient supply-chain, the readily-available retail space, and modern technology, which help in reducing consumer prices to a great extent.

Furthermore, with the entry of big foreign players, the Indian organised retail market has become more competitive in terms of implementing newer business models on the operational format, and pricing, and in terms of efficiency. The organised retail sector will
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largely benefit in terms of productivity and growth if sectors like agriculture, food processing, and textile are encouraged further. The above-mentioned sectors would receive a remarkable boost if they would supply to big Indian and foreign retail players, which will ensure their growth in tandem with the retail sector. Moreover, the organised retail sector will directly and indirectly improve the countrys employment scenario. Many Indian retail players have already started purchasing supplies directly from farmers and other suppliers, which has invariably eliminated the supply-chain complexities and large number of intermediaries, and has resultantly lowered prices for consumers. Furthermore, the amendment of the Agriculture Product Marketing Act (APMC) has revamped the farm produce supply chain.

INDUSTRY SEGMENTATION
Organised retail can be segmented in two ways - segmentation by verticals and by channels. Verticals are segmented on the basis of the type of merchandise offered; similar merchandise can be clubbed together to form a vertical, for instance food and grocery. Channels are the means through which retailers sell their merchandise; for example, store channels of retailing that comprise different formats like hypermarkets, supermarkets and department stores and non-store formats like online retailing, vending and kiosks.

MAJOR RETAIL SEGMENTS


Food and grocery: In 2007, the food and grocery segment was valued at Rs 7,920 billion, and it enjoyed a dominant market share of 62% in the total Indian retail sector; however, there was a completely opposite scenario in the organised retail segment. The food and grocery segment is the second-largest in the organised retail and has an 11.5% share that is valued at Rs 90 billion. Initially this segment grew at a slow pace due to the presence of an established retailing system led by kirana stores, a highly-fragmented food supply chain, and the lack of a
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developed food processing industry. Nilgiri was one of the earliest retailers that started a chain of stores in different parts of the country. However, the growth of Nilgiris stores was limited as it was challenged by a weak supply chain and an under-developed food processing industry. Post-liberalisation, organised retailers saw a renewed opportunity in the food and grocery segment. Few food and grocery retailers Food Bazaar: PRIL ventured into food retailing with Food Bazaar in Apr 2002. Initially it was a part of Big Bazaar but later on it started operating as a standalone outlet in addition to being a part of Big Bazaar. The store offers a wide range of fruits, vegetables, FMCG products and ready-to-cook products. It uses a concessionaire model for wet groceries, and it sources staples from APMC or farmers (where the state permits). Food Bazaar attracts high footfalls due to innovative initiatives like live-grinding, live bakery, fresh juice corner etc. In Aug 2007, the store ventured into another retail format that served the food and grocery segment called the KB Fair Price shop. This store is modelled on the concept of low-frills neighbourhood store of 1,000-1,600 square feet. The Fair Price store follows a pricing model that is 20% lower than the prevailing market price. More: Aditya Birla Retail Ltd forayed into the retail business in 2006 by acquiring Trinethra Super Market Ltd, the south-India based retail chain. In May 2007, the company launched its own brand of stores called more in Pune. The supermarket store has a minimum size of 2,500 square feet and offers fruits, vegetables, staples, personal care, general merchandise, pharmacy, poultry and dairy products. Reliance Retail: Reliance Retail Ltd, a subsidiary of Reliance Industries Ltd, has an aggressive plan to expand its retail network across India. It entered the food and grocery segment in November 2006 through its convenience store format Reliance Fresh. The store offers a range of fruits, vegetables, personal care, home care and kitchen utensils. It focuses on building a strong relationship with the agri-business value chain and sources directly from wholesalers.
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Fashion and accessories Fashion and accessories is the largest category in organised retail and had a 38.1% share valued at Rs 298 bn in 2007. In terms of total retail, this category held the second position with a 9.5% share valued at Rs 1,313 bn. The segment has driven the retail boom in India and has opened many opportunities for large as well as global retailers to enter the segment. Despite the high rental, many global retailers like Gas, Gucci, Levis, Benetton, Marks and Spencer have opened their stores in India, and also have plans to increase their presence. The mens wear segment had the highest share of 40.2% in the Rs 1,313-billion fashion and accessories market in 2007 while the womens category accounted for 34.8%, followed by the kids wear and uniform category at 24.9%. Demand in the branded apparel segment is increasing as consumers are upgrading to premium brands due to changing preferences. The premium segment has seen the fastest growth in value owing to the rising preference for formals at Indian workplaces, the new offerings from international brands, and the increasing willingness on the part of consumers to pay a premium for quality. The apparel retailers are also pushing themselves to the accessories segment to attract more customers. Few fashion and accessories retailers Pantaloons: The first Pantaloon store was opened at Gariahat in 1997 in 8,000-square-feet area. Over the years, the store has undergone several transitions. When it was launched, the store mostly sold external brands. Gradually, it started retailing an eclectic mix of external brands as well as private labels. Initially, it positioned itself as a family store targeted across age and gender groups but later it shifted its focus towards being a fashion store and gave more emphasis on the youth. As on Dec 2008, Pantaloons had around 44 stores spread across major cities in India. Shoppers Stop: Shoppers Stop is one of the largest retailers in India. It primarily caters to the lifestyle segment and offers customers both domestic and international brands. The store recently revamped its branding by introducing a new symbol. Shoppers Stop has

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lifestyle retailing as its core housing brand across categories like apparels and accessories. The store operated at 26 locations in 12 cities as on Dec 2008. Koutons: Koutons Retail is a leading manufacturer of readymade and fashion wear brand. It was established as Charlie Creation Pvt Ltd in 1991 for manufacturing and exporting garments. Later in 1998 Koutons was established to provide affordable mens wear to the masses. Koutons also entered the womens segment in Apr 2008 by launching its brand Les Femme, which caters to young women in the 16-34 years age group and includes apparels like t-shirts, partywear, lycra, semi-formal shirts, denims, capri pants etc. Koutons has also launched its brand Les femme for women & Koutons Junior for kids. Few renowned brand of Koutons are: Koutons mens wear, Les Femme, Koutons Junior and Charlie Outlaw. Footwear In 2007, the footwear segment had a 1.1% share in the total retail market and was valued at Rs 160 billion while it had a 9.9% share in the organised market and was valued at Rs 77.5 billion. In the same year the organised footwear market recorded a fantastic growth of 49% over 2006 while the overall retail market grew by just 16.4%. The changes in consumer behaviour and attitudes reflected in the increasing demand for newer styles and different types of footwear. The market currently offers many brands that cater to every target segment. The Indian footwear market is moving at a brisk pace presently to cater to the domestic demand. Moreover, the influx of international brands is inducing the otherwise price-conscious customers to shell out more bucks for their favourite brands. The footwear market is experiencing a changing consumer preference for casual and younger style due to media penetration and due to the increasing awareness about international trends and lifestyle. There already are a large number of players, both domestic and international, in the semi-formal, formal and casual segment but the casual segment dominates the Indian footwear market with a 75% share. Branded sportswear is also growing at a faster rate than the other segments and the key players in this segment are Adidas, Reebok, Nike, Puma et al. Few footwear retailers
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Reebok: In 1995, Reebok forayed into the Indian retail market. Today Reebok is one of the frontrunners in the Indian sportswear industry. Reeboks offerings include apparels, footwear and fitness equipment and products. Its footwear offerings are mostly in the trainers and sneakers segment. Reebok recently has introduced its new lifestyle vertical Reebok Classic. Bata: Bata India is one of the most well-known and largest footwear retailers in India. The retailer manufactures and markets different types of footwear that includes rubber, canvas, leather, and plastic footwear. It markets footwear under the brand names of North Star, Power, Ambassador, Marie Claire besides dealing in international brands like Dr Scholl and Hush Puppies. Bata has a strong distribution network structure of wholesalers and distributors. Khadims: Khadims forayed into footwear retailing in 1993 and is one of the most renowned retailers in east India. Khadims markets its own products besides few others and specialises in womens and childrens footwear. The retailer has a presence in multi-brand outlets (MBOs) across the country in addition to its own exclusive outlets. Home and office improvement In 2007, the home and office-related retail segment was valued at Rs 455 billion in the total retail market while it was valued at Rs 50 billion in the organised retail market. In the same year the segment had a 6.4% share in the organised retail. Home and office improvement is another important segment of the organised retail as people have started spending more on discretionary items. Presently the segment is growing at an impressive rate. Due to the salary hikes and rise in the double-income households, the lifestyle needs of the young and flourishing India are surging and consequently, consumers are going for renovation of their homes. The concomitant rise in investments in furniture, home accessories and furnishings, has added to the segments boom. Few home and office improvement retailers Godrej Lifespace: On Apr 1, 2003, Godrej & Boyce Manufacturing Company Ltd launched a new retail division. The division was established to present a new concept in retailing by
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displaying and selling under one roof the Godrej range of home and office furniture, appliances, security equipment and locks. Later in 2005, the showrooms were branded as Godrej Lifespace Stores. Home Stop: Home Stop is one of the premium home improvement stores that offers a wide range of merchandise. It stocks various national and international brands that cover all the home needs like home dcor, furniture, bath accessories, draperies and health equipment. Home Stop currently operates three Home Stop stores, one each in Mumbai, Bangalore and New Delhi. Home Town: Home Solution Retail (India) Ltd (HSRIL), a subsidiary company of Pantaloon Retail, is designed to cater to the home furnishing and improvement market. The format is designed as a one-stop destination that offers a complete range in consumer electronics, furniture and other home products. HSRIL operates five retail formats: Collection-i, Furniture Bazaar, Electronics Bazaar, Home Town and e-zone. Electronics In 2007, the electronics segment had a 4% share in the total retail segment and was valued at Rs 575 billion while it had a 9.1% share in the organised electronic retail segment valued at Rs 71 billion. The electronics market has seen a proliferation of brands and product categories in recent years. All international brands from Japan, Korea, the US, Europe and China have been launched in India and have been trying to build a pan-India dealer network. The lifestyle category has seen higher growth in India on the back of changing consumer preferences and a consumption boom. Few electronic retailers eZone: eZone is an electronics specialty retail format from HSRIL by Kishore Biyani-led Future Group. The first eZone store was launched in 2006 in Indore and was followed with a second one in Bangalore. eZone offers a range of personal products like computers, laptops, handy cams, MP3 players and mobile phones, entertainment products like plasma/LCD, flat TVs, home theatre systems, DVD players, and stereosystems, home products like refrigerators, air conditioners, washing machines and microwave ovens, among other kitchen appliances.
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Viveks: In 1965, B A Lakshmi Narayana Setty founded Viveks in a 200-square-feet-shop in Chennai. Today Viveks is one of the largest consumer electronics and home appliances retail chains in India. Viveks Ltd is a public limited company that runs two retail brands Viveks and Jainsons. The store was transformed into a public company from a family-run company when 14 stores of Jainsons were bought over in 1999. Later on in 2001 two stores of Premier and in 2002 Spencers Super Store were purchased. Viveks has recently absorbed Spencers into the Premier brand. Viveks grew from three stores in 1995 to more than 35 stores as on Dec 2008. Catering services In 2007, the catering service in organised retail showed a tremendous growth of 44.7% over the previous year. It was valued at Rs 713 billion in the total retail market and at Rs 57 billion in the organised retail market. The catering services market is divided into fast food, cafes and restaurants and others. India is a buoyant market for this segment with over a billion people with different food habits, religious festivals, and various regions. Each region has its own traditional food, dietary habits and its own food specialities. In recent times many international food chains have entered India, which has made this segment more dynamic and its growth, fast-paced. The key growth drivers of the segment in India are: the changes in Indian demographics, young working population, nuclear families, rise in double-income household etc. Few catering service retailers Yum! Restaurants: Yum! Restaurants is present in India through its brands Pizza Hut and KFC. In 1995, KFC, which mainly serves chicken products, set foot in India. After taking into account the vegetarian population of India, KFC recently modified its menu and launched a vegetarian fare, which now constitutes 40% of the product categories. Pizza Hut entered India in 1996 and as on Dec 2008, there were 147 Pizza Hut and 45 KFC stores across 35 and 14 cities, respectively. McDonalds: McDonalds is a 50:50 joint venture partnership in India between McDonalds Corporation (USA) and two Indian businessmen. Hardcastle Restaurants Pvt Ltd owns and operates McDonalds restaurants in West India while Connaught Plaza Restaurants Pvt Ltd owns and operates these food outlets in the North.
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Caf Coffee Day: Caf Coffee Day is a division of Indias largest coffee conglomerate Amalgamated Bean Coffee Trading Company. Caf Coffee Day sources coffee from 5,000 acres of estates and is the second-largest coffee shop in Asia. It has ventured into formats such as music cafes, book cafes, highway cafes, lounge cafes, garden cafes and cyber cafes. Telecom In 2008 the telecom market in India was worth Rs 272 billion and had a 1.8% share in the total retail market while it had a 3.4% share in the organised retail segment and was valued at Rs 27 billion. The mobile and accessories segment exhibited tremendous growth in 2007. The Indian telecom sector emerged as the second-largest wireless network in the world after China with the recent spate in number of wireless subscribers. Few telecom retailers The Mobile Store: The Mobile Store, promoted by the Essar Group, is one of the countrys largest mobile retailers. Its a one-stop mobile solution shop that offers telecom products like mobiles, accessories, mobile connections and recharges, mobile bill payments, handset repairs, handset exchange, music and gaming devices and DTH, all under one roof, in a world-class shopping ambience. The shop had more than 1,300 stores spread across 200 cities as on Dec 2008. MobileNXT: Bangalore-based MobileNXT Teleservices Pvt Ltd has a pan-India presence and operates in the following three major retail formats: standalone stores, store-within-astore, and enterprise stores. This store is eyeing a pan-India network and hence has initiated a tie-up with Shoppers Stop, Star Bazaar, Mega Mart, and Landmark stores, for setting up store-withina- store in their outlets across the country. As on Dec 2008, the company was operating more than 36 stores that were spread across major cities in India. Pharmaceuticals In 2007, the pharmaceuticals market had a 3.5% share and was valued at Rs 488 billion in the total retail market; however, its share in the organised retail market accounted for merely 2.0% share at Rs 15.4 billion during the same period. The organised pharmaceutical
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retailer is known to implement innovative concepts and global standards to provide customers with an experience that is completely different from what an unorganised retailer offers. Few pharmaceutical retailers Apollo Pharmacy: In 1983, Apollo Pharmacy, a division of Apollo Hospital Enterprise Ltd, entered retailing by opening up its first store in Chennai. The retailer also took initiatives to provide medicines to the rural regions by tying up with ITCs e-choupal and Godrej Aadhaar. Apollo has also started expanding through the franchise route. It has recently launched a new concept, NurseStation, at its pharmacy outlets, where the nurses are available to attend the patients at their houses, or refer them to an Apollo Clinic nearby. As on Dec 2008, Apollo was operating at over 890 outlets across the country. MedPlus: In 2006, MedPlus Health Services Private Ltd was incorporated in Hyderabad to cater into the health care segment. The company has established a large number of pharmacy outlets chain across major cities in various states of the country, and are majority of those are spread across four southern states. It has over 600 pharmacy outlets spread across 63 cities/ towns in the country. Beauty and wellness In 2007, the beauty and wellness segment grew at a tremendous rate of 65% over the previous year in the organised retail market. Its share in the total retail market, however, was just 0.3% and was valued at Rs 46 billion. In the organised market, the segment showed tremendous growth due to the rise in service sector employment. Few beauty and wellness retailers Reliance Wellness: In Oct 2007, Reliance Retail Ltd, owned by Mukesh Ambani, entered the beauty and wellness segment by opening its first store at Hyderabad. This store offers a wide range of products under the health foods, personal care, healthcare, and pharmaceuticals categories. Himalaya Drugs: The Himalaya Drug Company operates both exclusive retail outlet formats and shop-within-a-shop outlets. The stores offer an entire range of Himalaya drugs from
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pharmaceuticals, personal care, to baby care and animal healthcare products at competitive prices. The company emphasises on service, trained personnel and a quality shopping experience in their stores. Himalaya has also launched its online shopping website to make all its products conveniently available to its customers 24/7 and to reach a wider market, where its stores are not present. Jewellery In 2007, jewellery retail was worth Rs 694 billion and accounted for 5% of the total retail market. In the organised retail market, jewellery retail merely had a 2.9% share at Rs 23 billion. In the same year jewellery retail in the organised retail market recorded high growth of 36.9% over 2006 as compared with 15.3% recorded in the total retail market. Few jewellery retailers Gitanjali: Gitanjali Gems Ltd (GGL) is one of the largest, integrated diamond and jewellery manufacturer and retailer in India. It sources rough diamonds from primary and secondary source suppliers in the international market, cuts and polishes the rough diamonds and exports the diamonds to its international markets. GGL sells diamonds and other jewellery through retail operations in India as well as in international markets. Its brand extensions include Gili, Asmi, Sangini, DDamas, Giantti, Nakshatra, Collection G, Gold Expressions, Vivah Gold & Kiah. Tanishq: In mid-1990s Titan Industries Ltd - promoted by the TATA Group - entered jewellery retailing through Tanishq. Tanishq has set up production and sourcing bases by researching the jewellery crafts of India. Its factory, located at Hosur, Tamil Nadu, is spread across 135,000 square feet and is equipped with all modern machinery and latest equipment. As on Dec 2008, there were 115 Tanishq stores spread across major cities in India. Reliance Jewels: Reliance Retail Ltd entered jewellery retailing by opening its first store in Bangalore. The company aims to make Reliance Jewels a one-stop destination that offers consumers a wide range of gold and diamond jewellery.

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Timewear In 2007, the Indian watches market enjoyed a 2.9% share in the overall organised retail market as compared with merely 0.3% in the total retail market. The market size of the watch market was valued at Rs 44 billion in the same year. The size of this market has expanded due to the changes in consumer preference and the growing market for international watches in India. International players like Tag Huer, Rado, Omega, Rolex have even signed up Indian celebrities as brand ambassadors to tap the market. Few timewear retailers Citizen: Citizen has 38 exclusive outlets in 27 cities across India. The Exclusive Branded Outlets (EBOs) called First Citizen house the latest international range of Citizen Watches and display over 800 different watches. Besides, Citizen Watches are also available at Lifestyle, Shoppers Stop and more than 250 Citizen Corners (MBOs) across the country. Titan: Titan is one of the largest manufacturers of watches in India. It offers product ranges that include the flagship brand Titan, Edge, Fastrack, Nebula, Raga, Steel, Regalia, Flip, Sonata, which is available in Titan and exclusive Sonata stores. As on Dec 2008, there were 245 exclusive Titan showrooms (World of Titan) across 122 Indian cities in India. Books, music and gifts Books, music and gift retailing were the earliest segments that witnessed a consolidation of business into organised formats. The combined share of this segment was 1.1% of the total retail market at Rs 164 billion in 2007. Organised retailers like Planet M, Music World, and Landmark dominated the music segment. Archies, a prominent gift retailer, has a presence on both high streets as well as in malls. The books and publishing business continues to thrive due to greater literacy levels and rapidly growing middle class and higher middle class population, English-speaking middleclass population. Moreover, new format chains like Crossword, Landmark, Oxford, and now, Odyssey, that fit into the leisure aspirations of people, are located conveniently, and offer
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an ambience conducive to browsing and book buying. As a result, the segment has been growing further. Crossword: Crossword was established in Oct 1992, is Indias leading bookstore chain and a wholly-owned subsidiary of Shoppers Stop Ltd. The company sells books and other products under the Crossword brand. Crossword sells a wide variety of products like magazines, CD ROMs, music, stationery and toys apart from books. Crossword provides customers with cafes, reading tables and cloak facilities at each of its outlets. Crossword customers can also shop for books using dial-a-book, fax-a-book and email-a-book facilities offered by the company. Its other services include gift vouchers, apart from the return, exchange & refunds policy being followed by the company. Crossword bookstores are presently located in Mumbai, Bengaluru, Ahmedabad, New Delhi, Pune, Nagpur, Vadodara, Kolkata, Chennai, Jaipur and Hyderabad. Entertainment In 2007, the entertainment segment was worth Rs 456 billion and had a 3.2% share in the total retail industry. This segment has been driven by the increasing base of young population in India, whose entertainment needs has been surging with the influx of malls and multiplexes that provide leisure retail, gaming, and cinema. Players in the segment are likely to gain greater market share as the consumer spend on entertainment is increasing. PVR cinemas, Fun Cinemas, Inox are the major players in the entertainment retailing space. Overview of formats/channels The Indian retail industry is categorised into different retail formats on the basis of the retail operation. The formats are basically defined on the basis of the size of the outlet, the pricing strategy followed, the type of merchandise sold, and also the location. Given below is a list of formats on the basis of the above-mentioned characteristics: Hypermarkets: Hypermarkets are big-box formats with an average size that ranges between 60,000-120,000 square feet, and they stock multiple lines of products such as food and grocery, general merchandise, sports goods, and apparels. Hypermarkets are mammoth outlets that are fewer in number but cater to a larger area (3-5 kilometres).

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HyperCITY, Big Bazaar, RPG Spencers and Shoprite Hyper are some major players in this format. Supermarkets: The average size of supermarkets range from 10,000-30,000 square feet. They are a smaller version of hypermarkets that holds multiple lines of merchandise but is limited in number when compared with supermarkets. Supermarkets are spread across the city, are greater in number, but cater to a smaller area (1-2 kilometer). Foodworld, Food Bazaar and Spinach are some major players in this format. Convenience stores: Convenience stores offer easy purchase experience through easily accessible store locations. The stores are basically small in size (500-3,000 square feet), which allows quick shopping and fast checkouts. Subhiksha and Reliance Fresh are some major players in this format. Cash-and-carry outlets: Cash-and-carry outlet is strictly not a retail format, but considering the business dynamics it follows it can qualify for a retail format. In a retail business usually a consumer has to purchase one or more products but under this format, the consumers have to buy a minimum volume of products or value specified by the cash-and-carry retailer. In this format the buyers are basically small retailers or catering service providers who purchase in bulk quantities. This stores size ranges from 100,000 square feet to 300,000 square feet. At present, Metro is a major player that falls under this format. Walmarts alliance with Bharti and Tescos with Trent will also come under the cash-and-carry format. Discount stores: The focus of these stores is to offer merchandise at a price that is lower than the market price, and to gain profit from volumes. These stores keep merchandise mainly on the basis of its saleability. Usually these are no-frill stores with simple surroundings and less service. Big Bazaar and Subhiksha are some famous examples. Specialty stores: These stores usually specialise in one line/category of merchandise. As these stores are concerned with only one type of merchandise, they are able to offer a wider range of products at a lower price. Examples: Next and Vijay Sales.

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Department stores: These stores are typically lifestyle stores where most of the merchandise constitutes apparels and products other than food and grocery. These stores offer high quality service to consumers. These stores stock lesser merchandise than other formats since the merchandise is stored in a presentable manner. Notable examples are Shoppers Stop, Westside, Trent, and Globus. Category killers: Many major retail chains have adapted small specialty store concepts and have expanded themselves to create large specialty stores. These expanded, large speciality stores are known as category killers. Ezone, which specialises in electronics, and Staples, which specialises in office stationery, are examples of category killers.

Can the lifestyle branding strategy backfire? The success of lifestyle brands stems from their appeal to consumers' need for selfexpression. For example, brands like Gucci, Polo and Abercrombie & Fitch enable consumers to express themselves by identifying with the lifestyles represented by these brands. The problem, however, is that consumers' need for self-expression, like many other needs, can be satiated. This means that as alternative outlets for self-expression continue to proliferate, the marginal importance of many lifestyle brands will likely decline. To make matters worse, unlike competition based on functional attributes, which in most cases is limited to a given product category, focusing on lifestyle puts brands from different categories in direct competition with one another. For Puma, this means that it now has to compete not only with its direct rivals but also with lifestyle brands from unrelated categories. These include not only traditional lifestyle brands like Gucci, Abercrombie & Fitch and Ralph Lauren, but also functional brands like Gillette, Harley-Davidson, Starbucks,
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Swatch and Apple that have come to play a self-defining role for many consumers. Thus, by switching to lifestyle positioning, Puma might be trading traditional in-category competition for even fiercer cross-category competition. Who benefits from lifestyle branding? The increased competition among lifestyle brands does not necessarily mean that lifestyle branding is the wrong strategy. Rather, it means that to succeed a company needs to have core competency and strategic assets in lifestyle branding. As in any market, there will be winners and losers. The winners will be the brands that are best positioned to represent popular lifestyles. PPR's experience in building luxury brands means Puma is poised to become one of the winners in the lifestyle category. Puma's future trajectory might be similar to other brands that have managed to successfully transition from functional to lifestyle positioning. For example, Montblanc has repositioned itself from a functionally focused brand that manufactured high-end pens into a lifestyle brand spanning different categories that include leather goods, watches and sunglasses, in addition to its core pen business. In the same vein, Lacoste managed to broaden the appeal of its brand from being closely associated with tennis to representing a lifestyle of exclusivity and luxury. The casualties of lifestyle branding Conventional wisdom would argue that a company's switch to lifestyle branding should have the greatest impact on its direct competitors. In Puma's case, this means that its repositioning will have the biggest effect on its direct rivals in the sports gear market, including Adidas and Nike. By effectively removing itself from the market in which brands compete on functionality, Puma might have made life a bit easier for Adidas and Nike. The brands that will really suffer from Puma's repositioning are the lifestyle brands that do not have the resources or commitment to sustain their lifestyle positioning in the face of increasing competition. Consider, for example, Nestle's Coffee-Mate creamer, which
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recently launched the "express yourself" campaign aimed at repositioning itself from a functional coffee-creamer to a self-expressive brand. Ironically, Puma might even sink its competitive claws into fellow feline, Kellogg's Tony the Tiger, because despite being in different categories both brands compete to satisfy the same customer need -- the need to express one's self. The limits to self-expression The idea that lifestyle branding puts brands in different categories in direct competition with one another is supported by recent findings published in the Journal of Marketing, which provide experimental evidence that the barrage of lifestyle brands can end up satiating consumers' need for self-expression. Specifically, the study shows that exposure to a series of self-expressive brands can weaken consumers' future preference for lifestyle brands by making them appear less personally relevant, lest distinct and less desirable. The study is among the first to explore how brands serve as a means of self-expression, revealing the limitations of expressing one's identity through brands. The competitive landscape is rapidly evolving and is no longer constrained by the boundaries of category. Now brands are competing across categories for a share of consumers' identity. Fulfilling individuals' need for self-expression is becoming the new frontier of brand competition.

REGULATORY FRAMEWORK
The Indian government has not focussed on retail as an industry. Until now, there are no specific rules and regulations that are to be followed by retail companies. However, there are certain laws that the retailers need to follow, which are general in nature and which pertain to the establishment of stores and the conduct of activities. These laws are as follows:

Shop and Establishment Act Standards of Weights and Measures Act


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Provisions of the Contract Labour (Regulations and Abolition) Act The Income Tax Act Customs Act The Companies Act

Apart from the above Acts, the companies also follow certain regional rules and regulations on the basis of the stores location. In some regions regulations are imposed on the organised retailers to restrict their expansion and to promote regional retailers; for instance, the Tamil Nadu government imposed a 10% surcharge on organised retailers; the West Bengal government has been asking mall developers to reserve 10% space for unorganised retailers. Retailers are also required to take necessary approvals from local bodies to carry on with their business. There is no single window for clearances, and companies have to go to different agencies to get approvals, which is one of the biggest hurdles that the segment faces.

CHANGING CONSUMER PREFERENCES AND SHOPPING HABITS


The prime reason for a paradigm shift in the shopping attitude of the Indian consumer is the change in their preferences and tastes. Due to the increasing use of IT and telecom, Indian consumers have become aware of brands and shops for lifestyle and value brands according to the need and occasion. Consumers will continue to drive the growth in the organised retail by expanding the market and compelling retailers to widen their offerings in terms of brands and in terms of variety. The spending on essential commodities has been steadily falling over the years, whereas the consumption of discretionary products has been growing at a healthy pace. If the composition of PFCE is studied, one can notice that the share of food, beverages and tobacco in the total PFCE has declined from 53.0% in FY90 to 42.2% in FY08. On the other hand, the share of communication, entertainment, personal care consumption has been rising over the years. Changes in lifestyle have brought about a paradigm shift in consumption, which will undoubtedly continue to drive retail growth in segments like
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beauty, healthcare, telecom, and entertainment. Moreover, the rising reach of media coverage is increasing consumer awareness about products, their prices and services, which is likely to further encourage growth in the organised retail segment. Changing demographics India is one of the youngest and largest consumer markets in the world with a median age of around 25 years, which is the lowest as compared with other countries. According to estimates, Indias median age would be 28 by 2020. It is expected that over 53% of the population will be under the age of 30 by 2020, which means that the potential for the Indian retail segment will be enormous. Another plus about this population is that they will be more dynamic than the previous generations because their consumption is driven by wants rather than needs. Thus, the organised retailing, which thrives on lifestyle products, is expected to receive a boost because of the young population by 2020.

INCREASE IN WORKING POPULATION


India is the second-largest country in the world in terms of population, and is the largest consumer markets in the world owing to its favourable demographics. In 2008 Indias working population (in the 15-49 years age group) constituted around 53% of the population as compared with 48.6% in the UK, 49% in the US, and 53% in Russia. Further, the increase in the number of working women has fuelled the growth in sales of discretionary items. There has been a 20% increase in the number of working women in the last decade.

SPURT IN URBANISATION
Historically cities and towns have been the driving force of overall economic and social development. Currently over 335 million people of India reside in cities and towns, which translates to around 30% of the total population7. The rapid growth in urbanisation has facilitated organised retailing in India, and has caused the speedy migration of population into major tier I and tier II cities, which have a significant share in the retail sales of the country.
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The urban populations contribution in Indias GDP shot up from 29% in 1951 to 60% in 2001 and is expected to increase to 70% by 20118, as migration to cities and towns grows rapidly in anticipation of higher income opportunities provided by these epicentres. Moreover, the continuous development in urban areas has invariably attracted substantial inflows of capital both from domestic and foreign investments have led to the transition of urban areas. As the Indian organised retail is mainly concentrated in the urban areas, its growth (urban areas) is imperative for the organised retail in the country. Notably, the urban areas are Indias growth centres and they are growing rapidly over the last couple of years as compared to the world average as well countries like Brazil, the US and UK among others. For instance, during 1995-2000, annual urban growth in India was 2.35% as compared to the world average of 2.07%. Furtherance, the annual urban growth in India would touch 2.6% during 2020-25, while globally it would fall consistently to reach 1.6%, China 1.36% from 3.1% during 1995-2000, followed by Brazil to 0.82%9. Though, percentage of urban population to total population in India (29%) is comparatively quite low against the world average (48.6%), as well as countries such as Brazil (84%), China (40%), the US (81%) and Russia (73%), it is however noticeable that total urban population in India was far more than the total population of the entire US in 2005 and by 2025, it is expected that Indias total urban population would constitute around 6.7% of the total world population. This would undeniably emerge as the Indias largest market for organised retail, and therefore the challenge for the retail players to leverage the full potential of flourishing urban areas. Furthermore, due to the rapid infrastructure development in major tier I, II and III cities, many rural inhabitants are attracted to cities, which increase the urban per capita income and in turn offers unbound opportunities for the organised retail segment. Increased globalisation has also played a big role in the development of urban areas.

INTERNET DRIVES AWARENESS AND ONLINE PURCHASES


There has been a substantial increase in the number of Indians who use the Internet and a concomitant increase in the number of online purchases. Indians have started using the
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Internet not only for increasing awareness but also to shop online, which has opened a whole new channel of retailing in the Indian retail scenario. Online retailing offers consumers the convenience of ordering merchandise to their doorstep. Recently, Future Group, which owns Pantaloon, has initiated a measure to capitalise on the online opportunity through futurebazaar.com. A similar venture flipkart.com is also proving the new channel to be highly viable, especially since it eliminates the biggest cost of the physical store.

EASY CREDIT AVAILABILITY A BOON FOR ORGANISED RETAIL


The higher penetration of credit cards in India has also boosted the growth of the organised retail sector; in fact, the young populations increasing fancy for plastic money has further fuelled their purchasing power. Even though the organised retail sector is at a nascent stage (constituted 5.9% of the total retail industry in 2007), it is growing at a rapid pace. Moreover, the spurt in issuance of credit cards and loans by both Indian as well as foreign banks has further boosted the segments growth. According to the RBI, as on FY09, the total number of outstanding credit and debit cards in India was 24.7 million and 137.4 million respectively.

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RETAIL INVESTMENT
Investments in the retail sector have improved since FDI has been allowed in single-brand and cash-and-carry formats. According to the Technopak estimates, investments in the organised retail will touch US$ 35 billion in the next five years or so. Investments allow organised players in retail to expand at a very high rate. All key retailers in India have expansion plans over the next 3-4 years; for instance, Pantaloon has an ambitious expansion plan to take its retail space up to 30 million square feet by 2011. Likewise, Vishal Retail is expected to take its total store count to 500 with an estimated retail space of around 10 million square feet by 2011.

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