300 Million Strong Indian Middle Class
So, what are the problems that the Indian middle class faces?
To answer this question, one should ask another question : How did the Indian middle class come to be?
India has had a tremendous poverty problem, from which a certain class lifted itself out, primarily through education. They then climbed the steps to the lower middle class, then the middle class, the upper middle class, and many are now rising to affluence.
Throughout, the determining factor has been education.
NIIT understood this phenomenon really well, and built a superb technical education franchise by tuning into the middle class’s aspirations.
Today, however, the opportunity for fueling more growth via education still remains, at all levels - from K-12, as well as in colege and graduate education.
In pursuing this, one should squarely keep in mind the NIIT model, and refrain from trying to sell technology to schools. [I recently had lengthy discussions with Atanu Dey, who is researching this topic and harbors desires to do something entrepreneurial.] The Sylvan/Kumon learning center model, for one, would be very successful in India, and tutorial centers are very popular places, helping clear exams such as JEE.
Other obvious areas are the ones the Indian middle class opens its wallet for: Bollywood, cell phones, and consumer staples. Job search and matrimonial classifieds are also popular categories, and are being thoroughly addressed by the Internet investments of recent times.
It would also pay to dissect the behaviors of specific ethnic segments, and their quirks. For example, Bengalis tend to be voracious readers and consumers of culture. An online Bengali literary magazine (like Desh) that is supported by a branded TV channel with cross-marketing of culture and literature could be an interesting opportunity. [Read this article on the Top 10 World Languages; Bengali is spoken by 211 million people.]
Similarly, Telegus, Tamils, Gujaratis, and other groups have their own quirks. Tuning into these quirks will open up other such opportunities. Both Tamil and Telegu have over 60 million speakers each, while Gujarati has about 45 million. [I confess, I don't know these quirks as well as I know the quirks of Bengalis.]
We should continue exploring other ideas from the readers, and in doing so, please feel free to use the forum.
The exciting thing is, the momentum to quickly move from one class to the next (if possible bypassing a stage), is picking up velocity.
There is a huge opportunity in creating additional cashflow streams for the full spectrum of middleclass. The network marketing mushrooms are just scratching the surface.
A mobile phone as a cash exchange device will reduce a lot of friction and unfurl a lot of creativity.
Quirk of Puneites (a Maharashtrian town – so called culture capital), is to be very sarcastic and bitter…
We have a UGC site about it…
http://www.puneripatya.com
Related to ‘Education’ i have observed that there are not many good books being sold for very small kids (like the kind of books being sold by Ficher Price here in US).Small picture books for kids to teach them bengali or any other language. Infact if you will see there is no major brand that holds ‘children books/toys/clothes etc’ in their portfolio in India.
I think there is an opportunity out there for the same.If the cost of the product is not very high then i think it would sell.
Education is indeed one thing on which the middle class does not hold any limits in spending!
As rightly mentioned, in coaching for JEE, a large amount of students go to coaching spending amount equivalent to around 2-3 semesters of the college fee.
Rightly most middle class families have the “poor dad” (character from the book Rich Dad Poor Dad) who profess – Go to college, work hard and don’t buy what you cant afford!
With the Indian middle class, it’s not only the business but also the strategy employed to play with the consumer behavior which determines the success. For instance, the popularity of Big Bazaar is enormous as compared to other players in this field. The store has various promotional offers throughout the year to attract the consumers. Though promotional offers can be seen in almost all department stores these days, they still lack far behind Big Bazaar in terms of popularity.
Kishore Biyani describes at length about his observations on the Indian consumer in his book “It happened in India”, before he started with the first Big Bazaar model. The book is a good read for all entrepreneurs aiming at the vast market provided by the middle class.
A keen observation of the Indian middle class is essential for a viable enterprise. The factors affecting their choices and wallet share are enormous, and are different from region to region. Ever wondered as to why a lot of shopping malls still serve as an ideal window shopping place in most cities; an Indian youth prefers a Levis Signature as compared to Levis Strauss; most business done by fashion lifestyle retail outlets is during their annual sales etc. The reason behind all these being the same -the desire to get good quality at lower prices.
The opportunities to trap with the Indian middle class are huge, but they require an extensive understanding of their purchasing behavior.
Very true. Indian consumers are extremely price-sensitive, much more so than other markets. The only place where they are not as price-sensitive is in purchasing kids’ education and related products/services. Do you agree?
Yes, indeed. The Indian middle class is not price sensitive towards education and related services as it has used and will be using education to improve the earnings of the future generations and to raise their standard of living. Even though majority of middle class travels in small cars and spends modestly, they make sure that their children get to attend the best of schools and colleges. Sad to say though, that the education system in India still requires significant development and needs to reach out to more people (there is a dearth of good primary and secondary education and colleges in most towns and the so called cities).
Students are migrating to a handful of cities (Bombay, Delhi, Pune, Bangalore, Hyderabad among the top), for their education; they are then employed by companies mostly also based in one of these cities. This not only puts a strain on the infrastructural resources of these cities but is resulting in continuous development of the metropolises while a lot of places lack basic infrastructure. I agree that education is not the biggest contributor, but it is still a major factor. Setting up of good educational institutions will encourage companies to set their bases, harbor more job opportunities, more income flow and put the Indian towns also on the track of development. The middle class is expected to rise by 200 million in next two decades, the rise not being centered to a few cities. Infrastructure and opportunities need to be developed in more cities and setting up of good schools and colleges across different places can be seen as an initial step towards a uniform development of India.
At the same time, the educated middle class Indian is shifting from needs to discretionary products and the companies need to be dynamic and adapt themselves to demands, desires and income of the growing Indian middle class which is expected to rise as the fifth largest consumer market in two decades.
You are right, the middle class and all those who live in the middle India are still deprived of easy & simple higher education which will help them to fetch a decent job. If you ask me about the financial – litracy . . .its more worse, I personally feel that there is a huge scope here.