CONSUMERISM IN INDIA AND ITS

IMPLICATIONS

CONSUMERISM AND ITS INDIAN CONTEXT

Consumerism is a social and economic order that encourages the
purchase of goods and services in ever-greater amounts. It is the
belief that personal well-being and happiness depends to a very
large extent on the level of personal consumption, particularly on
the purchase of material goods. A consumerist society is one in
which people devote a great deal of time, energy, resources and
thought to consuming.
Mahatma Gandhi, the father of nation, very rightly held that A
Consumer is the most important visitor on our premises. He is not
dependent on us we are on him. He is not an interruption to our
work; he is the purpose of it. We are not doing a favor to a
consumer by giving him an opportunity. He is doing us a favor by
giving an opportunity to serve him.
The most challenging and exciting time to live in, is on the cusp of
change. And that is where India is today. India is on the cusp of
change wherein a huge, multicultural India is transforming from a
socialist economy to a consumption-led creative economy. The
scope and depth of change that is taking place across India, is
unparalleled in its history. This change provides both a

humongous challenge and a gigantic opportunity for marketers

and retailers.
Changing demographic profiles, increasing income levels,
urbanization, technology, globalization and a free flow of ideas
from within and outside the country is bringing about a dramatic
shift in consumer tastes and preferences. As retailers, India not
only has to acknowledge this change but also stay a step ahead
of the evolution curve of Indian consumers.
Indian consumers, unlike the rest of people in the world, demand
ideas and solutions that are uniquely Indian.

The diversity and heterogeneity of our nation doesnt allow us the

luxury of developing a standardized solution.
At the same time, as Indian retailers, we are in a uniquely
advantageous position to understand and react proactively to the
needs and aspirations of Indian consumers.
The economic, social and cultural diversity of Indian consumers
forces marketers and retailers to view this mass of consumers not
as one single market but as a mass of niches. The language
people speak, the religion they follow, the food they consume, the
fabric they wear and the festivals India celebrate changes every
few hundred kilometers.

Logic and emotion, individual and social, poverty and affluence,

capitalism and socialism, life and lifestyle, value and indulgence,
and the past and the future simultaneously coexist in India. And
all these paradoxes converge to make India what it is.
At the forefront of private consumption-led growth are retailers
who cater to the consumption needs of the consumer. Over the
next couple of years retailers will need to play a more inclusive
and holistic role in building brands, shaping desires, creating
aspirations and catalyzing further consumption. We are at an
inflection point wherein the first phase of retailing is coming to a
close.
Contrary to popular perception, the Indian consumer markets
were significantly unbranded, especially in categories like food,
apparel, home care and home products. Brands are a product of
imagination. A brand is an idea and if translated properly, it can
fire a customers imagination. Therefore each brand needs to be
developed on a fresh canvas.
Yet, most of the new brands that have emerged in the last fifteen
years seem to have been borrowed from the international market
and often lack a real connection with India. There are very few
brands that have been launched in the last two decades that were
conceived in India.

Therefore, there lies a significant opportunity to conceive and

create new brands that cater to aspirations of the new generation
of Indian consumers.
Being present closer to consumers, retailers have the inherent
advantage in building or supporting brands. Increasingly in many
categories, retailers will have the option to directly tie-up with
manufacturers and develop their own brands.
In certain categories like snacks, staples, tea and dairy products,
we have been able to develop a strong portfolio of brands by
directly tying up with small manufacturers. At the same time, a
large retail chain network allows brand owners to collaborate with
retailers.
Over the next couple of years, one will notice an increasing
collaboration between retailers and consumer goods companies in
sharing consumer data and insights, exclusive packaging and
product formulations for specific retail chains and joint promotion
and marketing of certain brands.
While brands that are able to establish an emotional connect with
Indian consumers will be able to boost consumption, what will
catalyze it further is the availability of customized credit products
provided by retailers within their stores.
Till now, credit products have largely been made for very large
sum of purchases like automobiles and home and cater to a very
small segment of the population.

Customer aspirations are increasing faster than their income and

in order to capture the full consumption potential, we will need to
build credit products customized for sections of the society yet
untouched by existing credit products.
As retailers, we are now in a far better position to understand and
cater to customized credit needs of our customers. In fact, we can
draw some lessons from Latin American, especially Brazilian
models wherein the largest retailers have built a substantial
chunk of their business through integrating credit products in
every product category.

AFFECT OF CONSUMERISM ON CONSUMER

SOCIETY AND ECONOMY
Consumerism is becoming the hallmark of most world economies.
In the West, it is a common phenomenon, but now even
developing countries in the world are resorting to it.
Consumerism refers to the consumption of goods at a higher
rate. The economy is judged by the production and selling of
goods. The more goods produced and consumed by society the
higher the growth rate of the economy. The prosperity of a nation

is judged by the per capita income of individuals residing in it. The

economy is considered to be doing well if the purchasing power
of the people is high.
In consumer society, people replace their goods with newer ones.
They purchase goods, use them and throw them away. New goods
when they become old are replaced by newer ones. The question
of repair does not arise. People have money to purchase goods in
plenty. In case, they do not do so as it leads to recession and
depression and also results in unemployment.
Consumerism is known to have positive and adverse effects on
the consumer society and economy.
The primary positive effects of consumerism are:
Increase in Industrial production.
A higher growth rate of the economy in terms of GDP, GNP
and Per Capita Income.
More goods and services available.
More advertising and knowledge base since goods
manufactured have to be sold.
Increased production will result in more employment
opportunities.

 A variety of goods and services to choose from

example : Soaps. There are multiple brands in India in the
soap market.
Higher Standard of Living.
More comfort and luxury enjoyed by the consumer.
The negative effects of consumerism are:
The focus of the consumer shifts from what is necessary to
what satiates the lust.
Consumers do not value the true utility of the product, rather
go for the products that are advertised with precision w.r.t
consumer mindset.
Consumers follow fashions and trend even though it serves
marginal utility to them.
Consumers start spending money on luxuries to keep up with
their lifestyle and start neglecting the basic requirements.
Material wealth is the deciding factor about whether a
society is highly developed or not. Our ethical and spiritual
values are left unimportant under the circumstances
Consumerism has also resulted in ecological imbalances. The
natural habitat is being destroyed to create more goods and

build more buildings affecting the weather. Global warming

will eventually result in health problems. Industrial pollution
is affecting people rather than focusing on simplicity.

CHANGING CONSUMERISM PATTERN OF INDIA

AFTER INDEPENDENCE

Indian consumerism has seen phases of changes since

independence. The three phases are the post independence era,
pre liberalization era and the post liberalization era.

A.

THE FIRST PHASE (POST

INDEPENDENCE 1969)
The first phase of changing consumerism came with attaining
independence itself in 1947. During those years Indian
consumerism was undergoing the swadeshi movement initiated
by Mahatma Gandhi. The swadeshi movement focused on being
self-sufficient and sustaining our economy on locally made
products. Mahatma Gandhi had the vision of all small villages
earning their living through cotton spinning and farming.
In the era just succeeding Independence it was an appropriate
measure as India as an economy had just found her feet and it
was necessary for the economy to first stabilize and then grow.
While India was building its foundation after 1947,
consumerism did not have much of an effect on the
economy and society as the consumers were looking to
make their ends meet.

The Per Capita income and standard of living had not attained a
decent standard to allow consumerism to make its foothold in the
Indian economy.
A handful of population had an income/salary which could support
a lifestyle allowing consumers to buy over and above the basic
requirements.
The cost of goods was significantly low compared to the 21 st
century prices as the cost on advertisements was significantly
low. The rise of advertising industry came much later both in form
of print advertisement and media advertisement.

B.

THE SECOND PHASE ( 1969 1991 PRE

LIBERALISATION)
The second phase of consumerism started to beat a hasty
retreat to the growing woes faced by a normal, average
consumer of the society.
By the late 60s and early 70s, India had managed to stabilize
the economy to an extent that it could now stage its focus on
development.

During that era, India was in the grip of license raj, a legacy left
by the mighty British Empire.
However, as the economy grew, consumerism started finding
its gradual marks in the society. Even though people did not
realize that consumerism had slowly entered the productionconsumption life cycle, consumerism had now finally made a
mark on the Indian consumer society.
Consumerism started its journey with a need to raise its voice
against the quality of goods in 1969, first by housewives. Then
it took shape of a revolution at later stage and finally,
parliament passed an act for the welfare of consumers in 1986.
The Consumer Protection Act 1986 had further undergone
many challenges, criticism and even questions on its legal
validity when it was put forth before the Supreme Court of
India. After the case heard accusations, challenges and
constraints from the big business houses, the apex court finally
declared this welfare act very much valid, legal and within the
framework of our constitution.
Since 1986, there have been three major amendments to this
act and also since then the scenario has seen an overhauling
change due to the liberalization and subsequent ending of the
license raj.

However, with the rampant and rising consumerism the

negative affects which loom over such a society finally came
into play.
India, like any other consumer society started buying goods
based on lust rather than need.
This era also saw more and more brands and products being
introduced in the market which gave multiple options to the
consumers. Henceforth, the consumer started buying goods in
plenty. As a result, the consumption started to rise,
subsequently giving rise to the demand.
Many joint families started breaking up to form nuclear
families. With the increase in number of families, the number of
houses being bought also started to rise.
The size of our houses started to expand. From a 1 BHK flat, the
consumers started aspiring for an individual room for every
member of the family, a separate drawing room, dining room,
kids playing room, media room etc.
With the coming uppance of the brand culture, people started
purchasing branded products which were slowly becoming a
fashion in the consumer society. The consumption of branded
products started becoming a matter of prestige and status
symbol.

Even though the branded products were overpriced vis--vis

the local products, consumers were enticed by these brands
and wanted to be in vogue with the latest trends.
However, the foreign players did not have a significant growth
till this era because of the fortification set by the government
by the means of license raj and various other policies and acts.
These policies made it very difficult for the foreign players to
set a strong foothold in the Indian Markets.
Therefore, even though the branded products were being
heavily sold, the local products still survived in the Indian
Markets and those too making decent profits.
However, a shift in the paradigm of consumerism had already
taken place which ultimately went through a major overhaul
post the liberalization era i.e. post 1991.

C.

THE THIRD PHASE ( POST

LIBERALISATION 1991-Till Date)

The socialist policy of the government post independence was
to make sure that India as an economy could solidify its
foundation before it became ready for globalization.
India wanted to become self-sufficient so that it did not become
an economic colony once again as happened in the past with
East India Company.
Though the rationale behind this belief was quite practical, the
implementation was not done with the necessary force.
The policies of the government had many flaws in itself which
ultimately led to many hurdles in the governance and
sustenance of the Indian Economy.
The Indian Economy was on a brink of collapse. At that time,
the then Finance Minister, Dr. Manmohan Singh undertook a
series of reforms for the Indian Economy to re-stabilize it.
The three main focuses of the reforms were Liberalization,
Privatization and Globalization.
As a result of the reforms the Indian Economy
underwent a sea change, thereby affecting
consumerism in almost every possible way.

With the ending of license raj and Indias urgency of

maintaining a depleting Foreign Exchange levels the economic
governance system was thoroughly liberalized. This move
allowed the foreign players, who had a huge might in various
corners of the world, to establish a foothold in the Indian
Markets.
During the years preceding the liberalization, Indian
Consumer had already become an affluent consumer. He
had already tasted the lust that bites the consumer
having access to surplus funds ready for disposal.
Now, the Indian consumer had a good knowledge base about
the brands and multiple options available, courtesy
advertisements, and also had surplus money in his hands for
extravagant consumption.
These years has also seen a major rise in the Standard of Living
Index and Per Capita Income of the Indian Consumer.
Now, luxury is slowly becoming a necessity. Consumers
purchase products in abundance i.e. purchasing more than
what is required. The obvious result is wastage and pressure on
national resources.
Also, this creates scarcity for less affluent and poor consumers
who usually fight for survival.
Now-a-days, with the abundance of products and a wide variety
of options to choose from, advertising has become a major

deciding factor in the minds of the consumer before buying a

product.
With the right advertising, the product can be sold to the
consumer, without consumer realizing its true utility.
Now, the consumerism is focused more on creating the utility in
the minds of consumer even though it does not actually serve
utility to him. A fine example of this hypothesis is the case of
soft drinks. Soft Drinks have been repeatedly pegged at being
unhealthy but still it has witnessed a burgeoning demand. The
manufacturers of the soft drinks have successfully been able to
change the consumerism in their favor and thereby swinging
the markets in their court.
As a fast-growing, upwardly mobile middle-class comes to
dominate urban India, changing attitudes and behavior towards
consumption and savings, particularly among the youth, are
affecting a shift from need-based spending to discretionary
spending.

THE CHANGING FACE OF INDIAN MARKET AND

THE FDI ERA
India's economic growth has accelerated significantly over the
past two decades and so, too, has the spending power of its
citizens. Though the raging fire of global economic slowdown has
engulfed almost all the nations, India, a country of 28 states, with
over one billion people, has somewhat escaped the scare. India is
a big country that consists of various segments of consumers,
based on income, class and status.
Real average household disposable income has roughly doubled
since 1985. With rising incomes, house- hold consumption has
soared and a new Indian middle class has emerged.
The seller market is slowing giving way to the buyer's market.
With economic liberalization initiated in 1991, new products have
made way into the Indian markets, thereby increasing the product
varieties.
Import licensing restrictions have been abolished, and as a result
an assortment of consumer goods has been flooding Indian
markets. Indian consumers have always longed for foreign goods
and with open-market policies being practiced by the
government, their longings has apparently reached a fruitful end.

It is widely believed that the Indian market will fuel the growth of
multinational companies in the coming years. While most leading
companies are cutting costs in the US and Europe, they see India
as a strategic market, which can fuel their growth.
Two decades earlier, there was not a single Mall in India, but now
we can see the consumerism changing face in India. Now every
major cities are flooded with malls especially the metropolitans.

Companies like Carrefour, Wal-Mart already have a greedy

eye on the Indian Markets. These are the organizations
pushing for FDI in retail sector. Organisations like WalMart are known to have changing the consumerism
pattern of the society to such an extent that the changes
then become irreversible.
Another interesting fact about the supermarket culture with
respect to consumerism is that they increase the shelf base of the
products to such an extent that the consumer ends up buying
more than the planned budget.
Example. In a supermarket things like chocolates, biscuits and
other ready to eat food items are all displayed on the shelf in
numerous varieties. These items being tempting quickly catch the
eye of the consumer and the consumer ends up buying more than
what he had planned.

The supermarkets are known to make huge profits simply on the

impulse of the consumer.

CONCLUSION
Indians have come a long way from being known as the shrewdest customers
in the world , value factor' very much intertwined with their lives, so much
so that even luxury brands have to devise unique pricing strategies to inspire
the great Indian consumers.
They are family people , giving more importance to nurture and care than
ambition
Winning in the Indian market is about being able to design the right business
machine which can profitably deliver adequate quality at affordable prices to
serve the mass market which is a large base of consumers with modest
incomes but sophisticated needs and demands". They must also give due
recognition to the fact that consumer India is a "federation of different
cultures that just happen to be sharing the same geography."
Indian spending patterns has also evolved, with basic necessities such as
food and apparel declining in relative importance, and categories such as
communications and health care growing rapidly.
But in order for India to achieve these positive results, the country must
continue to reform and modernize its economy, as well as address significant
shortfalls in its infrastructure and education system.

The upcoming changes in the Indian consumer market will create major
opportunities and challenges for Indian and multinational businesses alike.
For example, companies will need to attract and educate large numbers of
new consumers, establish and retain brand loyalties as tastes change with
rising incomes, and introduce high-value products and services at sufficiently
low prices to be accessible to the emerging middle class.
The quadrupling of the Indian market will present companies competing in
India with a critical discontinuity to navigatewho the leaders of this
changed market will be has yet to be decided.
Growth in Indian incomes and consumption will also deliver extensive
societal benefits, with further declines in poverty and the growth of a large
middle class.

REFERENCES

http://en.wikipedia.org/wiki/Consumerism
verdant.net/society.htm
papers.ssrn.com/sol3/papers.cfm?abstract_id=1877744
www.futuregroup.in Future Thought
www.americanessays.com ... Free Essays Marketing
www.quora.com/Consumerism
www.helium.com ... Philosophy Political Philosophy
http://yami-l.hubpages.com/hub/What-are-the-Pros-and-Cons-of-living-in-aconsumerist-society