Special issue with the Sunday Magazine
From the publishers of THE HINDU

CONSUMER : October 31, 1999

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Enticing the consumer

Pradeep Mehta

The author is with the Consumer Unity of Trust Society (CUTS), Jaipur.

A plethora of advertisements every day constantly bombards the consumer with a million enticing messages. From angled toothbrushes to credit cards or electric roti-makers to the 650cc BMW motorbike, the list of desirables is endless.

India ushered in the era of liberalisation in 1991-92 entailing a free market philosophy. This resulted in the unshackling of controls and removal of industrial restraints. The liberalisation measures and the process of globalisation made the entry of new enterprises (both foreign and domestic) easy. Many foreign enterprises entered the country, some for the first time. Most of these began to market a variety of goods and services, some of which were completely new to the Indian. Others offered attractive alternatives to whatever traditional substitutes existed.

During this time there were certain complementary factors operating that made the marketing of products easy. One was the unprecedented leap in communication facilities. Many new television channels were launched. This trend was substantiated by the introduction of Internet. Currently, the World Wide Web is being increasingly used in both homes and offices and has enabled business to reach out both intensively and extensively.

Another was the continuous improvement, cosmetic or otherwise, on existing products that kept the choice set of the consumer large.

Furthermore, the existence of 25 crores strong middle class consumers was a sufficient motive to lure the big business. In the past, there were no appropriate channels for the consumers to acquire the foreign goodies with ease. Thus, there existed a huge starved market that made it easy for the multinationals to win them over with little effort. In this short span of six or seven years they have emerged as the dominant players in the market place.

Amit

The marketing policy of business now is based on two strategic aims. One, to satisfy existing needs by supplying competing but differentiated products. The other and the more important one is to create the need for new goods and services. Often the need is created for those goods and services for which it is never felt. This deeply influences the consumption patterns and takes its toll on both ecological sustainability and economic capacity of consumers.

In the increasingly competitive marketplace, both foreign and domestic business have scaled new heights in advertising and publicity. In order to achieve their strategic aims business often resorts to country-specific marketing and promotional strategies. These include gimmicks like "buy now pay later", "buy two get one free" and "low-interest finance schemes". This marketing juggernaut is drawing Indians into a mad rush for consumer goods and services.

Given the existence of a large number of middle class consumers, the multinational companies try to change their mind set so that they could be tuned to the latest products. As the middle class is tradition bound in their choice of things, the multinationals and their ad agencies have evolved a special approach. This new trick to lure the consumers is the offering of freebies and hefty discounts.

The list is endless: buy a new refrigerator for between Rs. 27,900 and Rs. 70,000 and you get a free automatic camera worth Rs. 3,500. Spend Rs. 22,000 on a new colour television and walk out with another 14-inch television free.

One explanation for this spurt in offers is that these are part of short-term efforts by companies to prop up sales in the face of an economic slowdown. Further, as the market becomes increasingly competitive and the differences between brands become hazy, free gifts and exchange offers are seen as a convenient way of pulling in consumers. The freebies offered when one buys a product from an established manufacturer also builds brand equity for the free-riding product. Thus acting as a first step to get the consumer hooked to goods that were not intended to be purchased. This, in its turn, acts as a first step in the spiral of consumerism.

Children in this country as in other places are responsible for a bulk of household purchasing decisions. Many advertisers and their clients are targeting this segment. The strategy is to get the children hooked to a product so that the companies can count on a steadily increasing brand-loyal class of consumers.

Advertisers know that the concern for the well being of their child is one of the prime concerns of most parents. This has been used to promote products ranging from tyres to water purification systems. For this very reason, bank deposit ads appeal to you to save for the future of your children.

There are many case studies, which indicate how advertising has changed the consumption of some traditional items used by Indians.

Shashi Shetye

For over 50 per cent of India's 90 plus crore population, rice is the staple diet. Rice is usually just boiled in aluminium or stainless steel vessels or in pressure cookers and is rarely fried. In the Nineties, a Japanese electric rice cooker model, National, was introduced in the country backed by aggressive advertising promoting an easy lifestyle.

Now large numbers of urban households are switching over to the Japanese way of cooking rice in electric cookers. In 1993, at least 1,25,000 electric cookers were sold. Each cost about Rs. 2,500 or about one-fourth of the average income on an urban, middle class household. It has increased to 2,00,000 units in 1994. One marketing agency has predicted that its sales will increase to 70-80 lakh units by the year 2000.

It is just another item that will add to the ever-increasing demand for electricity and the associated problems of environmental pollution.

A new fad has come to India in the form of bottled water. Increasingly consumers are relying on buying bottled water to protect themselves from water-borne diseases, which are increasing rapidly due to urbanisation and resource constraints. Whether they get safe water or not is a moot point. However, comparative tests by two consumer organisations showed most brands do not come up to the required standard. The dozen manufacturers who dominate the scene have a total turnover of nearly Rs. 3,400 crores.

In sum as more and more big companies come in, the rivalry only leads to more aggressive marketing thus increasing the market. This is also aided by the increasing consumer population. McKinsey and Co. reports that the overall market for value-added goods will treble from Rs. 92,000 crores to Rs. 2,68,000 crores in 2005.

Getting coaxed and cajoled by advertisements, a section of the people of this country are incurring economic and environmental debts, which have to be repaid one day or the other by later generations.

Furthermore, on account of the advertisement driven conspicuous consumption (among other reasons) the trend of household savings is on the downslide, which in turn is bound to have telling effects on the national economy.In addition, the scarce resources of the nation because of market-driven demand are being used in the production of consumer goods. This in itself is unsustainable as it is at the cost of the production of capital goods.

Therefore for countries to develop sustainably, it is necessary to have a holistic approach to the problem; to begin with the need to curb aggressive advertising. Indeed, by exercising the right to choice-wisely.