OCTOBER 12, 2003
 Cover Story
 Personal Finance
 Back of the Book

Kashmir On The Map
After a succession of false starts, this might actually be something worth taking note of. The World Travel and Tourism Council has joined hands with the Jammu & Kashmir government to promote the state as an international tourist destination for just about anybody who appreciates natural beauty. The plan.

Cancun Round-Up
The drumbeats on the way to Mexico were low-key, but audible enough. Now that the World Trade Organisation is back in pow-wow mode and India has attained some clarity on what the country's trade agenda is, it's time to do a quick round-up of the Cancun meet.

More Net Specials
Business Today,  September 28, 2003
After The Rains, The Sunshine
Great monsoons, booming stockmarkets and no major downers have pushed the BT-Indica Research Index of Consumer Sentiment (BT-IRICS) to a 12-month high. But unadventurous marketers may just spoil the party.

It's been just a little over three months since the last BT-IRICS survey, but as far as Consumer India is concerned, it's already a different era. Back in April 2003, the index-which measures consumer confidence across 10 major cities-stood at a not-so-happy 133 (base 100). Pan to September, the index has shot up 25 points to 158, a 12-month high. On virtually every parameter of consumer sentiment-be it current economic situation or future expectations-optimism scores are zooming north. But what should really warm the cockles of the marketer's heart is that for the first time in the past 12 months, the consumer's buying intent has moved up along with the sentiment. What does it mean?

That after months of expressing confidence over her tomorrow, the consumer is finally willing to open her purse strings.

The consumer's quick shift into the feel-good zone has been helped along by several factors. Top of the list: a generous monsoon, which has perked up sentiment across the economy, including the stockmarket. And so much so that even the twin blasts in Mumbai late August could not dampen Dalal Street's smart rally. "If the market for consumer goods doesn't pick up this year, then when will it?" asks with mock consternation Atul Sobti, Senior Vice President (Sales & Marketing), Hero Honda. Indeed, that is what the consumer seems to be saying. "Dealers are reporting a surge in walk-in consumer enquiry, although sales for July-August are down because of rains and shraadhs. It's the lull before the storm," reckons R. Ravi, Head of sales at Godrej Appliances.

Yet, if you thought marketers of everything from consumer durables to apparel were firing on all cylinders, you'd be mistaken. Although the festive season is round the corner, there's no surge in advertising spends of most big companies. Why? "For businesses, the current buoyancy is clearly demand led, not cost related," says Santosh Desai, President, McCann Erickson, meaning that since consumers are already in the mood to buy, they feel no necessity to go any extra mile to woo them.

So expect all the regular promotions, much like the previous years', but no 'marketing spoilers' like the Akai exchange-mania for CTVs that forever changed the industry equation. On a larger level, the upturn in consumer sentiment may not translate into more jobs in the economy (that's notwithstanding the white collar jobs in BPO, telecom, retail and it services). In fact, the poll respondents think as much-a bare 11 per cent expect more jobs over the next 12 months. That's a drop of 1 percentage point. A couple of things could be behind this "jobless growth". One, no big job-creating capital investment is happening. Two, companies are focusing on cost control, hence seeking more productivity on the same headcount. "Earlier companies would start hiring immediately as soon as demand picked up, but not any longer," says Gurdeep Hora, Managing Director of placement firm Synergy Consultants.

There's a silver lining, though. Most industries are through with downsizing and even if they haven't been hiring anew, they've been generous on increments. "People's expectations from the economy have improved. Now they're willing to buy a house on loan," says an upbeat Niranjan Hiranandani, Managing Director, Hiranandani Construction. Ultimately, the momentum of middle-class aspirations coupled with an upbeat consumer sentiment could result in increased sales across most consumer categories. Only that marketers would have played very little role in the boom.

Go, Marketers
Consumers are raring to spend. Marketers should cash in on the sentiment with innovative plans, says B. Narayanaswamy.

Total sample 1,187

10 cities: Delhi (121), Mumbai (119), Chennai (120), Bangalore (126), Hyderabad (118), Kolkata (120), Ahmedabad (120), Lucknow (95), Kochi (126) and Nagpur (122)

Purely random sampling process; Equal representation of male and female; SEC A 573 respondents and SEC B 614 respondents

Face-to-face interviews using a structured questionnaire

The questionnaire covered three core areas: current assessment of economic situation, expectation about the future economic situation and overall consumption mood

Besides key variables for indexing, the survey also measured explanatory measures

All data was weighted; each variable first indexed for Nett optimism

Data then indexed as proportion of total score possible

This index then weighted to arrive at All India Index of Consumer Confidence

The Indica Research Index in September 2003 stands at 158. It is a clear increase from where it was in April 2003, when the indexed figure stood at 133. It had stayed pretty much unchanged from January.

Moreover the sentiment on all the constituent elements has improved. This is so particularly on the expectations on the business conditions, and on the inflation conditions over the next year. Consumers are in a spending mood too in the oncoming festival season.

Corporate results that have been announced in the last several weeks, the pay hikes in many of the sectors, the 'feel-good' that a buoyant stockmarket and abundant monsoons create in an average sec A or B householder, expectations on the likely festival-linked bonus payouts, availability of finance...are all clearly aligning themselves into creating this mood on the future and the willingness to spend.

The data on the indicators would indeed suggest that the proportion of those who see the future outlook as 'better' has improved; and of those who see the future outlook as 'worse' has also dropped. So, the shifts are adding to each other as well-unlike the last time round, when the shifts were cancelling each other out. (The index is derived from the patterns at both ends of the scale).

We note here that:

  • It comes at a time of the year when consumers do spend and marketers do have control on what they wish to do-unlike in, say, January where an opportunity to energise consumption depended on the contours of the budget, that too within a larger mood of saving rather than spending.
  • It comes at a time when the stockmarket has risen sharply. One can, therefore, reasonably expect just the right amount of discretionary monies jangling in the wallet of the retail investor-with a wide range of options to spend it on.
  • It comes at a time when the investment outlook is looking good too, judging from capacity utilisation metrics in the larger manufacturing sector, and the status on credit availability. So the long-range outlook is also looking good, besides the portents on new job creations.

So it's much like the moment when the 'ignition sequence' starts in the movie Apollo 11, leading to the 'lift off'. So marketers would want to share the optimism, and consider providing a sharp impetus that gets all the engines running, in the sense of a repertoire of consumption, purchase and replacement behaviours. Whether it's new products or new schemes, whether new price points or new retailing methods- it's time to be innovative, and indeed even adventurous.

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