|
   
|
COVER STORY Marketing to the Superich
By Adite Chatterjee
They're gold-mines for your sales. They're also mine-fields for your marketing strategies. They're the country's richest section of consumers. They're also the country's poorest conformists to expectations. They're the tiniest customer segment of India. They're the biggest spenders of India. They're the Superich: the target of your most expensive products and services. The unpredictable, undefinable, unslottable group of customers who have brought many a super-premium brand to its knees with their utter disdain. The corpses of the evidence are scattered all over India's marketing landscape. Targeted by super-premium marketers with the assumption that the cash at their disposal makes them the perfect consumer of top-end products, just why did the Superich reject these--and many other similar--offerings despite being eminently capable of affording them? The marketers didn't know who their customer really is. For starters, marketers to the Superich grossly overestimated the size of their target audience. Confident that there was a large body of consumers waiting to spend its millions on everything--from large-screen televisions to skiing holidays, from Scotch whisky to designer diamonds, they unleashed a range of products assuming a market size that just did not exist. Secondly, they ignored the individual preferences and tastes of the members of the Superich, extrapolating from their common level of incomes a mistaken notion of commonality of consuming patterns. And third, they ignored the relationship of the Superich to the other sections of consumers in the country. For, the Superich are not who you think they are. Just who, then, are they? Holding the key to the answer is I. Natarajan, 58, chief economist, National Council for Applied Economic Research (NCAER), the architect of a pathbreaking study definitively identifying and describing India's top-bracket consumer. A.k.a., the Superich. Following up on its trend-setting 1996 study of Indian consumers, The Consuming Classes (See Mapping The Marketplace, BT, February 7, 1996), the NCAER has now homed in on the country's most affluent consumers in its new Very Rich Whitebook. According to the NCAER's normal classification, consumers in the country can be divided into five broad genres: the Destitutes, the Aspirants, the Climbers, the Consuming Class, and the Very Rich. For the first time, details of the topmost segment are available to marketers targeting this segment. In the NCAER's book, the topmost section can be further classified under four sub-segments: households earning between Rs 5 lakh and Rs 10 lakh a year; those with incomes between Rs 10 lakh and Rs 20 lakh a year; those earning between Rs 20 lakh and Rs 50 lakh annually; and those taking in more than Rs 50 lakh. And it is this last slice, the very tip of the pyramid, where the country's most affluent customers--the Superich--are perched. Says Natarajan: "This study reveals the level of income at which people start buying super-premium brands." The crucial facts about India's Superich that marketers now know for the first time: They're small. Forget the estimates of half-a-million consumers who can afford top-of-the-priceline brands, based on which many a premium product debuted in the country. According to the NCAER Whitebook, the Superich constitute no more than 6,500 households. Or, about 39,000 individuals. THEY'RE RICH. There are no doubts about their buying power. With average annual household incomes of Rs 50 lakh and above--and, don't forget, incomes at these levels tend to be understated--the Superich can afford to purchase every super-premium product targeted at them. THEY'RE GROWING. Smaller they may be than the wishful thinking masquerading as market research had suggested, but the ranks of the Superich are being fattened steadily. In 1993-94, for instance, the NCAER estimated their size at just 1,500 households. That figure has risen more than fourfold in three years. THEY'RE POLARISED. The Superich are concentrated in urban India, with just 24 cities accounting for 4,994--or, 77 per cent--of their numbers. Mumbai and Delhi alone account for 3,432--53 per cent--of the households, while the top 10 cities are home to 4,728--or 73 per cent--of the country's Superich consumers. Given the numerical strengths, geographical distribution, earning characteristics, and spending potential of the Superich, just how can marketers leverage this information to win the custom of their target audience? Judging from the spate of failures, do they even represent a meaningful market segment? After all, there is a school of thought which believes that even the Superich, their spending power, are really value-for-money shoppers who will not part with a premium so long as a cheaper product is available. Says Asit Mehra, 38, director (strategic planning), Ammirati Puris Lintas: "There's absolutely no doubt in my mind that there's very little opportunity for super-premium brands in India. A 1997 P: Snap study conducted by Pathfinders, with a 7,000-and-odd consumer base, indicates an agreement of barely 2.70 per cent on a high price-high value plank." Actually, it was a misreading of the real value equations that drive the Superich which caused the catastrophes. As Natarajan points out, the segment is small, but real. Adds Kamini Banga, 43, CEO, Dimensions Consultancy & Qualitative Research: "It would be premature to dismiss the Superich segment as a fiction of the premium marketer's imagination." Agrees R.K. Caprihan, 52, director (marketing) of the Rs 753.81-crore LML argues: "The super-premium segment is small. Getting volumes with a presence only in this segment will be tough. But it cannot be ignored, particularly since it can be a good entry point into a market." Just where, then, have premium marketers gone wrong? "One problem," says Jagdeep Kapoor, 37, CEO, Samsika Marketing Consultants, "is that, in their quest for niches, marketers seem to have forgotten to check out whether there is a market in the niche." In other words, they assumed facts about the Superich that appeared to knit them into a targetable segment, ignoring the realities that actually drive consumer behaviour among the Superich. After researching the classic failures in addressing this segment, BT presents Five Super Strategies For Selling To The Superich: Segment Your Customers Socio-Geographically Large consumer segments allow averages and stereotypes to be identified and targeted. The logic? There are, inevitably, enough individuals or households within the broad average band to allow a specific marketing strategy to be meaningful. Among the Superich, however, the numbers are too small to permit standardised averages across different geographical markets. Thus, the Superich in Mumbai, whose money may have been earned through export-driven enterprises, and whose lifestyles are closely aligned to those of the Western countries, are vastly different from their counterparts in Delhi. There, the riches may have come from small-scale manufacturing businesses, and the consumption habits oriented more towards asset purchase than towards affluent lifestyles. Says Banga: "It would be more appropriate today to take each such segment separately, and work out different multipliers which would include income, age, and geographical factors." Moreover, the first-generation Superich varies considerably from the second-generation Superich. The former is more likely to be purchasing his, or her, first super-premium product or service across many different categories. The latter, by contrast, may be a repeat user of a smaller number of super-premium items. That destroys the very concept of one Superich niche as marketers understand it. Observes Ammirati Puris Lintas' Mehra: "Globally, a niche marketing gameplan would imply a small number of customers with regular buying habits and high loyalty. In India, this has evidently become a case of a handful of customers with occasional buying habits and considerable experimentation." CASE STUDY. When Club Med entered the country two years ago, it was with its eye squarely set on the Superich. Unfortunately, it assumed far greater similarities between every member of this segment than is the case, ignoring the socio-geographic--and, by extension, the psychographic--differences, and offered a standardised product in every city. Its erroneous assumption: every member of the Superich wanted to travel to the same destination--South East Asia--and would be happy to pay as much as the budget traveller in the US does. What Club Med did not realise was that the Superich consumer in Mumbai, for instance, is well-travelled, has a global worldview, and resembles his counterpart in London or New York more than the Superich in, say, Calcutta. Thus, he travels in luxury, not on a budget. And he would prefer to holiday in the cultured climes of Europe, not on the vacation beaches of Asia. These miscalculations meant that the effective target audience for each of Club Med's products was, actually, far smaller than the dimensions of the Superich would suggest. It picked up a bare 1,000 bookings in its first year, and opted out of the Indian market after the number rose to only 1,700--despite a repositioning targeting other consumer classes--in the second. THE LESSON. The only factor common to different members of the Superich is their wealth. Beyond that, their consuming habits and profiles vary considerably from one another.
Redefining
the Rich / The Nearich / The Clearich |
||||||||||||||||||||||||||||||
|
 |
 |
Why have India's super-affluent
customers rejected so many super-premium brands? BT presents a myth-busting study by the
NCAER, identifying the real figures and the facts about the SupeRich, and draws up the
super-laws of marketing to India's richest customer class. 