The bottom of the pyramid still remains relevant but the strategy structure may soon take then shape of a diamond. Indians have developed a taste for luxury and sales of premium products ranging from cars to FMCG to flat screen TV’s are clocking strong growth.
Corporations have for long milked the bottom of pyramid (BOP) a strategy conceptualized by the late management guru C K Prahalad to boost sales. While the bottom and the middle ends of the pyramid continue to generate volumes across sectors a quiet revolution is taking shape of the top end of pyramid (TOP) where companies are now eyeing a fortune.
Retail stores toady are stocked with a range of premium hair care skincare and cosmetic brands which are clocking growth along counterparts aimed for the masses This was not the case a decade ago which witnessed an extended run of low unit price sachets which continue to generate trials in the BOP segment even today. The likes of Dove hair care range and the rising number of post shampoo products like conditioners are fuelling the growth in personal care TOP.
A consumer who seldom purchased a mid priced skin care cream is now going in for repeat purchases of high end anti-ageing creams in the market. Large sums are being invested into global brands like Olay, Pond’s and Garnier to grow this market and trigger purchases. This has resulted in higher average consumer spends, which have grown 15% in the premium cosmetics.
In consumer durables to showrooms where earlier salesperson had a lot of convincing to do to sell a standard television set to a family are bigger in size and showcase high end flat TVs and premium range of washing machines and refrigerators . What’s more —consumers e not thinking twice before replacing their old TV’s with flat screen high end ones. According to Samsung India deputy MD flat panel TV volumes are doubling year on year while the split air conditioners (AC) contribution to total AC sales is now hovering between 65-70% compared to a market totally dominated by window ACs a few years ago. A similar story is being played out in Freon free refrigerators and fully automatic washing machines which were growing at a healthy 15-20 % this year.
Families are also seen up grading from small batch back cars to bigger sedans and SUVs. Although at the bottom end, the Nanos of the world, are driving in new car owners into the sector, increasingly people are shifting gear to more spacious and premium cars. Rising income levels and aspirations are driving families as well as singles to go in for bigger cars, and a large number of consumers are making down payments rather than opting for credit.
Premium cars are priced upwards of Rs 12 lakh and the segment is growing at double digits. Companies from Skoda to Toyota are cashing in on the demand and are revving up marketing of pricier models. A Nissan India spokesperson says Income levels are expected to continue to grow across all levels. The bullish stock market and strengthening of real estate prices would further fuel the luxury segment sales.
The luxury market with an entry price point of Rs 50 Lakh and which includes the BMW 7series and Audi Q7 comprises about 35% of the total passenger cars market. This, according to auto analysis would grow by 5-7% in the near future.
Even the mobile phone segment, consumers are opting for high end convergence gadgets even though the companies smell an opportunity of selling sub Rs 5,000 hens in BOP The change from mass to premium is clearly taking place across industries with disposable incomes going up growth in the number of double income households and a number of banks dolling out easy financing options.
While Indians with old money associated with heritage have always and already been luxuriated the nouveau riche are increasingly getting oriented to luxury The Indian Luxury market is pegged at $3 billion and is set to grow at 20% for the next couple of years. Thereafter the Indian luxury market shall grow at 15% to $6.5 billion by 2015.