Student Article
Myth of the Great Indian Middle Class
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Myth of the Great Indian Middle Class “Change is not a destination, just as hope is not a strategy.” - Rudy Giuliani (Former Mayor of New York City) As we all know that the Indian market is a huge diversified market which is complex in its nature, heritage, culture & religion. Taking cue from the historical data of Indian Economics, Philosophy, and Culture, we get a detailed understanding of Indian economy and the Marketing challenges faced by the global enterprises who want to expand into India. As India is not an easy market to understand and operate in, companies have to go through different and extreme marketing strategies in order to penetrate the market. Indianized Products India is the 7th largest economy of the world and is expected to take the 4th largest position by the year 2022, but it has a low per capita income. So, global ideas on price performance and margin volume equations are totally ineffective. India is an emerging market. The nature of emerging markets is different. But emerging markets need not be virgin markets. The strategy followed should be to change the products to fit the Indian requirements. This is called ‘Indianized Products’. Indian market today is not what developed countries were in their infancy. Countries change around their DNA. The Indian DNA is so different from the rest of the world that the Indian Market will never become like the markets of the western world. After the economic liberalization of 1991, global companies had to make a 180 degree turn in their marketing ideologies. By throwing its doors open to the foreign world, it created two myths the great Indian middle class and the great Indian growth story.Twenty-five years after economic liberalization, the economic power of the middle class has not matched up to expectations. India’s economic liberalization in 1991 promised the creation of a robust middle class.“In the early years of reforms in the 1990s, political and business leaders and mainstream media discourses presented sharply inflated figures of a large untapped middle-class consumer market,” says the Routledge Handbook of Contemporary
India. International and domestic businesses scrambled to position themselves for a share of the burgeoning new markets India’s developing middle class would provide after the government started liberalizing the economy. Over the past 25 years, successive governments and analysts, stray voices notwithstanding, have continued to propagate this discourse. It now appears, however, that the economic power of the great Indian middle class may be more a myth than reality. Companies such as Coke, Kellogg, and Seagram were forced to change their business models to fit better in the Indian Market. In the beginning there was a phenomenal demand boom as the Indian market was now exposed to the huge global market. And this short term high demand led to the myth of the ‘Great Indian Middle Class’. Companies like Coca-Cola nearly bankrupted themselves when they fell for this myth. In the beginning of liberalization, the demand will always be high, but as time goes on, the supply of desired goods may increase, but the income
