BUYING PROPENSITY INDEX Measuring India’s Buying Sentiment
VOL.-2016 VOL. 2016 ISSUE-01 ISSUE - 01
Q1
APR APR-JUN - JUN, 2016 2016
The Buying Propensity Index (BPI) is a quarterly index that measures the buying keenness by directly connecting with consumer-influencers. The research queries consumers on their Need-based, Aspiration-based and Environment-based sentiments towards buying, the three aspects which critically impact purchase decisions. Buying Propensity is a scientific tool the gets to the root of buying, an act that manifests on the basis of Trust (based on reasons to buy) and Attractiveness (based on the inherent magnetic pull to be bought). These two important factors sit on two sides of the Buying Propensity Axis and influence all consumer behavior towards buying. Q1 2016 BPI was at 0.42 which shows a high propensity to buy in the quarter. Though there has been southward pressure on BPI from April through June due to several extraneous factors, the overall Buying Sentiment outlook remains ‘Positive’. N. Chandramouli CEO, TRA Research
Q1 2016 BUYING PROPENSITY Buying Propensity Index
0.42
Introduction 0.50 0.40
0.46
0.44
BPI Q1 2016 = 0.42
0.37
0.30 0.20
Buying Propensity Index Q1 2016
0.10 0.00
April-16
May-16
June-16
The Buying Propensity Index (BPI) is a measure of the existing buying sentiment or ‘keenness to buy’ of India. The current Index represents the first Quarter of FY 2016, i.e. April, May and June. The BPI provides clues as to the consumer’s natural propensity and resistances to making buying decisions. The Buying Propensity Index is generated through a detailed analysis of three factors - the transactional and psychological buying sentiments of the Indian consumer and the environmental buying sentiment of the country.
The BPI value can lie between -1 and 1 ranging from a completely negative sentiment to a fully positive sentiment. The BPI for Q1 2016 stood at 0.42, showing a modest buying sentiment in the country with a downward tendency. The monthly BPI for April 2016 (0.46) fell by 19% in June 2016 (0.37). The higher BPI value for April 2016 (0.46) was on the back of two important announcements. First, RBI’s reduction of the repo rate, albeit by only 25 basis points, to 6.5%, the lowest in more than five years. Just a few days later, in April 2016, the Indian Meteorological Department (IMD) and Skymet, a private weather forecaster, predicted an above-normal monsoon for 2016 after two successive rain-deficient years. The positive sentiment in April 2016 is most likely to have been impacted by these two announcements. However, the BPI in May 2016 (0.44) and June 2016 (0.37) got pulled down by an upsurge in Consumer Price Index (CPI), the highest in 19 months, which went up 5.76%. Delayed rains, which refused to follow the Indian Met Department’s earlier predictions, and uncertainty over Brexit also contributed to a downward pull to the overall buying sentiment in June 2016 (0.37).