“Consumer-confidence is Back”: How Marketers can seize the Opportunity | by: Harish Bhat | Business Line

Which means people are going to spend more….Here’s how “Marketers” can seize the opportunity..!!

Each quarter, research and measurement company Nielsen publishes the results of a Global Survey of Consumer Confidence…This is perhaps the largest survey of its kind, sampling more than 30,000 consumers online in 60 countries, to understand how confident they are about the future…It also gauges their future spending intentions, which are dependent on such confidence…The results of the latest survey were published by Nielsen a few days ago…What do these findings tell us ?? 

The big news in these latest results is that India has topped the #ConsumerConfidenceIndex…In the previous five consecutive quarters, Indonesia had ranked first, but this time around India is well ahead…This means that Indian consumers are today the most confident and optimistic, in comparison with their counterparts in all 60 countries surveyed worldwide…The equally important news is that India’s consumer confidence score has also increased significantly within the past few months — it now stands at a handsome 128, up from 121 in the previous quarter..

Any score above a baseline of 100 indicates degrees of optimism in the economy… Interestingly, #consumerConfidence, scores in large countries such as the US, the UK, and the UAE — which have strong linkages with the #IndianEconomy — have also increased by 4, 5 and 3 points, respectively, compared with the previous quarter…

India’s consumer confidence score requires some further detailing, to understand how powerful a figure this is. At 128, it is now virtually on par with its pre-slowdown score of 133 during 2007, when the Indian economy had been roaring ahead at a growth rate of more than 8 per cent per year. It is also significantly ahead of the global average, which stands at 97 and which has increased by only one point over the previous quarter…This means that Indian consumers are surging ahead in terms of confidence, compared with historical and global yardsticks…!!

This is surely very good news for Indian marketers…Many #ProductCategories, and Brands are likely to rise on this swelling tide of optimism…But the biggest victories will belong to #Marketers and #Retailers, who leverage this increased consumer confidence most appropriately and powerfully — particularly because such rising confidence comes in the run-up to the busiest shopping season in India, the festivals of Navratri and Diwali….To translate consumer confidence into extreme purchase buoyancy for their brands, companies will need to understand the fundamental reasons why Indian consumers are feeling far more optimistic today; and also what they can do, as smart marketers, to fuel and leverage these factors…!!

Budget Moves :

At the national level, the coming to power of a stable Narendra Modi-led Government with a strong majority and a progressive agenda appears to have impacted Indian consumer confidence very positively. Consumers feel more confident when their Government espouses and drives an agenda for economic growth, which has the potential of spurring future investment and creating new jobs. As the Nielsen report points out – “The annual budget announced by the new Government reveals a positive outlook for business, and we expect this to reflect in consumer sentiment in subsequent quarters as well.” A strong Independence Day address by the Prime Minister on August 15, which emphasises the actions being taken to drive growth, will undoubtedly add further to such consumer optimism..

In addition, tax-paying consumers today feel that they have more disposable income to spend on products they want to buy, because of some specific personal income tax exemptions announced in the recent Budget. The Finance Minister has raised the basic income tax limit from Rs. 2 lakh to Rs. 2.5 lakh for everyone, and from Rs. 2.5 lakh to Rs. 3 lakh for senior citizens. In addition, he has increased the amount eligible for tax exemption under Section 80C and has also enhanced tax deduction on #HomeLoans…

All this means that a tax payer in the 30 per cent tax slab is richer by Rs. 36,000 per year and a tax payer in the 20 per cent tax slab by Rs. 25,000 per year…That is enough additional money for the consumer to buy a new television set, an air-conditioner or several pairs of new clothes for the family, in the season ahead…

What Media says, Matters :

People are generally aware of their own economic state but there is also the additional impact of media on consumer confidence. A CES study undertaken in 2006 (“Impact of Newspapers on Consumer Confidence”) highlights that consumer optimism is impacted not only by economic fundamentals but also by the way these fundamentals are reported in media…

Indian media, over the past few weeks, has generally voiced optimism about the economic policies and measures of the new Government and also about the long-term India growth story. This has also added to the overall positive sentiment…

In this positive landscape, a poor monsoon and continuing high inflation still have the potential to play spoilsport. However, there is no doubt that the number of factors driving an optimistic outlook has gone up sharply over the past few months and this is what has resulted in India topping the global consumer confidence index. And it is also heartening to see that the monsoon, after a shaky start, has revived during July…

What Marketers should Do ?:

How should Indian marketers respond to such growing consumer confidence ? The answer will vary across categories and segments, but here are some initial thoughts for us to consider…

First and foremost, when consumer confidence shows such strong increases after several quarters, there will be significant pent-up demand that suddenly begins expressing itself. If people had put off buying discretionary items such as a new car or two-wheeler or wrist watch for the past couple of years, this is the season when they are likely to consider purchases once again. Therefore, in the months ahead, marketers would do well to focus their energies and investments on discretionary categories which have seen sluggish demand, or even declines in demand, over the past two or three years.

Second, there are a number of useful consumer insights that marketers can tap into, in these times. For instance, many people may wish to indulge their families during the forthcoming festive season, after having been somewhat frugal in the past couple of years.

Also, if consumers can be appropriately reminded of the significant amount they are saving in taxes this year, they may be willing to spend this amount relatively freely, without any undue anxiety or guilt. Savvy marketing can help leverage and own such insights powerfully.

Third, marketers and retailers should consider significantly stepping up investments in driving footfalls and purchase consideration during the busy season ahead. Marketing investments tend to work much better during times of consumer optimism, than during relatively bleak periods.

#Brands, that are the first to occupy consumer mind space in their respective categories are most likely to be the ones to best leverage such positive sentiment…!!

Finally, for brands that target affluent and upper-middle-class consumers, this is absolutely the right time to promote premium products that may be somewhat more expensive but are also far more indulgent. Confident and optimistic consumers generally like to indulge themselves.

Here’s wishing all my fellow marketers good luck, as you begin preparing for an excellent festive season ahead. This year, you should feel greatly encouraged that you have consumer confidence on your side…

“Consumer confidence in India highest since 2012”, “54% says good time to buy things” : Nielsen | ET Retail

Despite Macro-economic and political uncertainty,India continues to be the Second Most Optimistic Country in the world” and recorded its highest confidence level since the Fourth-quarter of calendar 2012, a new global study by market researcher Nielsen said…

India’s consumer confidence level increased six points in the first quarter of the current calendar year (January-March) with a score of 121, trailing only Indonesia, the most upbeat country for more than a year with 124 points.

According to the survey, 68% of urban respondents in India feel the country is going through a recessionary phase, and within this 54% say the country will be out of it in the next 12 months…

“Consumers are reconciled to the negative economic conditions and despite the challenge of inflation, are hoping for a better year,” Nielsen India President Piyush Mathur said in a statement. ” They are optimistic that overall sentiment and investment will pick up gradually.”

This flies in the face of the current state of the economy, with growth stuck in a slump and a looming threat in the form of a monsoon that might be below average, possibly adding to inflationary pressures, which, in turn, could mean the central bank will be forced to keep interest rates high.

The survey said three-fourths (74%) of respondents in India are optimistic about job prospects over the next 12 months and sentiment is up by 4 % points from the last quarter.

March quarter earnings don’t reflect too much of the consumer confidence, with most firms including Hindustan Unilever, Godrej Consumer Products and Marico posting muted numbers. “Consumer confidence is high on the hope that a strong government will come in and announce progressive policy decisions.

But actual consumption numbers are not necessarily reflecting this confidence, whether it’s consumer goods, real estate or cars,” said Zubair Ahmed, managing director of consumer goods maker GlaxoSmithKline Consumer Healthcare, maker of Horlicks and Sensodyne toothpaste.

Nielsen said more than half (54 %) of online respondents said it was a good time to buy things they want and need. On the other hand, the intention of online respondents to invest spare cash in savings is up by 6 % points to 68 % from last quarter. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

Kishore Biyani, promoter of the Future Group, which runs the country’s largest modern retail chain Big Bazaar, expressed optimism that consumption would accelerate over the next few quarters. ” We are a young population which wants to step up consumption across categories. India will continue to grow… We have always been optimistic about that”, Biyani said.

Half the respondents said they are looking to invest in new technology products and buy new clothes. About a third (32 %) indicated they would invest in a retirement fund, a 9 % point increase from last quarter. Further, 36 % said they planned to invest in the stock market and in mutual funds, up from 29 % in last quarter. This is borne out by what’s happening on the stock market. Shares have been on a tear over the past few months on expectations that a Narendra Modi-led BJP will be well placed to form a stable government after the ongoing election.

“Overall discretionary spending is higher than the last FOUR – Quarters and there is a renewed focus on savings for the long term. Consumers are also anticipating the outcome of the elections and the impact will reflect in subsequent months,” Mathur said.

” Stable government leads to consistency in policies which jump start investment across sectors. Increased investment will improve customer sentiment as more employment will be created in addition to increases in Per-capita income leading to increased customer spending,” said Senior Vice President, sales and marketing, Hyundai Motor India. Improved “investment climate and consumerism will bolster business confidence too”.

Indonesia leads the global index with 124 points and the Philippines is third with 116. ” India had been the world’s most optimistic market for nine consecutive quarters until the April-June 2012 period “, when it ceded the title to Indonesia. The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns and spending intentions among more than 30,000 respondents with Internet access in 60 countries.

In the latest round of the survey, conducted in the February 17-March 7 period, consumer confidence increased in 60 % of the markets measured by Nielsen, up from 43 % in the preceding quarter !!