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India is a huge consumer products market poised for higher growth over the next decade, but only 1 in 5 brands will succeed. Joydeep Bhattacharya, a partner in Bain's Consumer Products practice, discusses the importance of household penetration and three areas where brand winners in India can invest to stay on top.
Read the transcript below.
JOYDEEP BHATTACHARYA: India is a huge market for consumer products. And it's poised for even higher growth over the next 5 to 10 years. However, Bain analysis shows that only one in five brands will win. To find out what brand winners do differently, Bain partnered with Kantar Worldpanel.
We looked at the purchase and usage behavior of nearly 80,000 households across 37 product categories. And what we found in the India shopper study confirms what the Ehrenberg-Bass Institute has been saying for many years: that household penetration is the primary driver to brand share and growth, which is to say that brands are larger because they've penetrated far more households than other brands in the category and not by increasing loyalty higher than the other competing brands.
Secondly, consumers exhibit what we call repertoire behavior. They buy multiple brands in a category, and the more frequently they buy a category, the more number of brands they end up buying.
Thirdly, heavy consumers or heavy shoppers of a brand are really not exclusive to the brand. You know, you would typically get not more than 50% to 60% of his wallet share. So they tend to buy competing brands, as well.
And finally, you need to re-earn consumer penetration year after year. Because as much as a third of your consumer base is likely to not buy you at all the next year. So it's a question of re-earning the consumer penetration.
So what do brand winners, therefore, do? They invest in three assets. The first is really brand memorability. This is about investing to create distinctive brand assets and about reach-and-repeat at scale to get sales.
The second asset to invest in is shopper visibility. Be in as many outlets as possible, so drive numeric distribution, and invest in the right kind of visibility and shelving in those stores.
And the third asset to invest in is range productivity. This is about focusing on a few hero innovations which will drive incremental household penetration.
So these three assets around brand memorability, shopper visibility and range productivity [are] what brand winners need to invest in over the next 5 to 10 years in India.
Read the Bain Brief: Winning with India's Shoppers
Published in July 2016