India is the second most populated country in the world, with nearly one billion people. It has the business environment that attracts multinational companies (MNCs) and because of its massive market size and positive business climate, American firms such as General Electric, General Motors, McDonald’s, Kellogg’s, and Microsoft have recently entered the Indian market. As a result, the country has forged strong commercial interests with the United States, with trade and business relations across many industrial sectors. In fact, the U.S. is India’s leading source of technology and her most valuable investor.
In the past 20 years, India has grown in the eyes of the global community from a rural, developing nation to a burgeoning global marketing hub. While India had much guidance from the United States and other global powers, the country has still chosen to follow its own path of business and marketing development. This paper is designed to evaluate India’s current marketing environment in comparison with the marketing environment here in the US, citing both nation’s similarities and differences (Ramachandran, Raja, 2000).
India is a nation that is on the move towards becoming one of the leaders in the global economy. While the country still has a long way to go, it is making significant strides towards competition with nations such as the United States and England. Indian leaders have been moving towards “a five-point agenda that includes improving the investment climate; developing a comprehensive WTO strategy; reforming agriculture, food processing, and small-scale industry; eliminating red tape; and instituting better corporate governance. These steps are geared to begin India’s transformation from a third world nation into a global economic leader. The current marketing environment in India is in transition, with both similarities and differences in comparison to the marketing environment in the US.
The first and likely most complex influence on both nations’ marketing is culture. Culture of USA has been a blend of varied influences of the different tribes and races that have inhabited the place from historical times. Capitalism and individualism is what the US holds at the heart of its culture. Americans tend to reward individual efforts rather than the efforts of a group, which has a significant impact on our society. This aspect translates into our marketing, and can be seen in advertising and in business practices, where the underlying focus is usually on competition and individualism.
In comparison, India is a nation that is rich in history and culture. Like the US, India has a mesh of different races, languages, and cultural beliefs. Yet unlike the US, India’s people have a long history which influences their culture. The nation has taken full advantage of the technology boom, and has embraced the commercial lifestyle that has taken hold in the 21st century. Yet there is still a divide between the modern urban culture and the rural culture in India, where agricultural dominance is prevalent (Merchant, 1999). The distinguishable thing about India however, is the fact that the younger, up-and-coming generation is embracing consumerism and technological advancement. The willingness for India to become a capitalistic society has helped shoot the nation into the forefront of global commerce. Many American companies, such as IBM and Google, are penetrating the market and enjoying much success (Prasso, 2007). As a result, India has welcomed and embraced many aspects of American business and marketing.
Marketing in India has been advancing over the past 20 years, due to improvements in custom and import duties, and personal and corporate taxes. Yet the nation has embraced direct marketing in a much different way, compared to the US. In the United States, direct marketing is dominated by TV and radio ads. Yet in India, television ads are virtually nonexistent. Instead, email marketing is becoming much more common. As well, the US relies heavily on mail order catalogues, yet in India, online catalogues are the mainstay, as internet shopping holds a huge part of the market share (Precision Marketing, 2007). Additionally, “the costs of sending an email are miniscule compared to direct mail, so most marketers are spending a lot of time and effort capturing email addresses or directing prospects and customers to their website” (Precision Marketing ¶ 4, 2007). In comparison, some traditional American forms of direct marketing are gaining popularity in India. Many airlines, hotels, and retailers are offering loyalty programs, and have been seeing much success (Precision Marketing, 2007).
Segmentation of market
The differences between India and the United States do not end with the direct marketing employed by the two nations. The greatest differences lie with the differences in market segments. Marketers in the United States can, of course, find many different market segments to concentrate on. But typically there is not a huge divide in the market segments. In India, however, there are three very distinct market segments because the nation is a developing country. The three markets are:
▪ The traditional rural/agricultural sector- Composed of those who tend to work in the countryside.
▪ The transitional sector- Composed of those moving from the country to the large cities. Usually this is a large sector, and is made up of low-income urban slums.
▪ The modern urban/high-income sector- Composed of an expanding westernized middle class.
Of India’s more than 1 billion population, only 200 million to 250 million fall into this sector. Having three very distinct market segments makes marketing in India very complex because each segment needs to be addressed independently based on its needs. This can make marketing strategies very costly and time consuming, yet if done correctly, companies can be very successful. “Many companies market successfully to both the traditional and the modern market segments but often have problems in the transitional segments, where, for example, advertising targeting high-income consumers reaches low-income consumers” (Cateora & Graham p. 29, 2007). Dealing with three very different market segments definitely creates a unique marketing climate in comparison to the United States.
Political and Legal Environment
The Indian market structure has 17 official languages and an ethnic diversity as wide as that from Britain to the Middle East–not to mention 26 states, dozens of castes, and six major religions. The 5.7 million people in Chennai (formerly Madras) have vastly different tastes than the 8.5 million people from New Delhi, the 11.2 million in Calcutta, and the 12.8 million in Mumbai (formerly Bombay). Such a diverse marketplace has a tremendous impact on product labeling, product variety, and where products can be sold successfully. McDonald’s provides a good example of adapting to the diverse Indian marketplace. Though famous for its beef patty entrees, it has introduced vegetable burgers to the large Hindu population and mutton patties to Indian Muslims.
Additionally, the political and legal environment affecting marketing in India differs from the environment in the US. India’s tariffs are much higher in comparison to other developed nations. In the US, tariffs are comparable to other developed nations. As well, there are no significant systems of protection for intellectual property rights in India. The US, in contrast, has protections such as patent and copyright laws in place to protect intellectual rights. Finally, India is experiencing a significant level of corruption in both business and politics (Cateora & Graham, 2007). Corruption of course exists in the US as well, but there are many more laws and regulations in place attempting to prevent it. Battling corruption, tariffs, and inadequate protection of rights makes marketing a difficult task for businesses, but the potential for success in India makes it worthwhile.
Overall, India is proving itself to be a nation with great potential. Its marketing strategies are similar to those in the US in many ways, including the advancement of direct marketing through email and the internet. Yet the differences between the two nations are significant, as India has three very distinct market segments to consider when creating a market strategy. In a sense, India is quickly following the lead that the United States has set forth for economic growth while still maintaining its own identity. If it stays on course, India has the potential to become one of the more flourishing and powerful nations in Asia.
Justin Paul (2008). International marketing: text and cases McGraw-Hill
Cateora, P. R. & Graham, J. (2007). International Marketing, 13th Edition, Chapter 9. McGraw-Hill
Ramachandran, Raja (2000 ) Understanding the Market Environment of India. Retrieved from http://www.accessmylibrary.com/coms2/summary_0286-27502938_ITM