New figures released last month by the Office for National Statistics show that UK exports to India have increased by 19% compared to the previous year. Asia as a whole is becoming increasingly important to UK trade. UK business has also seen a whopping 40% growth in exports to Taiwan and 17% to Thailand. But India is a particularly exciting market for the UK businesses looking for new export markets, due to its sheer size and growth forecasts.
India’s GDP growth forecast for 2019 is 7.3%, making it one of the fastest growing economies in the world. Increasing salaries mean the region has a burgeoning middle class, with an increasingly disposable income. According to The Economist, HSBC recently stated the size of the middle class in India has reached 300 million, a figure it thinks will rise to 550 million by 2025.
The demand for products and brands within India is at an all-time high and this is set to continue for the foreseeable future. This is especially true for British products. Research from Barclays Corporate Banking found that 64% of consumers in India were prepared to pay more for goods made in the UK.
Ideally, to successfully launch a brand in India, a company would first launch around the Indian market, in places like Singapore, other ASEAN countries or UAE. Establishing a brand in these destinations initially will ease the path into India. That way the target segment of consumers will already have formed an understanding of the brand, which will likely pique demand.
Going directly into India requires an intricately planned marketing strategy and strong capital power to back it up, though it is possible. India is a multi-religion country which has a population of around 1.4 billion people. Cultural customs vary hugely by region and it’s essential to have local advisors on hand to smooth the process and minimise costly mistakes.
There are four broad segments to the market, with different customs:
- The Socialites: Socialites belong to the upper class. They prefer to shop luxury products, travel in high-end cars and buy high-end villas. They are always looking for something different. Socialites are also very brand conscious and would go only for the best-known brands in the market.
- The conservatives: The Conservatives belong to the middle class. The conservative segment is a reflection of the true Indian culture. They are traditional in their thought process, slow in decision making and they seek a lot of information before making any purchase.
- The working women: The ‘working woman’ segment has seen a tremendous growth in recent years.
- Youth segments: The next generation is optimistic and enthusiastic. They believe in having a modern lifestyle, are brand cautious and ready to pay for quality.
- Indian consumers have become more value sensitive than price sensitive. If they feel that a particular product offers them more value, even if the price is high, they are willing to buy the product.
- Indian consumers strictly follow their culture, tradition, and values. As a result, foreign companies are forced to give an ‘Indian touch’ to their product and marketing communication in order to succeed in India.
- Indian consumers have shown another major change in their buying behaviour: they don’t just want the product to be available, they also want an enjoyable buying experience. They expect a good level of customer service and ambiance. This has led to the growth of shopping malls, where shops, entertainment and food courts are all available under one roof.
The cultural differences between India and the UK can prove to be a real challenge for businesses entering the market. This is tricky not only in terms of marketing products but also in conducting business. Finding trusted local partners is crucial to success and so is navigating the often complex and time consuming process of ensuring a product meets regulations and protecting your IP in the region.
About the Author
Siddharth Shankar is a leading trade expert and CEO of Tails Trading, an innovative new solution helping UK SMEs export their goods. Visit www.tailstrading.com to find out more.