The price-value equation: Indian consumer’s purchase behaviour is evolving

It’s a common belief that there is only one thing that can move the Indian consumer to buy — price.

price value, consumer
Apart from the price-value equation, one key factor for the consumer in any purchase is deal hunting.

By Nishant Gupta

It’s a common belief that there is only one thing that can move the Indian consumer to buy — price. Well, this belief is only partly true. While price is an important consideration, what Indian consumers find more important is value. One can say the Indian consumer is very ‘value conscious’, evaluating benefits and quality vis-à-vis price. Apart from impulse purchases, any other purchase is like extended problem-solving. The Indian consumer is a ‘smart shopper’ and takes massive pride in being one.

Until recently, price was the most important determinant of a purchase, given the low disposable income of most Indian households. But with the India growth story, there has been an evolution in what defines ‘value’ for Indian consumers. The key trigger for this shift has been the exposure to modern lifestyle through media and travel, giving them a perspective on various products and possible benefits.

Key consumer behaviour trends

Quality: Although, traditionally, quality is defined by a promise of durability and reliability, consumers are redefining quality as design and aesthetics are becoming important. Aligning with global trends, consumers are increasingly willing to pay a premium for better, modern design. This behaviour is clearly reflected in categories like jewellery and furniture. Jewellery brands are banking on the consumers’ desire for finer and less bulky designs without compromising on their durability — something the local jeweller may not guarantee. The same holds true for a category like furniture — the once ubiquitous Godrej wardrobe is now being replaced by aesthetically designed storage units from branded furniture players.

Brand: A brand is increasingly seen as a projection of the person. Hence, it has become an important metric in evaluating the value proposition of a purchase. Consumers are willing to pay extra, even if they may find a cheaper alternative in a lesser known or unbranded product. Apart from denoting credibility and quality assurance, the brand acts as a badge of achievement for consumers — a sign of their upwardly
movement in society.

Functionality: While there are other components consumers value, core product functionality remains at the heart of the proposition. Consumers have to see a perceptible need to pay a premium for the product, despite having greater disposable incomes. This is partly why the luxury segment has yet to make a dent within middle-class homes. A case in point: ‘premium petrol’. Indian users have been apprehensive in adopting this fuel option. Consumers aren’t willing to pay the extra 5% as they do not understand the perceivable difference in premium petrol versus regular petrol to increase the longevity of their vehicle.
Other triggers

Apart from the price-value equation, one key factor for the consumer in any purchase is deal hunting. This phenomenon has always existed, but is stronger than ever with e-commerce discounting, cashback and promotional sales. Shopping is now as much a treasure hunt as it is therapy.

There’s no denying that India’s growth is being fuelled by the middle class. They are evolving very fast and so are their needs, tastes and attitudes. Supported by higher disposable incomes, consumers are willing to pay more for that extra value, thereby reducing the overall price sensitivity. As brands build their propositions, they must also keep in mind that low pricing isn’t the only guarantee of success — consumers are putting more and more emphasis on the long-term value of products.

The author is VP, marketing, Urban Ladder

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