The second of a four-part series on NCAER's latest report on what consumers are buying in different parts of the country, and how purchase behaviour is varying across urban and rural areas, large and small cities, and different income and occupation groups.
Should a manufacturer of refrigerators target its marketing campaigns for first-time buyers towards those owning televisions, two wheelers or those owning air conditioners?
Perhaps even those owning cars? Is it better to target those owning cars to sell insurance policies or those owning television sets, or two wheelers?
Ownership of cars to double by 2009-10
While questions like this lie at the heart of any marketing campaign, the National Council of Applied Economic Research's latest The Great Indian Market provides some answers by way of a correlation matrix detailing the ownership for different product combinations.
The results are based on an all-India survey of around 300,000 households.
The analysis shows, for instance, that while 62 per cent of two-wheeler-owning households already owned televisions in 2001-02, only 12 per cent of them owned cars/jeeps, clearly identifying the two-wheeler segment as an ideal candidate for switching to low-end cars such as the Maruti 800.
This is the first time NCAER has attempted such a correlation matrix since the time it began all-India consumer surveys, according to Rajesh Shukla who headed the team that worked on the project.
Equally important, just six per cent of this very large population of two-wheeler-owning households had credit cards as opposed to around 14 per cent in the case of car/jeep owning households.
While credit card sellers would do well in both segments of households considering just how low the usage of credit cards was, two-wheeler owners would make a better target market given their low usage as well as much larger number in comparison to those owning cars/jeeps.
Similarly, according to the survey, 54 per cent of those owning cars already owned at least one life insurance policy (at the time of the survey, LIC was the only company that sold such policies) as compared to just 30 per cent of two-wheeler owning families, which had a life insurance cover.
There is, naturally, a big difference in the correlation matrix across urban and rural areas. While a fifth of the two-wheeler owners in urban areas owned cars/jeeps in 2001-02, the figure was under two per cent in rural areas.
While six per cent of two-wheeler owners also owned air conditioners in urban areas, the figure was well under half a percentage point in rural areas.
Around a third of two-wheeler owners also owned a refrigerator in urban areas compared to under a tenth in rural areas (the all-India figure is around 22 per cent).
Equally important, of course, is to keep in mind the total size of the market for each product. In overall terms, quite obviously, the number of television owning families (45 per cent of Indians owned televisions in 2001-02) is much larger than the ones owning two wheelers (about 20 per cent).
So even if the correlation in demand is lower for televisions, the number of potential targets is higher.
Interestingly, though, by the end of the decade, this difference narrows down considerably (63 per cent will own televisions as compared to 44 per cent for two-wheelers, 28 per cent will own motorcycles as compared to 31 per cent with regular-sized colour televisions).