David Eldridge (pictured below) explores the opportunities and lessons to be found in the fast-growing Indian market.

The jewel in the crown for any global company and marketer at the moment is India. With a large English-speaking population that is growing rapidly and an even faster-growing economy, India holds many opportunities and many lessons for marketers.

According to the Economist Intelligence Unit’s June report, India’s real GDP growth will average 7.2 per cent over the next five years, even as risks to the global economy remain high. With this continued growth, coupled with a growing population of more than 1.1 billion, India is an exciting place. In March 2009, Alterian announced its first commercial office in India – and, six months in, here are our initial thoughts on the market, the main trends we are seeing and what the future may hold.

A land of contrasts
The main issue affecting marketers in India is the access to data. Getting rich, quality data to profile and segment customers is very difficult. There are few decent home address databases and geographic information is practically non-existent. Marketers rarely hold rich information about their customers beyond their transactions and have even less insight into their behaviour. To make matters worse, a lack of integration between online and offline channels and a single view of the customer’s behaviour and purchasing patterns is difficult.

Another big issue for Indian marketers is cost. The GDP of India is growing but it is still low in comparison to western countries and a huge amount of consumers have relatively low incomes. This means that campaign-based marketing is scarce as companies often focus their marketing activities in the urban markets where there is more money. Direct and integrated marketing is growing, however, but the lack of addressable customer databases has hindered growth. A few marketers are using data and direct media in very advanced ways, while others haven’t even scratched the surface of what their data can do for them.

This is not to say that Indian marketers are less advanced than their western counterparts. They are working in a markedly different environment. Considering that the first mobile phone call was made in India in 1995 and Internet access outside of urban centres is practically nonexistent, the western model of relying on technology for targeting customers becomes a little harder. This leads many companies to use a scatter-gun, mass marketing approach, rather than employing analytics, measurement of ROI and effectiveness to better target their customers.

The land of tea and mobiles
The Indian technology infrastructure is markedly different to the west, which makes what we would call ‘traditional’ online and digital marketing techniques a little more difficult. The main difference is there are not as many landlines or users with Internet access, although there has been an explosion in mobile phone usage. There are between 60 and 70 million Internet users in India compared with almost 350 million mobile phone users, which makes mobile an extremely popular marketing channel. The Indian mobile subscriber base grew by 48.5 per cent in 2008 and is ever-expanding, thanks to cheap call rates, low-end handsets and a network expansion spree.

Mobile operators are becoming aggressively competitive in terms of market share. Vodafone grew quickly – from 12 to 70 million subscribers and the biggest operator, Airtel, currently has 100 million customers. Whereas in the west, people have gone from the PC to mobile devices, in India, people will skip the PC and move straight to mobile due to entry price and ubiquitous coverage.

With the growth of 3G and multimedia messages still some way off, the basic SMS channel is one of the main tools in the marketers arsenal. Currently, it isn’t being used very effectively with most marketers taking an untargeted scatter-gun approach. One example of this we have come across is a colleague who went into a grocer’s two years ago to buy some potatoes, but has never been back. Every Friday since he has received an SMS telling him about the grocer’s great offers on vegetables this week. The grocer holds the transactional data on him but isn’t adding any value to the product or the organisation by using this information effectively.

Over time, as infrastructure improves and 3G and Internet-enabled devices grow, Internet usage will grow and, in turn, email will grow as a channel. Already, most mobile phone operators offer access to free email services with new mobile purchases, so we see this as the major growth opportunity for the Indian market.

Most Indian marketers also seem quite taken with the idea of ‘going digital’, especially the ones who target the affluent urban consumer, who is already online and highly mobile.

Similarly, while SMS marketing is basic at the moment, as the market grows and users look to replace their phones, it will become a more complex channel.

Currently, multimedia phones only make up about five per cent of the market, so the MMS and email channels will grow as the uptake of these phones increases.

Data for everyone
With the channels marketers can take in India still very much in their infancy, the same can be said of the issues that surround the use of customer data – for example, data privacy.

Privacy of data is a huge topic in the west and concerns are equally high in India, where organisations will not let their data out of their sight. However, best practices in terms of ensuring customer privacy currently are not as stringent as they are in the western countries.

Many of the data laws in the west have resulted from the saturation of customers with media messages. The Indian consumer and the Indian market have not yet reached this fatigue point when it comes to receiving marketing messages. As this is the case, unsolicited materials are still accepted in the Indian market although marketers are very quickly testing tolerance levels. With this almost ‘blank slate’ for marketers to work from, the opportunities are endless, especially for people who are using highly-targeted, well-executed marketing tools to engage with their customers.

It’s an exciting time to be involved in the marketing industry in India. The market is growing at a time when others are shrinking and Indian marketers are definitely making positive noises about the future of the industry. As the country’s infrastructure continues to develop, and the industry matures, so too will the opportunities available to marketers.

David Eldridge is CEO of Alterian.

David Eldridge