Consumer Segments

Your columnist was moderating a forum briefing when the CEO of a consumer company said something that stayed with him. He remarked that the Indian consumer had become impossible to understand because the same family that complained about the price of cooking oil was perfectly happy to spend Rs 900 on a skin serum for their daughter and Rs 2,000 on a meal ordered through an app. The old assumptions were no longer holding. Price sensitivity had not disappeared, but aspiration had become stronger. That, in many ways, is the real story of the Indian consumer today. We often speak of India as though it were one market, one middle class and one demand curve. It is not. It is several Indias living inside a consumer universe. There is a household buying a premium dishwasher and another shifting from a large shampoo bottle to a sachet. Sometimes, these are not even different households. They are the same people making different choices across categories.

For marketers, this is the central strategic question of growth. How do you build brands, products and pricing for a country where premiumisation at the top and value seeking below are happening at the same time? The numbers tell the story well. India’s urbanisation rate is only about 35 percent, yet urban consumers account for nearly 65 percent of FMCG consumption, which shows how strongly city lifestyles shape spending patterns. At the same time, rural India contributes more than 38 percent of annual FMCG sales and has become a major growth driver. The average monthly per capita consumption expenditure now stands at Rs 7,000 in urban India and Rs 4,100 in rural India and, importantly, that gap has been narrowing.

What surprised many executives in the past two years is that premiumisation is no longer a South Mumbai phenomenon. In 2025, rural India overtook cities in affordable premium FMCG consumption, accounting for 51 percent of volume share and 42 percent of super premium sales in some tracked categories. This sounds counterintuitive until one remembers that premium in India often does not mean luxury. It means better ingredients, trusted quality and a sense of upward mobility.

Your columnist, on a recent visit to Lucknow, saw this clearly where a retailer explained why a shaving gel priced expensively was moving faster than expected – people wanted to feel they were buying something modern. It was about participating in a different standard of living. Consequently, the smartest companies are no longer asking whether consumers can afford to trade up rather, they are asking what the smallest believable step upward looks like. Hindustan Unilever has understood this well. Its strategy has long rested on a ladder of aspiration. At the mass end sit brands and pack sizes designed for affordability. At the premium end are products like Dove and Lakme premium skincare – more sophisticated home care variants. But the real ingenuity lies in the bridge between the two. Entry premium packs allow consumers to step up without feeling reckless. HUL also derives roughly 35 to 40 percent of revenue from rural markets and has strengthened reach through its Shikhar digital retailer network, which connects over a million retailers. This is segmentation through distribution.

Dabur India offers another useful example. Around 45 to 50 percent of its business comes from rural India, and its distribution reaches well over one lac villages. Dabur’s success has come from recognising that trust behaves differently outside metros. Ayurveda, familiarity and credibility often matter more than glamour. Premiumisation here is not built through glossy campaigns but through reassurance. A honey bottle, a chyawanprash jar or a health supplement succeeds because it suggests reliability.

The automobile market tells the same story but in a different language. Maruti Suzuki once dominated by understanding value better than anyone else. But as the market evolved, it realised that the Indian buyer was not content to remain at the entry level forever. The creation of Nexa was one of the smartest segmentation decisions in recent corporate India. Premium customers did not simply want a more expensive car. They wanted a different buying experience, a different showroom and a different emotional signal. Nexa separated aspiration from the functional clutter of mass retail. Consequently, Maruti protected its core while creating a pathway upwards.

Titan Company did something similar with Tanishq. Jewellery in India has always been both consumption and savings, but Tanishq built trust where the category was traditionally opaque. Certification, transparency and premium store experience created a middle class premium market that barely existed at scale before. Here again, premiumisation was not about extravagance. It was about reducing anxiety. The mistake many companies make is to assume that premium means expensive and mass means cheap. That is no longer true. Real segmentation asks what job the consumer is hiring the brand to do. A premium paint may not be bought because it is shinier, but because it reduces repainting for five years. A premium biscuit may succeed not because it tastes richer, but because it signals that guests are being treated with respect.

This is where failure becomes instructive. Tata Motors and the Tata Nano remain one of the best lessons in failed segmentation. The Nano was economically rational on paper. It aimed to move two-wheeler families into car ownership with an ultra-affordable offering. But the positioning as the cheapest car created the wrong aspiration. Indian consumers do not like buying symbols of compromise. The car solved a transportation problem while misunderstanding a status problem. Consequently, what looked like a brilliant value proposition became a marketing cautionary tale.

Your columnist has heard several of his clients at forum sessions discuss Nano because it reminds them that consumers rarely buy according to spreadsheet logic. They buy stories about themselves. This matters now because quick commerce and digital retail are changing how segmentation works. A household in Indore or Coimbatore sees the same beauty brand on Instagram as someone in Bangalore. Exposure is no longer the barrier. That is why small packs, regional language communication and retail trust are becoming strategic weapons. The shelf has become a media channel. Blinkit, Zepto and modern trade are not just distribution platforms. They are influence platforms. A brand must decide whether it is being discovered as affordable, aspirational or both.

For marketeers, the lesson is broader than marketing. Portfolio architecture is now competitive strategy. If all growth bets sit only at the premium end, the volume engine is at risk. If everything is built for mass affordability, margin and aspiration are left to competitors. The answer lies in carefully designed ladders where consumers can move upward without abandoning the brand. India is not becoming uniformly richer. It is becoming more ambitious. The companies that will win are not those that choose between premium and value, but those that understand how both coexist inside the same consumer.

The Indian household is telling us something important. It is saying that it will save fiercely where it must, and spend generously where it cares. The job of leadership is to know the difference.