Explore - Experience - Excel

Velocity 12 Markets- A summary report from Ogilvy and Mathar and its implication in Indian Market

Velocity 12 Markets- A summary report from Ogilvy
and Mathar and its implication in Indian Market
                                                                                                          By   Dr. Shampa Nandi

 A very recent
report (June, 2016) of O& M has identified Velocity-12 market comprising
the fastest growing middle class consumers with a population of more than half
of world population. This study defined middle class as those with annual
income of $4000 to $40000. The rapid expansion of global trade, technology
transfer and urbanization has added 2 billion new middle class customers. New
strategies need to be considered by the marketers to approach this large
emerging market because of the growth as well as the speed of growth. This pool
of large middle class customers not only different in terms of their lifestyles
but they will be having significant impact on politics, as well as on economy
of a country. Twelve countries are considered as velocity 12 markets as per the
growth potential in 2015-2025. They are–
Present no. of middle class customers
(in million)
No. of new middle class customers are joining
(in million)
Why “Velocity 12”
market is different from previous middle class markets?
All these markets are mostly concentrated towards
Southeast Asia, Africa, and parts of Latin America. Not only that, they are
from diverse ethnic, cultural, lingual and religious backgrounds. This
expanding middle class group is –
dominated by women and young consumers.
faster than the other parts of the globe.
of them are tech savvy, connected with internet
large number of Islamic populations will be joining in this group.
marketing will play a vital role in influencing them as most of them share
views and brand discussion through social media.
than individual countries, prominent cities will pop up in terms of invention,
entrepreneurship and investment.
issues like child health and safety, better work life, financial equalities,
environment & cleaning up pollution, ending ethnic discrimination, rooting
out corruption are some prioritized areas in those countries for the next
Why the word “velocity” is being used?
O&M has used the term velocity to describe the
growth of middle class consumers which is much more than the normal economic
growth. It also refers the speed of changes in the billions of consumers in
their social life, lifestyles as well as the social structures. Market optimism
will be visible considerably in China, India, Bangladesh, Pakistan and
Indonesia. It is not a small segment will change, but a large majority
comprising of educated and high income group can feel the lifestyle changes at
a much faster pace, which will be even noticeable outside the velocity 12
markets. Velocity 12 market will result in more economic equality throughout
the world. The reason is, in the two heavily populated countries, China and
India with nearly 3 billion citizens, the wage growth rate is estimated about
6.3% – four times that of the west. The percentage of population living in
absolute poverty (Living on $1.25 per day, defined by World Bank) is going to
be reduced to 23% from 44%.
Velocity12 market-what
it means to companies?
A huge amount of population joining the middle class
will definitely lead to more business. The velocity 12 market will be dominated
by educated independent women, children, tech savvy consumers; as well as by
first generation entrepreneur. Demand for branded products will be in upward
trend as branded items are symbolising social status. Large accessibility and
possibility of foreign trips, for education and business purposes will mobilize
more affluence and create more market. Market demand for both foreign brands
and local brands will be growing. Foreign brands normally preferred by affluent
class in most of these “velocity 12” countries, as they are perceived as high
quality products. With more foreign exposures, people’s sentiments toward their
own culture will be increasing. This new trend will be very much visible in
their consumption pattern. Popularities of foreign brands in technological product
categories continue to grow. The exception is China, where many national brands
have already captured the market. In non-technological categories local brand
will gain a strong preference, especially Indonesia, Brazil, Philippines,
Bangladesh and India. In fact the O&M study shows percentage of consumers in
those countries, preferring local brand to foreign brand is double. The
underlying principle for any company (local or global) to capture market is to
understand the local preference. Entertainment, education, travel tourism
market will get a big push as there will growth in disposable income. Smart
phone, tabs and digital devices continues to have a growth trend as entire
world wants to stay connected including velocity 12 countries. Companies should
involve consumers in brand building and consider them not only loyal customers
who recommend to others, but also build strategies to get contribution from
them with the help of social media, self-service technologies, company’s
websites and other online forum.
India as a Velocity 12 market
grown opportunities– A trend of coming back to India leaving a lucrative job
in west to start a new venture at home. As all of them comprise well of
segment, it will act as a flux to the market.
Rely on mobile phone
& growth of digital marketing-—Not only checking mails, or SMS, but getting
sophisticated services as well as buying or selling, mobile apps are the new
gateway of business. In one year the growth of internet user in India has gone
up to 400 million from 300 million. Digital technology is playing a major role
in transforming Indian economy, society and business. A recent study has shown
Indian ecommerce industry has grown eight times from 2012 to 2016.
Urbangea—a large amount of migration to cities creates more challenges for
cities in terms of sanitation, housing, infrastructure and growth. Parallel to
that urban agglomeration, a megacity connected to surrounding satellite town
called as Urbangea is the new trend in India. NCR (national capital region) is
a perfect example of that. Same time, more number of small cities is popping up
creating huge scope for organised retails.
of women as entrepreneur or activist- More number of women are adding up in
workforce and emerging  as small or
medium entrepreneur which help them to have more amount of financial controls
in their lives. Almost 91% of Indian women believe that career opportunities
have improved in recent era than ever before. With the advancement of their
career path, or with financial independence, Indian women still rooted with
culture and are continuing to play a vital role in fulfilling the needs of
family and household. Though portrayed as confident, assertive and ambitious, most
of them trying to maintain a balance between modernity as well as traditional
practices. A mixture of traditional Ayurvedic brands will make good business
along with modern Indian and foreign brands. With more financial control, many
women are taking a lead role to raise voices against harassment, violence both
using traditional and social media.
& religious velocity- India is a country with diversity in term of
religion, culture, and ethnicity. Most of the brand should focus on understanding
the culture, which should have a dominant role in advertising, brand promotion.
It’s a country where people’s affinity towards its culture, family traditions
is much higher than some other V12 countries. Though there is a shift in
cultural values in V12 countries but the pace of change differs. Brands are
encasing both culture and cultural shifts to tap the market. Cadbury has made a
campaign based on “Transforming Cold Saas-Bahu relation to a more jovial warm”
which became very popular. On the other hand “Titan” projected bran ambassador
“Katrina Kaif” as to get married once a woman is ready, not for any other
reason is a classic example of cultural shift.
The O& M report has reported that “emerging
market” is an out-dated term as already there is a tremendous growth in those
markets, making them already emerged. Treating the new
billions of middle class customers, emerged as “Velocity 12 market” as the
common middle class consumers in the west will be a big mistake for the marketers
as this “velocity 12 market” is a social synchronisation of people of diverse backgrounds
originated from different countries.
As per the report almost half of the world’s GDP will come from this velocity
12 market considering ppp (Purchasing Power Parity) as an index. A new task and
challenge is waiting for the marketers to grab the huge opportunity by evolving
fast, making a brand more customer centric, culture driven and most inventive.

Reference: Ogilvy & Mather (June2016), “The velocity 12