03 Feb 12 Tracking disposable income – CI for driving sales

walletDisposable income is a key growth driver for several industries in India such as consumer durables, automobiles, tourism, education, real estate, telecom, entertainment, BFSI and so on.

These industries are interested to know where the disposable income resides by geography, occupation, age, income group and so on, so that they are better able to target their products, sales efforts and marketing campaigns.

Long term trends in demographics, income distribution, sector growth rates, regional growth rates, etc. are therefore of interest to them.

Going a step further, it is also interesting for them to know if there are temporary spikes (or drops) in disposable income. For instance, in India, the Sixth Pay Commission is a much discussed event, as it will lead to an increase in disposable income in the hands of the beneficiaries, the central government employees. Their pay scales have been revised with effect from 2006, and they expect receive the arrears in installments.  They are attractive prospects for the above industries.

Other events that have a similar impact on spending power are land acquisitions, either by the government for building roads, bridges, industry parks, etc. or by builders for developing large townships. The recipients in these cases are generally farmers.

Certain industries also get windfall gains once in a while, as a result of changes in exchange rates, commodity prices, government regulations, etc.

In agriculture, there are smaller spikes on a regular basis. The variability in agricultural incomes arises from variation in area under cultivations due to weather, prices, availability of inputs, etc.; or variations in yield due to irregular monsoon, outbreak of diseases, floods, etc.  Macro level performance of agriculture is often widely reported, but even in a “bad” year, there are small pockets of abundance. And these could be of interest to companies as they can target their sales efforts in the “right” areas rather than spreading them thin across the country.

Of course, not all of the above may be worth tracking. Organisations need to balance the impact of the event for its business, and the effort required for monitoring the event.  For instance, the weak rupee has delivered windfall gains to many, but it is perhaps not worthwhile trying to identify them as they are scattered, and hence hard to target.  Monitoring of regional patterns in agricultural incomes is possible, but could be a little bit painstaking as the information is dispersed.  Land acquisitions, on the other hand are limited in number,  impact concentrated groups of people, and are relatively easy to monitor.

What are other sources of spikes in disposable incomes you have noticed?

Varsha Chitale

Varsha led the competitive intelligence practice at ValueNotes. As part of her drive to educate India Inc. on the merits of competitive intelligence, she often conducted webinars and seminars on CI for senior executives of Indian companies.

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