The purchasing power of the consuming class is greater than their paper incomes suggest. Actual consumption patterns indicate that a large percentage of middle class households evade tax by not declaring major portions of their income. This hidden wealth helps to explain the sustained demand for cars, clothes, cosmetics, entertainment, leisure and real estate. Sophisticated Consumers Understanding the attitudes and aspirations of the different segments of India's consuming class is as crucial to success as is calculating marketplace size.
Price is as important as elsewhere.
Further, new entrants simply underestimated the ability of Indian companies to respond quickly to competition. The tactic was resented by the target consumers who were familiar with 'real' premiums from foreign travel and the media. An established Indian company saw its opportunity. It attacked at both ends of the market by launching a prestige brand at double its competitor's price and a lower range at half the price. The Indian market will continue to grow due to the rising incomes of the ever larger number of middle-class and urban consumers.