DM Offers Challenges and Opportunities in India, Speaker Says

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NEW ORLEANS -- A middle-class population the size of the United States, familiarity with English and a GDP that grew 6.7 percent last year are the biggest factors for India as it makes its case for direct marketing interest in the world's second largest country after China.


Though there are no reliable statistics on the direct marketing expenditures by media spend or commerce, there is no doubt that India is under-served.


"On average, two direct mail pieces are mailed in a period of two weeks," said Dharti Desai, Great Neck, NY-based director of Regency Direct Marketing (I) Pvt. Ltd., an insert media firm with offices in New York and Bombay.


Desai was addressing a session Oct. 17 during the DMA's fall conference.


Like most emerging countries, India's market of 1 billion people has its pros and cons, she pointed out.


On the plus side, the local direct marketing industry has untapped potential. Individuals receive few DM materials. Most of the mail pieces are soft sells, with no response device, contact numbers or reply address. Printing and mailing is 35 percent cheaper from within India than North America.


Equally important, Indians are attracted to foreign offers.


"There's a pent-up demand for Western-type product in India," said Wesley Wood, president of Marketing Capital Corp., New York, and a co-panelist with Desai and partner in her firm. "What works overseas may work in India. Most Indians relate very well to the United States or the UK."


But there are downsides. Data security is a concern. A huge black market for mailing lists exists. There is no guarantee that a $200 per thousand file will perform better than a $2 one. Address formats and accurate merge/purge is hard. Suppliers in India often cannot make complex packages. And the Indian rupee is a not a free-floating currency.


But Desai and Wood focused on three major stumbling blocks.


First is the absence of a mature list industry. Few companies besides banks and credit card issuers, publishers and utilities hold direct response-generated lists. Next, suppliers are not as reliable as those in the United States.


The final hurdle is perhaps the most cloying: an immature infrastructure with significant operational challenges. Payment processing issues loom, albeit credit card and check chargeback to dispute charges have fallen from one year to three months. Most of the charge disputes occur within one-and-a-half months in the United States.


Desai pointed out that the vast majority of transactions in India take place with cash for the lower income class, and cash, check or credit card for the middle and upper classes. And it was only a year and a half ago that Indian credit cards were made good to buy products or services from overseas.


"[Marketers] need to ensure they have the funds and means to pay you," Desai said of the Indian middle class. "If you're bringing money outside of India, this means credit card payment or U.S. dollar checks only."


That said, India is not a market to be ignored. The sweet spot is the 18 percent of the 320-million-strong middle class that has spending power on par with most development markets. However, direct marketers should realize it is at an early stage of development.


"You're not going to enter this market for short-term profit," Wood said, describing the country's stage of DM development as where the United States was in 1948 or the '50s.


He recommended a joint venture with an Indian partner to reduce operational frictions. Also, anything that can be manufactured locally -- for instance, finished leather goods, costume jewelry and paper products -- is easier to market directly to the domestic market. And Western products sell well, too, since Indians are plugged into the American culture through travel or relatives.


"India and China are sleeping giants," said James Thornton, Manila, Philippines-based managing director of list firm MLA's operations in that region. "They're just beginning to wake up, but there are certainly infrastructural changes that need to be established before direct marketing really begins to grow."


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