Understanding the intricacies related to profile of consumers in a market like India

By Ritesh Gupta

In any market, it is quite intriguing to assess the profile of the consumers, their needs, preferences and choices available.

In the context of India and considering its geographical area and diversity, it is much more challenging for marketers to work on their business models as per the needs and the customer behaviour.

The current status of travel distribution, especially considering the growing revenues of online travel agencies, points to some interesting specifics about the profile of the consumer in India.

Talking of the OTA business in India, if OTAs have pure online business models and a player is targeting an annual turnover above US$280 million, would it be right to say that Indian consumer's profile doesn't fit in with browse online and buy offline behaviour?

With total Internet penetration in India currently being around 3.7 percent of the total population, the total level of penetration is still extremely low by Western standards.

However this still adds up to very high number in absolute terms (42 million internet connections), which already forms nearly 10 percent of all the Internet users in Asia. The vast majority of these Internet connections are from India's urban areas, potentially, opening up a 'digital divide' between those who have access to these powerful tools and those that don't. Overall, however Internet connections have grown at a staggering 740 percent in India over the period 2000-2007, pointing to the emergence of a real and influential 'online generation'.

In order to know more, EyeforTravel.com spoke to leading industry executives about current trends in buying behaviour. Here is what they had to share:

Brett Henry, Vice President Agency Marketing, Abacus International: Many Indians do prefer to deal with people and will continue to use a traditional storefront travel agencies as they derive more confidence from seeing and talking to the travel agents as well as utilising credit facilities.

Other Indian travel buyers will progress to a 'research online' and 'buy offline' model as huge volumes of travel information are now carried on the Internet including peer-to-peer travel sites with their famously candid travel recommendations. A third grouping is entirely comfortable with 100 percent online transactions. The key to enlarging this group is delivering successful, problem free online experiences giving people the confidence to extend their online buying and encourage others to do the same.

Sharat Dhall, Managing Director, Expedia India: Online travel offers fundamental advantages to the Indian consumer in terms of width of offering, transparency and   convenience, and I think the rapid growth in the online travel market is a reflection of their increasing adoption of buying online.

All market studies indicate that the online market is doubling every year, so clearly there are a fair amount of consumers making the shift from offline to online travel. However, we also would like to point out that offline bookings via call center can be very profitable.   

Cleartrip.com's CEO Sandeep Murthy: I think the argument around online as a transaction environment for travel is no longer an issue. Along with Cleartrip, we have seen a number of models successfully build a marketplace around online transactions in travel.

What is more relevant is the continued evolution of this model. As more investment is made in technology and intuitive UI's coupled with deeper penetration of broadband will continue to be a catalyst for other product lines to move successfully online in the same manner as domestic Air and Domestic Hotel have done. This will however take time and a great deal of investment in fundamentally demonstrating to the consumer the value proposition. An increasing acquisition cost and a need to broaden the customer base are perhaps earlier drivers of a combined online / offline approach.

Urrshila Kerkar, CEO, Cox and Kings: We have people of a mixed profile in India. It is also product dependent. For flights, people know what service they will get and are not hesitant to buy online. The same applies to Indian Railways, who are the pioneers in online booking in India.

A large number of people do extensive research online on land products for travel. In the absence of anyone offering land products people automatically use the offline route. However, if the brand is strong and reliable and the product is available online, people will move due to the convenience. Some are comfortable to book any service online as we have experienced, even just vanilla products like travel insurance. Some of them are happy to browse online, understand all the options and then shop offline.

Some pay the advance online and the rest offline as the value per transaction can be very high and the credit card limit does not cover the amount. This trend will change soon. It took 2-3 years for the banking industry to adopt online banking. Today how many of us actually visit a bank for any transaction. Travel will also take this route in the next 3-4 years. Close to 99 percent of the sales from our UK office, is either through the call centre or the net. We hardly get walk in clients the way we do in India.   

Vinay Gupta, CEO, Via: Since the online bookings is in the nascent stage in India, this is true only about 8 percent of the hits are converted online while the balance 92 percent prefers to book either with their local travel agent or directly with the airlines. Joint promotions and apt marketing strategies will slowly change this behaviour, also the dispersion of plastic cards and the augmentation of Internet access across India will favour online booking.