Affluence Signals: The Secret to Unlocking India’s Consumer Market
A Nostalgic Reminder
Do you remember when “cold drinks” were reserved for guests in the 90s? For many of us growing up, it wasn’t about health; it was about cost. Cold drinks were a luxury—affordable only on special occasions or for special people.
Looking back, this simple behavior tells us something profound about human psychology: the need to signal affluence.
The Insight for Founders
In India, this ingrained behavior isn’t just a quirk of the 90s. It’s a defining trait of the market. Despite being a low-income, price-sensitive economy, we consistently overspend on items that signal affluence.
Why? Because signaling wealth or the perception of it is embedded in our collective psyche.
The Business Opportunity
For founders targeting the Indian consumer market, this insight is gold. To identify a big market, focus on categories where people stretch their budgets to appear affluent. Here’s why:
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Affluent vs. Aspirational Buyers: The aspirational group outnumbers the affluent 10:1.
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Premium Margins: These categories allow for healthier profit margins.
What Categories Work?
Not all products carry the same signaling value.
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Low Signaling Value: Premium soaps, despite the marketing, don’t help signal affluence.
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High Signaling Value: Cosmetics, handbags, SUVs, premium housing, and iPhones—categories where buyers willingly pay a premium to display their status.
The Proof Is in the Numbers
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SUVs now dominate the car market (57%), doubling their share in just five years.
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Premium housing (>INR 1 crore) has doubled from 15% to 30% of the market.
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iPhone sales have skyrocketed alongside other premium brands.
These aren’t trends. They’re a reflection of deep-rooted consumer behavior, and they’ve always sold.
Takeaway for Founders
Want to win in the consumer market? Build products that cater to aspirational buyers. Categories with high signaling value are your ticket to capturing a larger market and driving profitability.
A Personal Anecdote
Even I couldn’t resist the pull. After years with my trusty OnePlus, I recently switched to an iPhone. Why? I’d be lying if I said it’s because I “love iOS.”