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When
the markets are touching dizzy heights, why should you be sitting
on the sidelines? If number crunching is a bit tiring, and parameters
like market capitalisation are what just about everybody is looking
at, try some clever thinking. The companies likely to ride the
wave, whether in retail, lifestyle, telecom or bike segments,
will be those tapping the growing purchasing power of the youth.
Not all below 25-year-olds, making up half
of the population, may belong to the aspiring class. But there
are enough tech-savvy and conspicuous consumers out there at the
malls to tempt these segments. Your aim should be to piggy-back
on their success.
"Looking at the consumer segment the
company is targeting is another way one can pick stocks,"
says Prithvi Haldea, Managing Director, prime Database. Companies
like Hero Honda, Shoppers' Stop, Shringar Cinemas or Titan, which
target the youth, are likely to grow fast. But one of the reasons
why these stocks are likely to do well is the fact that this age
group lives by the 'here and now' premise.
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| SHOPPERS' STOP: No full stop |
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| TITAN SHOWROOM: In shop with the time |
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| HERO HONDA: It's a joy ride |
According to Santosh Desai, President, McCann
Erickson India, this age group believes that tomorrow will be
better, so it's best to spend the money at hand. "Even 10
years back, persons in this age group used to save and were not
so consumption-oriented. Today, 20-year-olds get energised by
money," adds Desai. For the advertising fraternity too, the
archetypal consumer has changed from the householder to the youth.
"Today, at 15, one is an adult," he adds.
Assures Arvind Singhal, Chairman, KSA-Technopak,
"The entire 15 to 25 age group is hungry for brands."
According to him, while they are highly brand-conscious, they
are not loyal to any one brand and keep trying out new things.
And that keeps the companies on their toes. "Companies can't
take consumer behaviour as given. They have to be in tune with
the latest trends," he adds. They must keep changing the
design, packaging, communication strategies, and keep looking
out for new channels to sell their products to the youth.
Right Ringtone
When it comes to connecting to the young
and keeping in tune with changing fashions, cellular giants like
Bharti Tele-Ventures (market capitalisation Rs 59,642 crore, stock
at Rs 318.35 and climbing) are at the forefront. For them, the
youth market is nothing short of a mantra. Bharti recently launched
Friendz Pre-Paid Card where friends can recharge each other's
phone, SMS at lower rates and chat in a group at discounted rates.
Airtel's ringtones and Hellotunes are also
very popular with this age group. So are its games and fan clubs.
This includes mobile fan clubs like King Khan's Den (Shah Rukh
Khan fan club) and Master Blaster's Pavilion (Sachin Tendulkar's
fan club) and a collection of over 1,000 mobile games, including
Sudoku and Van Helsing. "In this age group, the penetration
of mobiles is still quite low-only 8 to 9 per cent. So the potential
to grow is huge," says a company official. Bharti also sponsors
college festivals, and Valentine's Day is bonanza time.
| There are enough tech-savvy and conspicuous
consumers out there at the malls to keep sales of retail,
telecom and other happening sectors surging |
Bike Boom
No surprises then where the bike-makers head
to capture those young lovers. "Everytime we launch a bike,
we first take them to colleges," says Atul Sobti, Executive
Director (Business Operations), Hero Honda Motors Ltd (market
capitalisation Rs 13,350 crore, stock at Rs 678.50). According
to Sobti, when a company has a pan-India appeal, it cannot afford
to target only one age group. But focussing on this particular
segment can rev up sales. The company sponsors programmes like
Hero Honda Roadies and Pepsi-Hero Honda Campus Rock Idols on MTV.
Like Bharti, it also sponsors college festivals. So do Hero Honda
dealers.
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| BHARTI: Stay connected |
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| WESTSIDE: Best bargain |
Sobti, however, brakes when he sees a bump:
"India is a highly price-sensitive market. And even if a
product appeals to the consumer aesthetically, he/she may not
be able to ignore the other aspects-like price, fuel economy and
power." He adds, "The concept of purchase changes the
moment you cross the Rs 5,000 mark. While a Reebok, Ray-Ban or
Nike may fall under the impulse purchase category, a bike does
not." And easy availability of loans has reduced the price
sensitivity of two-wheelers by only around 10 per cent, feels
Sobti. "But in this particular segment, you need to constantly
work on upgrades. They don't want to buy what everyone has,"
he adds. So every two years, the company needs to change styling
and looks, without increasing the price. So, the company has recently
launched Passion Plus, Super Splendor and Splendor Plus-upgrades
of its bikes Passion and Splendor.
Retail Raj
In the retail sector, there may be a question
mark on the foreign investment front, but passion is aplenty.
Playing into youth sentiment, Trent (market capitalisation Rs
1,073 crore, stock at Rs 817.90), a Tata group enterprise, that
boast of retail chains Westside and Star India Bazaar, has launched
two brands for the collegiate-"Too Fast for You" for
men and "SRC" for women-at its Westside stores. According
to Himanshu Chakrawarti, General Manager (Marketing), Trent, these
two brands are "funky" and high on attitude. The range
includes college wear/day wear, club wear and disco wear. "When
we launched Westside stores, we were catering more to the family
and office-going segment. But soon, we realised that the moment
any mall opens, the maximum number of consumers that rush in belong
to this group." In fact, the two brands-Too Fast for You
and SRC-have seen growth in the range of 50 to 70 per cent, year-on-year.
While SRC was launched five years back, Too Fast for You was introduced
two years ago. Trent also sponsors college festivals and places
ads in niche youth magazines like Jam and JLT.
| As the companies' equity with the youth
grows, there is every reason to bag these hot scrips. The
only catch: check the pulse of the youth from time to time |
Another Tata group company-Titan Industries-is
betting big on this brat pack. Titan now markets the Tommy Hilfiger
range of products in India and recently launched Fastrack range
of sunglasses with actor John Abraham as its brand ambassador.
"Over the last one year, Titan has launched 150 new products,
and a majority of them cater to the youth," says Manoj K.
Chakravarti, General Manager (Corporate Affairs), Titan Industries.
According to Chakravarti, 57 per cent of watches sold by Titan
are bought by people below the age of 25. While Fastrack range
of watches and sunglasses are aimed at the collegians, Titan Steel
is positioned at the young jobber and Tommy Hilfiger at the high-fashion,
rich youngsters.
So, as long as the companies' equity with
the youth is growing, there is every reason to bag some of these
scrips. The only catch: check the pulse of the youth from time
to time.
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