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7 October 2008
Mumbai, India
The recent US credit crunch may have triggered alarm bells for many consumers, but Indian investors have been safe-guarded by the country’s relatively nascent financial market where fewer investment options have resulted in savings accounts becoming the principal ‘investment’ option for many.
According to the recently published Nielsen Money Monitor 2008, a comprehensive survey of consumers’ investment behaviour, category drivers, and brand imagery for financial service marketers, Indian consumers prefer saving for a secure tomorrow to spending for a comfortable today.
“Indian consumers are relatively conservative when it comes to wealth creation. Many place greater emphasis on securing their savings than making their money grow. As a result, Indian investors seek out low risk financial solutions despite the moderate returns offered,” said Kalyan Karmakar, Associate Director, Client Solutions, The Nielsen Company. “While the local economy may be experiencing unprecedented growth and tales of generous pay packages abound, the Indian society is still emerging from an economy of scarcity and in the absence of any government-funded social security system, an individual’s financial security remains paramount.”
The Indian investment basket
In urban India, SEC A and SEC B, the penetration of saving accounts is 94 percent, the highest among all other banking accounts available. While equity-linked Investments barely reach double digit penetration, Shares and Mutual Funds only command a respective five percent of penetration.
Life insurance has the highest penetration among non-banking products (68%). Other popular investment options are the more traditional Gold and other metals (24%) and Property (14%).
“The panic selling witnessed during recent market fluctuations indicate that the stock market remains an unknown entity for most investors,” observed Karmakar. “The recent drop in the price of Gold saw investors scurrying back to their old favourite, with banks quickly jumping on the bandwagon by aggressively pushing Gold sales.”
Lifestage objectives
Investment decisions are intrinsically linked to one’s life stage. The Nielsen Money Monitor reveals that consumers in their ‘Responsible years’ – married with at least one kid – form the largest chunk of Indian investors. The key concern voiced by this segment is “We need to save for our child’s education…own house”. Advertisements in the financial sector are clearly aimed at these individuals.
The second largest segment consists of consumers in their ‘Spending years’, i.e. today’s youth, with the mantra – “I save almost nothing but spend all I earn…; I need instant access to my money 24/7…” Their financial appetite is greater than the married segment and they are more prone to risk-taking.
“Most mass media communications across financial sectors feature securing a better future for the next generation. There is an untapped opportunity for these products and their advertising, to talk about helping to stretch their money better, today, which is particularly timely given the prevailing inflation situation,” added Karmakar“.
About the survey
Nielsen Money Monitor 2008 is a comprehensive syndicated research to provide financial services marketers an understanding of Indian Financial Market through a primary survey conducted among the end consumers. It gauges current status and behaviour, future consumer disposition and brand penetration and imagery of various financial products in the market. The survey included 19,312 respondents in the age group 21-60 years, from SEC A and SEC B.
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). The privately held company is active in more than 100 countries, with headquarters in New York, USA. For more information, please visit, www.nielsen.com.
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