Id | Magazine Issue Id | Magazine Category Id | Title | Filename | Short Content | Content | Status | Created | Modified | Keywords | Description | Sortorder | Feature Article | Image | Actions |
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100 | 221 | 0 | Revisiting Nepali Consumers: Facts, Trends & Business Impacts |
Many believe that Nepal is still an under-explored market given the potential it has. The market is growing and chances of further expansion are still very high due to the increased awareness and affordability of consumers. The world’s leading brands available in Nepal have created an environment in which consumers can expect to get what they want. Every product has been putting their effort to get a hold in the market by expanding their consumer-base. Based on Purchasing Power Parity (PPP) Nepal’s Per Capita Income has doubled in 32 years. Recently released Human Development Report 2013 by the United Nations Development Program (UNDP) has revealed that the gross national income (GNI) per capita in PPP increased by 101 percent to US$ 1,137 in 2012 compared to 1980. Inflow of remittance and an large portion of youth population has made Nepal a potential market to companies. In this issue, New Business Age provides marketers and companies with some interesting insights to know the changing consumers landscape in Nepal. In the capital Kathmandu, varieties of goods and shopping places can be found within a few minutes from their homes. People can find products according to their affordability. There are varieties of price ranges and choices to consumers. Family run groceries are still the norm in Nepal, but supermarkets and malls are also doing good business. Despite economic slowdown, the consumption of fast-moving consumer goods (FMCGs) has not dropped but constantly going up. Nepal has been witnessing satisfactory growth in per capita food and non-food consumption expenditure. Household consumption of fast moving consumer goods (FMCGs) has also gone up. Multiple factors have contributed in expansion of Nepal’s market. The visible growth of Nepal’s economy, especially income of the people, over the last decade has put more money in the pockets of the country’s middle class, prompting retailers to target this group of consumers. Census 2011 In the report of National Population and Housing Census 2011 published by the CBS, the population of the country has grown to 26.6 million with 1.35 percent annual growth rate since the last census that was concluded in 2001. Thus, Nepal is the market of 26.6 million consumers including 12.8 million male population and 13.64 female. The census report shows that Terai region constitutes of 50.27 percent (13.31 million) of the total population. Similarly, hilly and mountain areas constitute 43 percent (11.39 million) and 6.73 percent (1,781,792) respectively. Highlights:
Age Groups and Corresponding Market The age of the consumer determines the type of products sellable in the market. Normally, a young person is fashion conscious in the choice of products, while a middle-aged person is status conscious. The age group of 10-14 years of the population is seen the highest (when compared to other 5-year gap intervals) in Nepal as per the 2011 census data. Also, the female population is slightly more than that of males. There are 13,645,463 women in Nepal, which accounts for 51.5 percent of the total population, while the number of males is 12.84 million. Higher population of women shows that the market of cosmetics items, clothing and boutiques are very good in the country.
Youth Population The census data shows that more than half of the population, about 55 per cent, is below 25 years of age. According to the 2011 census report, some 34.91 per cent of the population is aged below 14 years and another 19.97 per cent is aged between 15-24 years. This is one of the reasons why many world players are coming and establishing their presence here in the Nepali market. Young Nepalis today expect a lot more from their lives, and often face pressure that was unfamiliar to earlier generations. Young people often want to keep up with global fashions and market trends. Their passion of following global fashion and trends has created many opportunities in Nepali market. Though Nepali population is mostly young, the size of old-age population has been increasing as well offering increased opportunity for business that provide goods and services to aged. Family Size and the Family Life Cycle The buying decision in a large family is more complex as several individuals play different buying roles, such as that of initiator, influencer, prayer, buyer and users, economist Dr Chiranjivi Nepal says. He opines that the large families generally buy a single brand while small families are found to be more brand-switching. Consumers’ product varies according to the stage of their family life cycle. The consumption pattern of a bachelor is different from that of a man with several children. The average household size of Nepal is 4.88 as per the 2011 census data. The household size of the urban and rural was seen 4.32 and 5.02 respectively. The largest household size was seen in Rautahat district with 6.44 and the lowest of 3.92 in Kaski district. Remittance Around 1,500 Nepali workers go abroad for employment every day and it is their remittance that keeps the Nepali economy afloat, opines economist Nepal. According to the World Bank, Nepal ranked 6th in the world among top remittance-receiving countries in 2011, with remittances making up 20 per cent of its GDP. A total of 56 per cent of the total households in Nepal receive remittances. Of which, 48 per cent comes from international labour migration, according to Central Bureau of Statistics. Accounting for more than 20 per cent of the GDP, migrant labourers brought in Rs 359 billion in the last fiscal year alone.
Education Of the total population, 39.04 percent are at the level of primary education. The male population dominated all the regions of the country in the literacy level. 65.94 per cent of the total population are literate (can read and write) in Nepal. 2.52 percent of the population of Nepal can read only as per census data. Kathmandu has the highest literacy rate and Humla, the lowest with 86.3 per cent and 47.8 per cent respectively. The school enrollment of Nepal is seen at 95.1 per cent as per census data. This means over 95 per cent of school going age population is actually enrolled in schools. This indicates to very good market for educational material and education-related services.
Toilet Use More than one-third, i.e., 38.17 per cent of the Nepali population does not have toilet facility. In Terai region, a total of 51.24 per cent of population are still without toilet facility. However, the trend of constructing the flush toilet and squat toilet with septic tank is increasing in the country including both in the rural as well as in urban areas. Therefore, the business of sanitary ware has also been going up.
Rural Market Though the business volume may be big in Kathmandu and urban areas, Nepali villages offer very good markets in terms of the number of consumers as about 82.30 per cent of the population of the country is living in rural areas. Interestingly even some parts of the urban population have rural consumption behaviour. And urban characters can be seen also in some rural areas due to the influence of remittance, for example. However, purchasing capacity of rural community is low compared to urban population. Rural population still depends on agricultural activities. The consumption habit, however, has been changing in the rural areas too. One reason is the road access and the other is education. Also the availability of electricity and cable TV as well as opening of cinema halls in those rural areas have been changing the consumption habit in rural Nepal. Many companies have been launching products targeting the rural population. Comparatively low-cost products and micro-packing are main strategies adopted by companies to get a hold in rural areas.
Fuel According to National Population Census 2011, Nepal still relies heavily on firewood to fulfill its fuel demand for the purpose of cooking. However, the consumption of Liquefied Petroleum Gas (LPG) has significantly increased in the recent years which has created lots of space for the business of LPG stoves, regulators, pipes, cylinders and other necessary accessories. One interesting fact about source of fuel for cooking is that big urban districts like those in the capital (except Lalitpur), Parsa, Kaski and Morang do not feature among the top users of electricity. Obviously the frequent power outage and cheap price of LP Gas have prompted the households ot shift to LP Gas in those districts.
Lighting Sources Electricity is seen as the major source of lighting for Nepali households. Total of 67.26 percent of the population is using electricity as the source of lighting. Similarly, kerosene is the second major source of lighting (18.28 per cent). But these households suffer from frequent power outage. This has created much opportunities for the traders of invertors and batteries as well as solar power systems. Therefore, business of electricity accessories such as bulbs, wires, poles and ceiling lights is doing well in Nepali market. At the same time, business of solar energy has also gone up and possibility of bio-gas related business is also very high in the Nepali market.
Religious Cultural Factors In September 2012, World’s famous fast food chain McDonalds launched its first vegetarian restaurants in India targeting Indian Hindu. The reason of launching vegetarian products was obvious that McDonalds did not want to lose Hindu consumers. Cut-throat competition among various companies and outlets has created a scenario whereby all companies try to lure consumers by offering what they want. Nepal is multi-religion country and companies may want to tap consumers according to religion. Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services.
Absent Population One in every four households (25.42%; 1.38 million households) reported that at least one member of their household is absent or is living out of country. Total number of absent population is found to be 1,921,494 in 2011 census against 762,181 in 2001. The highest proportion (44.81 percent) of absent population is from the age group 15 to 24 years. Gulmi, Arghakhanchi and Pyuthan districts reported the highest proportion of their population being absent (staying abroad).
Media Consumption The media consumption patterns, profiles of audiences on different platforms and media types, and the effectiveness of advertising across platforms have been significantly changed over the last decade. Consumers concentration has been shifted to the television from radio, according to Managing Director at JWT-Thompson Nepal Joydeb Chakravarty. “Ten years back the national media was radio but today more people watch television,” he says.
Computer and Internet Computers and Internet products are also growing day by day. The number of Internet users in Nepal has accelerated in the country. Access to the Internet has positive implications for society and the economy. A study carried out by Computer Association of Nepal (CAN) last year showed that the computer penetration rate in the country had crossed five per cent. The survey was carried out based on the record of import of computer monitors and branded laptops, according to CAN general secretary Narayan Neupane. The penetration rate of computer at present may have crossed eight, he says, adding that the trend of using computers is on the rise since schools, health institutions, clubs and other social groups in far flung areas of the country have started using computers for their day-to-day activities.
Automobiles Nepal has been seeing the penetration of two- and four-wheelers increasing at a rapid pace, thanks to the expansion of road connectivity and increased income of citizens. Expansions of road network throughout the country and a steep rise in the number of migrant workers have played a catalytic role in the growth of automobile sales. So, many automobile brands have been able to establish themselves and automobile has become one of the largest customs duty contributors in the country. Nepali consumers have been using four-wheeler ranging from the most expensive one to the cheapest Nano car. Similarly, Nepal-assembled brands such as Mustang and Sherpa has also been rolling on Nepali roads.
ICT and Mobile Not only telecom sector but also the market of entire Information and Communication Technology (ICT) has expanded over the last few years. As far as mobile market is concerned, Nepal has approximately Rs 15 billion transaction every year, according to chairman of Mobile Traders Association of Nepal Purushottam Basnet. Nepal has been very potential market for mobile phone sets and other ICT products.
Home Appliances Sales of the home appliances have tremendously increased over the last year. The sales of refrigerators, washing machines, vacuum cleaners, LEDs and LCDs has boosted in the recent years. Besides, people living in urban areas are continuously upgrading their living standards, and home appliances are deemed as components that add value to their living condition. The market of home appliances has also increased in the rural areas too.
Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services. |
1 | 2013-06-30 00:00:00 | 2013-06-30 00:00:00 | new business age cover story news & articles, cover story news & articles from new business age nepal, cover story headlines from nepal, current and latest cover story news from nepal, economic news from nepal, nepali cover story economic news and events, ongoing cover story news of nepal | new business age cover story news & articles, cover story news & articles from new business age nepal, cover story headlines from nepal, current and latest cover story news from nepal, economic news from nepal, nepali cover story economic news and events, ongoing cover story news of nepal | 86 | 1 | View Edit Delete | |||
101 | 221 | 0 | Experts’ Views | ‘Young Consumers have Smart Perspective on How to Spend Money’ --MANI RAJ DAHAL ,Country Manager ,The Nielsen Company Nepal Pvt Ltd
It is very important to assess how the market is doing and what the current trends of consumption are to revisit the consumers. Nepal is still an unexplored market in many fields and, therefore, it offers possibilities of market expansion to companies. It is worthwhile to mention here that the spending and consumption habit of consumers are positive in Nepal, despite the huge political problems the country is going through. Rising Consumerism There is a tremendous potential in the country for companies to expand their products and services. The swelling consumerism has seen the introduction of a range of new products like ready-to-eat snack foods, breakfast cereals, textures vegetable protein foods and so on. Different brands of the same item and attractive packaging vie for the consumers’ attention. Spending Capacity The increased spending capacity of consumers is really a good sign in the Nepali market. The inflow of remittance and tourism have contributed to increase the income of consumers. The purchasing power of consumers has a direct impact on the market expansion. Every investor asks some questions before starting a business: how big is the market and what are the possibilities of growing? And the scenario in Nepal is not so bad. Though Nepali market is not that big, there’s enough room for new companies and brands. Youth Focused Market At present, the consumption of Nepali young generation forms a thriving market. Young consumers are usually impressed with branded and quality goods and services then being purely price sensitive . Companies and service providers can take advantage of this to further set up their brand image. The young generation enjoys a staggering amount of purchasing power in the country due to foreign employment and inflow of remittance. Young consumers not only have money, but also have smart perspectives on how to spend money. Consumerism and Socialisation It is really interesting to mention here that Nepali culture has changed over the years due to technology and consumerism. Our socialization process has changed, compared to some years ago. Lifestyle and consumption habits are considered to be the main reason for the socialization and it is obvious that the process of socialization has changed throughout the last one or two decades. For instance, we can take café culture, business in Valentine Day or may be English New Year. Nepali Products Entrepreneurship is something that will help the country to achieve sustainable development. The chances of entrepreneurship are very high in Nepal, all we need is creative minds and creative ideas. In Nepal, the chances of branding local products are very high. Nepali people are very much habituated to consume Nepali food and drinks trend and young entrepreneurs can establish Nepali brands of that sector. The typical Nepali style goods are also making their brands . Price Hike Impact It is an interesting fact that in Nepal, despite the frequent price hike of Fast-moving Consumers Goods (FMCG), the market has not seen a drop in the demand of such goods. This indicates that consumers have got the capacity and are willing to pay more for the products of their choice of consumption. Products of High Demand • Lifestyle products • Gadgets • Essential commodities • Fuel • Automobiles ‘When you build your own brand you are able to command a premium rate’ --JOYDEB CHAKRAVARTY ,Managing Director ,JWT-Thompson Nepal
Some experts say that Nepal is still an untapped and unexplored market. Do you agree? Nepal was first country in the region to be exposed to international brands. Some 30 years back, India did not have the access and exposure to the brands that were here in Nepal. Nepali consumers have always been exposed to these kinds of international brands for last 30-40 years. So, when local brands try to enter this market they find it a challenge because consumers benchmark it with international brands that they have already used. It could be in any category, but the consumers give it a fair trial and if it does not meet their expectations then they have no hesitation in rejecting it. The Nepali consumers are very discerning indeed! Can you please tell us some major differences in the consumers’ behavior in the past and present? Today the consumers have a different kind of exposure because of the reach and penetration of the international media. This has had very large impact to the consumers’ psyche. When you look at the way people dress, we see they are following the world’s leading trends. Nepali consumers’ tastes and trends have evolved over the last couple of decades. Look at the way they have embraced new technology, new gadgets and even smart phones. Look at two wheeler sector, earlier people went for something functional but not anymore. Now they want a higher-end bike to go with their perceived self-image. People have a much higher level of aspiration now, and want to show that through their material possession. What are the practices of the companies regarding study of consumers’ buying behavior in Nepal? Client and organizations in Nepal are talking about research. Although, they might not always employ a professional research agency, they might want to do research in-house, through their own team, which is not the right way to do it, but it still goes some way. Earlier there a few companies who actually believed in market and consumer research but that’s changed. We now see that clients and companies are talking about research, which is a very positive sign. How is the branding practice in Nepal? How important is branding from your perspective? Branding has caught on over the last two decades. Everything now seems to be branded. I am just not talking about the consumer goods, but commodities which at one time were sold loosely are now branded. Companies have now come to realize and appreciate that when you build your own brand you are able to command a premium rate. What is the media consumption habit of Nepali consumers right now? If you see the ownership in the durables likes colour television (63% in 2012 Vs 13% in 2003), radio, refrigerator and mobile phones have drastically increased. Ten years back the national media was primarily radio based but today there are more people watching television than listening to the radio. Obviously radio has not been able to catch the imagination the listeners, while television has caught on despite having more than 350 FM radio channels in Nepal. The print too have taken its toll, readership has gone down over the last ten years even though literacy has gone up. The reason could be the high cover price of newspapers. The usage of the internet has gone up drastically from 2% in 2002 to more than 25% in 2012. How do you envisage the importance of advertisement to catch the emotional side of consumers? If you are unable to connect with your customers on an emotional level, you will not be able to engage with them meaningfully. Consumers today have many interests and they are not waiting to see your advertisements! Unless you are able to make an emotional connection with your customers; make your advertisements distinctive, emotional, entertaining and engaging otherwise you cannot hope to catch their attention. What are the contributing factors in the quality of advertisements? What are the reasons behind low quality of advertisement in Nepal? Over the last few years the quality of advertisements has not matched the expectation of the Nepali consumers. There are many reasons for that, no one wants to take a ‘risk’ and everyone wants to ‘play safe’. Companies feel that if they come up with a “creative” advertisement it might go over the head of their audience. There is very little the advertising agencies can do in that kind of a scenario. This is also compounded by the severe shortage of creative people in the advertising sector. Moreover, top quality advertising production – especially films cost huge amounts of money. The market here is very small compared to other countries in the region. |
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