There was a time when understanding your target audience was a relatively straightforward exercise. If you were selling a premium product, you looked at higher-income households in major cities. If you were selling something affordable, you focused on customers with lower disposable incomes. Age, gender, geography and income were usually enough to give marketers a reasonable idea of whom they should be talking to, what they might be interested in and how much they were likely to spend.

Of course, there were always exceptions to this. A customer earning a modest salary could save up for an expensive purchase, while someone with a considerably higher income might be extremely careful about discretionary spending. But broadly speaking, demographic categories gave businesses a useful starting point for developing products, setting prices and deciding where to advertise. The problem today is that Indian consumers are becoming increasingly difficult to understand through these categories alone, particularly as their exposure to products, services and lifestyles expands.

A customer in Coimbatore might purchase an expensive smartphone but remain extremely particular about how much they spend on groceries. Someone working in Bengaluru might prefer affordable clothing while spending generously on travel. Two people of the same age, living in the same neighbourhood and earning similar salaries might have completely different priorities when it comes to shopping. Their purchasing decisions are shaped by what they value personally, which categories they are interested in and how they choose to spend their disposable income.

These differences have always existed to some extent, but digital access has made it easier for consumers to explore products that suit their individual interests. People no longer need to live in a metropolitan city to discover international brands, compare specifications or learn about new trends. They can research a product online, watch reviews and make purchasing decisions based on information that would have been considerably harder to access a decade ago. For businesses, this means that understanding a customer’s income and location may tell you whether they can afford a product, but it often tells you very little about whether they actually want it.

India’s Consumer Market Is Becoming More Diverse

India has always been a complicated consumer market because of the differences in language, culture, geography and purchasing power across the country. A product that performs exceptionally well in one state may require a completely different positioning strategy in another. Even within individual cities, customers can have very different expectations depending on their lifestyles, household responsibilities and personal preferences.

What’s changing is the combination of greater digital access, rising consumer aspirations and an expanding range of available products. In February 2025, Boston Consulting Group and the Retailers Association of India published a report titled Winning in Bharat & India: The Retail Kaleidoscope, which projected that India’s retail market could reach approximately ₹190 trillion by 2034. The report described a market where rising affluence exists alongside a large, value-conscious middle class, and where customers increasingly combine global aspirations with local preferences.

The research also highlights how different consumer behaviours can coexist within the same market. Some customers are willing to spend more on premium products, while others continue to prioritise affordability. Digital shopping is expanding, but physical retail remains important, and many customers move between online and offline channels depending on what they are buying. These differences make it increasingly difficult for companies to develop one standard approach to large consumer segments.

For marketers, the challenge is deciding which groups to focus on and understanding what influences their purchases. A business targeting young professionals in urban India may discover that its audience has widely different spending priorities, even when everyone falls within a relatively narrow income bracket. Similarly, a brand expanding into smaller cities may find that customers are familiar with international products but still have strong preferences for local styles, regional languages or particular shopping experiences. Broad demographic categories remain useful, but they need to be supported by a much better understanding of actual customer behaviour.

Income Doesn’t Tell You Everything About Spending

Income is one of the first things businesses consider when defining their target audience, and there’s a good reason for that. A customer’s financial circumstances influence which products they can afford, how frequently they can purchase them and how much flexibility they have in their budgets. However, income doesn’t automatically tell us which purchases a customer considers worthwhile or how they distribute their spending across different categories.

Imagine two professionals earning approximately the same salary. One might spend a considerable amount on a car because driving comfort is important to them, while the other prefers an economical vehicle and spends more money on international travel. Both have similar purchasing power, but their personal priorities lead them to make completely different decisions. A marketing campaign that treats them as identical simply because they belong to the same income category will probably overlook those differences.

Visa’s April 2026 white paper, India’s Affluent Economy 2025–2026, offers an interesting perspective on this behaviour. The research examined affluence through spending patterns rather than relying entirely on income, drawing on Visa transaction data and a Visa-commissioned YouGov study. Among the consumers included in its affluent segments, the research found significant differences in how spending was distributed across travel, dining, retail and lifestyle categories. For the ultra-elite segment, travel accounted for 58% of discretionary spending, while retail and luxury together accounted for 28%.

The study is focused on affluent consumers, so its findings shouldn’t be used to describe the entire Indian population. What it does demonstrate is the usefulness of looking at where consumers choose to spend their money. A person may qualify as affluent based on income or assets, but their purchasing decisions are still influenced by individual preferences and the experiences they consider valuable.

For businesses, this means that targeting premium products purely on the basis of income can be inefficient. A company selling expensive travel accessories may find stronger demand among frequent travellers than among people selected simply because they earn above a particular amount. Similarly, a premium fitness business may benefit from identifying consumers who already invest in their health rather than assuming everyone in a high-income neighbourhood is a potential customer. The more closely a business can connect its targeting to actual interests and behaviour, the more relevant its marketing becomes.

The Difference Between Affordability and Perceived Value

There’s another important distinction that businesses need to understand when analysing consumer behaviour. A customer may be perfectly capable of affording a product and still decide that it isn’t worth purchasing. Someone might have enough money to buy a ₹5,000 accessory but choose a cheaper alternative because they don’t see enough benefit in paying the difference. The same person may willingly spend ₹10,000 on something else because that purchase matters more to them.

This is where perceived value becomes important. Customers assess products in relation to their own priorities, and those assessments can differ considerably between categories. The value of a product might come from its durability, how frequently it will be used, the convenience it provides or the quality of the experience associated with it. Price influences whether a purchase is possible, but customers also need to believe that the benefits justify the expense.

In August 2026, BCG published Five Consumer Behavior Shifts Reshaping Growth in 2026, based on a survey of more than 13,000 consumers across twelve markets and an analysis of over 1,000 brands. The research found that 67% of surveyed consumers would avoid purchasing a product they could afford if they did not perceive sufficient value. The study covered multiple international markets, so this figure should be understood as a broader consumer finding rather than a measurement specific to India.

The implication is relevant to Indian marketers because it highlights the limitations of judging demand through affordability alone. A product may fall comfortably within a customer’s budget, but they still need a compelling reason to choose it. This is particularly important for companies introducing premium versions of existing products, where customers will naturally compare the additional benefits with the increase in price.

It also helps explain why customers can appear price-conscious in one category and comparatively generous in another. Their behaviour may be perfectly consistent when viewed through the importance they attach to each purchase. Businesses that understand those priorities can develop better products and communicate their value more clearly, while those relying on broad assumptions about spending power may struggle to explain why their customers behave differently from what they expected.

Smaller Cities Can No Longer Be Treated as One Consumer Segment

For years, businesses have divided India into metropolitan cities, tier-two cities, smaller towns and rural markets. These divisions are useful when planning distribution and understanding differences in infrastructure, but they can become misleading when marketers assume that everyone outside a major city has similar purchasing preferences.

Digital adoption has changed the information available to consumers across the country. According to the Internet in India Report 2025, prepared by the Internet and Mobile Association of India and Kantar, India had approximately 958 million active internet users in 2025. Of these, around 548 million were based in rural India, which accounted for more than 57% of the country’s active internet population. The report also found that rural internet usage was growing at nearly four times the pace of urban internet usage.

These figures matter because internet access changes the range of products and information available to customers. Someone living in a smaller town can discover a product through social media, compare alternatives online and purchase from a brand that may not have a physical store anywhere nearby. Their exposure to trends and product categories can therefore extend considerably beyond the retailers operating in their immediate surroundings.

The growing importance of smaller cities is also evident in retail data. According to the Deloitte and FICCI report published in August 2025, tier-two and tier-three cities accounted for more than 60% of e-commerce transactions in India. The same report projected that the country’s online retail market could grow from approximately $75 billion in 2024 to $260 billion by 2030, although that remains a forecast rather than a guaranteed outcome.

For brands, these developments create opportunities outside their traditional metropolitan markets. However, businesses still need to understand regional differences rather than treating smaller cities as one homogeneous group. A customer in Jaipur may have different product preferences from someone in Kochi, and those differences can be influenced by climate, local culture, shopping habits and household economics.

A company expanding into these markets should therefore examine what customers are purchasing, which products are already popular and how people prefer to shop. National advertising may create awareness, but local relevance can influence whether that awareness converts into actual purchases. The opportunity is substantial, provided businesses are willing to understand individual markets instead of assuming that the same strategy will work everywhere.

Digital Access Has Changed the Way People Research Products

Think about how someone might have researched a product fifteen years ago. They could visit a few stores, speak to friends and rely on salespeople for information about the available options. If they were buying a television or a household appliance, for example, the advice they received at the store might have influenced their decision considerably.

Today, the research process can be much more extensive. Customers can compare specifications, watch detailed demonstrations, examine reviews from existing buyers and learn about potential problems before purchasing. They can also discover alternative brands that they may never have encountered through traditional retail channels. This gives consumers more information to work with, although the quality and reliability of that information can vary.

The growth of digital content has also influenced what people become interested in purchasing. Someone may discover a skincare ingredient through a dermatologist’s video, learn about running shoes from a fitness creator or develop an interest in a particular kitchen appliance after watching cooking content. These interests can emerge independently of the customer’s age, income or location, which makes them difficult to capture through traditional demographic categories.

The IAMAI and Kantar report also found that 44% of active Indian internet users had engaged with AI-enabled features such as voice search, image-based search, chatbots or AI filters during 2025. This is a broad measure of exposure to AI-enabled technology, but it suggests another way in which consumers are becoming familiar with digital tools that can help them discover and evaluate products.

For marketers, the practical implication is that a customer’s interests and research behaviour may provide useful clues about their purchasing intentions. Someone repeatedly comparing washing machine specifications is likely to be in a different stage of the buying process from someone casually watching a home renovation video. Understanding those differences allows brands to provide information that is appropriate to the customer’s actual requirements.

Younger Consumers Are Influencing Purchases Across Age Groups

Age is still an important part of consumer segmentation, but marketers also need to understand the difference between the person buying a product and the person influencing the decision. This becomes particularly relevant when examining the role of younger consumers in Indian households.

In October 2024, BCG and Snap published The $2 Trillion Opportunity: How Gen Z Is Shaping the New India. The research estimated that India’s Gen Z population contributed to or influenced approximately $860 billion in consumer spending, equivalent to around 46% of total consumer spending at the time. This includes purchases influenced by Gen Z, rather than spending funded entirely from their own income.

That distinction is important because a young person may help determine which smartphone their parents purchase, which restaurant the family visits or which streaming subscription the household chooses. They may research alternatives and recommend products even when another family member ultimately pays for the purchase. A brand targeting only the person with the money may therefore overlook someone who has considerable influence over the final decision.

BCG’s research also reported that only 15% of the marketers it surveyed had taken concrete action to address the Gen Z opportunity. This suggests that recognising the importance of younger consumers and building effective strategies around their behaviour are two different things. Businesses may understand that younger audiences influence purchasing decisions while still relying on campaigns designed around traditional assumptions about who the buyer is.

A more useful approach is to examine the different roles involved in a purchase. The person who pays, the person who uses the product and the person who recommends it may all have different priorities. In categories such as electronics, entertainment or family travel, understanding those roles can help businesses communicate more effectively throughout the decision-making process.

Consumers Are Increasingly Defined by Their Interests

Some purchases are closely connected with how people spend their time and what they enjoy doing. Someone who runs regularly may be willing to invest in specialised footwear, while a person interested in photography may carefully compare cameras and lenses before making a purchase. These interests can influence the customer’s decisions more strongly than broad demographic characteristics.

Consider a company selling equipment for home recording studios. Its potential customers might include students, working professionals and older hobbyists with very different incomes. What connects them is their interest in recording music, although the products they need will vary depending on their experience and how they intend to use the equipment. Targeting this audience purely by age or salary would probably be less useful than understanding their technical requirements and purchasing motivations.

The same principle applies to fitness products, gaming accessories, gardening equipment and numerous other categories. Customers may belong to entirely different demographic groups but share a particular need or interest that makes them relevant to the same business. This creates opportunities for brands to build more specialised products and develop communication around the actual problems those products solve.

However, businesses should distinguish between expressed interest and purchasing intent. Someone who watches travel videos every evening may enjoy the content without planning an expensive holiday, while someone searching repeatedly for flights to a particular destination may be much closer to making a purchase. Marketers need to understand the difference between people who are interested in a category and those who are actively considering buying something within it.

This is where combining behavioural information with customer research becomes useful. Search activity and website interactions can suggest what people are interested in, while interviews, purchase histories and customer feedback can help explain the motivations behind those behaviours.

Customers Can Be Premium Buyers in One Category and Value-Conscious in Another

One of the limitations of traditional segmentation is the assumption that consumers behave consistently across different purchases. Someone identified as a premium customer might be expected to prefer expensive products in most categories, while a value-conscious consumer might be assumed to prioritise lower prices everywhere.

In practice, customers frequently behave differently depending on what they are buying. Someone may purchase a premium mattress because they place considerable importance on sleep quality but choose inexpensive furniture for the rest of their home. Another person may invest in professional kitchen equipment because they cook regularly while spending relatively little on entertainment.

These decisions can reflect the amount of use a product receives, the customer’s personal interests and the consequences of choosing a cheaper alternative. A customer may spend more on an item they expect to use every day and considerably less on something they regard as occasional or unimportant. Their choices become easier to understand when marketers examine the role that individual product categories play in their lives.

This is also relevant to how premium brands position themselves in India. Businesses sometimes assume that rising household incomes will automatically create demand for more expensive products, but the relationship is rarely that simple. A customer needs to see a reason for spending more, and that reason may be highly specific to the category.

For marketers, the useful question is whether they understand what customers value enough to pay for. A premium appliance brand might discover that certain customers care most about reliability and after-sales service, while others are primarily interested in advanced features. Both groups may be willing to spend more, but they need different explanations of the product’s value.

Consumer Behaviour Changes With Life Circumstances

Customer segmentation often treats age as a convenient way to approximate life stage. Marketers may assume that people in their twenties are primarily interested in individual spending, while those in their thirties are more concerned with family purchases and long-term financial commitments.

These assumptions can provide useful starting points, but they are becoming less reliable when applied too broadly. People make decisions about marriage, parenthood, housing and careers at different ages. Someone in their late twenties may be supporting a family, while another person in their forties may be living alone and prioritising travel or personal interests.

Life circumstances can also change quickly. A person who has recently moved to a new city may be purchasing furniture, appliances and household essentials. Someone who has started a new job may be reconsidering their commute or professional wardrobe. A customer who has become a parent may begin researching products they had never previously considered.

These changes influence purchasing behaviour even when a person’s demographic characteristics remain largely the same. A thirty-year-old customer can have very different needs from the same customer two years later, depending on what has happened in their life.

This is why businesses should pay attention to situations that create demand. A home furnishing brand might focus on people setting up new households, while a financial services company might develop communication around particular financial decisions. Understanding the circumstances that lead customers to search for a product can provide a more useful foundation for marketing than relying entirely on age-based assumptions.

Regional Culture Still Matters

Digital connectivity has given consumers greater access to national and international brands, but regional culture continues to influence purchasing decisions across India. Food preferences, clothing traditions, festivals and household habits can differ substantially between states, and businesses need to understand those differences before assuming that a national campaign will work equally well everywhere.

A food company expanding into a new market may need to examine local tastes and cooking practices. A fashion retailer may find that particular fabrics or silhouettes perform differently across regions. A gifting business needs to understand which festivals are widely celebrated within the communities it serves and what kinds of products are associated with those occasions.

Even when customers are familiar with global trends, that familiarity does not necessarily replace their regional preferences. Someone may use international technology brands and follow global fashion creators while still preferring traditional foods or locally relevant products in other parts of their life.

The BCG and Retailers Association of India report describes this combination of global aspiration and local preference as an important characteristic of India’s evolving retail market. For brands, it means that understanding what customers want may require attention to both influences, rather than assuming that greater digital exposure will make purchasing behaviour identical across the country.

Companies that want to expand nationally should therefore examine their product mix and communication in individual markets. Localising a campaign can involve language, but it may also require changes to the products being promoted, the occasions around which campaigns are planned and the customer concerns that advertisements address.

Traditional Customer Personas Need to Become More Specific

Many marketing teams still create customer personas that look something like this: a thirty-two-year-old professional living in Bengaluru, earning a particular salary, interested in technology and willing to spend on premium products. The persona may include a name, a photograph and a few assumptions about lifestyle preferences.

This can be useful as a starting point, particularly when a business is developing its first understanding of a target market. But it can also create false confidence if the details are based primarily on assumptions rather than customer research.

A more useful customer profile would explain what the person is trying to accomplish, which problems they experience and what influences their purchasing decisions. For example, if the business sells project management software, the customer’s job responsibilities and the difficulties they face at work may be more important than their age or income.

The profile should also account for practical considerations such as purchasing authority, budget constraints and the alternatives the customer is already using. Someone may be extremely interested in a product but unable to approve the purchase, while another person may have the budget but little understanding of why the product is necessary.

Businesses should regularly revisit these profiles because customer expectations and market conditions change. A persona created several years ago may no longer reflect the people purchasing the product today, particularly if the company has expanded into new markets or introduced new offerings.

The objective is to make segmentation more useful for decisions. If a customer profile doesn’t help the business improve its products, choose suitable channels or communicate more effectively, it may need additional research.

Businesses Need to Ask Better Questions About Their Customers

The growing complexity of Indian consumer behaviour doesn’t mean that segmentation has become impossible. It means marketers need to use a wider range of information when deciding how to group customers.

Demographic data can help identify where customers are located and what they may be able to afford. Behavioural information can show what they browse, compare and purchase. Customer research can then help explain the reasons behind those decisions, including the problems people are trying to solve and the benefits they value most.

These different sources of information work best when considered together. Website analytics may show that customers frequently abandon a product page, but it won’t necessarily explain whether the problem is pricing, confusing information or uncertainty about delivery. Speaking to customers or conducting usability research may reveal issues that would otherwise remain hidden in the data.

Businesses should also distinguish between patterns that appear repeatedly and assumptions built around a handful of examples. An unusual customer purchase can be interesting, but it may not indicate a commercially meaningful segment. Marketers need enough evidence to understand whether a behaviour is widespread, whether the group can be reached effectively and whether its needs justify a different product or campaign.

This requires ongoing research rather than a single segmentation exercise conducted at the beginning of the year. As new products become available and consumer expectations change, companies need to revisit their understanding of demand.

What This Means for Indian Marketers

The practical implication for marketers is that customer targeting needs to become more closely connected with actual purchasing behaviour. Businesses should still consider age, income and geography, particularly when those characteristics influence affordability or product suitability. But they also need to understand what motivates customers, which categories matter to them and how they evaluate competing products.

For example, a premium skincare brand might find that interest in particular ingredients and skin concerns is more useful than targeting everyone above a certain income level. A travel company may benefit from understanding the kinds of experiences customers prefer, while a technology retailer could focus on how people intend to use a device rather than assuming that all customers within an age group have similar requirements.

There is also an opportunity to develop more relevant communication. When businesses understand the actual problems customers are trying to solve, they can explain their products in terms that are meaningful to those customers. This can improve the usefulness of marketing content and reduce the reliance on generic messages designed to appeal to very broad audiences.

However, more detailed segmentation also creates responsibilities around customer data. Businesses should collect information transparently, respect consent and avoid assuming that every digital interaction reveals something definitive about a person’s preferences. A useful customer insight should be based on sufficient evidence and applied in a way that respects the people being studied.

The aim is to build a clearer understanding of the market rather than create increasingly complicated customer profiles that nobody uses.

India’s Next Phase of Consumer Growth Will Require Better Understanding

India’s consumer market is expanding, and the opportunities for businesses are considerable. Retail growth, increasing internet access and the growing importance of smaller cities are changing where demand comes from and how customers discover products.

At the same time, consumers are becoming more selective about where they spend their money. Their priorities vary across categories, their purchasing decisions are influenced by different people and their preferences are shaped by a combination of personal interests and regional circumstances.

This makes consumer understanding a much more important part of business strategy. A company that relies entirely on broad demographic assumptions may continue reaching large numbers of potential customers, but it may struggle to explain why some people purchase while others show little interest.

Businesses that invest in better research have an opportunity to make more informed decisions about product development, pricing and marketing. They can identify groups whose needs are poorly served, understand what customers value and develop communication that addresses those priorities.

As Pravin Chandan’s perspective on marketing has consistently emphasised, understanding the customer requires looking beyond the information that is easiest to collect. The important questions concern what customers want to achieve, why particular purchases matter to them and what would persuade them to choose one product over another.

India’s next phase of consumer growth will create opportunities for companies that understand these differences. The size of the market is certainly important, but the ability to identify specific customer needs will influence how effectively businesses participate in that growth.

A person’s age, income and location can tell us quite a lot about their circumstances. To understand their purchasing decisions, however, we need to know considerably more about the life they lead and the things they actually value.

www.pravinchandan.in

#pravinchandan #pravin #chandan #marketing #consumerbehaviour #indianconsumers #businessstrategy #marketresearch