Financial Times

Profiling the Sri Lankan consumer
By Dr. Uditha Liyanage
Marketers within each firm may embrace the primacy of the "customer focus" as a venerable dictum, but only to the extent that it helps to achieve their ends. In this context, "customer focus" becomes just another way of looking in the mirror: how to sell what we make. This is probably the reason for the marketer telling the customer, "here I am, and this is my offer", rather than listening intently to the customer who is crying out, "this is me, and here is what I need".

"Composite Man"
The ageing population and smaller family size reflect changes in the family life cycle, which is a key determinant of consumption patterns. Marketers need to define their target markets in terms of specific life cycle groups and develop appropriate products and marketing plans.

The implications of an ageing population has far - reaching implications which policy makers have to reckon with and marketers have to respond to. For example, formal education is traditionally concentrated among the youth, work among those in the 25 - 55-year age group, and leisure among older people. Changes in the age structure of the population will thus impact, inter alia on education, the labour market and the provision of pension, which continues to be an increasingly un-funded liability for the government. Importantly, the impact of ageing on private savings can be visualized using a life-cycle framework, which postulates that households smoothen their consumption over their lifetime by saving during their working life. An ageing population and an ageing work force will thus have implications for marketers as they will deal with an increasing number of the "new elderly", especially of the higher income deciles. A propensity towards greater private consumption is likely in this context. On the other hand, after empirical testing, Higgins and Williamson (1997) suggest that higher elderly dependency depresses investment more than savings.

Yahampath (2003) suggests a number of "retirement product" opportunities for the middle and upper-middle-income segments, examples of which are, retirement planning and wealth creating products, life style financial planning, reverse mortgages, annuities, residential accommodation units, including retirement villages, self - care units, nursing homes, health insurance and geriatric care products.

"Economic Man"
Continuing the pattern observed over the last couple of years, private expenditure on imported goods and non-factor services, rose at a higher rate than expenditure on domestically produced goods. Private consumption, which stood at Rs. 644 billion in 1997, increased to Rs. 1.2 trillion by year 2002, an 89% increase over six years. Within the category of imported consumer goods, food and beverages, consumer durables such a motor vehicles, and electrical goods recorded a significant growth.
The relative expenditure on food and beverage is often considered to be an indicator of the prosperity of a nation and the standard of living of its people.

Developed countries typically have a food ratio, which is below 33%, and a ratio in excess of 50% is an indicator of poverty. The progressive reduction of the food ratio is therefore, an indication of economic progress. Household penetration of key consumer durables and others items provides useful data in one's attempt to profile the Sri Lankan consumer.

In 1995/96, the all-island median monthly household income was Rs. 3793 in comparison to Rs. 13,038 in 2002. However, real income (at 1980/81 constant prices) has increased in favour of the urban consumer belonging to higher income deciles. Hence, the increased median household income does not necessarily suggest an enlarged purchasing capacity of the "average consumer". It should be noted that the urban sector consists merely of areas within urban and municipal councils. The estate sector is composed of plantations in excess of 20 acres where 10 or more resident workers are employed. The remainder of the country is classified as the rural sector.

The distribution of income across the households in the country has changed over time as indicated below. In relation to the year 1985/86, in the year 2002, the income received by the top decile has declined and a corresponding increase in the middle and bottom deciles is evident. This should, however, be seen in the context of the overall increase of income received by the top decile since 1978, consequent to the post-liberalization of the economy.

"Flip Side" of the
"Economic Man"
The distribution of household income points to a reduction of income of the top decile in relative (percentage) terms. However, Gini Coefficient (i.e. a measure of income disparity), over the last three decades suggests the growing income inequality. The Gini Coefficient of spending units (i.e., members of a household who act as a unit of spending) in 1973 was 0.35. The inequality has continued to widen from 0.46 in 1986/87 to 0.48 by 2002. This suggests a re-distribution of income has occurred over the period in favour of the affluent. By comparison, the Gini Coefficient of developed countries has steadily decreased to around 0.30.

The income disparity between urban and rural/estate sectors on the one hand, and the disparity of income distribution within the urban sector itself on the other, provides the backdrop for the recognition of the key facets of the "flip side" of the "Economic Man" - a key to profiling the impoverished Sri Lankan consumer.

The increasing polarization between the affluent and the economically disadvantaged, indeed the impoverished is evident. Its far-reaching implications, however, will only become patent through the analysis of the social fall - out of the economic conditions that have been delineated. Underpinned by the country's changing economic condition, significant sociological patterns appear to be unfolding in particular strata of society that are increasingly exerting an influence on the society at large.

Traditional middle-class
One sub-stratum of the Traditional Middle-Class (TMC) has lost its hegemony and has rapidly dwindled to the point of near extinction. Management/administrative cadres in the public sector, school principals, teachers and university academia, professionals solely engaged in the public sector are principal actors of the TMC, which, importantly is dwindling in size and stature. Indeed, its hegemonic role is increasingly diminishing. This group is relatively traditional in its orientation and considers heritage and occupation as key determinants of one's status in society. They are exposed to Western lifestyles and behaviours, but are not avid followers of them.

New Urban Middle- Class (NUMC)
The emergence of the private sector as the leading agent of economic and social change and its corollary, the relative down-sizing of the state bureaucracy, have set in motion a seemingly irreversible process of social structural change.

Importantly, unlike in the public sector where salary and wage differentials are contained within reasonable limits based upon equity considerations, senior private sector executives receive salaries and a package of fringe benefits, which include, inter alia, the reimbursement of defined expenses and the use of automobiles. The high salaries and attractive perquisites enjoyed by the senior executives of the private firms are comparable with those of their counterparts in the export production sector. A survey by Ernst and Young (2003) indicates that over the last 10 years (i.e. 1993-2002), the remuneration packages of CEOs of the top 25% of the companies, increased by 5.40 times, senior level managers by 4.17 times, and middle level managers by 3.67 times.

The significant discretionary incomes in the hands of the NUMC accompanied by its distinctive Western orientation and expressive lifestyles, increasingly shaped by the exposure to television and foreign travel, in particular, have thrown segments of Sri Lanka's society into the age of modern consumerism. Multiple television networks, the proliferation of modern restaurants in and around Colombo, luxurious office buildings and hotels, rapid expansion of the advertising industry, the increased number of luxury cars on the city streets (an estimated number of 1,300 vehicles each costing more than Rs. four million were imported into the country in 2002) and the spread of mobile telephones (around 900,000 in number) are tell-tale signs of the transformation of the urban landscape. The increasing number of upscale private hospitals and nursing homes, rapid expansion of International Schools (around 80) and an estimated 6,000 Sri Lankan students who attend universities overseas at a total cost of Rs. 6 billion a year essentially cater to the NUMC.

Conspicuous consumption and the overt life style of the NUMC are largely observed in a small segment of the population, particularly in the large cities. Importantly, the impact of the consumerist ideology is far more pervasive and has, in fact spread even to the remotest villages. How else could one plausibly explain the increasing availability of Coca-Cola, instead of home-spun "sweet tea" in some remote nook or distant corner of the country or the adoption of Western fashions by village folks in regard to clothing in particular?

The consumerist ideology championed by the NUMC has thus reached all comers of the country with varying impacts. Indeed, as observed earlier, those who are denied access to the NUMC lifestyle and do not possess the requisite socio-economic attributes constitute the vast majority of the country's population. This, however, does not necessarily mean that all those who are so denied tend to abhor this lifestyle as illegitimate and immoral. Many in fact admire and attempt to emulate the NUMC lifestyle, at least in symbolic fashion.

Herein lies the pivotal marketing implication of the emergence and spread of the consumerist ideology. Marketers may well endeavour to recognise the changing definitions of social status and the redrawing of the contours of social class structures as a direct consequence of the evolving sociological trends that have been recognized.

Status and individual identity are increasingly defined not in terms of social position (i.e. who you are) but rather, in terms of lifestyle (i.e. what you have). In other words, consumption patterns and acquisition of status symbols are increasingly replacing one's occupation and heritage as key determinants of social status and personal identity.

Marketers must take particular cognizance of the increasing influence of the NUMC, and the consumerist ideology and ethos it has spawned, and recognise the growing significance of symbolism in marketing their products and services. New product development, packaging, consumer shopping behaviour and marketing communications are areas of particular concern and interest for marketers in this regard.

Importantly, marketers can respond in two ways to the changing social landscape. First, they can be aggressive riders and shapers of the rising wave, the emerging consumerist and Western ethos. This is an approach many marketers and their organisations have readily adopted. Symbols that reflect the social status and personal identity of people have been vividly and tangibly conceived by marketers and effectively communicated to the emerging consumer in a rapidly changing market space. The functional value of clothing, housing, transportation, consumption of food, for instance has been de-emphasised in the marketing communicator's attempt to portray their product and service offerings as symbols of social status and personal identity.

Interestingly, many marketing companies and advertising agencies, together have attempted to grossly exaggerate the NUMC lifestyle delineated earlier and present a larger - than - life rendering of a lifestyle and behavioural pattern that is characteristic of high brow and extroverted Western youth who are, at best, representative of a cosmopolitan elite, patently small in size, existing in parts of Colombo and adjacent areas.

A number of current television commercials in the beverages and communications product categories, are a case in point. Importantly, as will be discussed in regard to the religio-cultural facets of the "new consumer", these portrayals are not entirely consistent with the values and norms of the majority of youth in the country.
It should be noted that the NUMC is not numerically significant, but it is ideologically dominant.

Alienated Rural Youth (ARY)
The "flip side" of the economic condition of the Sri Lankan consumer highlighted income disparities and poverty, particularly in the rural areas of the country, the impact of which on the rural youth is significant and far reaching. Youth unemployment is predominantly a rural phenomenon.

The Youth Survey recognised the continuing commitment to the socialist ideology by the majority of youth. Notwithstanding, the pursuit of an explicitly market - led development policy for almost 25 years now, it is significant that 62% of the sampled youth continue to be committed to a socialist ideology. Only 10% expressed commitment to a capitalist ideology. Survey data on regional variations suggest that the commitment to a socialist ideology is more widely prevalent among marginalised groups. It is noteworthy that the commitment to a socialist ideology increases with higher education attainment.

The NUMC, though not significant numerically, is becoming increasingly important, both in economic and ideological terms. The growing influence of the NUMC is, however, resisted by the TMC and ARY, in particular, though not overtly.
The TMC, especially its younger members though somewhat distant from the mainstream NUMC, are becoming increasingly influenced by the lifestyle of NUMC.
The ARY, on the other hand, though aspiring to belong to a higher socio-economic stratum of society in relation to their current position, finds their upward mobility thwarted by an expanding private sector which fails to accommodate them.

The ARY, though not necessarily repugnant of the NUMC lifestyle and consumption patterns, find themselves increasingly removed from the economic and ideological dictates of society. Importantly if the resultant discontent and frustration of ARY are not adequately and expeditiously addressed, the very stability of the nation - state will be at stake. A significant majority of youth (i.e. 78%) believe that they play an important role in the intra-family decision making process. There was no gender difference that was evident, but the influence of the youth increased in keeping with the level of education. The survey suggests that youth spend most of their time with family members (i.e. 45% of the time) and with friends (35% of the time). Importantly, 90% of the youth stated that they receive emotional support from the family, when such support is needed.

The country's youth, in the main, irrespective of their urban - rural bias, continue to hold traditional and conventional values and beliefs, albeit some changes are evident. This observation should be contrasted with the spread of the consumerist ideology described earlier. Importantly, it is argued that, although in behavioural terms, there appears to be a clear movement towards Westernization, the value system of the individuals has not undergone radical change. This is a key observation in one's attempt to understand the emerging consumer.

The manifest lifestyle of the NUMC; buttressed by the media's portrayal of a western ethos has spawned a consumerist ideology which, importantly has spread beyond the confines of the western province. It is argued that many marketers have grossly exaggerated this bias for western lifestyles and drawn larger-than-life portraits of their consumers. This is particularly evident in the marketing communication programmes of many companies and their advertising agencies.

The aspirations of an overwhelming majority of the population to emulate the lifestyle of the NUMC and embrace the consumerist ideology are often frustrated by both their lack of resources and access to the domain of the NUMC. Moreover, it is argued that, albeit consumption is fast replacing occupation as the chief determinant of one's status in society, the traditional belief and value systems are very much intact and is only changing slowly, rather than radically. It is argued that the formal private sector in the country is of the NUMC (i.e. key actors of the sector are members of the NUMC); and are in the NUMC (i.e. share the mind-set of the NUMC), and operate for the NUMC, by and large (i.e. key target markets are essentially composed of the urban, western and top income deciles of the population).

Indeed, if the formal private sector is to be faithful to its glorified title of being the "engine of the nation's growth", it will have to broaden its scope, first in terms of its mental grasp of the socio- economic realities of the rest of the country, and thereafter, aided by prudent governmental policy regimes, physically grasp markets outside their present comfort zones.

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