When budget airline Air Asia launched its inaugural domestic flight between Bangalore and Goa in India last month, the tickets – which were priced at a cut-throat rate of $4.50 one way – were sold out in 48 hours.
"I booked mid-June. It was cheaper than a bus ride! I had no intention to visit Goa and the taxi to the airport cost more but the price was worth it," said 31-year old techie Pallavi Patil.
Meanwhile, San Francisco-based Uber recently launched a stripped-down, lower-priced version of its cab hiring service app in Bangalore, Delhi and Hyderabad. With a base fare of $0.83 and just 25 cents per kilometer and less than 2 cents a minute, UberX is the cheapest service it offers worldwide to customers.
More significantly, it is an unprecedented move by the company that began four years ago with a global focus on high-end cab services.
Welcome to the world of the increasingly price-sensitive Indian consumer where bargain-hunting is the norm and brand loyalty non-existent.
"It's a never before world," say Rama Bijapurkar, India's foremost retail strategist and thought leader, describing the fast-growing middle class consumer as a "monster hammering down prices relentlessly" in his pursuit of value and quality.
For a sampling of how this so-called promiscuous consumer operates, look no further than India's smartphone market where high-end offerings like Apple's iPhones have failed to make significant inroads. Instead, local players like Micromax, Karbonn and Lava now dominate the market. Their strategy? Launching smartphones that priced in the $45-$75 band – a bargain compared with the iPhone 5S which retails at $850.
Global players are taking notice – Google last month announced that it would launch a sub-$100 smart phone for the Indian market this fall that would feature a 4.5-inch screen, dual-SIM slot, removable SD card and FM radio. While Mozilla is reportedly launching a series of inexpensive Firefox OS smartphone models for the market, priced at around $50.
"If companies try to push global products on to the mass Indian market, they will be frustrated. The annual average income of the Indian consumer is not touching $50,000 in a long time for him to consume 'global' products or best practices. To thrive in India, winners must continue to customize, innovate and adapt to this market reality," said Debashish Mukherjee, a partner at AT Kearney.