Demographics and Market Segmentation: China and India

Abstract

China and India are the two most populous countries in the world but have followed different demographic courses. Both countries have experienced substantial expansion of their markets for a range of commodities. However, dissimilar household composition and socioeconomic paths have affected household preferences in the two countries. The paper reviews macro demographic trends that have led to different demographic structures with significant implications for productivity and household purchasing power and discretionary spending in the two countries. It then conducts an examination of household expenditures based on household surveys undertaken in 2005 and assesses similarities and disparities in household preferences for broad categories of goods and services in rural and urban areas, and also for households with varying levels of income. This provides a basis for hypothesis building concerned with market growth for progressive commodities, in view of current demographic structures in the two countries and projected fertility and population growth.