Welcome to yet another edition, chief!

In today’s edition — Forecasting demand becomes difficult for companies when buyers pull in three different directions — premium, value, and a restless middle whose preferences are choices are particularly hard to predict. India seems to be hitting that stage now, where CFOs can learn a thing or two from their US counterparts who have started tweaking prices and products to retain all three segments.

Why CFOs Need a New Model to Forecast Demand

Vishwas Ved

There have always been two Indias within India’s consumer market. One that buys premium stuff, luxury brands and lifestyle upgrades. Basically, the well-off guys.

The other India sticks to monthly budgets and chooses products that meet essential needs at best. A familiar story. 

This income divide is not unique to India; it’s becoming more apparent in other countries as well particularly in the US, where companies are being forced to redefine their objectives and redirect their business goals.

In other words, it is changing the way companies do business and price their products.

According to a Bloomberg note for CFOs published earlier this week, the growing income gap is prompting American companies to modify product lines, pricing plans, and cost structures to ensure that their offerings cater to premium as well as value-focused buyers. 

The write-up pointed out that older assumptions about demand are obsolete and harder to rely on because not all shoppers are moving in one direction. 

For example, the CFO of Hasbro, an American multinational toy manufacturing company, was quoted as saying in the note that half its range now sits at $20 or below so that value shoppers have something they can buy. 

P&G’s finance chief said customers are more cautious, prompting the company to trim categories and cut overhead. 

At the other end, Dollar Tree saw nearly 10% sales growth because it sells more items at $2 or less, while Target highlighted $1 products to attract budget-conscious families. 

And of course, premium brands like Coach and Rolex sellers continue to see strong demand from wealthier shoppers.

Now let’s turn to the India story, where spending power has been rising, but the pattern of that growth is uneven. 

Uneven Spending Growth

Household spending is a big part of the Indian economy, and a government report now shows that this spending has indeed gone up in rural and urban areas. 

But the rise, another report points out, is uneven. Premium buying, for example, is picking up in several areas. 

The country’s smartphone market, according to Communications Today, recorded a 12% jump in revenue in the July-September quarter of 2024, though shipment volumes did not grow as much. That clearly shows a demand for higher-priced devices.

But this rise is not restricted to urban areas alone. 

A report by India Briefing on income and consumption behaviour confirms that the income of Indians has indeed grown over the past decade, and even rural household expenditure in India grew at around 9.2% annually between 2012-2024, narrowing the rural-urban spending gap.

Because of this, premium products — from phones to fashion and beauty — continue to disappear from the shelf.

The Budget Sticklers

But that’s only one side of the story. There is still a large section of households that watches monthly budgets closely.

A national consumption data shows that even with higher overall spending, the shopping cart of this section is still occupied by sachets and smaller packs of products, which only meet essential needs. 

The rise in spending, as confirmed by the data released in January 2025, is not uniform across states or product categories.  

This combination of premium purchases and price-sensitive buying in India almost looks universal as it matches the American pattern highlighted in the Bloomberg note.

This uneven spending could have been passed off just as a consumer trend, but that’s not the case. It’s becoming a business problem that requires the attention of CFOs. 

One study on emerging economies, including India, shows that when income gaps widen, the middle of the market starts shrinking and becomes harder to predict. 

These buyers swing between premium and cheaper options depending on prices, jobs and sentiment, which means companies can no longer rely on a single demand pattern or curve.

Three Demand Curves

It’s obvious that companies cannot just do with two demand curves — premium and economy. There is something in the middle, and that market is the most unpredictable. 

These buyers aren’t strictly value-focused, but they also don’t upgrade easily. Their choices shift quickly depending on prices, confidence and external shocks. 

This applies to the Indian markets as well and that’s why companies here may want to plan for three demand curves instead of two.

People with high disposable income will continue to spend on quality products, while value-focused buyers will continue to make affordable choices. And the middle guys will keep moving around. 

The Bloomberg CFO note seeks to establish that with three curves going in three different directions, making forecasts won’t be easy, and one single trend is unlikely to capture how all three groups will behave.

US companies are adjusting to this, and Indian companies will need to do the same, and they may want to start by reclassifying their products and avoiding blanket price hikes. Or maybe look for better ways to skin the cat.

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