101 Markets 2008: Make the most of the Dhoni effect

The Dhoni Effect – that’s what Ashok Rajgopal of Ernst & Young said he’d like to call the phenomenon wherein the youth in small town India want everything and want it “now”. Whether it is the latest in styles or the best in brands, each one wants to be a Dhoni. Rajgopal, who is partner, business advisory services, at Ernst & Young, was speaking at the day long seminar, 101 Markets: India Beyond the Metros, organised in Mumbai by agencyfaqs!

Rajgopal said this desire was evident in the unanticipated growth for male skin whitening creams in India, which is now a Rs 300 crore market and growing at an astonishing 150 per cent. And this growth is coming mostly from small town India. “With the growth of the Indian economy, the growing rich and middle class is spreading beyond the metros to Tier II, III and IV cities,” he said. “This has accentuated the growth in the markets of the rest-of-urban-India (ROUI) from beyond the six metros.”

Quoting figures from an Ernst & Young study, Rajgopal said consumption spend in metros constitutes about 30 per cent of the country’s total consumption market. This, he said, implies that ROUI and rural India together garner almost 70 per cent of this market.

“Considering the consumer base of ROUI and rural India is much larger, this market’s potential consumers will provide an impetus to the accelerated pace of growth,” he said, giving the example of telecom, where subscriber growth in the four metros stood at 58 per cent (the emphasis being on value added services such as ringtones, wallpapers or news clippings) as compared to the rest of India, where the growth rate stood higher than 93 per cent – the focus being entirely on consumer acquisitions.

The key challenge for marketing beyond metros, especially in Tier III and IV towns and rural India, has traditionally been logistics, which Rajgopal said was vanishing now with recent investments and developments in infrastructure and connectivity that have brought the marketer in closer contact with ROUI and rural areas. Yet, he said, the average outlets to population ratio remained smaller in ROUI as compared with metros as of now.

Post market selection, the next set of questions to be answered by marketers is on choice of media platforms and allocation of media and marketing spends. These choices are largely dependent on a combination of the selected market, nature of product/ service offering and the stage of the product life-cycle of the offering.

Another challenge for marketers that is vanishing in ROUI and rural India, said Rajgopal, is access of media. “Increasing disposable income, easier access to credit and better retail reach have been instrumental in pushing television, satellite and radio in ROUI in absolute terms, with the exception of only press and cinema,” he said. Television and radio, according to him, has given the marketer easier access to the consumer.

At the same time, Rajgopal said that while India’s top marketers were now consciously focusing on the top 15-20 towns, the media spends remained skewed in favour of the metros. “An industry estimate puts spends on the six metros at over 60 per cent of the national spend,” he revealed.

A new direction taken by marketers in allocating funds, according to the Ernst & Young survey, has been the significant jump in the investments going into below the line (BTL) marketing. Across the board, marketers are spending 10-50 per cent of their total budgets on direct marketing, events, activation and other BTL activities, depending on the nature of the product/ service and market of choice. “The average BTL spend across marketers met during the course of the research was closer to 40 per cent against about 15 per cent just three years earlier,” Rajgopal said. “One reason of course is mass media fragmentation and, therefore, less bang for the above the line buck.”

However, according to Rajgopal, the logic for using BTL in metros was clutter in mass media and because getting audience attention was difficult. In comparison, the logic for using BTL in ROUI was limitation of media options.

The Ernst & Young survey also tried to explore the constraints limiting marketing spends in ROUI. The reasons, Rajgopal pointed out, were lack of presence and/ or sub-optimal quality of local media in ROUI and limited measurement tools to judge media effectiveness beyond the metros.

The event was sponsored by STAR Majha, UTVi and Dainik Bhaskar.