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101 Markets 2008: The immense potential of small town India

By , agencyfaqs!, Mumbai | In Marketing | March 20, 2008
Ashok Das, managing director, Hansa Research, talked of why these towns are important, what's changing and how efficient it is to reach them

The small & #BANNER1 & # towns of the country are increasingly becoming hubs for marketing activities. With the economy growing consistently, the purchasing power of people in these towns is showing a rising trend. At 101 Markets: India beyond the Metros, a day long seminar organised by agencyfaqs! to highlight the marketing potential and importance of the emerging towns of India, Ashok Das, managing director, Hansa Research, talked of why these towns are important, what's changing and how efficient it is to reach them.

Das said that of the total 4,177 towns in urban India, with a total population of 2,566 lakh, 99 per cent are towns with less than five lakh population. According to him, half of the urban population in India lives in small towns. More than 75 per cent of the people living in these towns are literate. And 28 per cent of the total sales of small cars in India in 2007 were in these towns.

Ashok Das
In 2002, 45 per cent towns with less than five lakh population owned a television set, 43 per cent had an audio system, 42 per cent owned two-wheelers, 19 per cent had personal computers at home and 31 per cent owned still cameras. Some 40 per cent possessed telephones, 35 per cent, refrigerators, 24 per cent, mobiles, and 27 per cent, washing machines.

In a span of five years, the number of households owning an audio system went up to 47 per cent from 43 per cent. Personal computer ownership increased by 2 per cent to 21 per cent and still camera ownership increased by 1 per cent to 32 per cent. Households owning mobiles became 38 per cent (a 14 per cent increase) and telephone owners increased by 2 per cent. TV, two-wheeler, refrigerator and washing machine ownership remained almost constant.

Das says small towns are also important for business because there is an equally large chunk of population in these towns which has the intention of purchasing various household durables and electrical goods. In towns with less than five lakh population, there are 48 per cent more people who want to buy a TV, 41 per cent who want to buy a refrigerator, 47 per cent who want to buy a mobile, 50 per cent who want to buy a two wheeler, 33 per cent who want to buy an automobile and 31 per cent who want to buy a washing machine.

The potential of small towns can also be assessed by taking into consideration data from the Household Potential Index (HPI). HPI indicates the amount of disposable income and purchasing power of a household. The all India urban HPI stands at 22 points, and the urban and rural HPI combined comes to an average 10.7 points. Considering the mean HPI collectively for towns such as Chandigarh, Jalandhar, Ghaziabad, Thiruvananthapuram, Jammu, Guwahati and Bhubaneswar, which have a population of five-10 lakhs, the average figure comes to 37 points, which is much higher than the all India average.

The mean HPI for towns with less than five lakh population in states such as Goa, Punjab, Himachal Pradesh and Kerala, stands at 24 points, also higher than the all India average. Such towns in states like Orissa, Haryana, Assam, Uttaranchal, Rajasthan, Chhattisgarh and Gujarat have a mean HPI of 16 points, lower than the national average, but still a significant figure.

As far as media reach is concerned, small towns in India are just as reachable as metro cities. TV has been found to have the highest penetration in small town India, penetrating 69-78 per cent of the population in towns with less than five lakh population, not much lower than the 86 per cent penetration in metro cities with populations of more than 40 lakhs. Press penetration in small towns is 49-56 per cent, 9-16 per cent less than in metros. Radio has a penetration of 20 per cent on an average in small towns, 14 per cent less than in metros. The all India penetration of media in small towns stands at 83 per cent, just 10 per cent less than in metros.

The average time spent per media on working days in small towns is almost at par with that in metros. The average time spent on watching TV in small towns is 95 minutes; in metros, it is 110 minutes. The choice of programming on television in small towns and in metros is also more or less the same. The time spent on radio is 70 minutes for small towns and 77 minutes for metros. And press accounts for 27 minutes in small towns and 32 minutes in metros.

During 2003-07, the growth of press reach increased by an average 4 per cent in small towns, while the all India growth was 2 per cent. Radio saw an average growth of 14 per cent and 18 per cent in small towns and all India, respectively. However, television growth remained negligible in both cases.

Das concludes that along with the immense potential small town India holds, the cost of reaching the populations there is much cheaper than in metros. For a 270 square centimetre press ad in Dainik Bhaskar in Rajasthan, the cost per thousand (CPT) to reach 212 towns with less than five lakh population is Rs 11. This cost is incurred to reach out to 30 per cent of the people who read newspapers from a total of 74,46,000 people living in these towns.

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