Unmetros: A rewarding puzzle to crack

By Devesh Gupta , afaqs!, New Delhi | In Marketing | August 01, 2014
Brands can find a goldmine in the small towns and cities of India, but only if they understand the similarities, constraints, and dissimilarities hidden in them.

At Dainik Bhaskar's Unmetro conference, a key discussion centered around the issue of understanding these 'Unmetro' markets better.

The subject of the panel discussion was Unmetro Divide: The demographics of succeeding in Unmetro markets - its decision makers, the biggest consumption groups, the fastest growing categories and its future leaders.

The participants comprised Sudhakar Rao, director - branding, ICFAI; Bhaskar Choudhari, director - marketing, Lenovo; Srinivasan KA, co-founder, strategy, business development and marketing, Amagi Media Labs and Meenal Lall, DGM, business development, AMC Cookware. Peter Suresh, head - BIU, DB Corp, was the moderator. The panel delved deep into issues that included differences between these markets vis-a-vis metros, the challenges of connecting effectively with consumers here and more.

Suresh kicked off the proceedings by pointing out some facts. The Indian consumer market is around $1 trillion and is expected to grow by three-and-a-half times in six years. Sixty per cent of the expenditure is driven by urban India. Between the census in 2001 and 2011, the number of towns with less than 25 per cent population involved in any kind of agricultural farming work grew by 3,000 units. In 2011, there were close to 8,000 such towns. The number of villages, however, remained the same at 6,40,000.

Explaining what exactly Unmetro is Suresh mentioned that there are top 8 metros, then come the one million-plus cities. Below that comes the 1lakh-1 million towns and following that 7,500 administrative units, which are still urban. The top 8 metros typically account for 30 per cent of that expenditure.

In the Unmetros, there are issues of logistics, infrastructure, transportation, cost of acquiring a customer and brand challenges in connecting with the consumer. He pointed out that the choice and behaviour is not homogenous unlike the metros. The key challenges are geographic conundrum and consumer aspects, which means that the population should have the means to buy the goods, consumption has to happen, infrastructure should be in place and awareness of the brand has to be spread.

Rao of ICFAI began the discussion by mentioning that in the last decade, they had developed 11 universities in Hyderabad, Jaipur, Baddi (HP), Dehradun, Ranchi, Raipur, Tripura, Gangtok, Meghalaya, Mizoram, and Nagaland. "Five years ago, we had to shut down ICFAI National College that had 150 business schools in tier 2 and 3 towns. The learning from that experiment has helped us to start these 11 universities," says Rao.

He went on to add that ICFAI got into those markets by choice and hence cannot say that the behaviour of the students and markets is not homogenous. This is a challenge. "But the adherence to systems, methodologies and processes is more prevalent in students from Shillong, Raipur, Bhubaneshwar and others compared to those from Mumbai, Pune or Hyderabad," points out Rao.

Choudhuri of Lenovo said that India's urbanisation would rise to 40 per cent by 2020. That is a jump of 10 per cent in 10 years - this rate of growth is highest in the top 30 most populated countries of the world. "As marketers, do we consider similarities and dissimilarities when we compare metros and Unmetros? Most often, the success stories have come from those brands that have realised the differences," he explains.

The second conundrum is considering affordability or value. The products that work best here are the ones that are available. The third conundrum is conventional marketing and differentiating between marketing and sales - most people believe that demand creates sales but a look at the success stories of brands in the smaller markets proves otherwise. Brands have distributed their products first and then got demand.

Srinivasan of Amagi felt that he was the odd man out in the group. He believes that the behaviour pattern in the metros and non-metros are not necessarily different. "It often comes because we try to club tier 1, 2, 3 into one group. A similar socioeconomic strata exists in both metros and unmetros. According to a report, 46 per cent of ultra high net worth individuals are outside metros. We see real estate prices extremely high in all these Unmetros and people are buying so you see affordability is not a big problem in both the geographies, but the real question for the brand is who are you targeting," emphasises Srinivasan.

Another question that Srinivasan came up with addressed the systemic constraints that separate a metro from an Unmetro. Traditionally, he goes on to add, a lot of products are distribution-led, which FMCG companies have championed for years and is now working in their favour. "But I believe that the trend is changing because modern trade is significantly growing and e-commerce is making distribution irrelevant beyond a point," he says.

Another important aspect is that, in Unmetros, the average time spent on TV is 40 per cent lower than in the metros. Things are changing and new channels are focusing on the LC1 markets. TAM too has started measuring viewership in these towns. "One of the key things we realized, after working in these areas, was that the brand consciousness is high because the number of product they can sample are very few. One does not experiment much as the affordability is low. So branding becomes a lot more important," says Srinivasan.

Lall of Cookware India has an interesting example. "Some years ago, at Tupperware, one of the enterprising ladies extended her business to Madurai and at the end of the year, we realised that it was growing faster than any other markets. We then entered Chandigarh, Ludhiana, Jalandhar and other places. Since then, the dynamics changed as we registered humongous growth. It was easy to get into these markets as people were exposed to media, they knew what the brand was, they were talking about it and wanted the product. In my opinion, companies will go where the money is and Unmetros are the new destinations," she declares.

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