Ernst and Young (India) on 11 May released the report The New Market "Shehers": Tapping Potential Beyong the Metros, identifying the trends in consumption patterns and marketing spends in small town India. The report provides an insight on how non-metro urban markets are becoming more relevant in India's consumption story and how marketers are restructuring their budgets to take advantage of the new urban consumer.
The report highlights consumption patterns of consumers across Key Urban Towns (KUTs) and Rest of Urban India (ROUI).
For the report, India was divided into 4 geographical categories - the top-6 Metros (Mumbai, Delhi, Bangalore, Hyderabad, Chennai and Kolkata); the KUTs, which are 22 cities immediately following the metros in their market potential, e.g., Amritsar, Surat abd Ludhiana; cities in the ROUI and the KUTs, e.g., Kota, Jalandhar, Jabalpur and rural India.
Key findings:
- Retail presence in the KUTs and the ROUI through organized retail chains and malls has increased significantly. Over a 2 year period, the percentage growth in the number of malls in the KIT (55%) was more than twice that of the metros (24%).
- Consumers in the KUTs show an increasing preference for the premium products and services of established mass barnds. For instance, the sale of LCD TVs and wellness services is on the rise in the KUTs.
- Significant uptake in the leisure and lifestyle spends of consumers in the KUTS. Men are utilizing wellness services more than ever before, not just in the big metros, but also in tier II and III cities. Womens in small twons are more willing to pay large amounts for age correction, body sculpting and removing skin imperfections, etc..
- The share of KUTs and the ROUI in newpaper advertising (by volume of activity) in 2009 was higher that 50% across most categories. For categories such as cellular skinacare, orla hygiene, hair care and consumer durables, the advertising share is even higher at 75%.
- The KUTs and the ROUI comprise more than 50% of total below-the-line (BTL) activity in the country. BTL activity has grown significantly in non-metros (40% in 2009 vs. 15% during 2007), as compared to metros (60% in 2009 vs. 85% during 2007). 60% of BTL activity is concentrated in the ROUI and in rural India with sectors such as telecom, consumer durables and certain categories of FMCG products.
- Mobile advertising is also catching up more effectively in the KUTs and ROUI as opposed to person-to-person marketing with more than 500 million mobile users base in these regions.
The metros and the KUTs are driving growth in later-stage consumption (higher trandaction value products and discretionary goods), the ROUI are driving growth in early-stage consumption (necccesities and products with lower transaction value).
Marketers are taking cognizance of this new urban consumer and are aggressively targerying these KUTs and ROUIs, which has resulted in a ficus shits in media spends from the metros to the non-metros. This trend is likely to continue with the changing consumption pattern of consumers, fuelled by greater purchasing power.
This article appeared earlier on www.businesstrendsasia.com
