Looking at markets beyond metros

Updated: Jan 27 2005, 05:30am hrs
We witness serious competition for any product category in all metros. Metros and mini metros are saturated with marketers of all kinds and types of products and services. To add to this, the Indian market being value-oriented, there is a constant pressure on prices and margins. Given this condition, marketers will have to look for other potential areas to market their goods. They will have to get out of the metro mindset. And a marketer smart enough to move in to these new markets first, would register a better share of consumers mind.

However, the very process of thinking beyond metros and implementing is easier said than done. Even though our country has vast sources for information on economic, industrial, agriculture and other production activities, these are available primarily at an aggregated level. But, marketing operations need these at a town level for easy understanding. And looking at census data for market priority is not the correct decision.

The only known source for this is the R K SWAMY BBDO Guide to Urban Markets, which ranks and estimates market potential for towns with population above 50,000. The Guide gives enough information to choose markets for potential under various yardsticks. It not only provides indices based on the total aggregate prosperity of a town (market potential value - MPV), it also gives per capita prosperity by town (market intensity index - MII), which is indicative of the quality of a town.

To understand the overall quality of the town for marketing purposes, the marketer needs to understand both MPV and MII. MII indicates quality of a market and MPV gives the volume of potential. A marketer cannot only identify markets but can also benchmark with respect to other towns where he is already present. As the indices are very much market-specific, most marketers can apply regardless of the industry/category.

Let us take Madurai, Rajkot and Trivandrum (see table). Their per capita potential (MII) is more or less the same. Also, the total aggregate prosperity (MPV) is quite the same, with Madurai taking a marginal lead. To understand this better, let us take ownership of high-end durables in these three towns from the Indian Readership Survey. The correlation is amazing. When we see the percentage ownership we find that Trivandrum takes a lead followed by Rajkot and Madurai. This pattern is reflected in the per capita prosperity indicated by MII. Whereas, when we see the absolute or total ownership, we get Madurai leading, followed by Rajkot and Trivandrum.

Absolute ownership reflects on the overall town prosperity as can be seen from their MPV values. Similarly, we can find many such towns with a combination of high quality with a reasonable overall aggregate prosperity. Surely, therefore, we can conclude that there are markets beyond metros. The Guide lists more than 60 towns with an MII greater than 100. But yes, care has to be exercised in selecting new towns with such levels of prosperity.

On the other hand, if the marketer wants to take into account both the quality of buyers and the numbers relating to them, then by using both MPV and MII we can determine the true relative market potential. On this basis, we list below a list of the next 15 towns that a marketer can target other than metros and mini metros.

The table is interesting since the true relative market potential rank per se does not go with either MPV or MII ranking. But the new relative potential rank emerges when both aspects are taken into account. Let us look at Guwahati and Trivandrum. The quality of these two towns (as indicated by their MII) is good but their MPVs were low, which brought down the ranking while determining the true relative market potential.

On the other hand, markets with lower MII, like Lucknow, Kanpur, Bhopal and Patna, but with relative higher MPVs, offer a better true market potential. Similarly, if the marketer had gone by the MPV alone, without considering the per capita purchasing power, the marketer would not have been benefited by the ranking under true relative market potential. True potential of Amritsar and Jalandhar would not have come out clearly by looking at only MPV or MII.

However, we do know that some marketers look at a variety of other characteristics of the town before arriving at any conclusion. India is a country of diversity. There are different paradigms of town characteristics that are weaved into its economy. Each zone or even states within a zone have a distinct profile, which the marketer has to understand. A case in point is a towns propensity to consume vis-a-vis its income. Some towns may consume more compared with their income while some may not. Therefore, it is imperative to find the variables as given in the Guide or elsewhere that gives the best fit for the product/category.

For the marketer who is serious in identifying priority markets beyond metros and mini metros, he could either go with MII, MPV, or the true relative market potential or use any other parameter of significance for his product category. There is no substitute to thinking and hard work!

The writer is CEO, R K Swamy BBDO Advertising