The importance of infrastructure in growing the demand for consumer durables is obviously well known. In fact, the National Council of Applied Economic Researchs (NCAER) Indian Market Demographics Report 2002 points out that electricity for example, was the force driving demand for consumer durables particularly in villages, which was the fastest growing segment accounting for over 60 per cent of the market in 1998-99. So it was comforting to finally see a report on Indias markets that has actually incorporated this factor into its analysis.
The RK Swamy BBDO Guide to Urban Markets has a parameter called Market Support which tries to deal with this aspect of markets and gives it a weight of 10 per cent when evaluating market potential. (One can quibble on the 10 per cent, but the way I figure it, its an important conceptual start). The report clearly defines market support as the trade and transport facilities required for marketing as measured in these towns.
How important market support is can be seen from the figures the report cites. For example, in an affluent state like Haryana, Market Support (MS) varies across towns from 1.92 for Faridabad to 4.95 for Ambala. (Delhis MS is 5.64). Similarly, while Maharashtras MS is 6.55 that of its neighbour Gujarat is 3.49 which is even lower than that of Meghalaya which is 4.90.
Interestingly, the MS of Himachal Pradesh is 6.58this is actually the MS of Shimla, which is its only town with a population of more than 50,000 persons, compared to states in its immediate vicinity like Punjab or Haryana which have 33 and 25 towns, respectively, and where the average MS of Punjab is 4.50 and that of Haryana 3.81. So, the only reason Dominos will continue to service that outlet in Shimla despite formidable costs is because it makes for a great brand statement! Because it is obvious that the number of additional market-worthy towns it can get enroute from Delhi to Shimla, in the state of Himachal Pradesh, with a population of more than 50,000 is not likely to change in a long time. But as per the report, Shimlas market support is higher than that of Delhi. So, despite living in splendid isolation, according to the BBDO report, Shimla scores higher than Delhi.
This brings me to one of the areas the report could do better on next time, which is to measure the access to the towns evaluated as well, since road infrastructure enroute from the main metros to these towns and the distance to be covered also has a bearing on the sales or marketing efficiency of a company (if that looks like Im quibbling, I am!) Once this is done, Im sure the market support numbers will change dramatically. For, as someone whos spent over a decade in the retail business, I find it very difficult to believe that Shimlas market support is higher than that for Delhi.
Of course, the attractiveness of a market is a lot more than just MS. RK Swamy BBDO calls it the Market Potential Value, or MPV. Another term coined by the report is the Market Intensity Index (MII), or the concentration of purchasing power in a market. While the concept is an attractive one, some of the numbers sound a bit off.
Ludhiana, says the report, has an MII of 137 compared to Kolkatas 112this sounds reasonable, and basically means that the Ludhiana market has more concentrated purchasing power in comparison to Kolkata, despite Kolkata being a much bigger market. Yet, the report also says the MII for Shimla is 141, while that of Delhi is 149. Now thats a bit hard to digest. True, the report says the MPV of Delhi is 789 compared to Shimlas 8.4, but while the MPV represents the size of the market (and is probably largely influenced by the size of the population in it), the MII represents the purchase-intensity or the quality of the market. (All MPVs are relative to Greater Mumbai which is 1000, implying that this is the city with maximum market potential.)
What makes life confusing for marketing professionals like myself, of course, is that most reports on the market appear to be sending out completely different signals. The BBDO report says the MPV of Gujarat is 712 compared to Delhis 789that is, Delhis a far bigger market. However, when we look at Indicus Analytics Market Skyline of India, it says Delhis market size is Rs 74,354 crore compared to Rs 128,000 crore for Gujarat! In fact, the Indicus report says Gujarat leads in the FMCG segment (Rs 5,700 crore compared to Delhis Rs 2,550 crore) as well as in durables where Gujarats figure is Rs 7,900 crore compared to Delhis Rs 2,535 crore. I wish someone like I. Natarajan, who apart from being the author of the BBDO report has also been the person behind all the NCAER consumer surveys for years, would try and explain these (seeming) anomalies to us.
As a marketing professional, Id also be interested in getting the MPVs/MIIs for different parts of cities like Delhithis is something that Indicus study does. The reason is simple. At the Nanz supermarket chain where I worked, we had outlets within Delhi at Archana, at Alaknanda, and Punjabi Bagh, and then we had an outlet each in Faridabad, Noida and Ghaziabad. While the sales at the Faridabad outlet were the second highest amongst all the outlets, this is not something that comes across from the BBDO study which places Faridabads MPV (50) at a fraction that of Delhi (789). Clearly, Delhi has huge differences within its various zones.
Namita Jain is a retail consultant. She can be contacted at firstname.lastname@example.org