Tapping the potential beyond the metros: Earnst & Young Report
In 2008, Earnst & Young came out with a report titled "The Dhoni Effect: Rise of small India town", wherein it was found that tier 2 and 3 cities accounted for a large proposition of India's consumption, media spends and skewed in favour of the metros.
A presentation profiling and detailing the smart marketing techniques used by Amir Khan during the pre-release promotion of his film "3 idiots' kicked off the proceedings and it was shown how smartly the perfectionist Khan tapped the Indian market. This was followed by an enlightening speech of the creative guru Piyush Pandey and then the elite panel mentioned above had a discussion.
The Earnst & Young report stated that the share of Key Urban Towns (KUTs) and the Rest of the Urban towns (ROUI) in India, the urban consumption has increased significantly and is now more than 70%.
India's buoyant economy and its robust growth are not restricted to its major metros any more. The top eight cities accounted for almost 40% of the country's domestic expenditure a few years ago and however the top six contribute to only 72% of its urban consumption.
Due to increasing affluence and higher population in the KUT's and the ROUI, markets are larger outside of the metros.
Advertisers continue to pay a premium for metro markets despite of the fact that the consumption choices made by consumers in non-metros increasingly mirror those made in metros.
Product penetration does not differ significantly between the metros and the KUTs. However, it must be noted that the ROUI towns are relatively under penetrated in key consumer categories.
As the spending capacity increased over the years, and continues to, there has been a significant uptake in the leisure and lifestyle spends of the consumers in the KUT as well as the ROUI.
Although the consumers in the metros and the non metro seem to make similar consumption choices, media ad rates, especially for print, OOH media and radio, continue to be much higher in the metros.
Media spends are moving towards non-metros with the KUT and the ROUI increasing their share of advertising spends and volume.
There is a clear shift in advertising spends and volume toward non 'metro urban markets. The KUT and the ROUI potentially command 40-50% of the country's urban advertising expenditure ' an industry estimate had approximated this share to be 30-35% in 2007. Since media rates are much lower in the metros, the shift in the volume of marketing spends is even more significant than the absolute rupee shift.
Every member of the panel added their observations to the table.
Piyush Pandey the key speaker at the presentation said, "Small towns have been happening from the past 50 years but we have been bloody blind, wearing coloured glasses and reading books from the western and not considering the non- metros"
He further added, "these small towns are pepping up the entire economy" and finally concludes," lets start thinks local and stop worrying about getting global."
Llyod Mathias: Today the growth has been driven to non-metros from the past one year and therefore even we are working on the relevant product tarrifs. If you are not able to understand the consumers need then you will not grow. Communication is very important. Communication will always have the advantage of the great communication minds.
Nandani Dias: We don't see the six metros as the only metros, and we have been seeing 23 metros from a very long time. The perception that we are living under, for which we should do something terribly different but when we track the smaller markets they are actually larger. We need more mass media and lets not just shift the focus to smaller markets though the growth of micro market is higher than macro market.
Sanjay Tripathi: I am form a small town. It's the first priority to build the trust and it's a big task for companies. We have tried to establish the communication platform. If you closely see the insights from a small ton works universally.
L.V.Krishnan: Metros and non metros are equally same, the penetration is pretty high in the small towns but the consumption is completely different. In metros the consumption of media is higher by women and in non-metros it is higher by males. In non metros the consumption of the movies is very high and it's a tilted market. The differences are there in the nuances.
Sameer Jain: There is hardly anything that comes from the metros, in the last 4-5 years the growth chart has shifted to the smaller towns. It transcends beyond the conventional. In smaller towns it goes much beyond marketing and the reach is extremely important, therefore a bulk of our advertising budget still focuses on the Doordarshan.
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