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Marketing and Strategy

August, 2012


Indian markets are undergoing vast transformation and marketers are continuously upgrading their strategies to woo the customers. Integration of entertainment, information and telecommunication, majorly driven by introduction of digital technologies, is impacting the consumer base across the country.

India's huge consumption market is expected to grow two-and-a-half times by 2025, from current Rs 43 trillion (US$ 777.85 billion) to Rs 110 trillion (US$ 2 trillion), according to a Kotak Institutional Equities report. The report forecasts that consumption market will account for 59-62 per cent of the gross domestic product (GDP) over the prediction period wherein urban market will form 55 per cent of the pie. Growth in urbanisation is expected not only from further development of the metros, but also hugely from the development of tier-II and tier-III cities.

In the light of such forecasts, Indian marketers are trying to reach maximum present and prospective customers to leave an impact which is highly effective and long-lasting. Conventional media, advertisement industry and internet platform would play vital roles for strategy-makers to help them identify the best modes, content and targets.

Marking in Semi-Urban and Rural India

Marketers are focussing on the aspiring rural and semi-urban India to harness growth opportunities. Cable and satellite penetration has helped in a big way to access hard-to-reach rural pockets. Moreover, advertising budgets for hinterlands do not demand much of the liquidity. Marketing of products and services through simple ways like village melas (fairs), nukkad natikas (road theatre), boat branding, mobile vans and wall paintings prove to be very effective and that too at minimal costs. For instance, Hindustan Unilever Limited's (HUL) initiative Khushiyon ki Doli is an inexpensive medium of multi-brad activation wherein the company reached out to as many as 10 million rural consumers.

Given the number of categories and brands, fast moving consumer goods (FMCG) companies and automobile giants are the biggest advertisers in semi-urban and rural India. Most of the FMCG firms follow the strategy of introducing low unit packs for the people residing in hinterlands. Euromonitor International's survey has found that 68 per cent of personal care products were sold in rural India in FY 12 as against 31 per cent in cities.

  • Godrej & Boyce Manufacturing Co's home and office furniture retail arm-Godrej Interio is planning to infuse Rs 80 crore (US$ 14.47 million) for expanding its footprint in tier-II and tier-III cities. In the last few months, the firm has opened 23 sub-urban stores and plans to open 20 more in 2012.
  • Largest tile maker H&R Johnson has invested around Rs 250 crore (US$ 45.22 million) to augment its capacities to meet the growing demand from tier-II and tier-III cities. The company is prepared to initiate marketing operations in 16 new locations to penetrate deeper in sub-urban markets.
  • Sony India, which rakes in higher revenue contribution of 56.5 per cent from tier-II and tier-III cities compared to 40.8 per cent from tier-1 cities, is focussing on enhancing its sales network, including brand shops, national chain stores and distributors from 10,000 to 12,200 in FY 13.

Thus, markets in rural and semi-urban India are poised to be the future growth drivers due to higher disposable incomes, rising aspirations of people to own quality products and improved infrastructure support extended by the Government for the development of these cities.