RC&M Towns & Beyond..Semi Urban India PDF by rcmindia


Towns & Beyond Semi Urban India pdf offer by RC&M Experiential marketing. Semi Urban is surrounding residential areas of a bigger city; a group of these can collectively be regarded as the suburbs”. Generally they pertain to residential districts.

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									Towns & Beyond…

Semi Urban India

   Understanding Semi Urban
     – Definition
     – List of Towns
     – Growing States

   Potential Markets - Fortuners & Competition in these Markets
     – Case Study Automobile
     – Case Study Durable
     – Case Study FMCG
     – Case Study Finance
     – Case Study Telecom

   Sales Point Presence
      – Sales Point – Population Segmentation
      – Virtual Presence

   Opportunities in Semi Urban
      Why should we go semi urban?
      Where to go in semi urban India?
      Who is the Semi Urban customer?

   Infrastructure
      – Lay out of a Semi Urban Town
                                                                                                   List of Semi Urban Towns
                                                                                                     State         No. of Towns
                                    Definition                                                    West Bengal          43
                                                                                                Andhra Pradesh         40
   Region                    Definition                          RC&M Specific                    Maharashtra          27
                                                                                                   Karnataka           26         P
    Urban            All statutory places with a       All locations with a population of 5                                       o
 (100+ cities)       Municipality, corporation,                          lac+                     Tamil Nadu           22         p
                 cantonment board or notified town      i.e. Metros, State Capitals, Top 5      Madhya Pradesh         20         u
                        area committee, etc.                    cities of every state                                             l
                                                                                                    Haryana            19         a
 Semi Urban       Surrounding residential areas of a   All locations with a population of
                                                                                                     Bihar             18         t
(300+ Towns)       bigger city, a group of these can                 1 lac - 5 lac                                                i
                    collectively be regarded as the    i.e. District Head Quarters, Tehsils       Western UP           16         o
                 suburbs”. Generally they pertain to                                                                              n
                                                                                                    Gujarat            15
                          residential districts
                                                                                                   Rajasthan           13         1
    Rural        Areas with Population density < 400    All locations with a population of
(4000+ Blocks)   / sq km , or where 75 % of the male   less than 1 lac i.e. Blocks , Villages       Punjab             11
                   working population is engaged in                                                Eastern UP           8         o
                     agriculture , or areas with no
                    Municipal corporation / board                                                    Orissa             8
                                                                                                   Central UP           6
                                                                                                  Chhattisgarh          6         a
                                                                                                     Kerala             5         c

                                                                                                   Jharkhand            4
                                                                                                Himachal Pradesh        1
                                                                                                  Uttaranchal           1
                                                                                                     Total             309
                   Developing States – Growth & Income

     State         Growth Rate                     State         Per Capita Income (INR)
     Bihar           24.33%                      Haryana                 68914
  Chhattisgarh       19.88%                    Maharashtra               54867
    Haryana          18.39%                       Punjab                 52879
Andhra Pradesh       15.56%                       Gujarat                59570
 Uttar Pradesh       15.27%                       Kerala                 49316
  West Bengal        14.96%                     Tamil Nadu               45058
    Punjab           14.90%                  Himachal Pradesh            44538
Himachal Pradesh     14.60%                     Karnataka                40998
     Kerala          14.55%                   Andhra Pradesh             40902
Madhya Pradesh       14.49%                    Uttarakhand               36675
   Rajasthan         14.32%                    West Bengal               36322
  Maharashtra        13.55%                    Chhattisgarh              34483
   Karnataka         12.76%                  Arunachal Pradesh           33302
     Orissa          12.21%                       Orissa                 29464
  Uttarakhand        11.63%                      Rajasthan               27001
  Tamil Nadu         11.22%                       Assam                  23993
    Gujarat          11.02%                  Madhya Pradesh              21648
     Assam           10.68%                     Jharkhand                21465
Jammu & Kashmir      9.35%                     Uttar Pradesh             18214
   Jharkhand         9.33%                         Bihar                 13663
                Potential Semi Urban Markets

INDUSTRY                                FORTUNER

Four Wheeler                           Maruti Suzuki

Two Wheeler                          Hero Honda/ Bajaj

   Finance                                 ICICI

  Insurance                              Max Vijay

   Telecom                                 BSNL

Durable/ FMCG                            LG/HUL
                                                  Case Study – 4 Wheelers

              Fortuner – Maruti Suzuki                                         Competition – Hyundai
Maruti India generates 10 per cent of its domestic sales from        As per Hyundai “almost 50 per cent of the 220 million
           Semi Urban sales, amounting to 32000 cars.                 households in semi urban India are potential care buyers
                                                                          due to the agricultural subsidies extended by the
   Semi urban markets' share in Maruti's overall sales during          government and also due to increase in productivity of
     April-January 2009 has gone up to 8.5 per cent from 3.5             agri-based products, thus presenting an attractive
              per cent in the same period last year.                            market for hi-technology products”.

The company plans to add another 600 people to its present       Plan
tally of 7,200 employees of which over half will be engaged in   The company plans to touch 58% of the semi urban market in
sales and marketing.                                             India by targeting middle semi urban class.

Campaign                                                         Campaign
Maruti has launched its marketing campaign for semi urban        Launched promotional scheme for semi urban areas titled
India “Ghar Ghar Mein Maruti” (Maruti in every Household”),      “Ghar Ghar ki Pehchan”, under which special schemes for
'Mera Sapna Meri Maruti‘                                         government employees in semi urban areas and members of
                                                                 gram panchayats on the purchase of Hyundai Santro

Tying up with public sector banks that have both a branch        Strategy
network in these areas and the resource base to make loans       Focus on Govt employees and panchayat members as they
like PNB, Bank of India to increase finance penetration                belong from well-to-do families
                                                 Case Study – 2 Wheelers

               Fortuner – Hero Honda                                              Competition – TVS

Penetration                                                     Penetration
HH has market share of 40 per cent from rural and semi urban    Thanks to their increasing semi urban penetration, TVS
areas.                                                          reported profit of 335.2 million rupees in the year ended
                                                                March 31 after posting losses in the previous two financial
Campaign                                                        years according to its website.
The company planned to cover 1 lakh towns by end of 2010
financial year through the launch of the promotional            Plan
campaign called Har Gaon, Har Aangan (Every Village, every      TVS Motor Co. Ltd is banking on new launches for a deeper
Household)                                                      penetration into the semi urban market to fuel growth in
                                                                2010, chairman and managing director Venu Srinivasan said.
Strategy                                                        TVS has also launched special marketing schemes for semi
Hero Honda is expanding its rural reach in India by adding      urban markets.
about 500 more dealerships, service centers and other outlets
across the country. Hero Honda has set up health care           Strategy
initiatives and services to guide people in getting driving     The new Bharat Stage III compliant model TVS Max 4R will be
licenses. Coupled with motorcycle tax cuts and economic         targeted at heavy load carrying riders predominantly found in
growth.                                                         the semi urban markets.

Hero Honda expects to sell 50 per cent of its motorcycles in
semi urban in the next three to five years. Hero Honda could
boost sales 24 % in the past 11 months.
                                                     Case Study – Finance

                      Fortuner - SBI                                               Competition - ICICI
Penetration                                                       Penetration
SBI, has a breathtaking semi urban branch network of 6,600        ICICI Bank is the country’s second largest bank,in urban as
with 972 specialized branches. These branches have been set       well as in Semi Urban towns.
up in different parts of the country with the sole purpose of
developing agriculture through credit deployment.
Strategy                                                          ICICI has adopted the franchise model of operation in semi
SBI has developed semi urban agricultural business units,         urban markets A one man office (known as “kendra”) in the
education programs for local farmers and “kisan” cards.           village forms an interface between the villager and the Bank’s
One of their recent endeavors is the tie-up with National         products. Crop loans, housing loans, automobile loans, farm
Agricultural Cooperative Marketing Federation (NAFED) to          equipment, seed financing and insurance policies are all on
finance farmers for cultivation of various crops like soyabean,   offer.
paddy, jute and potato.                                           ICICI is looking at tying up with micro-finance institutions
                                                                  and local self-help groups (or creating them if already do not
SBI has gradually evolved to become the leader in agricultural
finance with a portfolio of Rs. 18,000 crore in loans to around   Results
50 lakh farmers. has 30 Regional semi urban Banks in India        The number of borrowers has risen from 130 in 2000 to over
known as RRBs.                                                    42,000 today, and the semi urban loan book has crossed Rs.
                                                                  16,000 crore. And the bank’s default rate in the semi urban
The semi urban banks of SBI is spread in 13 states extending      retail sector is 1 – 2 % as compared to 2 – 3% in the semi
from Kashmir to Karnataka and Himachal Pradesh to North           urban wholesale sector and 5% for the banking sector as a
East. The total number of SBIs Regional semi urban Banks in       whole
India branches is 2349 (16%).
                                                   Case Study – Telecom

                    Fortuner - BSNL                                         Competition – Bharti Airtel

Penetration – BSNL covers total number of 5,23,532 towns       Penetration – about 55% of Airtel’s 100-million customer base
and villages across India. Its the largest telecom service     is from the semi urban areas
provider in India
                                                               Strategy – Has set up 14,000 Airtel Service Centres
Strategy – Grameen Sanchar Sewak (GSS) Scheme was              and initiated self-service options like Start Stop to build
launched in 2002 which provides Door-t-Door facility by        trust amongst customers .
Delovery agents in rural and and semi urban markets.           Focus on Value added services (VAS) as, Music and SMS
                                                               constitute significant part of Bharti’s Rs 3500-crore VAS
Results – At present, 2685 GSS are covering more than 11997
towns and villages. Across India, the scheme has been          Results – Company expects this share to reach 65% very
launched in most of the states                                 shortly, bringing renewed focus on VAS for the semi urban
                                            Case Study – Consumer Durables

                      Fortuner - LG                                            Competition - Samsung

Penetration                                                     Penetration
LG has set up 45 area offices and 59 semi urban and remote-     To counter LG’s strong semi urban presence, Samsung visited
area offices. semi urban market accounts for 60% of new CTV     48 small towns in 100 days in an effort to increase brand
buyers for LG                                                   awareness of its products.

Strategy                                                        Strategy
“Thinking locally, succeeding globally”                         “Samsung Guru comes to your town with Lots of excitement
                                                                and valuable prizes”

Product                                                         Product
LG Electronics launched a customized TV ‘Sampoorna’             Guru 1105, Guru 1080, Samsung Dholak (E-1160), E-2120 and
                                                                Samsung Tabla (E-2130)
A more important aspect of customization was to make TV set     Plan
which can appeal to local needs, it facilitated on screen       Samsung rolled out its 'Dream Home' road show, to provide
display in vernacular language like Hindi, Tamil and Bengali.   recreation in the entertainment starved semi urban areas.

Results                                                         Results
It is selling 1,00,000 sets in the very first year.semi urban   It has created an awareness in the semi urban areas and today
market for LG grew at 25% over the last year as compared to     in mobile phones category, it’s the leading brand in semi
15% urban                                                       urban
                                                   Case Study – FMCG

              Fortuner – Sunsilk (HUL)                                   Competition – Vatika (Dabur)

Penetration                                                   Penetration
Company launched Chik shampoo to target the low segment       LG has set up 45 area offices and 59 semi urban and remote-
people . Chik shampoo has a penetration of about 22% of       area offices. semi urban market accounts for 60% of new CTV
semi urban market                                             buyers for LG

Strategy                                                      Strategy
launched shampoo in several sachets – 5ml,10ml,2ml etc and    Dabur conducted Beauty Contests to make women conscious
also launched low priced bottles in several sizes             of how their looks, to encourage them to use beauty and hair
                                                              care products. It re-named products as per language used in
Plan                                                          regions
Direct media promotions, free sampling helped majorly to
build knowledge about product categories.                     Results
                                                              Dabur is fourth largest It is selling 1,00,000 sets in the very
Results                                                       first year.semi urban market for LG grew at 25% over the last
                                                              year as compared to 15% urban
The shampoo brands like Chik, Nyle (herbal category)
contribute 50% of the company’s turn over
Sales Point Presence
                           Sales Point Presence

                                                  Automobile -
                                                  Dealerships, sales and
                                                  Service outlets
Automobile – Salesmen,
Monthly service camps            10 lac +         Finance-
                                                  Branch Offices, Finance
Finance-                                          institutions, Banks
Regional Rural branches,
post offices                                      FMCG-
                              5lac – 10 lac       Shops, Retail Outlets
Small Shops with limited                          Durables-
supply                                            Small Outlets, Dealers

Salesmen                       1lac – 5 lac

                                Below 1 lac
Virtual Presence - Automobile
Virtual Presence - Retail
Virtual Presence - Finance
Virtual Presence - Durables
  Going the Semi Urban Way..

    Why?? Where?? Who??

Why should we go Semi Urban???
    Growing Industry Size

    The total number of semi urban households is expected to rise to 153 million in 2009-10 from 135 million in
     2001-02, suggesting a huge market

     Estimated annual Industry size
         FMCG – 65,000 Cr
         Agri Inputs – Rs.45,000 Cr
         2 / 4 Wheelers – Rs.8,000 Cr
         Durable – Rs. 5,000 Cr

    42 million house holds in semi urban and rural areas are availing banking services

    Of the 20 million Rediffmail signups, 60% are from small towns

    50% of online shopping transactions, are from semi urban towns

    % age of BPL families has declined from 46% to 27%

    Rural literacy level has raised from 36% to 59%

  Low penetration rates make it an open and high
opportunity market with substantially less competition
       Media Penetration

 More than 50% of the villages today have cinema, stars fan associations,
mahila mandals, youth clubs, self-help groups, angan wadi centres and
ration shops
 More than 80% of villages have community TV and cable connection,
 separate place of worship and general provision stores
 In all villages, the main source of any information was through television
 Other available Information sources are:
       – wall posters in 55%
       – publicity by panchayat office meetings in 53%
       – dandora in 43%
       – friends and relatives in 22%
       – announcement by loud speakers in 18%
       – cable TV in 16%
       – radio in 10% and
       – through health workers like VHN/ICDS
            workers in 8%

                                                                          The graph shows results of a study of more than
                                                                          50 towns across India
       Information Centers
    Most of the towns have local associations and place of worship where the people and community members
     meets and share information

    Policy makers and program managers tap all these resources to educate the semi urban community

    There are local libraries as well in growing towns where people are encouraged to read newspapers and
     magazines in local language so that they can stay informative

    FMCG Growing Penetration
    Semi urban consumers spend around 13 per cent of their income, the second highest after food (35 per cent), on
    fast moving consumer goods (FMCG), as per a RMAI study

    The FMCG industry in India was worth around US$ 16.03 billion in August 2008 and the semi urban market accounted
    for a robust 57 per cent share of the total FMCG market in India

    Moreover, according to an ASSOCHAM study, FMCG sector in semi urban areas is expected to grow by 40 per cent as
    against 25 per cent in urban areas
   A Gartner forecast revealed that Indian cellular services revenue will grow at a compound
    annual growth rate (CAGR) of 18.4 % to touch US$ 25.6 bn by 2011, with most of the
    growth coming from semi urban markets.

    A joint Confederation of Indian Industries (CII) and Ernst & Young report reveals that of
    the next 250 million Indian wireless users, approximately 100 million (40%) are likely to be
    from semi urban areas.

    By 2012, semi urban users will account for over 60 per cent of the total telecom subscriber
    base in India.

    Mobile phones in semi urban India also grew by close to 13.72 per cent to reach 70.83
    million in April-June 2008

   The traditional market for auto sector in semi urban areas has been driven by tractors
and two-wheelers

    The two wheeler penetration in villages is only 10% as compared to 25% in urban areas

   Nearly 50% of the Indian rural market, which includes 220 million households, is
potential car buyers. Two-wheeler penetration in rural belts is still very low with less than
10% households owning a two-wheeler. Sensing a huge opportunity many automobile
companies are trying to woo the rural consumer

   However, seeing a huge potential in villages and smaller towns where incomes are increasing,
most of the bigger auto brands are now focusing on expanding their share of rural markets
Where should we go in Semi Urban???
                                    Markets
                                    University/College areas
                                    Hotels/Tourist Complexes
UP, Haryana, Punjab,
                                    NRI
MP, HP, Rajasthan                   Defence Areas

                       UP, Haryana, Punjab, MP, Rajasthan

                       »   People are very flamboyant, enjoy festivals and
                           spend lavishly during festivals

                       »   Most expensive weddings take place in these
                           states, also the gatherings are enormous

                       »   HP is a state with high educational preferences and
                           only sources of development as usually research
                           work is undertaken there (agri studies)
Money Belts

                                        Industrial
                                        Govt. Offices
                                        Banks
Bihar, Jharkhand,                       Fisheries/Beach
Maharashtra, Kerala,                    IT Belts
Tamil Nadu,
Karnataka, Orissa

                       Bihar, Jharkhand, Kerala

                       »   Extremely rich people, coal and diamond mines,
                           rubber plantations(Kerala, Maharashtra, Karnataka)

                       »   IT Hubs, Industries in all sectors (Orissa, Tamil Nadu)

                       »   Bank chains, posh residential societies
Potential Areas


       North (Rajasthan, Haryana, MP)

        Kotak Mahindra
        IDBI
        HDFC
        ICICI
        Regional State Banks
       (Eg: Rajasthan- Bank of Rajasthan)

                                                South (AP, Karnataka, Kerala)

                                                 Dhanlaxmi
                                                 TVS Sundaram
                                                 Vijaya Bank
                                                 South India
                                                 ICICI
Who is the Semi Urban Consumer???
                                             Semi Urban Consumer

                  Male Profile                                           Female Profile

   He is aware about myriad products that are on          She is coming out of her closet and is exercising
    offer in the market place, thanks to television         her choice in selected categories

   He is a responsible, family person and starts          She is literate, but now transforming as a career
    looking for employment at an early age                  oriented woman

   He looks for respect more than anything else           Mostly women seek work in Home Sciences

    He could be a bank clerk, an accountant, a            She is comfortable going out in groups and tries
    factory worker, small shop owner, a teacher etc.        to find similar company

   His annual income is pretty low as compared to         She is a content woman, happy with her
    an urban male but he is recognizing better              changing lifestyle and recognition
    lifestyle needs & aims for a higher income
                                                    Buying Habits

 They buy daily usable things in large quantities like wheat flour, edible oil etc. Besides the daily use items; they buy
  things in small quantities and are not concerned with economy

 They recognize the need of advanced quality products but buy them only on special occasions like wedding or

 They like to show what they have bought when in groups, or evening meets, very common in semi urban

 The samples or small quantity bottles, in FMCG, is more often preferred by women

 There is a general perception that if more quantities are bought, it would lead to more wastage

 They are also flamboyant at times with their purchases so often they go to their neighbors after shopping or take
  them along
                                                  Purchase Patterns

 Influence Customs - They believe in old customs and traditions which influences
a lot on the purchasing decision. They look at functionality than on the style,
brand and features

 Packaging and Color - The size, color, shape, and packaging of the product
matters a lot. For example, in the south people prefer yellow as good, but in the
North it is a sign of a disease

 Retail Outlet Friendly - More retail outlet friendly customers, and there are fewer stores available per 1000

 Long Term Usage - They buy the product if they feel that the product will sustain for long term usage

 Economical with Good Quality - There is a saying in Hindi "sasta, sundar, mazboot”
They buy the product if it is in their budget. But if the product is good in technology, quality and adds value to their
role and status in the society then they do not look at money to buy it. If it is good and long lasting then there is no go
back from the consumers

 Society - They are driven by society. Word of mouth is the key factor in purchasing a product
                                       Decision Making Pattern in Semi Urban

            Category                     Influencer             Decision Maker                 User

          Automobile           Peers, Neighbors

            Finance            Peers

            Durables           Peers, Neighbors

             FMCG              Friends, Acquaintances,

            Telecom            Peers, Friends, Neighbors

 The Male Member in the family exercises the right to make purchase decisions

 Only decisions with respect to the eatables are chiefly contributed by the woman in the family

 The neighbors, friends and peers play a crucial role in the decision making for a semi urban consumer

 As he is a society man primarily, he also wants to buy what his neighbor or his friends have purchased
                                           Layout of a Sub Urban Town

                                                                       No. of Households – 9893
                                                                       Total HH Population – 39255

*The Table shows Education and Health Facilities available in Semi Urban Towns

*The survey was conducted in more than 50 towns in South India
           Marketers’ Infrastructure - Sub Urban Towns across India

The availability of Infrastructure in 50 towns
surveyed in south India

Marketers can make use of large Infrastructure ,
enhancing today at a greater pace
Thank You

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