India's small towns are hot markets, not Metros

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Washington, Jul 2: It is a long established truth that India and other such poor countries are the hot markets currently. Interestingly according to latest reports, it is not the metros or the luxury markets that the multinationals should continue to woo, the Middle class from the smaller towns are reportedly emerging as hot markets.

"The Indian urban growth story until now has been driven largely by metros. This is now moving beyond metros into smaller towns," says Ashok Rajgopal, a partner in the media and entertainment practice at Ernst & Young.

Making a strong case for the Middle India's buying power, there have been earlier studies that found that 51 Indian districts with population of more than 500,000, have twice the market potential of the four metros combined. The ratio of spending to earning is higher in Tier II towns such as Nagpur, Jaipur, Surat and Coimbatore than it is in the metros, says another study.

Apart from these studies, the experts have coined terms like 'The Bunty Effect' and 'The Dhoni Effect' which refer to the people from small towns who have made it big in the big cities or metros.

While the 'The Bunty Effect' (derieved from the characters of the movie Bunty and Babli) was coined by advertising agency Euro RSCG India in October 2007, and 'The Dhoni Effect: Rise of Small Town India,' was by Ernst & Young in March 2008.

"The Dhoni Effect identifies a phenomenon where rapidly growing small towns of India are taking center stage," says Rajgopal of Ernst & Young.

With the research that points out at the growing affluence, media penetration and physical connectivity the small towns; the manufacturers and sellers have started paying attention to the Tier I, Tier II, Tier III areas as that is where the growth is bound to happen from.

The marketers have also started doing their home work. They have begun to connect with these consumers by understanding the peculiarity of this market with an aim to strike a cord with them.

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