Towns & Beyond… Semi Urban India
Sep 08, 2014
Towns & Beyond…
Semi Urban India
Index
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
Definition
Region Definition RC&M Specific
Urban (100+ cities)
All statutory places with a Municipality, corporation,
cantonment board or notified town area committee, etc.
All locations with a population of 5 lac+
i.e. Metros, State Capitals, Top 5 cities of every state
Semi Urban (300+ Towns)
Surrounding residential areas of a bigger city, a group of these can collectively be regarded as the
suburbs”. Generally they pertain to residential districts
All locations with a population of 1 lac - 5 lac
i.e. District Head Quarters, Tehsils
Rural (4000+ Blocks)
Areas with Population density < 400 / sq km , or where 75 % of the male
working population is engaged in agriculture , or areas with no
Municipal corporation / board
All locations with a population of less than 1 lac i.e. Blocks , Villages
State No. of Towns
West Bengal 43
Andhra Pradesh 40
Maharashtra 27
Karnataka 26
Tamil Nadu 22
Madhya Pradesh 20
Haryana 19
Bihar 18
Western UP 16
Gujarat 15
Rajasthan 13
Punjab 11
Eastern UP 8
Orissa 8
Central UP 6
Chhattisgarh 6
Kerala 5
Jharkhand 4
Himachal Pradesh 1
Uttaranchal 1
Total 309
Population 1 to 5 lac
List of Semi Urban Towns
Developing States – Growth & Income
State Growth Rate
Bihar 24.33%
Chhattisgarh 19.88%
Haryana 18.39%
Andhra Pradesh 15.56%
Uttar Pradesh 15.27%
West Bengal 14.96%
Punjab 14.90%
Himachal Pradesh 14.60%
Kerala 14.55%
Madhya Pradesh 14.49%
Rajasthan 14.32%
Maharashtra 13.55%
Karnataka 12.76%
Orissa 12.21%
Uttarakhand 11.63%
Tamil Nadu 11.22%
Gujarat 11.02%
Assam 10.68%
Jammu & Kashmir 9.35%
Jharkhand 9.33%
State Per Capita Income (INR)
Haryana 68914
Maharashtra 54867
Punjab 52879
Gujarat 59570
Kerala 49316
Tamil Nadu 45058
Himachal Pradesh 44538
Karnataka 40998
Andhra Pradesh 40902
Uttarakhand 36675
West Bengal 36322
Chhattisgarh 34483
Arunachal Pradesh 33302
Orissa 29464
Rajasthan 27001
Assam 23993
Madhya Pradesh 21648
Jharkhand 21465
Uttar Pradesh 18214
Bihar 13663
Potential Semi Urban Markets
INDUSTRY FORTUNER
Four Wheeler
Two Wheeler
Finance
Insurance
Telecom
Durable/ FMCG
Maruti Suzuki
Hero Honda/ Bajaj
ICICI
Max Vijay
BSNL
LG/HUL
Case Study – 4 Wheelers
Fortuner – Maruti Suzuki
Maruti India generates 10 per cent of its domestic sales from Semi Urban sales, amounting to 32000 cars.
Semi urban markets' share in Maruti's overall sales during April-January 2009 has gone up to 8.5 per cent from 3.5
per cent in the same period last year.
Plan
The company plans to add another 600 people to its present
tally of 7,200 employees of which over half will be engaged in
sales and marketing.
Campaign
Maruti has launched its marketing campaign for semi urban
India “Ghar Ghar Mein Maruti” (Maruti in every Household”),
'Mera Sapna Meri Maruti‘
Strategy
Tying up with public sector banks that have both a branch
network in these areas and the resource base to make loans
like PNB, Bank of India to increase finance penetration
Competition – Hyundai
As per Hyundai “almost 50 per cent of the 220 million households in semi urban India are potential care buyers
due to the agricultural subsidies extended by the government and also due to increase in productivity of
agri-based products, thus presenting an attractive market for hi-technology products”.
Plan
The company plans to touch 58% of the semi urban market in
India by targeting middle semi urban class.
Campaign
Launched promotional scheme for semi urban areas titled
“Ghar Ghar ki Pehchan”, under which special schemes for
government employees in semi urban areas and members of
gram panchayats on the purchase of Hyundai Santro
Strategy
Focus on Govt employees and panchayat members as they belong from well-to-do families
Case Study – 2 Wheelers
Fortuner – Hero Honda Competition – TVS
Penetration
HH has market share of 40 per cent from rural and semi urban
areas.
Campaign
The company planned to cover 1 lakh towns by end of 2010
financial year through the launch of the promotional
campaign called Har Gaon, Har Aangan (Every Village, every
Household)
Strategy
Hero Honda is expanding its rural reach in India by adding
about 500 more dealerships, service centers and other outlets
across the country. Hero Honda has set up health care
initiatives and services to guide people in getting driving
licenses. Coupled with motorcycle tax cuts and economic
growth.
Result
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.
Penetration
Thanks to their increasing semi urban penetration, TVS
reported profit of 335.2 million rupees in the year ended
March 31 after posting losses in the previous two financial
years according to its website.
Plan
TVS Motor Co. Ltd is banking on new launches for a deeper
penetration into the semi urban market to fuel growth in
2010, chairman and managing director Venu Srinivasan said.
TVS has also launched special marketing schemes for semi
urban markets.
Strategy
The new Bharat Stage III compliant model TVS Max 4R will be
targeted at heavy load carrying riders predominantly found in
the semi urban markets.
Case Study – Finance
Fortuner - SBI
Penetration
SBI, has a breathtaking semi urban branch network of 6,600 with 972 specialized branches. These branches have been set up in different parts of the country with the sole purpose of developing agriculture through credit deployment.
Strategy
SBI has developed semi urban agricultural business units, education programs for local farmers and “kisan” cards.
One of their recent endeavors is the tie-up with National
Agricultural Cooperative Marketing Federation (NAFED) to
finance farmers for cultivation of various crops like soyabean,
paddy, jute and potato.
Results
SBI has gradually evolved to become the leader in agricultural finance with a portfolio of Rs. 18,000 crore in loans to around 50 lakh farmers. has 30 Regional semi urban Banks in India known as RRBs.
The semi urban banks of SBI is spread in 13 states extending
from Kashmir to Karnataka and Himachal Pradesh to North
East. The total number of SBIs Regional semi urban Banks in
India branches is 2349 (16%).
Competition - ICICI
Penetration
ICICI Bank is the country’s second largest bank,in urban as well as in Semi Urban towns.
Strategy
ICICI has adopted the franchise model of operation in semi urban markets A one man office (known as “kendra”) in the village forms an interface between the villager and the Bank’s products. Crop loans, housing loans, automobile loans, farm equipment, seed financing and insurance policies are all on offer.
ICICI is looking at tying up with micro-finance institutions and local self-help groups (or creating them if already do not exist)
Results
The number of borrowers has risen from 130 in 2000 to over 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 retail sector is 1 – 2 % as compared to 2 – 3% in the semi urban wholesale sector and 5% for the banking sector as a whole
Case Study – Telecom
Fortuner - BSNL
Penetration – BSNL covers total number of 5,23,532 towns
and villages across India. Its the largest telecom service
provider in India
Strategy – Grameen Sanchar Sewak (GSS) Scheme was
launched in 2002 which provides Door-t-Door facility by
Delovery agents in rural and and semi urban markets.
Results – At present, 2685 GSS are covering more than 11997
towns and villages. Across India, the scheme has been
launched in most of the states
Competition – Bharti Airtel
Penetration – about 55% of Airtel’s 100-million customer base is from the semi urban areas
Strategy – Has set up 14,000 Airtel Service Centres
and initiated self-service options like Start Stop to build
trust amongst customers .
Focus on Value added services (VAS) as, Music and SMS
constitute significant part of Bharti’s Rs 3500-crore VAS
revenue
Results – Company expects this share to reach 65% very shortly, bringing renewed focus on VAS for the semi urban customers
Case Study – Consumer Durables
Fortuner - LG
Penetration
LG has set up 45 area offices and 59 semi urban and remote-area offices. semi urban market accounts for 60% of new CTV buyers for LG
Strategy
“Thinking locally, succeeding globally”
Product
LG Electronics launched a customized TV ‘Sampoorna’
Plan
A more important aspect of customization was to make TV set which can appeal to local needs, it facilitated on screen display in vernacular language like Hindi, Tamil and Bengali.
Results
It is selling 1,00,000 sets in the very first year.semi urban market for LG grew at 25% over the last year as compared to 15% urban
Competition - Samsung
Penetration
To counter LG’s strong semi urban presence, Samsung visited 48 small towns in 100 days in an effort to increase brand awareness of its products.
Strategy
“Samsung Guru comes to your town with Lots of excitement and valuable prizes”
Product
Guru 1105, Guru 1080, Samsung Dholak (E-1160), E-2120 and Samsung Tabla (E-2130)
Plan
Samsung rolled out its 'Dream Home' road show, to provide recreation in the entertainment starved semi urban areas.
Results
It has created an awareness in the semi urban areas and today in mobile phones category, it’s the leading brand in semi urban
Case Study – FMCG
Fortuner – Sunsilk (HUL)
Penetration
Company launched Chik shampoo to target the low segment people . Chik shampoo has a penetration of about 22% of semi urban market
Strategy
launched shampoo in several sachets – 5ml,10ml,2ml etc and also launched low priced bottles in several sizes
Plan
Direct media promotions, free sampling helped majorly to build knowledge about product categories.
Results
The shampoo brands like Chik, Nyle (herbal category) contribute 50% of the company’s turn over
Competition – Vatika (Dabur)
Penetration
LG has set up 45 area offices and 59 semi urban and remote-area offices. semi urban market accounts for 60% of new CTV buyers for LG
Strategy
Dabur conducted Beauty Contests to make women conscious of how their looks, to encourage them to use beauty and hair care products. It re-named products as per language used in regions
Results
Dabur is fourth largest It is selling 1,00,000 sets in the very first year.semi urban market for LG grew at 25% over the last year as compared to 15% urban
Sales Point Presence
Sales Point Presence
10 lac +
5lac – 10 lac
1lac – 5 lac
Below 1 lac
Automobile -Dealerships, sales and Service outlets Finance- Branch Offices, Finance institutions, Banks FMCG- Shops, Retail Outlets Durables- Small Outlets, Dealers
Automobile – Salesmen, Monthly service camps Finance- Regional Rural branches, post offices FMCG- Small Shops with limited supply Durables- Salesmen
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???
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
Growing Industry Size
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%
Media Penetration
The graph shows results of a study of more than 50 towns across India
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
Information Centers
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
Telecommunications
Automobiles
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???
UP, Haryana, Punjab, MP, HP, Rajasthan
Reasoning 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)
Congregations
Markets University/College areas Hotels/Tourist Complexes NRI Defence Areas
Bihar, Jharkhand, Maharashtra, Kerala, Tamil Nadu, Karnataka, Orissa
Industrial Govt. Offices Banks Fisheries/Beach IT Belts
Money Belts
Reasoning 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
Finance
South (AP, Karnataka, Kerala) Dhanlaxmi TVS Sundaram Vijaya Bank South India ICICI
North (Rajasthan, Haryana, MP) Kotak Mahindra IDBI HDFC ICICI Regional State Banks (Eg: Rajasthan- Bank of Rajasthan)
Potential Areas
Who is the Semi Urban Consumer???
Semi Urban Consumer
Male Profile
He is aware about myriad products that are on
offer in the market place, thanks to television
He is a responsible, family person and starts looking for employment at an early age
He looks for respect more than anything else
He could be a bank clerk, an accountant, a factory worker, small shop owner, a teacher etc.
His annual income is pretty low as compared to an urban male but he is recognizing better lifestyle needs & aims for a higher income
Female Profile
She is coming out of her closet and is exercising
her choice in selected categories
She is literate, but now transforming as a career oriented woman
Mostly women seek work in Home Sciences
She is comfortable going out in groups and tries to find similar company
She is a content woman, happy with her changing lifestyle and recognition
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 festival
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
Buying Habits
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 population
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
Purchase Patterns
Decision Making Pattern in Semi Urban
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
Category Influencer Decision Maker User
Automobile
Peers, Neighbors
Finance
Peers
Durables
Peers, Neighbors
FMCG
Friends, Acquaintances, Relatives
Telecom
Peers, Friends, Neighbors
Infrastructure
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