Professional Documents
Culture Documents
A Report submitted in partial fulfillment of the requirement for the award of the degree of Master of Business Administration. Under the Esteemed Guidance of Dr. Pranab Deb Faculty IIPM, PUNE
Dixita Porwal, PGP/FW/10-12/ISBE-A Pratik Gandhi, UGP/FW/09-12/IIPM Rajwin Patel, UGP/FW/09-12/ISBE Sagar A. Agrawal, UGP/FW/09-12/IIPM Sneha Chandan, PGP/FW/10-12/ISBE-A
Page 2
Acknowledgement
We heartily thank our Project in-charge, Dr. Pranab Deb, Faculty IIPM, Pune . Whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the subject. We are grateful for Sirs contribution towards the execution of our project.
Lastly, we offer our regards and blessings to all of those who supported us in any respect during the completion of the Research.
Page 3
Abstract
The inclusive development is taking place through superior connectivity and better infrastructure in these cities. Therefore demand there might not be the same in quality as is in primary and secondary cities but it is growing by the day, and having a presence there is becoming critical for the marketers, manufacturers and retailers to cater for changing lifestyles in these cities as well. It would be noteworthy for retailers as well as manufacturers and marketers of consumer product companies that are always on the lookout for newer markets or potential hubs for consumerism, to understand the implications these investments will have on the economic growth of these hot-spots and even their nearby towns and villages. These hot-spots are going to bring to the forefront the next wave of new cities that real-estate developers, healthcare and education providers, consumer product companies as well as retailers would be interested in looking at in order to gain first mover advantage and a foothold in the market.
Page 4
Executive Summary
This report provides an extensive analysis and evaluation of the different attributes of the consumer category in the mini-metros in India andhow we understand their range and thereby knowing the sales pitch for those types of consumers.
As we understand the general concept, Sales Management is one of the most important elements for the success of modern organizations. It may be one of the most critical roles that influence the success of an organization. Here, you are closest to two important corporate assets: customers and the sales team. The report also draws attention to the different sales strategies that can be applied in the different industries depending upon the cities, which we have selected.
Page 5
Index
S.r. no. 1 2 3 4 5 6 7 8 9 Topic Introduction to the Project Methodology Analysis Top 6 Cities Sales Strategies Cases Conclusion Recommendation Bibliography Page no. 07 08 09 35 43 44 53 55 56
Page 6
Page 7
Methodology
Background:
Duration of Research 1 Month Target Audience SEC-ABC, AGE-GROUP 15- 24, 25-34, 35+ To get the proper inferences of the research, it was necessary for having a question bank through which we could asses the market situation of Mini-metros. Every question was researched and analyzed through the soft wares (IRS, TGI, TAM) available to use. The major comparisons were made over the mini-metros benchmarking with the metros, over years. The first step was to find out the cities falling under 10-40 Lakh market grids and eventually finding out the cluster of the cities, which were more upcoming, and fast growing within those market grids. And it was done by the different parameters listed below: Profiling the 10-40 Lakh market / Mini-Metro Consumer The Socio-Economic Classification TAM (Television Audience Measurement) TGI (Target Group Index) IRS (Indian Readership survey)
Almost everyone associated with retailing, marketing, media and consumer economics is required to deal with SEC categories. These categories are important as they help in effectively segmenting markets and targeting communication to core consumers. The SEC Classification (also called the Socio-Economic Classification) is a classification of households used by surveyors, market
researchers, media and marketing companies in India to categorize consumer behavior. Originally developed by IMRB International as a way of
understanding market segments, and consumer behaviour it was standardized and adopted by the Market Research Society of India in the mid-1980s as a measure of socio-economic class and is now commonly used as a segmentation tool in India.
The Urban SEC Grid, which uses Education levels and Occupational criteria of the Chief Wage Earner (CWE) of a household as measures to determine socioeconomic classification, and segments urban India into 7 groups (A1 to E2) and
The Rural SEC Grid, which uses Education and Type of House (pucca, semipucca, and katcha) as measures of socio-economic class, and segments rural India into 4 groups (R1,R2,R3,R4)
Page 9
These grids are used to determine the consumption preferences, and purchasing power of households, and are common tools used by social and business researchers working in India. The SEC grid does not use family income levels as a measure as this data is hard to collect and it has been demonstrated that education levels and occupation criteria in India are better determinants of consumer preference. The methodology used in these tools differs from the Household Potential Index, which measures consumption intensity.
Page 10
Page 11
Television, in nearly every country around the world, has become the dominant medium for information, commercial communication and entertainment. This has led to the ever-increasing desire by broadcasters, advertisers and advertising agencies to have accurate, consistent and detailed information about TV audiences. TAM (Television Audience Measurement) is the specialised branch of media research, dedicated to quantifying (size) and qualifying (characteristics) this detailed television audience information. Ratings, the Common Currency With the billions of dollars spent annually on TV programs and commercials, reliable TV audience information is required to evaluate and maximise the effectiveness of this investment.
Page 12
TGI includes 4,000 brands in 500 categories across the following sectors:
Appliances and durables Clothing Confectionery Drink Financial Services Food Holidays and Travel Household Products Leisure Motoring Pharmaceutical and chemists products
Page 13
Page 14
IRS (Indian Readership Survey) is the largest continuous study of the world with a sample size of more than 250,000 households across India. It has been providing invaluable information to the media and marketing fraternity since 1997. IRS is the single source survey for media and product ownership/usage. The prime objective of the study is to collect readership information from a cross-section of individuals, in great detail, so as to present a true and unbiased picture of their readership habits. On the media front, it also captures information on television and cinema viewing habits, radio listening habits and Internet usage. In addition to this, IRS captures information on various FMCG (Fast Moving Consumer Goods) products, usage and consumption and durable ownership amongst households. Since media and product ownership/ consumption information is captured from the same household, it enables linkages between the media and product data. IRS equips you with information that is truly reflective of the Indian population for making informed decisions. IRS covers information on over 100 product categories. IRS information is available in user-friendly software and is the essential tool for category, brand and media understanding.
Page 15
Research Parameters
Q1. What is the SEC split among 10-40 L towns v/s top 6 metros v/s Rest of Urban India? How has this changed over the years? A- Which SECare growing &are stagnant. (Do this at minute level taking SEC A1+, A1/A2, B1/B2 etc. as separate) B- Quantify the middle class in the 10-40 Lakh towns of India?
Q2. Have new-age jobs caught on the Mini-Metros? TGI 2010, Compare with Top 6 Metros (Combined) - Use both TGI and IRS to answer this question - Break up population into SEC A, SEC BC, SEC DE; only A, and BC in TGI - Beak up population into 15-24, 25-34, 35+ - Break up on basis of sex as well - See the % of people working in new-age occupations - Which are the occupations that are catching on now?
Q3. Profile the markets in the 10-40 L town class segment (Town wise) A- SEC profile town-wise of the 10-40 L bracket, compared to top 6 metros (IRS) - Is there a distinct pattern that emerges between North, South, East & West B- Ownership of durables and FMCG in 10-40 L bracket by market (Only SEC AB) - Penetration of up-scale, and mid-range HH durables, FMCG categories - Benchmark with Top 6 Metros
Q4. Youth in the 10-40 L town class bracket v/s Metros? {Using TGI, TG - SEC AB 15-24} A- Psychographics - Key Differences versus 6 metros - How has this changed from 5 years back B- Starting earning age - Differences versus 6 metros C- Leisure Touch-points: Key Differences versus 6 metros (Malls, Multiplexes, Coffee Shops, Discos, Multinational Fast Food Restaurants, Gyms, Hobby Classes / Vocational Classes, Theme Parks) D- Day in the Life
Page 16
Page 17
Analysis
The entire project is based on the comparative study of Mini-metro consumer market with Metro market.
List of 10-40 L towns 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Following is the list of town/cities falling under 10-40 Lakh town market & are considered in the entire project.
Surat Kanpur Jaipur Lucknow Nagpur Patna Indore Vadodara Coimbatore Bhopal Ludhiana Visakhapatnam Nashik Agra Faridabad Kochi Rajkot Meerut Jamshedpur Madurai Amritsar
Bhuvaneshwar
Page 18
From the list of the 28 cities we would be studying on the 6 cities mentioned below
1 2 3 4 5 6 7 8
List of Cities studied further 1 2 3 4 5 6 Bhuvaneshwar Coimbatore Lucknow Nagpur Indore Surat
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Surat Kanpur Jaipur Lucknow Nagpur Patna Indore Vadodara Coimbatore Bhopal Ludhiana Visakhapatnam Nashik Agra Faridabad Kochi Rajkot Meerut Jamshedpur Madurai Amritsar
Bhuvaneshwar
Page 19
Findings& Analysis 10-40 Lakh towns Growing SEC: Stagnant SEC: Page 20 A1,A2,B1 B2,C
Rest of Urban 2010 A1 A2 B1 B2 C D E1 E2 2.1 5.6 7.5 8.6 19.7 23.5 12.6 20.3 2008 2.3 6.2 7.9 8.8 19.6 23.5 12.5 19.2 2005 2.2 5.9 8.0 8.6 19.8 23.6 12.2 19.8
Findings & Analysis Rest of Urban Growing SEC: Stagnant SEC: C, E2 B2, D
Page 21
Page 22
Q2. What is the SEC split among 10-40 L towns v/s top 6 metros v/s Rest of Urban India? How has this changed over the years? A- Quantify the middle class in the 10-40 Lakh towns of India? Clustered the income range into A, B & C 2010 32.62 34.91 32.47 2008 37.1 36.7 26.3 2005 25.4 45.0 29.7
A B C A B C A B C
Middle class falling under - Cluster B SEC A1 A2 B1 B2 C D E1 E2 2010-B 0.6 7.1 8.9 11 23.5 25.9 11.1 11.9 2005-B 0.6 2.5 5.7 10.3 29 30.1 9.8 12.1 INDEX 100 284 156.1 106.8 81.0 86.0 113.3 98.3
The growing SEC is A2, B1 & B2 Middle class i.e. 70% of (B) population falls under SEC B2, C& D
Page 23
Q3. Have new-age jobs caught on the Mini-Metros? TGI 2010, Compare with Top 6 Metros (Combined) - Which are the occupations that are catching on now?
T Traditional jobs
Jobs like: Government, legal, financial, manufacturing, Science, Technology, Engineering, Production, Transport, and Mining etc.
Jobs like: Construction, Education, Health, Welfare, Marketing/Advertising/Public Relations, Scientist/Physicist/Mathematician, teachers/professors etc.
Jobs like: Author/Writer/Journalist, Artist/Designer, Sportsman, Architecture/Planning/Surveying, IT/Computing/Data Processing, Hotels, Catering, Retail, & Distribution etc.
SEC F 25-34 T S A N T S BC N 52.6 93.2 69.3 7.4 35 73.6 F 35+ T S N T S N 86.1 118.7 27.2 135.4 128.9 88.1
In the Mini-metro market, Females 35+ SEC-A - has caught on to Semi traditional jobs as compared to metros & Females 35+ SEC-BC has caught on to both Semi traditional jobs & New Age jobs compared to metros.
Page 24
Whereas Females 25-34SEC-A is catching up more with Semi traditional jobs & Females 25-34 SEC-BC are more catching up New Age jobs compared to metros.
SEC
N T S
BC
In the Mini-metro market, Males 35+ SEC-A - has caught on to Traditional jobs as compared to metros & Males 35+ SEC-BC has caught on to both Traditional jobs & Semi traditional jobs compared to metros. Where as Males 25-34 SEC-A is catching up more with Semi traditional jobs & New Age jobs & Males 25-34 SEC-BC has caught on to Semi traditional jobs as compared to metros.
Page 25
Q4-A. Profile the markets in the 10-40 L town class segment (Town wise) A- SEC profile town-wise of the 10-40 L bracket, compared to top 6 metros (IRS) - Is there a distinct pattern that emerges between North, South, East & West
Top 5 cities falling in 10-40 SEC-A & AB 10-40 Lakh Faridabad Top 5 Ludhiana Lucknow Indore Allahabad A1 185.9 125.0 112.5 103.1 93.8 10-40 Lakh Ludhiana Faridabad Patna Lucknow Allahabad AB 108.2 103.7 102.6 101.1 99.7
Bottom 5 cities falling in 10-40 SEC-A & AB 10-40 Lakh Dhanbad Rajkot Bottom 5 Madurai Visakhapatnam Surat A1 54.7 51.6 51.6 51.6 48.4 10-40 Lakh Coimbatore Madurai Agra Visakhapatnam Surat AB 74.1 74.1 66.8 65.6 64.2
Analyzing the zones on the basis of SEC profile: North Zone South Zone East Zone West Zone B1,B2 C,E1 B2,E2 A1,A2
There in no distinct pattern found in the SEC profiling of the zones, How ever the WEST zone is having more of SEC- A1 & A2 which are considered to be the top most profiles. Followed by North zone, which is having a good presence of B1 & B2 profile.
Page
26
Q4-B. Profile the markets in the 10-40 L town class segment (Town wise) B- Ownership of durables and FMCGs in 10-40 L bracket by market (Only SEC AB) - Penetration of up-scale, and mid-range HH durables, FMCG categories - Benchmark with Top 6 Metros
In order to answer the question: Profiling of cities in 10-40 Lakh market having up-scale penetration of consumer durables & non-durable in FMCG, Electronics, Automobiles & other categories, Benchmarking with Top 6 Metros. In answering this - Have considered all the cities falling in 10-40 Lakh market SEC-AB (which is already presented earlier in the report), finding out there penetration of consumer durables & non-durable in FMCG, Electronics, Automobiles & other categories, Benchmarking with Top 6 Metros by using the TGI software, then grouping the results city wise, so the list of cities mentioned below are having top-most penetration as compared to metros. 1 2 3 4 5 6 Bhuvaneshwar Coimbatore Surat Kanpur Nagpur Indore
These cities are growing so fast they are straining at their edges to make it to the big league soon. It was interesting to see cities like Faridabad, Dhanbad& Ludhiana appearing in the up-scale penetration. On an average, mini-metros have a higher share of rich households than metros, a reflection of the smaller size and the higher density of professionals and skilled migrants.
Page
27
Page 28
Page 29
Media and Entertainment comes in fourth in metros while the Mini Metros choose Banking / Financial Services over Media. Career aspirations Global Citizens: Young India reflects a strong affinity for Travel In the Metros, Salary is the highest sought after career expectation. New Skills and Experience score over Salary in Mini Metros
Youth ownership trends Home PC penetration is very high in the Metros (71%), while itis 54% in the mini metros. Bangalore and Delhi (77%) have highest PC penetration Among mini metros, Ahmedabad comes close at 73% Laptop, though an aspiration, does not seem to have reached many homes. Mumbai has the highest laptop penetration at 38%, compared to the national average of 19% IPods and Music player score over the digital camera both in metros and mini metros. Bangalore has the highest (91%) iPod/ digital music player penetration nationally
C - Leisure Touch-points
As shown in the table below, Youths exposure to leisure touch points in the minimetro markets is less when compared to the metros. However the malls & multiplexes are now increasing at a good rate in the mini-metro market.
10 - 40 Lakh 12.80% 16.60% 21.90% 20.80% 18.40% 21.40% AT PAR 29.8 33.9 38.2 49.3 38.7 59.1
Leisure touch points CLUBS / GYMKHANA'S: Member of any club: Yes COFFEE SHOPS: Gone to Coffee Shop: Yes DISCOS: Visited to disco: Yes EATING OUT IN RESTAURANTS: Gone to restaurant: Yes FAST FOOD RESTAURANTS: Eaten at fast food restaurant: Yes ICE CREAM PARLOURS: Gone to Ice Cream Parlors: Yes LEISURE CENTERS, GYMS, OR HEALTH CLUBS: Ever Done: Yes PUBS AND LIQUOR BARS: Visited in pub: Yes HOTELS: Stayed in hotel: Yes CINEMA HALLS/MUTIPLEX: Visited in last 12 Months: All Visit
Page 31
The day work cycle of todays consumer is much more packed & loaded as that of before. Consumers are now having less leisure time as compared to before. The days are longer i.e it starts early morning & ends late evening. With that of longer work hours consumers are having less time for leisure & other activities. Increased time spent on electronic gadgets like computers +internet, I pods/music player & phones.
Page 32
Digitization continues to be a key growth driver for the Indian M & E industry. As film studios saw a greater adoption of digital prints over physical & even the digital music sales have surpassed that of physical unit sales. With the increasing growth in the DTH & Cable, the Television penetration has increased in Tier II and Tier III cities i.e both the urban & mini-metro market. Print is the second largest contributor, as it has higher penetration in the Indian markets than that of other mediums. Radio is the most upcoming media in the mini-metro market, as with the increased localization & regionalization, its been attracting more attention of marketers & consumers. OOH is also expected to grow at a faster rate in these smaller cities and towns, owing to the cost effectiveness factor. OOH is expected to get more organized over a period of time.
Page
33
With increased digitization, increasing mobile and broadband penetration and ongoing 3G rollouts, the market is growing at increasing rate.
The new media i.e mobile & Internet (social) are now catching up in the mini-metro market. With the increase use of mobiles, computer & computing devices the marketers & advisors are looking forward to bank on this media. This will revolutionizes the entire industry in the coming future. West Bengal, Indore & Ludhiana are the key mobile markets in the 10-40 Lakh market. Tamil Nadu & Indore are the cities having highest Internet penetration in the 10-40 Lakh market. The TV time has gone done in the metros, whereas it has increased in the tier 2 & 3 cities. Top ten fiction programs in 2010 Reality TV is continuing to find its place amongst prime time viewing and impacting the channels GRPs to a large extent. The high awareness and popularity of reality shows andcharacters on TV has not necessarily resulted in high TRPs as thefiction shows have garnered higher TRPs than reality showsacross channels in 2010
Page
34
Page 35
Surat:
The heart of the Indian diamond industry. A very young population thanks to large-scale migration. Sixth in mall space per capita. The City Mayors Foundation has ranked these cities assuming annual growth rates for urban areas between the years 2006 and 2020. The study places special emphasis on growth/decline in the past and forecasts for the future made by international and national statistical organisations. Surat, India's diamond city, is India's second-fastest and the world's fourthfastest growing city. Surat is the one of the major cities in Gujarat. The city has seen rapid economic prosperity, registering an annual GDP growth rate of 11.5 percent over the last seven fiscal years. The city is mainly known for its diamond industries as more than 90 percent of world's diamonds are cut and polished here. Textile is also a flourishing industry here. Surat was ranked 12th in the report
Page 36
Nagpur:
Ninth most populous city in India and hence home to theninth most households. Nagpur's location at the center of India has earned it to be an important growth centre in industry and key logistics base for supply chain investors. It is the 27th fastest growing city in India and the world's 114th fastest growing urban centre. The city is ideal for business in education, banking, food manufacturing, and logistics. It is also central India's largest trade and cargo hub. Nagpur's average annual population growth rate: 2.26 per cent The city ranked 9th is one of the fastest growing cities in India. Nagpur is well known for its good infrastructure and educational institutions. The city of oranges has become an important commerce center and a booming services hub of Maharashtra.
Page 37
Bhubaneswar:
The capital city of Odisha, Bhubaneswar was designed to be a largely residential city with outlying industrial areas. The government has fostered the growth of the city by the development of IT Parks such as Infocity 1 and the new Infocity 2. Finland telecommunication company, Nethawk, has its India R&D center at Bhubaneswar. Gennum Corporation, a Canadian company, has its India development centre, Mindfire Solution, a software firm and the auditors PricewaterhouseCoopers also have their center in Bhubaneswar. The city also holds a private STP located at Infocity in Chandaka with a view to provide incubation and infrastructure facilities to new and young entrepreneurs in the MSME sector. With the latest quarterly report of RBI on the top banking centers in the country, places Bhubaneswar among the top twenty financial centers of India. The growth of deposits in the city is far high than cities like Baroda and Kochi showing a prospect of the city as an emerging Banking Business Hub of the country
Page 38
Lucknow:
The second highest proportion of graduates after Kolkata. Lucknow ranks 16th on per capita expenditure of TIG. Ranked 6th among all the cities in India for fastest job-creation,[26] Lucknow is not only a major market & trading city in Northern India, but is also an emerging hub for producers of goods and services. Being the capital of Uttar Pradesh state, the Government departments and the public sector undertakings are the principal employers of the salaried middle class. Liberalization has created many more opportunities in the business and service sector and self-employed professionals are burgeoning in the city. The city is the headquarters of both: o The Small Industries Development Bank of India (SIDBI) and o The Pradeshiya Industrial and Investment Corporation of Uttar Pradesh (PICUP). The Regional office of the Uttar Pradesh State Industries Development Corporation (UPSIDC) is also located here. Emerging businesses o Lucknow, with its excellent education[citation needed], commercial, banking and legal infrastructure[citation needed], is witnessing rapid growth in information technology[citation needed], banking, retailing, construction and other service sectors[citation needed]. o Commercial property, SEZs, Business centres, Multiplexes, Clubs, Banks, Food courts, Entertainment centres, Finance institutions.
Page 39
Indore:
Indore is one of the fastest growing tier II cities in India the Biggest Business Center of Central India Indore contributes maximum revenue to the Madhya Pradesh Government. Dewas & Phithampur, Madhya Pradesh two largest industrial towns are suburbs of Indore Indore has a regional stronghold in wholesale garment business Indore also boasts of being the best shopping destination in central India. Its a favoured test market for industries owing to the cosmopolitan nature of its population Indore is the biggest educational center of Madhya Pradesh
Page 40
Page 41
has been primarily designed to work for mobile users. This is the only way social media platforms will proliferate and reach the masses. Need proof look at how we have adapted and extended SMS! The social media campaigns on facebook, orkut are going to be ineffective because they are primarily targeted at the urban and internet based users at best 10 million. We need social media that reaches the masses to become vehicles for social movement! Therefore if we can bring mobile internet+social media+social movement together, we will truly democratize knowledge and every corner of India from the elites to the pariah will have access to knowledge and transformation of our society.
Page 42
Increased closing ratio by knowing clients hot buttons like Malls, Multiplexes, etc..
Improved client loyalty by understanding needs of the consumer in the Mini Metros
Shorten the sales cycle by using best CRM practices and loyalty programs Outsell competitors by offering the best solutions in the Mini Metro Markets.
Tier 3: Customer: Work directly with your customer and ask them what their needs are and if your business may offer a possible solution.
Page 44
Admittedly, the engagement aids the upgrade of users from compact cameras to the digital SLRs. Business is important, but the workshops also reflect the Nikon philosophy we want to be part of the Indian photography culture, said the Nikon India MD. The company is set to achieve a turnover of Rs 900 crore in the year ending March 2012, according to its MD, up from Rs 450 crore the previous year. Nikon claims to have 55 per cent volume share of the digital SLR (DSLR) market, which saw one lakh units sold last financial year, and is expected to register 60 per cent growth, said Mr Takashina. DSLR cameras from Nikon are priced between Rs 25,450 and Rs 5.25 lakh. In the lower value compact cameras segment, Nikon expects to have a 25 per cent volume share in 2011-12, up from 20 per cent a year ago. The compact segment in India is expected to grow from 24 lakh units in FY '11 to 32 lakh units this financial year, estimates Nikon. RS 20-CR FESTIVAL PUSH The festival season around Ganesh Chaturthi and Diwali accounts for close to 30 per cent of Nikon's annual sales, and is one of the two peak seasons for the category (the other being summer), said Mr Takashina. To cash in, the company is embarking on a marketing push involving an integrated campaign. The print campaign has been launched, and the television commercial also featuring ambassador Priyanka Chopra will break on September 23. Nikon, which doubled its marketing budget to Rs 120 crore for 2011-12, has allocated Rs 20 crore for this festival period.
Page 45
Case Analysis
Although being an MNC from Japan, Nikon has really understood the Indian market very well. It is eminently seen that they know the pulse of the Indian target group with a proper study that they have established. Brand visibility and creating a brand image through a broader audience is what their main objective is. Apart from that, we also see their competitors have not explored this avenue which gives Nikon the first movers advantage. Photography classes will enhance the brands overall presence and will supplement the sales boost so as to make the right sales mix.
Page 46
development
and
maintenance;
today
it
is
just
about
36
per
cent.
"We have evolved to next generation consulting and technology organisation. Today we offer a wide range of services, 32 per cent of our revenue comes from consulting and system integration work, 6.5 per cent comes from product and platforms," Shibulal said. "In percentage terms our aspiration is more to grow in the products and platform space, both organically and inorganically, and maintain balance in all three portfolios." Commenting on the global scenario vis-a-vis IT sector in India, Shibulal said that globally the environment is pretty uncertain, which reflects in company's guidance. Currently, one needs to be cautious. Stating his expectations from the coming budget, Shibulal said the need of hour is to grow at 9 per cent, and the expectations from budget are that it will support growth and remove regional imbalances. "We have to grow at 9 per cent at least, and I think that is the fundamental need for the country. The challenge is how you create nine plus growth.
Case Analysis
As one of the key growth engines of the economy, the Indian IT/ITeS industry has been contributing notably to the economic growth accounting for around 5.6% of the countrys GDP and providing direct employment to about 2.3 million people and indirect employment to many more. The sector witnessed an interesting 2010 which saw the industry move beyond the economic slowdown and shift its focus on building revenues, creating innovative service models, broadening geographical reach and optimising cost. Amidst the growth story, however, the falling margins and subdued growth of many small and mid-tier companies served as a wakeup
Page
48
call for that segment. Going forward, we expect to see a consolidation wave in the years to come, where small and medium players would merge to compete for large scale deals and keep up with the changing industry dynamics. Emerging trends in service delivery like Cloud Computing and Platform BPO are likely to remodel the industry by creating new business opportunities for the IT/ITeS vendors and driving changes in the traditional service offerings. Today, margin pressures are pushing companies to proactively look for ways to contain costs while enhancing output. For long, Tier-2 cities have played around the fringes of mainstream IT/ITeS delivery. Today, we are seeing more and more companies moving into Tier-2 cities to set up delivery centres.
Page 49
Page 50
It may be noted that online market in India is growing at the rate of 30 per cent compounded annual growth rate and is likely to touch $ 70 billion in next five years. Tapan Das, Director, Mouse eRetail, said, We are developing a model that would ensure cash profit at each product across categories. The company has received an angel investment to the tune of $ 2,00,000 and is in talks with a couple of venture capitalists for an investment up to $5 million by June 2012 for expansion across the country covering top 130 cities.
Case Analysis:
The internet broadband penetration has considerably increased and with the deployment of the new broadband by the government, the online industry in India is looking prudent. Towns and villages with less than 20 lakh people have overtaken metros in buying and selling goods online, known as e-commerce in industry parlance, as shoppers exhibit similar interests, preferences and buying patterns. Rural aspirations are in the same line with that of metros and Tier-I cities. Few things to understand from the case are, Consumers from both rural and urban areas look for competitive prices, product varieties and shopping convenience. The small town shoppers may be denied product varieties in stores, a metro buyer might have spend more time and face parking issues. Ecommerce actually reduces that particular gap and enhances the consumer experience. The profit margins can be substantially on a higher side as the set up cost for an online business is
Page 51
considerably low. Also, since they are expanding in the tier 2 and tier 3 it becomes easier to optimize the operational efficiencies at any given point in time. Major players are now going to re-align their positions vis--vis unexplored territories. There is now a very clear realization that it is extremely difficult to become a genuine Pan India player in every geography and real estate segment. Moreover, developers today have woken up to the fact that there is only limited capital available to real estate players today capital that is earmarked for residential projects, construction funding against achieved leases and signed contracts, or for cities displaying sufficient demand even in subdued market conditions. In the current context, it makes sense for developers to re-strategize and focus on their core geographies. For example, if a certain developer is extremely accomplished as a residential player in the South, having high credibility and sufficient brand recall in this region, such a company would ask itself how wise it is to experiment in the North or the West, and whether it would not make more sense to expand in the South. Likewise, developers accomplished in IT projects would now concentrate on geographies that feature a healthy IT component, and avoid branching out into cities that lack a sufficient volume of such activity. Such developers would see the virtue of focusing on IT-centric cities such as Bangalore, Hyderabad, Chennai, Mumbai, Gurgaon and Pune, and re-think on plans to invest in cities that lack Information Technology activity.
Page 52
Conclusion
INDIAS second and third rung cities are coming of age. Given their historical importance, many of these cities Kanpur, Ludhiana and Surat, for instance boast of an illustrious past. It is now time for them to regain there past glory, as a host of industries and brands reach out to them. Gearing to compete with the metros, Tier II and Tier III cities are the new growth centers of resurgent India. Organized retailing in smaller towns and cities is estimated to grow at a staggering 50-60 per cent a year compared to 35-40 per cent in the large cities. The second and third rung cities are fast emerging as Indias new growth centers. The arrival of consumer brands is helping fulfill the aspirations of a burgeoning affluent class in smaller towns and cities, and has also opened new markets for entrepreneurs. With the spread of television, consumers in these cities became aware of these brands. Now that these brands are in their markets, they are being lapped up. As we have seen that market is conducive for mini-metros, there will be a lot of potential for marketers, media planners, and advertisers to explore this type of market. From the report, we come to know the mini-metros have been doing better compared to the metros in India and are more cost efficient than the metros which can boost further sales and revenue for advertising and media within the companies/clients, which are operated in those cities.
Many businesses are moving to smaller cities because of cost advantage. They
Page
53
have to pay lower salary, spend less on rent, and cut the travel time for employees. This helps businesses in increasing efficiency. When businesses move, many employees also prefer to shift. Call it Semi-Bharat, if you will. As India's economy grows bigger and consumerism catches on, smaller towns and cities beyond the big metros are emerging as strategic centers for a host of big corporate trying to boost sales. As we have seen that market is conducive for mini-metros, there will be a lot of potential for marketers, media planners, and advertisers to explore this type of market. We also understand that the people in semi-urban India have the money, aspirations, knowledge of brands and purchasing power.
Page 54
Recommendation
As we understand from the report the mini-metro markets are the best-driven markets in India. Here are few things, which we can do to explore these markets: More time & effort can be given on these markets. Allocate more funds & budgets to these markets. Customize outlook for the mini-metro cities.
Page 55
Bibliography
Websites: www.groupm.com http://en.wikipedia.org http://www.scribd.com http://www.livemint.com http://slideshare.net
Website Links Business Standard http://www.business-standard.com/india/news/mouseeretail-targets-tier-2tier-3-cities/470980/ Times of India - http://articles.timesofindia.indiatimes.com/2012-02-16/softwareservices/31066613_1_tier-ii-development-centre-tier-i-citie Economic Times http://articles.economictimes.indiatimes.com/keyword/nikon Silver Infra - http://www.silverinfra.com/why_indore.htm Reports and Documents AC Nielsen Social Media Report 2011 TCS Generation Web 2.0 Survey (2008-09) Technopak perspective | Volume 04 Indias Emerging Hot-Spots Report: Published: Mint dated 13thSeptember 2010 KPMG Report 2010 Indian cities: Coming of age Democratization of Indian Markets Democracy And Socio-Economic Transformation In India
Page 57