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Rapidly urbanising India poses fresh challenges for marketers

26-August-2013
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Rapidly urbanising India poses fresh challenges for marketers

Migration and urbanisation are direct manifestations of economic development, particularly in the contemporary phase of globalisation. Understanding the causes and consequences of the former in terms of the changes in the distribution of population and economic activities, along with the success and failures of the interventions by state and other organisations, would be extremely important for evaluating the available policy options and exploring areas of possible strategic intervention.

Urbanisation gives out a clear picture of the shift in consumer behaviour to marketers. According to a study done by eStats India, the country’s urban population is more skewed towards the biggest cities today. The number of people living in million-plus cities almost doubled over the last 10 years, while the number of people living in cities with less than one lakh grew at half this pace.

The report also states that rapid urbanisation of already urban cities and organic growth of tier II and III cities will fuel the future growth of digital tech. Around 13 per cent of Indians now live in 53 cities with populations greater than one million, up from 11 per cent in 35 such cities in 2001.

Growth for internet users and penetration continue to be driven by urban cities as of now. The growth factor coming from tier II and III cities is also due mainly to the urbanised pockets of the population in these cities.

At the national level, the proportion of Indians living in big cities has increased, but not at an exceptional pace. The urban boom has taken place at both ends of the spectrum: there has been a big jump in the number of ‘census towns’ –villages that grow to the point that they satisfy the definition of a town – as well as in the number of million-plus cities.

What does this mean to marketers?
Aspiration brands have a great scope
Urbanisation leads to a lifestyle change amongst the consumers. With lifestyle change, there is a sense of aspiration that comes along with it. Experts believe that this creates a healthy environment for brands to capture an untapped set of potential consumers. For marketers and brand builders, being tuned into people’s aspirations matters, because brands that are aspirational win loyalty, premium and appeal. Brand owners and shapers strive to make their brands more aspirational. It can be observed that this is the very reason why various auto brands target the urban audience and constantly innovate their communication strategies.

Mall culture continues to thrive
India’s population is around 1.2 billion and the retail sector sees annual sales of $500 billion, with nearly 90 per cent of the market controlled by small family-run shops. Organised retail makes up less than 10 per cent of the market, but is expanding at 20 per cent a year, driven by the emergence of shopping centres and malls and a middle class population of close to 300 million, which is growing at almost 2 per cent a year. India allows full foreign ownership in single-brand retail and cash-and-carry or wholesale ventures. It allows 51 per cent ownership in supermarkets.

Having said that, it is noticed that the urban landscape is witnessing rapid expansion of mall culture. Today, every global brand wants to have a presence in India’s retail set-up and are strategising how to make a perfect business impact.

Communication strategies now have a modern outlook
With growing global competition, technological advances, and informed customers, it is important for businesses to make a powerful impact on target audiences and markets. Integrated Marketing Communication (IMC) is one of the most important communications trends adopted all over the world. One step towards this is an integrated approach to achieving efficiency by synergy. The emergence of this concept has become one of the most significant examples of development in the marketing discipline.

The growing purchasing power of India’s huge middle class makes it attractive. Therefore, concepts such as ‘Go Glocal’ have emerged. Storytelling has become an important aspect of advertising strategy. Social media is turning out to be a must have medium in media plans today. With market expansion and growing urbanisation, marketing will have to take a new look at India and its changing consumer profile.

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