Marketers no more can afford to ignore emerging markets of India, today. As according to Alok Bharadwaj, Senior Vice President, Marketing India, there are bout 4,000 cities in India that can be considered as emerging markets. Bharadwaj was speaking at the ‘real India Conclave, an initiative of Jagran Group and exchange4media Group to showcase the potential of these markets to marketers and media planners.
In the first of the series, the focus on Friday, June 29, 2012, was Bihar.
Good governance leads to better markets
According to Bharadwaj, to create a better tomorrow, we need to do two things: one is, to bring in change; and secondly develop a value creation platform. â€œI see this happening in Bihar. We can see the effort to create a better tomorrow,â€ he said.
What creates business is the market; what creates the market is economic activity and what creates economic activity is good governance. And according to him, Bihar has been at the forefront of bringing in good governance in the last seven years, which has created enormous opportunities for doing business and consumption of the best products, in the state.
According to him, one third of Canon’s business came from emerging markets, and that these markets were growing at 60 per cent, as compared to other cities, which were growing at mere 15 per cent. He also noted that while the growth was three times in these markets, marketing costs in these markets was not as high as in the developed markets.
In emerging markets, obviously, there has to be a strategy which has to be futuristic, he explained. Marketers have to work on three things: customer value, customer connect and customer trust.
Finally when we will look at the next decade, the marketer will see India as not one market, but many markets. The approach for building markets in India is very promising and the silver lining is in the emerging market category.
More households, more consumption
On her turn, Anisha Motwani, CMO, Max Life Insurance spoke about the significant contribution made by emerging markets in the scorching pace of growth of the Indian economy. Corroborating with an example, she said that while it took the country close to 60 years to reach the $1 trillion GDP number, the subsequent trillion is expected to happen by 2014, a mere three years.
According to her, the demographics of the country skewed in favour of the youth, and the societal shift towards nuclearisation of families is key to this growth. With 47 per cent of Indiaâ€™s population is in the age group of 15-34 years, there exists a huge potential that can be leveraged only if the youth is literate, productive and generates income. Motwani provided statistics which prove that this potential is slowly being tapped. â€œToday, 333 million young Indians are literate and are contributing to the economy. Every household that has at least one literate family member is seeing an increase in income by 67 per cent. There exists a direct correlation between literacy and income, and this is why markets are doing well,â€ she said.
The changing family dynamics towards a nuclear set-up is also resulting in a favourable growth. With more households getting added, consumption is increased which in turn fuels demand and increases supply to meet this demand.
Speaking of Bihar specifically, Motwani said that an improved social sector with better health and education, development of infrastructure and law and order, has increased investor confidence, which has further contributed to Biharâ€™s success.
â€œEven on a smaller base, you will see that the growth rate of Bihar is growing at 20 per cent, higher than many other states including prosperous ones,â€ she said.
She also added that while emerging markets in totality contribute 17 per cent to Indiaâ€™s GDP at present, the number can swell up once all these states begin to grow at a rate akin to that of Bihar.
Better infrastructure, better business
â€œEarlier it used to take us five days in Bihar for three meetings, but now with infrastructural development, we can move swiftly and finish off work as per our schedule. There are no transport issues, no road issues and we can travel in the night too,â€ said Vimal Pande, CEO, VI-John Group.
Since the change in the governance and the exposure that has been provided to the population of Bihar, it is growing exponentially in the past few years. Vimal made it clear that for a marketer the most important factor is the reach. It is imperative to reach the market interiors for better growth and the circle is completed only if there is good infrastructure.
â€œIn the FMCG sector, unless you reach the most interior of the villages, you cannot flourish. We have to make all our products available to everyone. In the early 2000s we were able to go to Patna, Katihari etc, but not the interiors. Now we are able to expand because of proper infrastructure, and are able to reach the people directly,â€ he said.