The Hindu : Business : South leads in high quality markets

Online edition of India's National Newspaper
Wednesday, Apr 21, 2004

Business

Business

South leads in high quality markets — study

By K. T. Jagannathan

CHENNAI, APRIL 20. The South has the largest number of towns identified among the top 100 high quality urban markets across the country by a study done by RK Swamy BBDO.

Touted as the most definitive source on purchasing power and market potential of urban India, the R K SWAMY BBDO Guide to Urban Markets takes the town (urban agglomerations as per Census 2001) as the unit. The Guide provides, in the order of ranking, the purchasing power potential of 784 towns with a population of over 50000 spread across 21 states and three union territories, accounting for 77 per cent of the urban population in India.

According to the Guide, South Zone comes first in terms of high quality markets. It tops in the matter of market potential as well.

These findings are based on a couple of measurements — Market Intensity Index (MII) and Market Potential Value (MPV). MII is basically a measure of the concentration of purchasing power, also known as purchase intensity in marketing parlance. The Guide has relied on means, consumption, consumer awareness and market support to measure purchase intensity. This reflects the quality of market. MII is based on per capita values and the all-India MII has been indexed as 100. A higher MII means greater concentration of affluent. MPV, on the other hand, is an index reflecting the aggregate purchasing power. This essentially is designed to help market planning. Here, the per capita market potential is adjusted to the respective town population to arrive at the total market potential value for the town. This is indexed with Greater Mumbai as 1000, the city with maximum market potential.

Thirty-five towns in the South figure in the top 100 identified by the Guide on the basis of MII, reflecting the quality of market. It is followed by North (33), West (27) and the East. If one were to use the MPV — indicator for market potential — the South tops again with around 29 towns figuring among the top 100. North (29) comes next on the MPV ranking followed by West (28) and East.

Within the South, the Guide throws up a surprise finding. Eighteen towns in Kerala figure among the top 100 identified by the quality of markets or by MII. Tamil Nadu has 11. Karnataka and Andhra Pradesh have single digit towns in this category with four and two, respectively.

If one were to go by the market potential or MPV, nine towns in Tamil Nadu, seven in Kerala, a similar number in Andhra Pradesh, five in Karnataka and one in Pondichery figure among the top 100.

Interestingly enough, the Guide uses yet another index — Media Exposure Index (MEI). This basically measures the exposure of a town to print, television, radio and cinema. This exposure is measured in per capital term and is indexed in relation to all-India as 100. A peep in the findings reveals an interesting story about the towns in the South. Among the top 20 towns in the South ranked by the quality of market, only nine offer good market potential as well (ranked in top 20 towns by MPV). They are Chennai, Hyderabad, Bangalore, Coimbatore, Kochi, Thiruvananthapuram, Salem, Mangalore and Tirupur in that order.

A closer scrutiny of the findings of the Guide tells a different tale. Hyderabad ranks 13 among the top 20 towns in the South vis-a-vis MII or quality of market. However, it is ranked second among the top 20 towns by MPV or market potential. Thus, the Guide finds market potential in Hyderabad. Yet, the town is found to be a less quality market. Why? The reasons are not obvious. Hyderabad ranks 103 in terms of awareness and market support (key constituents of MII). This means that there is tremendous scope for improvement in infrastructure and awareness in Hyderabad. According to I Natarajan, Senior Advisor (Special Projects), R K Swamy BBDO Advertising Private Ltd., "a savvy marketer will track these to draw up his/her future plans for this market.''

Srinivasan Swamy, CEO of the company, said that Guide was a culmination of three years of research and used comprehensive methodology to evaluate the potential offered by the towns.

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