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Small towns are not clearly defined in India. We have heard of very large towns described as small towns. In the Indian context, it appears that everything outside the top eight cities is a small town. For marketers, it is not the population but the income distribution and the size of the market (purchasing power) which matters and here again, there are about 10-15 urban clusters that tower above the rest.
When we look at hard data, we find that although there are over 2,000 towns in India, there are about 112 urban clusters, which account for 60 per cent of the urban population of India. These clusters account for more than 70 per cent of the city markets by size. We have estimated the total urban household income to be Rs 18.8 trillion (source: Market Skyline of India, 2008-09). The top clusters account for 71 per cent of the urban income.
Stars and wannabes
It is also interesting to note that the East is a laggard in terms of significant city markets, whereas the West (Maharashtra and Gujarat) is the clear leader. The top 10 clusters, namely the alpha cities, are the largest markets and will continue to be so for some time. The next 20 (beta cities) are the ones that are catching up and some of them will emerge as large, attractive markets. Many of them are actually virtual satellite cities of the alpha cities (see table and diagram).
Large markets such as Mumbai, Delhi, Chennai and Kolkata continue to be attractive. Their sheer sizes ensure that even at lower percentage growth, the absolute growth remains very high.
The star clusters for marketers are the high growth (large size) clusters, which consist of Surat, urban Thane (includes Navi Mumbai), Bengaluru, Ahmedabad, Pune, urban North 24 Parganas and Hyderabad.
Cities such as Jamshedpur and Salem have been industrial centres for decades, but seemed to be content giving precedence to newer centres that have grown. Some, such as Indore, have been threatening to make it big for many years, but never quite managed it. Others, such as Kanpur, have somehow lost their way.