While marketers have traditionally focused on large metro areas and rural India, Middle India, consisting of approximately 400 towns with populations between 1-10 lakh, is emerging as an important new market. Middle India has consistently outpaced overall India in FMCG growth over the past decade. It is estimated the Middle India FMCG market will grow from INR 287 billion in 2010 to over INR 4 trillion by 2026. Many categories are growing faster in Middle India than all-India rates, indicating its strong potential. As incomes and aspirations rise in Middle India, marketers are recognizing the opportunity to gain a foothold in this underserved market before competition intensifies.

1. Managing
the Middle India
Gold Rush
December 2011

2. Managing the Middle The Nielsen Company
December 2011
India Gold Rush
Ranjeet Laungani
Executive Director, Nielsen
Article at a glance
For more than a decade, marketers have focused their energies primarily on the thriving metros and the colossal rural
Indian opportunity; but as we weigh the still-to-be-had opportunity with the efficiency of reach over the next 5-10 years,
marketers should give Middle India a serious look.
While metros will remain a staple for marketers and increasing a rural footprint will be critical for volumes in the long run,
there is a growth opportunity that is vastly under-rated by many marketers today, which could emerge as a key growth
engine for the next 10 years. Middle India, a region made up of approximately 400 towns each with a population of 1-10
Lac, are home to 100 million Indians and today constitute up to 20 percent of the country’s FMCG consumption.
Middle India will grow from an FMCG market worth INR 287 Billion (5.74 Billion USD) today to over INR 4 Trillion (80
Billion USD) in value by 2026 and it is about time marketers took notice.
Fast Facts:
• Middle India has outpaced the all-India growth story: Since 2002, the FMCG sector grew 3.5 times in Middle India,
compared to 3.2 times in all-India.
• Middle India per capita FMCG consumption stood at over INR 2,800 (56 USD) in 2010 versus the all India number at just
under INR 1,200 (24 USD).
• The top 10 FMCG players in Middle India have added INR 35.8 Billion (716 Million USD) from these 400 towns in 2 years
alone.
• Forty-nine of 81 FMCG categories tracked by Nielsen in early 2011 saw faster growth rates in Middle India than their all-
India rates.
• As of May 2011, FMCG per-dealer offtakes increased to 14+ percent for Middle India – up 2.7 points from 2010 versus an
increase of 1.5 points for metros.
• The number of FMCG stores in these 400 towns has seen a rapid increase: more than 250 new stores were added per
town in the last three years.
The purchasing power of the contemporary Middle India consumer and the sheer plethora of goods and services available
are unprecedented. This market is expected to continue growing at a healthy rate at least for the next decade, which offers
most companies ample lead time to strategize on how to tap into this segment.
Marketers who make an aggressive foray into Middle India over the next few years will need to have a good understanding
of changing consumer aspirations and be mindful of some of the infrastructural drawbacks if they are to manage this gold
rush successfully. By studying the Middle India consumer profile, marketers will be better equipped to cater to this creamy
middle layer and define their growth strategies in these smaller towns.
The Middle India demand revolution has begun. The Gold Rush is here.
2 Copyright © 2011 The Nielsen Company.

3. Middle India on top While marketers remain fixated on opportunities at the
bottom-of-the-pyramid and in metro regions, not many
While 70 percent of the Indian population still resides in rural are aware that only the metros and Middle India (1-10 Lac
areas, poor reach and inadequate infrastructure have made it population towns) have outpaced the all-India growth story in
difficult for marketers to fully tap into the potential of these the last 8 years. Even today, Middle India leads the pack across
markets quickly. Most FMCG companies have concentrated urban and rural segments for FMCG value growth rates.
their energies on the metro and mini-metro regions in the past
10 years. Although some companies have partially penetrated Middle India has been outpacing the all-India FMCG story for
the Middle India market, many tend to overlook smaller towns, many years now
ignoring the fact that these markets are perhaps easier to
FMCG Value Sales Year Year Multiple
penetrate due to relatively sparse competition. Considering (Rupees Billion) 2002 2010 Increase
the expected growth of population in this area, rise in incomes
and aspirations and the expected influx of people from even All India 442 1,425 3.2
smaller towns to Middle India, this market is expected to create Metro 110 412 3.8
huge opportunities for marketers in the coming few years. Middle India 83 287 3.5
Rest of Urban 98 245 2.5
“Still-to-be-had” Opportunity + “Medium-term ROI” Scale Rural 151 480 3.2
Urban: Middle India Growing middle India; approximately Source: Nielsen
(1-10 Lac towns) 400 towns
Rest of Urban Fast growing but very spread out Strong Value Growth: recently Middle India is growing at 20%
(<1 Lac towns) (Approximately 7,500 towns)
(up 3+ points from 2010)
70% of the population but inefficient
Rural India
reach a challenge for marketers Value Growth %
Steady growth; in the spotlight for the MAT May 2010 2011 Delta
Urban: Mini Metros
last 5+ years
All India 18.5 18.8 0.3
Bread & butter for most marketers for
Urban: Metros Metro 16.4 19.1 2.7
many years now; competitive
Source: Nielsen 1-10 Lac towns 16.9 20.1 3.2
Rest of Urban 15.6 19.5 3.9
The 100-Million-strong population is only one of the reasons Rural 22.8 17.5 -5.4
why marketers should take note of Middle India. In addition Source: Nielsen
to the large size of the Middle India population, the increase
in household incomes and rise in spending power makes it an The expansion of Middle India shows that the demand
attractive market for consumer product companies. Many revolution is percolating to the next tier of cities. Why do
studies in recent years have focused on the rise of the Indian these cities matter? These cities are ready to behave like the
middle class, pegging this group of strivers—annual household metros of tomorrow. Of the total INR 1.4 Trillion (28 Billion
income of at least INR 500,000 (10,000 USD)—and seekers— USD) in FMCG sales in 2010, goods worth about INR 287
annual household income of at least INR 200,000 (4,000 Billion (5.74 Billion USD) were consumed by the Middle India
USD)—to rise to over 500-Million-strong in 15 years. We population. This number makes up more than 20 percent of the
believe this rising middle class story will disproportionately overall FMCG sales, and 30 percent of the urban FMCG sales.
advance the expansion of Middle India over the next decade. Middle India is also home to 30 percent of all urban stores,
comprising over 900,000 Million stores today. In addition
to this, the annual per capita FMCG consumption of Middle
Middle India: home to 100 million Indians
India towns touched INR 2,800 (56 USD), which exceeded the
national average by INR 1,600 (32 USD). This is a significant
achievement for these smaller towns, considering the fact that
354 42 68 31
towns towns million million the metros breached the INR 2,800 (56 USD) mark as recently
as 2009.
# of towns Population
1-5L 5-10L
Source: Nielsen
3 Copyright © 2011 The Nielsen Company.

4. The growth figures for different FMCG categories also reveal
Why does Middle India matter? a strong and vast market potential for Middle India. Out of
the total 81 FMCG categories, 49 product categories across
personal care, over-the-counter drugs, household care, and
1-10 Lac Towns 1-10 Lac Towns Annual per
contributed INR are home to capita FMCG food outgrew the all-India rate. Over 30 categories saw
287 billion in more than 910K consumption over growth rates faster than 1.15 times the all-India rate. The top
FMCG sales FMCG stores INR 2800 five fastest growing categories like diapers, scourers, liquid
in 2010
toilet soaps, acne preparations and air fresheners, which
fared strongly in the past year, performed even better in 2011,
This is 20% + This makes up for Versus a national
contribution to all 11% of all FMCG average of under INR indicating continued possibility of robust growth in the near
India FMCG and 30% stores in the country 1200; of note, metros future.
+ contribution to all & more than 30% of have only breached
urban sales all Urban stores INR 2800 in 2009
Interestingly, the focus on hygiene, health, personal grooming
and convenience seems to be driving the rapid growth in these
Source: Nielsen towns. Middle India is also accepting evolved categories like
breakfast cereals, air fresheners, acne preparations, and liquid
toilet soaps. The metros took on to many of these categories in
Marketers have been taking notice of Middle India: a big way just a few years ago and Middle India does not want
in the news in recent times to be left out.
Van Heusen, Louis Philippe Quality tea now finding
eye smaller towns, cities takers in smaller cities In these 1-10 Lac towns, 49 of the 81 categories outgrew the
(June 2011) (April 2011) all-India rate in 2011 vs. 2010
1-10 Lac
Towns Value
FitnessOne to invest Rs. 30 cr to BPOs offer jobs to school pass Growth
expand in tier II, III cities outs in smaller cities indexed Personal Care Household
(April, 2011) (April, 2011)
Food
to All-India / OTC Care
(MAT May
2011 over
India’s Fortis to open 25 low- Blue Dart to spread wings 2010)
cost hospitals over 3 years in to tier 2,3 towns After shave
smaller towns, especially in tier (April, 2011) Batteries,
lotions, Nail
II and Tier III cities / June 2011 Scourers,
1.5X or enamel,
Glass Chayavanprash
more Coconut
cleaners, Soap
Bacardi seeks to spread cheer Omaxe to focus on small oil, Shaving
to smaller cities towns (as inventory is pilling cakes/ bars
preparations
(July 2011) up in tier-1 cities)
(June, 2011)
Antiseptic
creams,
Source: News Reports
Antiseptic Air fresheners, Cough lozenges,
1.25X or
liquids, Acne Utensil Packaged tea,
more
preparations, cleaners Glucose powders
Middle India: firing on both Baby oils/
cylinders massage
Cash registers in stores all over Middle India seem to be
ringing off the hook, thanks to the growing consumer wallets, Breakfast cereals,
Chewing gum,
increased exposure to the ‘metro’ lifestyle, a larger assortment Analgesics/ Liquid toilet
1.15X or Squash cordials
of product supply, and improved access to consumer finance. Cold remedies, soaps, Toilet
more & drinks, Biscuits,
While the change in consumption patterns in Middle India can Condoms soaps
Milk foods, Baby
be partially attributed to a rapid surge in consumer demand, foods, Chocolates
the increasing ubiquity of consumer products is contributing
to this growth as well. It is a story of consumer pull meeting
Source: Nielsen
distribution push.
4 Copyright © 2011 The Nielsen Company.

5. Source: Nielsen
These developments augur well for FMCG companies, especially on a variety of products that enhance their standard of
in light of the fact that this market is still in a nascent stage, living. They are accepting categories that never were part of
and is expected to grow substantially in the next five years. their consumption basket. This has opened up a window of
The rise in demand for consumer products and relatively lower opportunity for FMCG companies to introduce products that
penetration of FMCG companies in these towns means that were initially brought to market primarily for the metros. The
competition is not as fierce in these towns as would be in larger size of the opportunity will multiply in the next few years as
metros. A few major players with adequate capital and wide these new categories will see deeper penetration levels across
distribution networks are already cashing in on the opportunity. a larger household base.
The annual turnover of the top ten FMCG players from the
Middle India segment rose more than 42 percent by INR 35.8 The consumer pull story
Billion (716 Million USD) in just two years between 2009 and
2011. Increased exposure to the media and a gradual improvement
in infrastructure have played a substantial role in introducing
Strong Value Growth: Just the top 10 FMCG players have the Middle India population to what was earlier only a ‘metro’
added 35.8 Billion from Middle India in 2 years lifestyle, fuelling a desire to improve their standard of living.
These factors, combined with an increased spending capacity,
are rapidly pushing up the demand for a vast consumer product
The top 10 FMCG The same players profile in Middle India.
players in these had a turnover of
towns clocked INR INR 121 Billion from
86 Billion in value these towns
Per Dealer Offtake Growth %
sales in 2009 in 2011
+42% MAT May 2010 2011 Delta
All India 12.1 13.0 0.9
MAT May
Metro 14.5 16.0 1.5
Source: Nielsen
1-10 Lac towns 11.7 14.4 2.7
Its not just a story of sheer volumes, Middle India is also
RoU 9.7 12.8 3.1
capturing marketers’ attention due to a shift in demand, a
direct consequence of people’s rising aspirations for a better Rural 15.1 11.4 -3.7
lifestyle in these regions. Consequently, there is an increase Source: Nielsen
in the Middle India consumers’ willingness to spend more
5 Copyright © 2011 The Nielsen Company.

6. “
A strong indicator of this trend is the rise in per dealer offtakes
– which represents the average sales per dealer over time. The
per dealer offtake in Middle India saw a rise of 2.7 points in
2011, compared to an increase of 1.5 points in metropolitan Consumption baskets in these
cities in the same period. This is a growth of more than 14 towns are evolving –
percent over the previous year (MAT May 2010). For some categories as varied as breakfast
FMCG categories like cheese, packaged rice, diapers, etc., the cereals, air fresheners, and glass
increase in per dealer offtake was quite substantial, at more cleaners which earlier saw little
”
than 30 percent! Per dealer offtakes for almost a dozen and a acceptance in these towns are
half categories in Middle India towns grew at over 20 percent in growing much faster in these towns
the last one year alone.
than at the all-India level.
The top ten FMCG companies in these Middle India towns saw
a spurt in per dealer offtakes, which grew 17% in one year.
Source: Nielsen
The distribution push story
In addition to the surging demand for consumer products
in Middle India, marketers are extending their reach in the
1-10 Lac population towns through a constantly expanding
distribution network. As a result, new FMCG retail stores have
mushroomed in these towns in the past few years.
The last three years have also seen a rapid increase in the
# of FMCG stores
June 2008 May 2011
Overall Number Increase of 250+
823K 926K
of Stores per town
Number of Increase
61K 80K
Chemists of 31%
Number of
Increase of
Modern Trade 1094 1501
37%
Stores
Source: Nielsen
6 Copyright © 2011 The Nielsen Company.

7. Source: Nielsen
The total number of stores in these towns rose from 823,000 A case worth mentioning: it is interesting to note that Cadburys
in June 2008 to 926,000 in May 2011, an average addition ranks #5 in value sales in 1-10 Lac towns versus a #6 ranking
of over 250 stores per town. The top ten FMCG players in at an all-India level. In the last 3 years, Cadburys has added
the 1-10 Lac population towns have aggressively expanded 30% more stores in these towns (the biggest leap of any top-10
in these areas, adding 29,892 stores on average in the last player) and the results are showing! In fact, in the last quarter
year alone and 55,767 stores on average in the last two years. of 2010, it actually moves to #4 place in 1-10 Lac towns.
More number of stores translates into an increased supply
infrastructure, which is helping marketers push products to Spotlight: The smaller 1-5 Lac
consumers faster. Not surprisingly, the distribution reach of
as many as 15 categories in the FMCG sector has grown by population towns
over 5 All Commodity Value (ACV) distribution points in the
3-year period from May 2008 to May 2011. Marketers who had In 1-5 Lac towns, 56 of the 81 categories outgrew the
recognized the potential and invested in these regions a few all-India rate in value in 2011 vs. 2010
years ago are, today, laughing their way to the bank. 1-5 Lac Towns Value
Growth indexed Personal Care / Household
to All-India Food
OTC Care
When we evaluated some of the top national FMCG players on (2011 over 2010)
their Middle India performance, two things were clear: Tooth Powder, After-
Glass cleaners,
Utensil cleaners,
shave lotions, Lipsticks,
1. Not all national players were optimally leveraging Middle 2X or more Toilet cleaners, Chayavanprash
Shaving preprations,
Other Scourers,
India for growth Hair Conditioners
Batteries,
2. Smaller national players were giving the heavy weights a
Coconut Oil, Twin
fight in these 1-10 lakh towns Blades, Liquid Toilet
Packaged Rice,
Coffee, break
1.5X or more Soap, Acne Preprations, Air Freshners,
2010 Baby Oil/Massage, Shoe Polish
Fast Cereals,
All-India Value 1-10 Lac Town Value Milk Food
Rank Antiseptic Cream
1 Hindustan Unilever Limited Hindustan Unilever Limited
ToothPaste, Toilet
2 Procter & Gamble Procter & Gamble Soap, Talcum Powder,
Skin Creams, Shampoo, Packaged Tea,
3 Nestle India Nestle India Washing Powder,
Sanitary Napkins, Ketchups/
Home Insecticides,
4 Parle Products Britannia Inds Ruberfacients, Nail Sauces,
1.2X or more Soap Cakes/Bars
Enamel, Hair Oils, Hair Chocolate,
5 Britannia Inds Cadbury India Floor Cleaners,
Dyes, Glucose Powder, Beverages, Baby
Utensil Cleaners
6 Cadbury India Parle Products Fragrance, Digestive, Food
Diaper, Condom,
7 ITC ITC
Antiseptic Liquid
8 Colgate-Palmolive Adani Wilmar
9 Dabur Frito Lay India Source: Nielsen
10 Godrej Consumer Products Godrej Consumer Products
Source: Nielsen Demonstrate better All India performance vs Middle India
Demonstrate better Middle India performance vs All India
7 Copyright © 2011 The Nielsen Company.

8. The buoyant Middle India story is not restricted to just the
larger Middle India towns. In the 350+ 1-5 Lac population And consumer confidence is reasonably buoyant…On
towns, the story is equally compelling. Not only are these the Middle India continuum there are several towns like
Anantapur that come close to the consumer buoyancy
towns growing at over 20 percent, but 56 of the 81 categories
in larger towns
are also outperforming the all-India growth rates. 15 categories
are exploding in these 1-5 Lac population towns with over 40 Stories like that of Anantapur are promising when compared
percent value growth in 2011 over 2010. Products as varied to Pune, which has been on the development path for many
years now.
as skin creams, coffee, baby oils, fragrances, and chocolates
are outpacing the all-India growth story. Even these 1-5 Lac
population towns do not want to be left behind.
15 categories are growing at over 40%. 127
The Top 8 categories grew in value at an average rate of Pune
70% in 2011 over 2010 and this was 2 times their all-India (Benchmark)
Middle India
growth rates. 97
114
Personal Anantapur
Food Household Liquid Toilet Soaps,
Breakfast Cereals, Air fresheners, Bhatinda
Hair conditioners,
Chocolate, Vermicelli Home Insecticide, Acne Preparations, 79
& Noodles, pre-post wash, Nanded
Diapers Fragrance,
Packaged Rice Other Scourers After Shave Lotion , Jhansi 99
Twin Blades 96
MAT May
Source: Nielsen
Nielsen also evaluated the consumer confidence of these
smaller towns. Nielsen’s research indicates that while
Of note, the consumer confidence index for Middle India
the consumer confidence index in the towns with 1-5 Lac while lower than Pune is much better compared to many
population is lower than that of a benchmark mini-metro town developing and developed markets world wide.
like Pune, many smaller towns are performing much better
than several developed and developing markets across the Source: Nielsen
world. Anantapur, for instance, has a consumer confidence aggressively and gained a stronghold in the towns with 1-5
index of 114, which is fairly close to Pune’s 127, and scores Lac populations - players like Ruchi Soya and Adani Wilmar
higher than many other urban areas. Importantly, consumer are among the top FMCG players in these smaller 1-5 Lac
confidence in Middle India spans a continuum, where towns population towns. It is also evident that while certain bigger
like Anantapur come surprisingly close to the optimism of national players have made these towns their focus, others are
the larger mini metros and towns like Bhatinda complete still to catch on to the Middle India bandwagon. The high value
the spectrum at the lower end. These numbers indicate that growth in these 1-5 Lac population towns supports the longer-
as marketers decide to be part of the gold rush, they have term Middle India story – it is not only the larger of these
the liberty of cherry picking towns in the first few years. In towns that will sustain this story in the coming decade. The
addition, a one-size-fits-all approach may not work for all demand revolution has percolated deep into these towns.
“
these smaller towns. Factors that influence stronger consumer
buoyancy include the level of employment, infrastructure
growth (including education infrastructure), and proximity to a
metro.
The buoyant Middle India story is not
”
Many FMCG giants have leveraged factors like steady flow of
restricted to just the larger Middle India towns.
capital, wide distribution networks and better understanding
In the 350+ 1-5 Lac population towns, the
of the local markets to establish themselves in these towns.
Nielsen found that some companies, which do not rank at
story is equally compelling.
the top in terms of all-India FMCG presence, have expanded
8 Copyright © 2011 The Nielsen Company.

9. While some FMCG players have been ahead on the Middle 1. Education on a higher pedestal
India curve, others have opportunity to catch up.
Education is paramount in Middle India. The education sector
2010 in Middle India has made considerable progress in the last five
All-India Value 1-5 Lac Town Value
Rank years, reflecting the population’s belief that higher education is
1 Hindustan Unilever Limited Hindustan Unilever Limited the ticket to a stable career and a better life.
2 Procter & Gamble Nestle India
Modern-day parents from smaller towns are more optimistic
about their children’s educational opportunities, which was not
3 Nestle India Procter & Gamble
the case a decade ago. Parents today, aspire to educate their
4 Parle Products Adani Wilmar
5 Britannia Inds Britannia Inds
6 Cadbury India Parle Products
7 ITC Cadbury India
8 Colgate-Palmolive ITC
9 Dabur Ruchi Soya
10 Godrej Consumer Frito Lay India
Products
Demonstrate better All India performance vs Middle India
Demonstrate better Middle India performance vs All India
Source: Nielsen
Although the infrastructure in smaller towns may not be Source: Nielsen
comparable with that in other urban areas, Nielsen’s findings
indicate that these towns have made significant strides in
ramping up basic infrastructure like schools, hospitals and children in English medium schools, as it opens the doors to
public transport. A steady rise in employment rates, income a brighter career. Nielsen’s data shows that the Middle India
and spending are expected to have a positive impact on the population’s desire to join the best institutions like IIMs and
economy of these towns in the next few years. A stronger IITs, at 47 percent, is nearly at par with that of an education-
infrastructure would aid marketers in pushing their products centric city like Pune. While post graduation studies in Middle
and help achieve economies of scale. However, bugbears like India find favor with only 42 percent of the population—nearly
corruption and weak law and order still persist, and these will half the figure of Pune—an impressive 50 percent of this
need to improve fast, so that the Middle India sheen stratum aspires to join professional courses like medical and
is maintained. engineering versus 57 percent in Pune. While the numbers are
not at par with the urban regions across the board yet, they
Decoding the Middle India indicate a growing awareness about the importance
of education.
consumer
What is important to the Middle India consumer?
The consumption patterns in Middle India mirror the change
in the consumer profile. The consumer fabric in these towns
is evolving. Marketers will be in a position to maximize their
rewards in Middle India if their offerings are customized to
the changing needs and aspirations of this consumer. Will the
middle India consumer display the traits of a metro consumer
in certain situations and those of a rural consumer in other
scenarios? What do we know about what is sacred to this
consumer group? Some key learnings and trends about the
Middle India consumer are worth highlighting.
Source: Nielsen
9 Copyright © 2011 The Nielsen Company.

10. The number of schools, colleges and educational institutions
that have sprung up in these small towns has kept pace with
the growth in the education sector in India. The rate at which
these institutions have proliferated has outshone the rate of
growth in other infrastructure facilities like roads, security,
water supply, etc. For instance, Nielsen’s figures indicate
that Jhansi, a small Mid-India town, has outgrown Pune’s
development in the education sector in terms of consumer
perception over the last few years. Moreover, education
opportunities in these towns are not only compelling people to
stay back, but also drawing people from even smaller towns.
One area where development is still needed is in the higher
education (post-graduate) sector.
2. Health & Wellness
Health consciousness is evident in Middle India households
as a large portion of citizens claims to periodically practice
some form of exercise, like Yoga, walking, swimming or visiting
a health club or a gymnasium. Our study shows about 24
percent people from Middle India practice Yoga, which is much
higher compared to the 19 percent who do so in Pune. In line
with this awareness, the consumption of health foods like oats,
cornflakes and other low cholesterol products in these areas
are at par with Pune at 37 percent. In addition to food choices,
Middle India consumers are also opting for annual health
check-ups and gathering more information on staying fit.
Not surprisingly, many healthy food categories are seeing
faster growth in Middle India relative to the all-India rates.
Categories like Chyavanprash, milk foods, and breakfast cereals
Source: Nielsen
are growing at rates of about 20 percent higher than the
all-India numbers. 3. Personal Grooming
Personal grooming has become increasingly important to
Middle India – personal care categories dominate the list of
Middle India categories outpacing all-India value growth.
Affordability, access, and awareness have contributed to the
rapid rise of the personal care segment.
“
”
Affordability, access, and awareness
have contributed to the rapid rise of
Source: Nielsen
the personal care segment.
10 Copyright © 2011 The Nielsen Company.

11. Middle India Growth Index
2010
Categories Value Growth Over All-India
Rank
Rate Rate
1 After Shave Lotions 10% 971%
2 Batteries 5% 291%
3 Other Scourers 71% 194%
4 Cleaners - Glass 22% 188%
5 Chyavanprash 28% 184%
6 Soap Cakes/Bars 9% 180%
7 Nail Enamel 23% 168%
8 Coconut Oil Pktyp 15% 163%
9 Shaving Preparations 14% 150%
10 Antiseptic Creams 27% 146%
11 Confectionery - Cough 29% 142%
Lozenge
12 All Air Freshners 48% 136%
13 Antiseptic Liquids 37% 136%
14 Acne Preparations 49% 135% Source: Nielsen
15 Packaged Tea 16% 133%
16 Cleaners - Utensil 10% 131%
5. Eating out & experimentation in the kitchen
17 Baby Oils / Massage 26% 130%
18 Glucose Powders 17% 128%
Despite making efforts to lead a healthy lifestyle, the lure
of fast foods and eating out seems to be getting the better
19 Liquid Toilet Soaps 57% 125%
of consumers in smaller towns. Convenience foods like
20 Breakfast Cereals 40% 123%
instant noodles, ready-to-cook foods and readymade spices
21 Confectionery - Total Gum 27% 122%
adorn kitchen shelves in Middle India. Although a very small
22 Sqsh Crdls & Sft Drn 22% 121% percentage of the population—24 percent compared to Pune’s
23 Biscuits 28% 120% 60 percent—prefers to eat out, the numbers are fast rising
24 Milk Foods 21% 119% since the last two years. Nielsen found that families prefer
25 Shoe Polishes 13% 119% to frequent fast food joints and bakeries, relishing Chinese,
South Indian, Punjabi and American cuisine. Moreover, global
Personal Grooming categories (MAT May 2011 vs. YAG) fast food giants like McDonalds, Pizza Hut, and Dominos are
Source: Nielsen considered an affordable and trendy option for a weekend
family dinner outing. Despite a recent squeeze in budgets due
4. Home Improvement & Hygiene to high inflation across the board, 80 percent of Middle India
The consumers in Middle India want their house in order and (versus 90 percent of larger cities) is either eating out at similar
or higher levels than what they did two years ago.
“
are beginning to partake in categories that were earlier not a
big part of their consumption basket. Household supplies and
cleaners are seeing a spurt in growth in Middle India towns
”
relative to all-India levels. The increasing household budgets
have allowed for new categories to enter the household. Middle India is keen on expanding
Housewives are open to purchasing specialty cleaning products their consumption basket with newer
to help them with household chores. This incremental categories
expenditure on improving the home is an investment many
Middle India families are consciously making.
11 Copyright © 2011 The Nielsen Company.

12. Middle India
Middle India
Source: Nielsen
Source: Nielsen
6. Steady women empowerment It is encouraging to see that a majority of the population in
Middle India believe in providing equal opportunities for boys
As more girls are encouraged to pursue higher education, and girls, with 75 percent people in smaller towns like Bhatinda
women empowerment is taking shape slowly but steadily. voting for the idea, compared to 90 percent in Pune.
According to Nielsen’s study, while women in Middle India take
60 percent of the decisions pertaining to health and beauty Though women empowerment initiatives have been taken, a
within the household, they are no longer confined to just that. lot more needs to be done before the impact of these programs
Moreover, women are increasingly playing a decisive role in is truly felt in society. Many women aim for tertiary education
the lives of their children. Nielsen found that more than 40 and making a contribution to the household income. However,
percent of the decisions related to children were taken by certain inhibitions prevent them from achieving their goals.
their mothers in Middle India towns. Additionally, women are Nielsen research found that lack of safety, corruption of moral
also beginning to influence the purchase of electronics, with values and an inferiority complex were major roadblocks for
31 percent having a primary say and 34 percent sharing the the progress of women in Middle India. Over the next decade,
decision-making power with men. the role women play in shaping the Middle India story should
only move North given the upside.
12 Copyright © 2011 The Nielsen Company.

13. Source: Nielsen
7. Durables on the purchasing horizon
The penetration levels of durables in Middle India versus larger
cities are vastly different today. Age-old durables like black
and white televisions, table fans and air coolers, which have
lost their popularity in metro cities, will still take some time to
work their way out of Middle India. Interestingly, Nielsen data
also highlights that ownership and upgrade of durables are one
of the top priorities for Middle India.
Many families aspire to own luxury durables. When the time
comes for an upgrade, goods which are considered necessities
like pressure cooker, mobile phones, ceiling fans and color
televisions top the list, whereas for new purchases, luxury
durables like washing machines, refrigerators, vehicles and
music systems are preferred. Given the current penetration
levels of many basic durables, the improving financial condition
of families, the aspiration to acquire, and access to consumer
finance, Nielsen expects this market to be ripe over the next
5 years.
Source: Nielsen
13 Copyright © 2011 The Nielsen Company.

14. 8. Mobile as a multi-faceted device
The mobile is a multi-faceted device for Middle India. The
population in these areas is playing games on mobile phones,
watching videos, and sending MMS clips at largely the same
rate as larger cities. Nielsen research shows that only 6 percent
of the total population does not own a phone for personal use.
The mobile phone has replaced the landline in many homes.
Even housewives carry their own mobile phone – albeit in many
cases this is a hand-me-down. Interestingly, today almost
three-fourths of the phones being used in Middle India are
Nokia phones which will change in the coming two years with
many affordable multimedia phones hitting the market.
More than
94% of the
population
claims to own a
mobile phone
for personal or
office use.
Source: Nielsen
14 Copyright © 2011 The Nielsen Company.

15. 9. Cable TV dominance
Cable TV is king in Middle India and serves up as the main
source of entertainment across age groups, providing
marketers with a captive audience like no other.
Source: Nielsen
10. Social media & internet readiness
Middle India has very low internet penetration—78 percent of On average, Middle India performs 3.2 activities online
Middle Indians have never accessed the internet—but those compared to 4.6 activities in a city like Pune. Interestingly,
who have access are highly aware of social networking / micro reading news online is an important activity for Middle India
blogging sites. The Middle India youth is in tune with the even more so than a tech-savvy city like Pune.
internet. Social networking, chatting, music, videos, gathering
information, and career searches are all in scope with this
segment of Middle India. Orkut prevalence among active
internet users is higher for Middle India than even Pune!
Source: Nielsen
Source: Nielsen
15 Copyright © 2011 The Nielsen Company.

16. Source: Nielsen
11. Selective openness to western influence 12. More to celebrate: prominence of festivals
The cultural fabric of the Middle India population has The definition of festivals in Middle India has evolved to include
undergone a visible change. With the proliferation of the not just Indian festivals, but also those beyond its geographic
‘mall’ culture and the penetration of cable TV, consumers and cultural boundaries. For instance, even in small cities like
are warming up to Western ideas. The youth, especially, are Jhansi, youngsters exchange flowers and greeting cards to
adopting trends in Western fashion apparel like jeans and tops, celebrate Valentine’s Day. The claimed festive expenditure has
which wasn’t the case 5 years ago. However, absorption of this increased considerably for 48 percent of consumers, though
fashion is limited, with youngsters following their own brand of it remains significantly lower than that of Pune at 81 percent.
modernism, which combines Indian and Western values. The This increased expenditure may be largely attributed to the
views of traditional families are found to be liberalizing too, fact that consumers now prefer to purchase gifts and sweets
which is reflected in Nielsen’s numbers: 28 percent parents from shops instead of preparing them at home.
have no qualms about their children staying independently and
22 percent are open to consumption of liquor in their homes. What sets Middle India apart is the increasing number of days
In a larger city like Pune, these numbers are surprisingly low at spent on festive celebrations – while 34 percent of consumers
16 percent and 6 percent respectively. In addition to this, the in Middle India state that the time they spend on festivals has
Middle India population prefers to use English as a medium of increased in the last few years, the number stands at just 17
conversation and finds the joint family tradition to be more percent for Pune.
and more restrictive.
Source: Nielsen
16 Copyright © 2011 The Nielsen Company.

17. Consumer Snapshot Nanded: Contrary to the youth in Bhatinda, the youngsters
from Nanded prefer to settle in their hometown, preferably
Middle India has a distinct personality. In some cases, there is after pursuing education in larger cities. Nielsen research
a stark difference in the values and beliefs of the population shows that internet penetration in the city too is lesser than
in Middle India compared with that in the larger metros, that in Bhatinda. This segment prefers affordable mobile
understandably so, given the disparity in education standards, phones with basic functions like games, camera, FM radio, etc.
surroundings, upbringing, and other societal factors. Adopting Youth from this town frequent Chinese and fast food joints,
a one-size-fits-all strategy, hence, may not help marketers and the young males pay special attention to their health by
achieve the desired results in Middle India. Knowing the pulse staying fit.
of various consumer classes would hold the key to success.
Jhansi: Compared to other cities, the youth from Jhansi are
While some Middle India cities will probably behave more like a
not very ambitious. Internet penetration is quite low, and
mini metro others might come very close to being a neo-urban
youngsters are open to experimenting with cuisines, relishing
area etched with rural consumer thinking. Nielsen identified a
Chinese food as often as possible. In gadgets, they prefer
few broad themes that could help marketers in decoding the
mobile handsets with features like FM radio, torch and games,
Middle India consumer. While this is not an all-inclusive profile,
which they consider essential. They are less brand conscious,
it should help marketers appreciate the difference in consumer
and follow a simpler lifestyle compared to their counterparts in
needs and aspirations vis-à-vis some of the larger cities and
some of the other Middle India cities.
also recognize the need for consumer deep dives before a
foray is made into these towns. Some attributes that can be Anantapur: Youngsters from Anantapur are ready to
associated with a Middle India youth, housewife and a working explore other cities for better education and employment
male professional are highlighted below. opportunities. As a result of relatively high internet
penetration, the youth here are tech savvy and like indulging
Middle India youth in computer games. This may be the reason why they prefer
internet access on their mobile phones, besides common
The Middle India youth are deeply attached to their customs features like camera, games and FM. Due to their exposure to
and family. They prefer not to go against the wishes of their a slice of life in Hyderabad, which is located close by, they have
parents, even ready to marry someone who meets their experienced the culture of hanging out at Pizza and Burger
parents’ approval. Despite harboring such traditional values, joints.
this segment, surprisingly, likes to be seen wearing the
latest apparels. They not only use homemade remedies to Middle India housewives
enhance their appearance, but also follow the hottest fashion
trends. The focus is on fitness, especially among males, and Insights collected by Nielsen position a Middle India housewife
bodybuilding as a form of exercise and fashion is fast catching as a budget conscious homemaker, who influences the
on. When it comes to technology, youth from Middle India brands that are included in her monthly grocery shopping.
towns gravitate toward modern gadgets. They are well-versed Interestingly, she is the main decision-maker when it comes to
with the benefits of the internet and prefer flashing the latest durables and home appliance purchases. Until a few years ago,
mobile phones equipped with multimedia. They frequently visit a typical housewife was a conservative cook. However, today,
malls, restaurants, food joints, parks, etc. and go sight-seeing she is ready to experiment, and is keen on trying out various
with friends to nearby local destinations in their free time. convenience food items like readymade spices, instant pasta,
processed foods, etc. In addition to these options, her kitchen
City-wise profile of the youth is equipped with modern appliances like food processors, which
reduce her cooking time and effort. She also likes to take a
Bhatinda: Nielsen found that youngsters from Bhatinda are break from mundane kitchen activities from time-to-time and
quite ambitious and are open to exploring options outside enjoys Indian soap operas and dining out with her family. The
their hometown. They take keen interest in information Middle India housewife is not very technology and internet
technology and use mobile handsets for varied purposes savvy. Being conscious of tight monthly budgets, she prefers
like internet browsing, SMS, chatting and multimedia. a simple hand-me-down mobile phone for basic features like
Besides experimenting with new cuisines, this group is highly calling and SMS.
influenced by Western culture and is glued to youth channels
like MTV and UTV. In addition to this, Bhatinda’s youth are
stylish and very brand conscious.
17 Copyright © 2011 The Nielsen Company.

18. City-wise profile of a housewife too much attention to his style of dressing, the Middle-Indian
working man scores low on the fashion quotient. However, a
Bhatinda: A housewife in Bhatinda would want to settle in a keen interest in healthy living and personal grooming has been
larger city after having spent many years in her hometown. noticed in his profile lately.
She understands the value of education, and is a vocal
advocate of higher academic options like post graduate City-wise profile of a working man
degrees, professional courses and foreign studies. Housewives
in Bhatinda are also fairly religious and regularly visit places Bhatinda: Most men in Bhatinda aspire to buy white goods
of worship. The claimed frequency of these visits is high in like electronic washing machines or automobiles and upgrade
Bhatinda as compared to other cities like Nanded, Jhansi or their existing color television to a high-end LCD or Plasma TV.
Anantapur. Their mobile phone usage is limited to calling, An increasing number of working men are now realizing the
messaging, listening to songs, playing games and clicking importance of fitness, and are consequently visiting salons and
photos. gymnasiums to enhance their appearance. In Bhatinda, the
services of neighborhood moneylenders are used as frequently
Nanded: Unlike in Bhatinda, the housewives in Nanded prefer as banks by the man of the house.
to migrate to their home towns after spending a decade or two
in a metro or a larger city. They feel that the importance of Nanded: Most working men in Nanded believe that there is a
festivals has decreased considerably over the past five years. paucity of jobs in their hometown, due to which their financial
Typically, their preference in mobile phones is limited to basic stability is impacted. Banks are the only preferred source of
features like calling, messaging, torch and alarm. credit for this segment. Nielsen also found that many working
men in this town aspire to travel by air in the next two years.
Jhansi: Our research highlighted the strong belief housewives
in Jhansi have for equal educational opportunities for boys and Jhansi: Nielsen data indicates that a majority of the working
girls. As their mobile phone usage is limited, they are content male population in Jhansi prefers living in their hometown. As
with calling, texting, listening to songs and using the torch compared to other Middle India towns, this consumer group
feature in their devices. has more in-depth knowledge of various investment options.
As a result, there has been a steady increase in purchasing and
Anantapur: Most housewives in Anantapur have not moved learning more about life insurance policies in the past few years
out of their hometown, preferring to spend their life within in this town. Unlike Nanded, the men in Jhansi do not restrict
its boundaries. They are highly inclined to buy products like their credit source only to banks, and are open to borrowing
pressure cookers, televisions, electric irons, ceiling fans, etc. from friends and close relatives. Working men in Jhansi prefer
According to Nielsen research, housewives from Anantapur to go on planned holidays, a tendency which is higher in this
show the highest frequency of eating out compared to those in town compared to others. The working male population here
other Middle India towns. gives quite a lot of importance to a healthy lifestyle, not eating
out very frequently, getting regular health check-ups and
Working men in Middle India practicing Yoga on a daily basis.
A typical working man from Middle India is the ‘man of the Anantapur: Working men from Anantapur are indecisive when
house’ in the truest sense, as he takes most of the big decisions it comes to settling down in a particular city. For credit, they
in household matters. He is methodical in managing the house, prefer neighborhood moneylenders over banks and other
and most often is involved in daily grocery shopping, albeit financial institutions. The average time this segment spends
aided by a to-do list. Whether it is financial or social issues or online is comparatively higher than that in other cities. Most
large purchases like electronics, automobiles or OTC drugs, working men in Anantapur either have a gym membership or
Middle India’s working male wants to partake in the decission practice Yoga regularly, which indicates that they value their
making. physical appearance. Due to an improvement in lifestyles and
increased awareness, a working man in Anantapur is optimistic
As the main breadwinner, he is keen on securing the family’s
about his general well-being, job prospects and the state of his
future through a well-planned long term savings plan. Gold,
personal finances in the coming year.
property and fixed deposits are his preferred investment
vehicles. He aspires to purchase consumer durables like a
refrigerator or a vehicle, and provide the best education to
his children with his savings. As someone who does not pay
18 Copyright © 2011 The Nielsen Company.

19. What does Middle India still need Addressing water scarcity
to thrive? Paucity of safe drinking water is emerging as a pain-point in
Middle Indian towns. Women in these areas need to wake
While there is tremendous scope in the Middle India market,
up early every morning to collect water for the household’s
there are many areas that can be developed further to
requirement. This is a huge problem in towns like Nanded and
facilitate fast-paced growth in this segment. Without such
Bhatinda, where people are forced to buy packaged water or
improvement, the Middle India buoyancy will be curbed.
water purifiers to meet their drinking water needs.
Following are some of the aspects that need attention:
Employment opportunities Higher educational facilities
While most small towns offer an appreciable level of primary
Job opportunities across Middle India are not adequate yet to
and higher secondary schooling, students are forced to migrate
sustain its growth path. Research from Nielsen shows that only
to larger cities for higher education. With a steady increase
38 percent of the Middle India youth is willing to stay back in
in the number of youngsters pursuing post graduate courses,
their hometowns as compared to 62 percent in Pune. Although
there is a dire need to increase the number of colleges to cater
the tough job market today has forced students to settle
to the demand. With professional degrees gaining prominence,
away from their homes and families, they show a willingness
more can be done to set up higher education infrastructure and
to stay back if the employment scenario improves. Lack of
organized coaching classes in these towns.
employment has also led to a rise in crimes and even drug
abuse in certain towns like Bhatinda. With many companies
and retailers making sizeable investments in these towns, % Claimed source of borrowed funds
it is expected that the virtuous cycle will improve the job 69
market overall. That said, huge private and public investments
will be needed over the next few years to ensure that ample 45
employment opportunities exist in the medium-to-long term. 26
Job creation will be one of the largest determinants of growth 11
3 4 5 5
in Middle India over the next decade.
Neighbourhood Banks Cooperatives Friends/relatives
Women empowerment moneylenders
Pune Middle India towns
Although the status of women in Middle India is improving, the
Source: Nielsen
fairer sex lacks adequate opportunities for employment and
education. Moreover, certain inhibitions and perceptions are Simplified Banking
impeding their progress. For instance, parents are apprehensive
about their daughters’ safety when they step out to work In this age of internet banking, many Middle India denizens
or pursue higher education. Teaching is considered a safe still rely on local moneylenders for their credit requirements.
profession as it does not entail late working hours or traveling. Almost 26 percent of the population still borrows from
Similarly, many believe that if a girl is well-qualified, it may be neighborhood moneylenders, whereas in a developed city
difficult to find a suitable groom for her. This, coupled with the like Pune, this number is a miniscule 3 percent. Such high
age-old custom of dowry, is a major issue in Middle India towns dependence on moneylenders may be due to the population’s
like Jhansi. Interestingly, the amount of dowry expected tends difficulty in transacting with the advanced banking system.
to increase if the girl is highly educated, especially in smaller This is apparent when only 45 percent of the Middle India
“
towns like Nanded. While women empowerment is happening population approaches banks to avail loans as compared to
in small doses, a lot needs to be done quickly if women are to 69 percent in Pune. Reserve Bank of India data over the past 3
play an equal role in the growth of Middle India. decades suggests that scheduled commercial banks’ deposit
accounts in semi-urban and urban India have not grown as fast
as accounts in rural and metropolitan areas – implying that
”
Job creation will be one of there is a lot of opportunity to improve penetration of basic
the largest determinants banking. Considering the propensity of consumers in these
towns to save & invest in gold, property and fixed deposits,
of growth in Middle India there is a huge opportunity for banks and other financial
over the next decade. institutions to promote their products. However, to exploit this
market, financial processes need be simplified to a large extent.
19 Copyright © 2011 The Nielsen Company.

20. Number of Deposit accounts in thousands (scheduled
commercial banks)
Implications for Marketers
1981 2009 Multiple
Market Sizing
Rural 34,862 199,695 5.73
The FMCG market in Middle India is expected to grow manifold
Semi Urban 43,690 169,725 3.88
in the next decade and a half. This predicted growth for the
Urban 33,878 142,272 4.20 coming 15 years will be unprecedented, and will have huge
Metropolitan 31,197 150,611 4.83 implications for consumer product companies.
Source : Reserve Bank of India
Improvement in roads and
infrastructure
The state of infrastructure in Middle India towns leaves a
lot to be desired. From narrow roads to perennial work-in-
progress, commuters face a harrowing time, and prefer to use
public transportation for daily travel. In the last 3-4 decades,
transport infrastructure has focused largely on metro and rural
connectivity; these urban towns will need some attention
in the coming decade. Connectivity will play a huge role in Source: Nielsen
speeding up progress for Middle India and the government The Middle India market size of the FMCG sector, which is
needs to do more to set up this missing link. currently about INR 287 Billion (6 Billion USD), is expected to
cross the INR 1 trillion (20+ Billion USD) mark by 2018 and INR
As a % of 4 trillion (80+ Billion USD) by 2026. This signifies a remarkable
Length of Roads (Kms)
total roads opportunity for the next decade and a half.
Roads in Kilometers 1971 2008 1971 2008
Highways 711,966 2,473,267 78% 60%
Rural Roads under
- 1,061,809 - 26%
JRY and PMGSY
Urban Roads 72,120 304,327 8% 7%
Project Roads 130,893 270,189 14% 7%
Total Roads (In Kms) 914,979 4,109,592 100% 100%
Source : Government of India (Ministry of Road Transport & Highways)
Entertainment options Source: Nielsen
When it comes to entertainment, there is a dearth of options. The population in this region boasts of per capita FMCG
Families and students are usually hooked on to cable television consumption of over INR 2,800 (56+ USD) more than 2.3
or frequent shopping malls, restaurants and parks in their times the figure for all-India. This number is estimated to
vicinity for leisure. A moviegoing culture is yet to catch on reach INR 31,000 (620+ USD) by 2026, which will be more
among this section, as most cinema halls are considered than double of what an average Indian will consume then.
inappropriate for women and families. Middle India wants to be These numbers should be music to the ears of marketers and
entertained, and this industry has a lot of potential for growth retailers who are planning to expand aggressively in the coming
in the coming decade. few decades. It is about time marketers started calibrating
strategies to fulfill the needs of this segment.
20 Copyright © 2011 The Nielsen Company.

21. “
Implications for business
Marketers will need to cultivate
Ramp-up in the FMCG segment
their brands with Middle
The rise of Middle India is expected to drive spending to India and build loyalty now
unprecedented levels. Since there is a vast scope and relatively while habits are changing, so
”
less competition in this market today, existing players have that they can flourish when
registered impressive growth in the last few years. FMCG spending increases manifold in
companies which anticipated this kind of growth and invested
the coming decade.
in these areas a few years ago, are reaping rich dividends today.
The good news is that marketers who will act quickly even now,
will be able to grab a sizeable portion of the market. Smaller packs and customization of small-sized packages,
homes, cars, etc. would address the specific requirements of
Marketers planning to penetrate the Middle India market in smaller families.
the coming years would do well to target the smaller towns
with 1-5 Lac population, as these regions would record
Media evolution
unprecedented growth in the coming few years and are less
likely to have competition already well entrenched. The While there has been some improvement in infrastructure
focus needs to be on building distribution infrastructure over in 1-10 Lac population towns, the penetration of internet is
the next 12-24 months. Current trends indicate that selling still negligible. Most consumers rely on cable TV for their
products in smaller packs through local business partners information and entertainment requirements. This medium
will drive sales for FMCG companies. Consumers are also caters to a vast group of consumers—from youngsters,
increasingly indulging in impulse buying, signaling a strong children, working men to housewives—and is expected to
growth for products in this category. Consumers base their maintain its stronghold for the coming few years. Cable TV can
decisions on affordability and convenience while making their hence become an ideal medium for marketers to promote their
choices. Marketers will need to cultivate their brands with products among all age groups.
Middle India and build loyalty now while habits are changing,
A very small percentage of the Middle India population, which
so that they can flourish when spending increases manifold in
mainly consists of youth in select areas, has access to the
the coming decade.
internet. This gap in the market can be tapped by internet
service providers. Those who do have internet access are
Personal grooming and hygiene in focus
engaged in social media activities like their counterparts in
The per capita expenditure on personal grooming and hygiene bigger cities. Companies that offer youth-centric products can
products is steadily increasing in the 1-10 Lac population hence leverage social media marketing (along with a relevent
towns. Today, this segment prefers to find homemade TV campaign) to popularize their offerings, especially gadgets,
solutions for their grooming requirements. However, over time, personal care products, and cell phones.
requirements are expected to evolve and schedules to get
busier, which would lead to a higher demand for personal care Cuisines & Convenience
services like beauty salons, and boost the market for beauty
Fast food restaurants that are convenient, affordable and
and hygiene products. With an improvement in consumer
provide quick service find favor with not only the Middle India
lifestyle, an increased acceptance for newer products like
youth, but families too. Chains like Pizza Hut, McDonalds,
affordable hair creams, deodorants, and shaving products
and Dominos that provide an affordable menu and a Western
is expected.
ambience are considered strong contenders for a weekend
family dinner outing. The lack of evolved options and limited
Shift in family consumption patterns
experimentation serves up Burgers, Pizzas, and American
There has been a gradual rise in the number of nuclear families cuisine as the next-in-line favorite to traditional Indian and
in Middle India in the past few years, and this trend is expected Chinese fare. In the kitchen, the demand for fast-fix items is
to accelerate in the next decade. For marketers, this would on the rise. With increasing dependence on time-saving food
entail redrafting their marketing strategies and product mixes, ready-to-cook foods, ready-made spices and prep kits,
offerings, as a change in the size of the family is likely to bring this is an ideal time for food brands to address this need and
about significant transformation in consumption patterns. expand in these towns.
Moreover, communication and promotional strategies need to
be targeted at a typical nuclear family in Middle India.
21 Copyright © 2011 The Nielsen Company.

22. Celebrations they purchase, including food items. In addition to this,
women are increasingly participating in big ticket household
The Middle India population celebrates festivals with great
purchases like consumer durables and electronics. White goods
enthusiasm, which is reflected in their readiness to spend more
companies should take note of these trends to design in-store
time and money on them. Nielsen data highlights that this
consumer experiences and form promotional strategies to grab
segment is heavily influenced by Western culture, especially
the attention of decision makers for their products.
when it comes to celebrating festivals, and is slowly shifting
from traditional gifts to celebration packs and ready-made gift When it comes to opportunities for women, Middle India is
options. Besides, there is a rising importance of celebrations making slow but steady progress. However, longstanding
like Valentine’s Day, Mother’s Day, Teacher’s Day, etc. in problems like inadequate security and dowry still persist.
the 1-10 Lac population towns. Considering that the trend Companies setting up shop in these regions that want to play
is expected to attract even more consumers in the coming a role in ensure women participation in the work force need to
years, companies dealing in festive offerings like flowers, gifts, ensure the safety of their female staff through facilities such as
greeting cards, chocolates, etc. can expect a strong growth in pick up and drop, flexible work timings, etc.
revenues. FMCG companies can leverage this trend by focusing
on seasonal, festive, and gift packs. Mobile telephony
Mobile phones have a stronghold in Middle India. More than
Mobility
94 percent of the population claims to own a phone for
More than one half of the Middle India households own a personal or office use. Factors like affordability of handsets
bicycle, about one-third own a 2, 3 or 4 wheeler and much and cheap call rates are driving the growth of mobiles phones
less than one in twenty households own a car. With income in these regions. Consumers, especially youth, are more
levels in 1-10 Lac population towns on the rise and a steady open to experimenting with handsets, and are excited about
increase in both the vehicle options and financing, consumers newer technologies. If service providers offer better mobile
will gradually upgrade their vehicles from bicycles to two internet services in small towns at affordable rates, it is likely
wheelers and from two wheelers to automobiles. Considering that a wave of consumers will skip the computer-led internet
the size of population in the region, such upgrades will open access phase and unlock the power of the web through mobile
up a huge market for automobile companies. Companies devices. However, this is possible only if telecom companies
dealing in infrastructure development will see a growth too, make internet usage appealing, affordable, and relevant to the
as the Government will strive to provide better transportation Middle India population.
facilities to match Middle India aspirations.
Opportunities for other industries
Entertainment & Leisure
Apart from scope for the sectors mentioned above, there is a
Consumers will also look to spend more on leisure activities huge gap in the Middle India region for the banking segment.
as incomes rise. Today not many options are at their While many national and international banks operate in this
disposal. Selective investments in customized and affordable space, local moneylenders are still very prevalent. Offering
entertainment options can yield big dividends in the next few simplified products and solutions can help banks make their
years for companies dealing in entertainment and hospitality. operations viable.
Movie theaters that are a step above the single-screen theaters
currently prevalent in most of these towns can encourage With an improvement in lifestyle and rise in consumer
family movie outings and unlock a huge opportunity for the awareness, a wave of health consciousness is sweeping across
entertainment segment. Middle India. Consumers are now willing to spend more on
fitness activities in gymnasiums and yoga centers, which bodes
Women power in Middle India well for fitness service providers, health-food players, and
lifestyle product companies.
While women are not the sole decision-makers in the
household, their contribution to the decision making process In addition to this, education is gaining importance in these
will evolve over the next few years. Nielsen research found that towns. This could mean rapid growth for private schools,
men and women have an equal say in many of the products colleges, & organized coaching classes in the coming few years.
22 Copyright © 2011 The Nielsen Company.

23. Heterogeneity in Middle India The Gold Rush has just begun
Although the 1-10 Lac population towns share some common
As educational levels rise, disposable incomes improve, and
traits, this market is characterized by its heterogeneity,
awareness increases, India will be a market worth betting on
with each sub-segment showing strikingly distinct behavior
in the coming decade and a half. While the current inflationary
patterns. The population in this area is scattered over a vast
environment is expect to curb the growth rates to some
territory and comprises an assortment of people with different
extent, the India story is still very much alive. We believe
backgrounds, cultures, literacy levels, needs and desires. While
marketers should not lose out on the Middle India opportunity
some towns will behave like larger urban centres, others will
as they cash in on the metro and rural opportunities. Over
mimic a more rural profile. This mix of consumers has huge
the next few decades, opportunities in the metro areas will
implications for marketers. In addition, three major factors
become relatively less enticing from an ROI perspective,
that will dictate the level of development of any town are
while the demand revolution will continue in the smaller
penetration of the private sector, education opportunities and
towns as the Indian middle class rises. Those that are reaping
distance from a major metro city. A one-size-fits-all approach
the benefits already have shown that building a distribution
may not work for such a mixed market. An ideal marketing
infrastructure quickly can play big dividends in Middle India.
approach would be to study all these factors before developing
Companies that act today and start building their brand equity
a communication strategy or committing resources for
and loyalty base in these smaller towns will be able to cash
expansion in a Middle India region.
in over the next decade. In a land of 8,000 towns and 6 Lac
villages, these 400 towns account for 1 out of every 5 rupees
Challenges before Middle India spent in the country; marketers who ignore this future growth
Although the Middle India market holds immense potential for engine will do so only to their peril. What the metros achieved
both global as well as domestic marketers, limited access to in the last few years, Middle India will achieve in the coming
these towns due to sub-par infrastructure may put a spanner few. The India story and the demand revolution will live on
in the works. The growth in 1-10 Lac population towns would through these Middle India towns.
depend largely on the pace of improvement in education,
employment opportunities and infrastructure development.
Considering the fact that all these towns are not uniformly
accessible by different modes of transport, the response to
marketing activities and resultant growth is likely to be diverse
and not very predictable. Moreover, lack of employment and
educational opportunities for a prolonged period might compel
consumers to migrate to larger cities, shrinking the Middle
India market further.
While the consumer confidence index in Middle India regions
is higher than that of many developed and developing
markets, it remains lower than that of Indian metro cities.
The success of marketing strategies for new products as well
as already existing offerings, therefore, would rely largely on
the consumption behavior, recent trends and opportunities
in the targeted market. In such a situation, adopting the
same approach for all Middle India areas would not be a very
effective idea for marketers. Companies will hence need to
base their decisions on insightful research and detailed market
mapping before launching any product or service.
D
23 Copyright © 2011 The Nielsen Company.

24. About this research
Several Nielsen assets were leveraged for this report.
Consumer research across housewives (25-50), the youth
(M/F; 18-24), and working men (35-50) was carried out in the
summer of 2011 across the 4 Middle India centers of Bhatinda
(Punjab), Anantapur (Andhra Pradesh), Nanded (Maharashtra),
and Jhansi (Uttar Pradesh); Pune (Maharashtra) was selected as
a benchmark city to represent a larger mini metro. Consumer
research included waves of quantitative surveys as well as
qualitative focus groups and all-day consumer immersions.
Nielsen retail measurement insights and other assets were
mined for the overall story. FMCG values exclude carbonated
soft drinks and cigarettes and are based on Nielsen New
Universe old Panel estimates as of mid 2011.
The author, Ranjeet Laungani [Delhi] would like to recognize
Seshagiri Gudipudi [Bangalore], Anubha Gupta [Bangalore],
Raji Nair [Bangalore], and Prochi Ginwalla [Mumbai] for
important contributions to the project’s leadership and thank
Abhishek Dadu [Delhi], Prateek Tripathi [Mumbai], Ishan
Acharya [Bangalore] and Sonika Gupta [Delhi] for their
substantial work on this project.
About Nielsen
Nielsen Holdings N.V. (NYSE: NLSN) is a global information
and measurement company with leading market positions in
marketing and consumer information, television and other
media measurement, online intelligence, mobile measurement,
trade shows and related properties. Nielsen has a presence in
approximately 100 countries, with headquarters in New York,
USA and Diemen, the Netherlands. For more information,
please visit www.nielsen.com.
Dollar value has been approximated at: 1 USD = ` 50
24 Copyright © 2011 The Nielsen Company.
Copyright © 2011 The Nielsen Company.