Finding more pots of gold

Marketers have historically approached India as a group of four zones that correspond roughly with income level: the high-income south, middle-income north and west, and low-income east. The report says that marketers have also concentrated their efforts on affluent and highly populated markets in India’s major metropolitan centres (those with populations of more than 1 million) and tier 1 cities (populations of 100,000 or more).

Within these individual cities, marketers have traditionally focused on either “catchment areas” or “neighbourhood areas”. The former have clusters of shops or a high street that attracts visitors and consumers, while the latter surround a local institution — such as a church, temple, school, or community centre — frequented by residents. In contrast, a market segmented according to the street-level strategy is much more precise: it is a single area, typically about 2 or 3 sq km in size, with a demographically and economically homogeneous population. It may contain no catchment and neighbourhood areas, or it may contain several. Most cities can be divided into myriad such street-segmented markets, each exhibiting its own characteristics.

Take the example of Delhi. This city of some 10 million people can be divided into five geographic zones. Traditionally, marketers have considered south and central Delhi the preferred areas to target high-income consumers; the south zone includes seven residential-intensive markets—such as Greater Kailash, Saket, and Hauz Khas — where affluent consumers live. “Using street-level segmentation, however, we can identify markets in east and north Delhi that are of equal or greater attractiveness than the south and central zones. In East Delhi, these areas include Lakshmi Nagar and Preet Vihar; while Rohini and Shalimar Bagh are similar areas in north Delhi. Based on the results of street-level segmentation, a company can identify high-potential markets throughout Delhi and in many other cities as well. Gurgaon, for example, is a city that a company might have overlooked in the past because a broad-brush catchment- or neighbourhood-based analysis would not have uncovered its attractive pockets of consumers.

On a national level, most marketers would not consider Panchkula, Ludhiana, Amritsar, and Surat as top priorities. But each has street-level markets that earn a place in the top 20 in India based on household income. Faridabad is another example. Although it is ranked only twenty-first nationwide for affluence, Faridabad has five street-level segments in which two-thirds of households have annual incomes of ₹1 million rupees (about $17,000) or more. This kind of analysis allows marketers to apply their resources to attractive street-level segments in multiple cities rather than saturating one or two large cities completely — and inefficiently.

(Excerpts from a BCG report Street-Level Segmentation in India – Winning Big by Targeting Small by Shweta Bajpai, Nimisha Jain and Neeraj Aggarwal)

COMMENT NOW