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Bagging the right opportunities in tier II & III markets


The change in perception of from mere commodity to a wardrobe essential is becoming prevalent among consumers in India. This has fueled the demand for trendy to go with all kinds of occasions – work totes, travel luggage, evening clutches, everyday purses. And the fad is not just widespread in Tier I & Metro cities in India. , as essential accessories, are rapidly capturing the fancy of consumers in Tier II & III markets, and retailers are taking note, bagging opportunities as they present themselves.

One of the main reasons for the surge in demand for lifestyle products like handbags in Tier II & III segments is the rapid growth in population. Another factor is the growth of the textile and apparel industry in the country, which is feeding the demand for bags. The increase in disposable income of consumers – both in Tier I and smaller cities and towns has augmented textile consumption, which in turn has driven the demand for bags.

The Industry

As per a global survey, India is the second fastest retail growing market in the world, as more international and national marketers are focusing on middle-class consumers here. Indian consumers have emerged as some of the most enthusiastic in the world, with consumption being driven by the youth and Millennials who are more adapting, and take to technology and innovation faster. They are also able to shop on multiple channels. Having said that, awareness in semi-urban and rural areas is also growing, as are the aspirations to possess different kinds of lifestyle products, and the bags industry fits neatly into this scenario. The right kind of bag is a matter of necessity than a luxury, a style statement for today’s consumer.

This leap in demand in semi-urban areas is expected to be bigger as consumers here are keen to catch up with their urban counterparts on the parameters of trend, style and usage. While rising aspiration is one part of the story, rural regions are seeing an increase in activity by discerning marketers who are becoming more conscious of the finer nuances of the region and are staying away from the one-size-fits-all approach.

What Makes Tier II & Beyond Tick

The Indian middle-class consumer is perhaps one of the most price-conscious categories in the world. For this consumer, value for money is the number one mantra. Their buying capacity is no longer in question and in fact, global marketers and brands are tailoring their products and strategies specifically keeping consumers of Tier II cities in mind. In these areas, the instances and opportunities of buying premium products might still be less but consumers buy if the right quality is delivered at the right price.

Since growth is being noticed not just in the purchase of a few specific product categories but across the board, it is clearly indicative of the fact that the Tier II consumer is not seeking to fill just need-based gaps, but is also looking for style, comfort and convenience apart from a lot of pampering and great packaging as far as bags are concerned.

Reaching the Rural Market

While reaching Tier II cities and towns is no longer tough for retailers, it is the rural segment of the Indian market – popularly referred to as the ‘Bottom of the Pyramid’ in retail jargon – which is tricky.

This segment of the Indian population which no company, brand or corporate can afford to ignore, mostly because the demand – supply ratio here is intense.

While companies may not off er their premium products in rural segments, the way these products are marketed needs to be addressed. While marketers always look for innovative ways to make their presence felt, what could be the possible communication strategy to reach the huge market at ‘Bottom of the Pyramid’ segment is a major area of concern for retail brands, and hence a huge challenge.

Since regional disparities are many, there is a need for a customised communication strategy. While a lot of thrust is being given to the marketing strategies for rural markets, especially distribution and packaging aspects, little is talked about the specific communication strategies required in these areas for the bags industry to flourish.

Communicating with the target audience in a market/region is a necessity and must be amply fulfilled by retailers. The medium of marketing communication has to be in a language that target customers understand and relate to and must vary from region to region, using diverse languages. Companies should focus on areas with high population concentration and use non-conventional methods while communicating with target customers in rural markets.

So far, marketing managers have been emphasising on only the distribution of goods and services effectively. Only recently have the realised the importance of connecting themselves with their target consumers through effective messages.

Marketing experts have understood that their products don’t stand a chance if no one understands what they are selling.

They recognize that the success of any strategy will be mostly dependent upon effective communication efforts. If the message is not properly sent, marketing initiatives may not yield proper results.

Various other tasks like building relationships with the customer groups, persuading them to alter their buying and consumption patterns, influencing their behaviour, etc. highly depend upon the way communication exercise with the target audience is taken up.

Media selection, consideration of local cultures, languages, beliefs and value systems, overcoming the barriers also form an important part of communication strategy. With these critical aspects in mind, the bags industry in India is all set to design and implement an appropriate marketing strategy to gain a foothold in Tier II towns and cities.