Smart Strategies for Brands to Penetrate Tier-II and III Markets
Smart Strategies for Brands to Penetrate Tier-II and III Markets

E-commerce and social commerce ecosystems are getting impetus due to the enhanced demand from the markets beyond metro cities. With the rapidly changing trend in almost every consumer-based industry, both Indian and international players have understood the importance of personalizing and catering to the consumer base in Tier-II and Tier-III cities of India. It has become of rising importance to understand how to enter and engage with consumers in these markets. This segment has a different purchase behavior than the metropolitans in India. With more than 3,000 cities under the tier II and III categories, one cannot simply avoid considering them while determining target audiences for their businesses.

The Growing Criticality of Non-Metro Markets in India 

Since the saturation levels of metros and tier-I cities are high, the consumers in these markets are more likely to look for upgrades. On the other hand, tier-II and III cities will typically have more first-time buyers of products or services or early-stage technology adopters. Companies looking to penetrate tier II and III markets need to develop appropriate products, sales, marketing strategies, and business models suited to these markets. 

Slowly and steadily, these cities are witnessing attention and fast infrastructural growth. Several startups are emerging to address the needs of these markets. However, building a presence requires a different approach. Companies need to adapt to user requirements by implementing significant changes in their core product.

Breaking the Language Barrier 

One of the most prominent is reverse migration and increased online buying in tier II and III cities. Conversely, the tier I cities' environment is immensely different from tier II and III. Hence, communication with potential customers requires a specialized and integrated approach. For instance, any startup and industry targeting these cities must provide local language support and focus on a user interface that is seamless and intuitive to expand its user base. The company needs to invest in multi-lingual interfaces and enhance its vernacular approach across processes. This will make the product and the brand more audience-friendly and will, in turn, increase their product/service consideration.

With the accelerated rate of digital adoption aided by e-commerce, businesses need to amp up their digital presence. This helps them transcend boundaries and reach a larger target audience base. Organizations should be focused on enabling ease of accessibility and online transactions – be it ordering a product or returning the same. 

Word of Mouth 

In order to reach the tier II and tier III segments, companies should target the local retailers who are already familiar with the customer and can reach them more effectively. This helps overcome the most common challenges that companies face while reaching consumers in these cities. As a matter of fact, consumers in tier-II and III markets generally rely much on recommendations of relatives, neighbors, and friends, as compared to consumers based in the tier-I markets, and word-of-mouth plays a significant role. Businesses can even leverage referral schemes to onboard more customers in marginalized markets.

Understand the Market 

Gauging the market potential is one of the most common roadblocks that businesses across scales are attempting to grasp. With a high population residing in India's hinterlands, businesses need to be able to anticipate the demand and execute high-volume deliveries in short turnaround times. In addition, consumer tastes and preferences also vary from place to place, and businesses need to be able to offer products and services to match relevant requirements. For instance, sachets were introduced since consumers from small markets prefer buying small-ticket products. Hence, businesses need to improvise to be able to match the demands.

Preferred Payment Mode 

Businesses also need to activate different payment options since there is a high level of cash dependency in rural areas. Customers still prefer cash transactions over digital modes due to a lack of digital financial literacy and trust in the internet. In addition, consumers are more cost-conscious and want more value for money. Hence, products need to be able to deliver more at a lesser price.

Adoption of Digital 

With the ever-increasing traction of social media and e-commerce platforms in tier-II and III cities, branding and its associated concepts have been witnessing remarkable growth. Thanks to their power of influencing consumer behavior and buying decisions, these digital platforms saw a massive influx of companies engaging in virtual combat to establish a solid brand name. Building local partnerships helps to gain trust, but one should follow digital marketing and content marketing with a vernacular approach to enhance conversion rates for better revenue. According to a report, 71 percent of the purchase decisions are influenced by social media platforms (digital marketing) and e-commerce, followed by 62 percent of the consumers considering the brands' online reputation. Due to the growth in the number of online consumers, digital marketing companies in upcoming urban cities have also mushroomed compared to Gurgaon, Mumbai, Bangalore, Noida, Hyderabad, where digital marketing companies have already started to saturate.

Credit for this boom goes to the advancement of technology for tier-II and III cities to have proper access to the internet and smartphones today. Startups leveraging digital marketing have a competitive edge over other strategies, as it is easier to spread awareness virtually to the target audiences, regardless of their cities.

Intelligent business insights empower B2C and D2C players to offer customized solutions and enhance the consumer experience. Instead of working in silos, businesses need to leverage these services. 

Most importantly, companies planning to expand to tier-II and III markets need to rework their product specifications, marketing strategies, and business goals - these need to be carefully monitored and upgraded as and when required. The touchpoints in these markets are fewer, and companies have to decide their plan of action accordingly. 

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