Low Spending Power is the Biggest Misconception about Unmetro Markets

Entrusted with the task of taking the brand “Godrej Interio” forward in 2010, Bedraj Tripathy (Sr. General Manager, Godrej Interio) discusses the prospects in Unmetro markets with Arshita Bhardwaj, and how Godrej Interio is Planning to ensure that the brand rides the growth wave in these markets.

Aimed at taking on a large brand and to substantially contribute to its growth over time he joined Godrej and Boyce to take the brand Godrej Interio forward in 2010.
Q1. What is the share of unmetro markets on Godrej’s portfolio currently? Where do you see it going in the next five years?
Ans: Currently, around 58% of Godrej’s revenues comes from the unmetro markets. This is due to our foray into unmetro markets way ahead of competition entering them. It has given us a leadership which is making entry difficult for other players. I see it continuing to be hovering around 60% in the next 5 years. Interestingly, It took us a few decades to move from 4 to 8 metros. I think the number of metros will grow at a much faster pace. However, the need for transformation of homes will be always there.

Q2. In your view, what is most common misconception about unmetro markets that marketers need to avoid?
Ans: Low spending power. This is the biggest deterrent for brands. However, this is not real. I think spending power is equal in metros and unmetros. In some cases (geographical locations), spending power of unmetros are higher. As marketers, we need to assess markets from a disposable income perspective. Interestingly, one would find that higher gross income in metros will have lower disposable income with consumers compared to high disposable income for a relatively lower gross income in the unmetros.

Q3. During your expansion into these markets, have you been surprised by the response from these markets personally? Do elaborate, for example, has this led to a shift in your marketing budgets to these markets?
Ans: No, I do not think there were surprises for us from a business perspective. I think we have always been in the unmetros and that has given us the advantage. However, the impact of entering unmetros is slowly being felt as media is getting fragmented and the net cost of reaching consumers is going up. Yes, currently we are increasing spends in the unmetro cities. We will have to look into newer ways of connecting with our audience as media fragmentation is increasing our costs at an astronomical rate. Interestingly, today since there is not much of competition in these areas, we do manage within fair spends. This could change the moment there is competition in these cities.

Q4. What has been the critical insight that has influenced your decisions for these markets?
Ans: As mentioned in one of the questions above, the gap between the gross income and disposable income is the core for us. We do keep a tab of income and expenses. In our business, people look at branded furniture only when their basic needs are met, leaving sizable disposable cash. This is where we see the opportunity.

Q5. In terms of the parameters consumers value when making a purchase, is there a difference between these markets vis a vis the metros?

Ans: Many parameters work in both metros and unmetros which are similar. However there are two parameters which uniquely stand out in the unmetros:
1. Consumers in the unmetros value the brands more than the consumers in metros. Once they have a buying power, they want to bring their aspirations to life and move from unbranded to branded purchases.
2. Word of mouth plays a key role. Advertising gets us only 30% of our customers while word of mouth gets us the remaining 70%. WoM is so strong in unmetros due to a very strong social connect.

Q6. Any favourite anecdote from Unmetro markets?
Ans: Once, in Ranchi, I was at our Godrej Interio outlet and this customer walks in. He seems to be the most unassuming person and can mingle with the crowd without any one even giving him a second look. He was actually wearing a stitched pair of plastic slippers and not so clean clothes. He comes in and after basic pleasantries with the sales team asks one question. “Which is the costliest bed you have in your range?” The sales person showed him the most expensive bed he had in his showroom. The customer repeated, “is this the costliest bed you have in this showroom or is there a piece costlier than this which is not displayed here?” The sales guy showed him a booklet of collection of beds and showed the most expensive one. He looked at it and confirmed the purchase. This one sale which happened when I was there at the store, led to 6 pieces being sold within a couple of months (purely WoM).

Check out complete Story-Interview on http://www.unmetro.in/news-detail.html?aid=15