Pain and Gain of Urban India
The Business World - May 2004

Here is a sample of what I found interesting, in terms of overall themes about the market, emerging from the data.

Table 1 show the levels of pain and gain in the Urban market. The 80 - 20 rule applies even more sharply! The Big 3, Mumbai, Delhi and Chennai account for a quarter of the potential and about one fifth of the population of the given universe of 784 towns. Just 24 towns harbour about half the population and half the market potential of this universe. The next 95 towns are a 'sweet band', with about a quarter of the population and potential. But then it takes another massive leap of 470 markets to cover the next 25% of the population, comprising the next 20% of the market potential - definitely a case for serious pain - gain evaluation, or for re - engineered distribution and servicing systems. And do we really need to bother with the last 195 towns, accounting for less than 5% of the potential? Unless, it is to use them as feeder points for smaller and rural markets, in which case they need to be thought about differently.

Table 2 provides what I call the pain - gain map of states, gain being the MPV and pain being the MII. No wonder we all love Maharashtra, highest on gain and lowest on pain, and just 19 towns accounting for 20% of the MPV. UP is a classic case of the Great Indian Rope Trick - a lot of people affording to consume a little each, yet adding up to a lot. In the same MPV league as Tamil Nadu and Gujarat but with significantly more pain. BIHAR is still that way - low on MPV and MII. Now I know why we dismiss any examples from Punjab and Kerala offered at meetings with "oh that's not typical" - both are low MPV (potential) but very high MII (quality) markets. In the MII sweepstakes, Chandigarh, Ludhiana, Jalandhar and Amritsar figure in the top 10.

Table 3 takes a look at towns. Each town has been represented by two indicators - a 'numerator' of MPV (gain) and a denominator of MII (pain). If these are vital statistics of towns, then notice the interesting way in which they progressively change as we go down the potential categories. Chandigarh, Coimbattore, Kochi, Vizag, Madurai, all celebrated small rich towns from our experience, have a quality of market (MII) far greater than the potential (MPV). Exactly the reverse for the top 3 metros. The AA grade are poorer clones of the AAA and Jaipur, Kanpur, Lucknow are sort of 'stuck in the middle' markets, with modest pain and gain.

Finally, I looked at some patterns in my head to put some analysis into intuitions and theories I have about Mumbai, Delhi, Bangalore, Hyderabad. The table shows the scores of the four indicators that make up the MPV index. And the explanations make intuitive sense too! Further drilling down into the composition of the "means" indicator, Hyderabad has higher per cap income, but much lower wealth (per capita bank deposits) and lesser affluent population than Bangalore. Which I guess is why we think the Bangalore market is just a tad classier than Hyderabad!