The majority of attention from international brands tends to be focused on the tier 1 cities in emerging markets. However, beneath these well-known cities exists a vast plethora of upcoming smaller cities that may lack international recognition but are of growing significance as engines of growth. This report discusses these lower tier cities and the FMCG opportunity associated with them.
- Gain an understanding of what defines lower tier cities (LTCs) and who their consumers are.
- Develop a clear picture of what opportunities and challenges LTCs present for FMCG growth in emerging markets.
- Understand the factors behind the success of brands targeting lower tier urban centers.
- What are lower tier cities and why are they important?
- What are the challenges that stand in the way of LTC success?
- Who are LTC consumers and what are their needs? How do they compare to tier 1 consumers?
- How have brands achieved success in targeting LTC consumers?
Aspirational consumerism is not isolated to tier 1 cities and the potential of the emerging middle class is reflected across differing urban strata. What brings variation is the differing income levels (and associated impact on spending priorities) and local factors such as culture, ethnicity/identity, and local product availability.
Typical tier-based city models developed by the many observers should be seen as useful guidance but not gospel. The most effective strategies for targeting LTC opportunities are those that take such structures as a starting point, use them to identify potential target cities, and then assess on a case-by-case basis.