There’s a lot of enthusiasm in the marketing world about engaging in emerging markets – especially at a time when mature markets seem unable to generate anything but gloom. The size of the populations in emerging markets and the rapidity of their growth have big global brands salivating.
Many brands are primarily looking to the major cities of the developing world – and in the travel industry often just the largest two or three cities. But there are millions of potential customers in smaller cities and towns who are largely overlooked.
In China, for example, less than 5 percent of the population lives in the “Tier 1” cities of Shanghai, Beijing and Guangzhou. In total, 113 cities in China have a population of more than 1 million people and at least 50 have a critical mass of high-income consumers.
If you include Tier 3 and 4 cities, brands are looking at roughly 2,000 cities and 250 million consumers in their marketing plans. Many of these cities have industries and services (like manufacturing) that support a burgeoning middle class.
At the same time, the operating costs of setting up in these cities are much lower and these largely forsaken consumers are hungry for your attention.
Not your big city consumer
People in second-, third- and fourth-tier cities want very different things from brands than their counterparts in Tier 1 cities.
Having been bombarded with less information, consumers in lower tier cities are often hungrier for the basics. They want transparent communications from brands that focus on the direct benefit their products will deliver.
This doesn’t mean these consumers lack sophistication, just knowledge and experience. In fact, it turns out that consumers in Tier 2 and 3 cities and towns are actually as likely to say they want experiences as material goods from brands.
To reflect this, Nokia has developed a series of apps called Life Tools that are specifically targeted at the needs of consumers outside major cities. For example, Nokia Education Life Tools offer English courses and tips for exams, while Nokia Entertainment provides content on cricket, Indians’ ruling passion. By doing this, Nokia can learn more about its customers while giving them a reason to engage with the brand.
They’re also different from each other
Regionality also plays a huge part in shaping consumer behaviour, so cities within a similar region (say Shenzhen and Guangzhou or Hyderabad and Bangalore) will have more in common with one another than with other emerging, second-tier markets.
Some scalability is thus possible within regions. This is particularly relevant for a market like China, where the densest concentration of these emerging cities is along China’s eastern seaboard.
But remote cities and towns present opportunities of their own. Take Recife, in Brazil’s northeastern state of Pernambuco. It’s geographically remote, but with a population of nearly 1.3 million inhabitants, this city has earned the moniker of the “Brazilian Venice” by building its wealth and growth through tourism and other resources.
So Recife is a highly attractive target market that sees itself very differently from the second-tier cities of the south. Brands should take account of this.
And they want you to recognize that they’re different
Second-tier cities in emerging markets have at least one thing in common with second-tier cities in mature markets: They tend to have a great deal of civic pride.
Being among the first to serve them can build a lasting connection. Remember the Pakistani businessmen in my post on walking in the customer’s shoes? This is just as true for an entrepreneur in a second city. By coming to his city – or, increasingly in emerging markets, her city – you are explicitly recognizing his success.
Once again, the opportunities for travel brands are abundant. By some estimates, international travel out of China’s second-tier cities has doubled in the past two years. I heard at the World Air Forum in Amsterdam last year how China Southern Airlines is one of the drivers of this. The airline is building a hub and spoke strategy to connect as many of these cities as possible to welcoming overseas destinations.
Bring them to you
As a destination, Australia (where I am based) has been among the leaders in recognizing and seizing this opportunity. Organisations like Tourism Australia, Business Events Australia and the Association of Australian Convention Bureaux (AACB) have set their sights on second-tier cities.
The Gulf Cooperation Council (GCC) airlines, led by Emirates, serve Mumbai and Delhi, but they also serve Kozhikode. While this is driven in part by access to labour markets, it also opens up a connection to the wider world for local businesses and continued growth in the Indian diaspora.
What this all means is that consumers in second-, third- and fourth-tier cities are now more connected to the global economy than ever. The time is now to take your business to them. But make sure you understand who you’re dealing with. Look before you leap, but don’t look too long.