Smart Strategies for Brands to Enter Tier II and III Markets

E-commerce and social commerce ecosystems are gaining momentum due to increased demand from markets beyond metropolises. With the rapidly changing trend in almost all consumer-based industries, Indian and international players have realized the importance of personalizing and catering to the customer needs of Indian Tier II and Tier III cities. It has become increasingly important to understand how to enter and engage with consumers in these markets. This segment has a different shopping behavior than the metropolises in India. With over 3,000 cities in Tier II and III categories, one simply cannot avoid considering them when determining target audiences for their businesses.

The growing criticality of non-metropolitan markets in India

Since metro and Tier I city saturation levels are high, consumers in these markets are more likely to seek upgrades. On the other hand, Tier II and Tier III cities will generally have more first-time buyers of products or services or early technology adopters. Companies looking to enter Tier II and III markets need to develop products, sales, marketing strategies, and business models tailored to these markets.

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

Break the language barrier

One of the biggest is reverse migration and increased online shopping in Tier II and Tier III cities. Conversely, the environment of Tier I cities is vastly different from that of Tier II and III cities. Therefore, communication with potential customers requires a specialized and integrated approach. For example, any startup and industry targeting these cities should provide local language support and focus on a seamless and intuitive user interface to expand their user base. The company must invest in multilingual interfaces and improve its vernacular approach across processes. This will make the product and brand more user friendly and in turn increase their consideration for the product/service.

With the accelerating rate of digital adoption aided by e-commerce, businesses need to boost their digital presence. This helps them transcend borders and reach a wider target audience. Organizations should strive to facilitate accessibility and online transactions, whether ordering a product or returning it.

Word of mouth

In order to reach Tier II and Tier III segments, businesses should target local retailers who already know the customer and can reach them more effectively. This helps overcome the most common challenges businesses face when reaching consumers in these cities. In fact, consumers in Tier II and III markets generally rely heavily on recommendations from relatives, neighbors and friends, compared to consumers based in Tier I markets, and word of mouth plays an important role. Businesses can even leverage referral programs to bring in more customers in marginalized markets.

Understand the market

Assessing market potential is one of the most common hurdles businesses at all scales try to navigate. With a large population residing in the hinterlands of India, companies need to be able to anticipate demand and execute high volume deliveries within short turnaround times. In addition, consumer tastes and preferences also vary from place to place, and companies need to be able to offer products and services that match the relevant requirements. For example, sachets were introduced because consumers in small markets prefer to buy products at low prices. Therefore, companies have to improvise to be able to meet the demands.

Preferred payment method

Businesses also need to enable different payment options as 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. Additionally, consumers are more cost-conscious and want better value for money. Therefore, products must be able to offer more at a lower price.

Digital adoption

With the ever-increasing traction of social media and e-commerce platforms in Tier II and III cities, the brand and its associated concepts have seen remarkable growth. With their power to influence consumer behavior and purchasing decisions, these digital platforms have seen a massive influx of businesses engage in a virtual fight to establish a strong brand. Building local partnerships helps build trust, but follow digital marketing and content marketing with a vernacular approach to improve conversion rates for better revenue. According to a report, 71% of purchasing decisions are influenced by social media platforms (digital marketing) and e-commerce, followed by 62% of consumers who consider brands’ online reputation. Due to the growing number of online consumers, digital marketing companies in upcoming urban cities have also multiplied as 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 that allows Tier II and III cities to have adequate access to the internet and smartphones today. Startups leveraging digital marketing have a competitive advantage over other strategies because it is easier to reach target audiences virtually, regardless of their cities.

Intelligent business information enables B2C and D2C players to offer personalized solutions and improve the customer experience. Instead of working in silos, businesses need to leverage these services.

Most importantly, companies planning to expand into Tier II and Tier III markets need to rework their product specifications, marketing strategies and business goals – these need to be carefully monitored and upgraded over time. measurement of needs. There are fewer touchpoints in these markets and companies need to decide their course of action accordingly.