Uttar Pradesh, West Bengal surprise with market potential

Here's the surprise package: West Bengal and Uttar Pradesh figure among top five states with maximum market potential. Giving them company are Maharashtra, Tamil Nadu and Delhi.

According to a study, Guide To Urban Markets, brought out by advertising agency RK Swamy BBDO, West Bengal and UP offer more opportunities for marketers than the perceived more affluent states like Gujarat and Karnataka.

The study, which ranks 784 towns with a population of over 50,000 across 21 states, uses an index called the market potential value, which is a combination of the town's per household income, consumption pattern, media reach and awareness, and market support systems like employment in trade, bank deposits and logistics.

Consumer spending in urban markets in the country is estimated to be close to Rs 300,000 crore. The project was headed by National Council for applied Economic Research (NCAER) former chief economist I Natarajan.

The study also breaks the myth that higher incomes automatically lead to increased consumption.

Punjab, which has one of the highest per person income at more than Rs 20,000, does not figure in the top 10 states ranked on the basis of the market potential value. It ranks even below Madhya Pradesh and Rajasthan.

The primary reason for UP's high potential is that the state has 106 towns, the maximum concentration of such towns for any state. In the case of West Bengal, the huge potential of its capital Kolkata seems to have made a big difference in the state's favour.

The city accounts for more than 65 per cent of the state's urban population and nearly 75 per cent of the eastern state's market potential value.

According to the study, income levels and media exposure of people in Kolkata is much higher than the consumption levels, which gives marketers the ideal platform increase their sales.

Maharashtra, which tops the list, has 73 towns offering almost 20 per cent of the entire country's market potential. The state also influences the potential of the western region. The region, according to the study, accounts for nearly 33 per cent or exactly a third of India's potential to buy goods and services.

The northern region, with 27.32 per cent of the country's urban population, contributes 27 per cent to the market potential value.

But going by the study, the southern states are tricky proposition for marketers in terms of supply and distribution because of the large number of urban centres compared to other regions.

The region, which is comparatively smaller in geographical size and population, has 236 towns to north's 220 and west's 196.