Strategies that brands can adopt to penetrate Tier-II and III markets

by Dinesh Madawat

September 16, 2022 | 05 min read


The 3,000 cities under the tier II and III categories simply can not be undermined while determining the target markets for your businesses.

E-commerce and social commerce ecosystems are getting impetus due to the increasing demand from markets beyond metro cities. With the rapidly changing shopping trend in almost every product-based industry, both Indian and international players have understood the importance of personalizing and catering to the consumer base in Tier-II and Tier-III cities of India.

The growing criticality of non-metro markets in India

The saturation levels of metros and tier-I cities are high, on the other hand, tier-II and III cities will typically have more first-time buyers of products or services or early-stage technology adopters. Slowly and steadily, these cities are witnessing attention and fast infrastructural growth. Companies need to adapt to user requirements and bring their products to these consumer markets. But knowing the right pockets where growth lies can seem like an impossibility in India’s 1.4 billion population. Luckily, monthly movement in retail sales is reported by experts and newspapers on a regularity. These data sets can be viewed to get an in-depth view into India’s consumer landscape and trend patterns.

Breaking the language barrier

One of the most prominent trends since 2020 have been reverse migration and increased online buying in tier II and III cities. Conversely, the tier I cities’ environment is immensely different from tier II and III. Hence, communication with potential customers requires a specialized and integrated approach. To tap into these markets, businesses need to speak in their tongue. Leveraging online and offline cost-effective mediums, brands need to belong where the consumer is at. This will make the product and the brand more audience-friendly and will, in turn, increase their product/service consideration.

Word of Mouth

How many times have you asked a retailer – “which one is better?” That’s the Indian mentality while exploring new products. So, in order to reach the tier II and tier III segments, companies should target and incentivize the local retailers who are already familiar with the customer and can reach them more effectively. Initiatives such as referral schemes can remarkably give a boost for onboarding more customers in marginalized markets.

As a matter of fact, consumers in tier-II and III markets generally rely on recommendations of relatives, neighbors, and friends also.

Adoption of Digital

With the ever-increasing traction of social media and e-commerce platforms in tier-II and III cities, branding and its associated concepts have been witnessing remarkable growth.

According to a report, 71 percent of the purchase decisions are influenced by social media platforms and e-commerce, and 62 percent of the consumers consider the brands’ online reputation.

Intelligent business insights empower B2C and D2C players to offer customized solutions and enhance the consumer experience. Instead of working in silos, businesses need to leverage these services.

Most importantly, companies planning to expand to tier-II and III markets need to rework their product specifications, marketing strategies, and business goals. These need to be carefully monitored and upgraded as and when the business’s internal and external environment undergoes a transformation. The touchpoints in these markets are fewer, and companies have to decide their plan of action accordingly.

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