BEIJING: Cities in emerging markets represent "the largest single growth opportunity" of the next decade, the Boston Consulting Group has argued.

"The most pivotal decisions that many companies will make in the near future are those regarding their commitment to winning in these cities in their strategies for doing so," BCG said in a study.

However, firms frequently think on a national scale or prioritise "megacities", rather than adopting tactics leveraging the new paradigm of "many cities".

Urban centres containing under 5m people contribute 83% of city-dwellers in developing economies, and now enjoy higher expenditure growth than bigger locales.

There are currently 717 cities in emerging markets housing at least 500,000 residents – compared with just 240 in developed nations – and this figure is pegged to hit 1,088 by 2030.

These consumers will account for 37% of global population, and 62% of worldwide GDP expansion, in 2010, rising to 40% and 67% respectively in 2015.

BCG estimated 558m people inhabit China's urbanised areas, falling to 364m in India, 173m in Brazil, 103m in Indonesia, 86m in Mexico and 55m in Turkey.

Income levels are also approaching an "inflection point" as the number of middle class shoppers in metropolitan sites climbs 70%, or by 430m people, between 2010 and 2015.

India will boast 366m individuals fitting this description in five years time, ahead of China on 314m, Russia on 123m, Indonesia on 103m and Brazil on 69m.

A further 1.3bn emerging market citizens should migrate away from the countryside by 2030, meaning a nuanced model will be essential.

For example, brand owners hoping to reach 80% of China's middle class population would require a presence in 60 cities by 2005, 155 in 2010 and a projected 212 in 2020.

Despite this, megacities such as Cairo, Delhi, Jakarta, Moscow, Rio de Janeiro and Shanghai should remain primary targets going forward given the huge potential audience, and talent pool, available.

They also serve as the "leading edge for consumption habits and high-end brands," but intense competition and strong indigenous rivals can prove particularly difficult to overcome.

Elsewhere, the 150 "cluster capitals" like Kochi in India, Veracruz in Mexico and St Petersburg in Russia all house between 5m and 10m people, and act as "regional hubs" for hundreds of "satellite cities".

Around 100 "specialist hubs", including Recife in Brazil and Wuhu in China, contain 1m to 5m citizens apiece, and are typically linked to the development of natural resources or specific industrial output.

While these places can be geographically isolated and provide lower incomes, real GDP growth is approximately 3%, an attractive trend where companies sufficiently extend their penetration.

"Horizon towns" constitute the biggest challenge, being widely dispersed and relatively small, with shopper behaviour generally shaped by necessities, prompting a willingness to trade up for better quality.

Key strategies incorporate identifying three or four go-to-market models covering all city types, monitoring changing demand, income and which locations have relevant demographics, and drawing insights from local experts.

To demonstrate the possible benefits, BCG stated cities in emerging economies now deliver 37% of all car purchases worldwide, measured against 8% in 2000.

Moreover, they will generate 30%, or $2.6tn (€2tn; £1.7tn) of clothing and household products consumption by 2015, alongside fuelling incremental sales for luxury brands.

Data sourced from Boston Consulting Group; additional content by Warc staff