Tier-1 versus Tier-2 Cities: Where should you be focusing?

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Classification of cities


The classification of Indian cities is a ranking system used by the Government of India to allocate House Rent Allowance (HRA) to public sector employees in different cities in India. Cities in India are classified based on HRA into Class X, Y and Z; more commonly known as Tier-1, Tier-2 and Tier-3 respectively. Some cities were added based on the results of the 2001 & 2011 Census of India.


Tier 1 Cities - 8 in all

New Delhi, Mumbai, Chennai, Kolkata - Metropolitan cities Hyderabad, Bangalore - added in 2007, after 2001 Census of India Ahmedabad, Pune - added in 20014, after 2011 Census of India


Tier 1 Benefits

● These cities are urban conglomerations ● Large number of private schools ● Upper middle class and affluent families residing here ● Hub of IB & Cambridge schools ● Flight accessibility to/from these cities is good



Tier 1 Challenges

● Plethora of international universities visiting round the year ● Not just universities from US, universities from Canada, Australia, UK, other parts of Europe line-up here as well ● India reps of international universities are mostly stationed in metropolitan cities. ● Students in schools are already overwhelmed with these visits, they show subdued interest ● Students/parents are mostly aware, take their own call ● Commuting in these big cities is a challenge: Distances and traffic snarls

Tier 2 Benefits

● Less traversed, near virgin territories, not many international universities travel to these cities- you can avail the first mover advantage ● These cities have very good and old private schools with rich legacies ● Students/parents craving for knowledge, lack awareness ● Here you will find a big chunk of rising middle class, looking for opportunities ● In addition, you have the respective upper middle class, affluent class in every city ● Longer face time with students/parents/school authorities ● More welcoming in nature ● Schools here are willing to collaborate and sign MOUs, long term & sustainable relationships ● Smaller cities - shorter distances, lesser traffic, hence easier to commute between schools

Tier 2 Challenges

● 5-4 star and big brand hotels may be missing ● Limited flight availability/connectivity ● Good private schools: numbers are limited ● Lack the kind of exposure available in Tier 1 cities US university perspective: Where should you be focusing? Although there is no set formula to calculate, below are some guidelines that may help you determine the right market for your institution. By Cost Cost of attendance /Schools & Cities to Target Less than $12,000 - National Board Schools in Tier 2 only $12,000 to $25,000 - National Board + Premier Schools in Tier 2 $25,000 to $35,000 - National Board Schools in Tier 1 + Premier Schools in Tier 2 $35,000 to $50,000 - National Board + International Schools in Tier 1 More than $50,000 - High-end International Board Schools in Tier 1

By Location Location/Schools & Cities to Target Rural - National Board Schools in Tier 1 & 2 Suburban - National Board Schools in Tier 1 & 2 + Elite Schools in Tier 2 Urban - Elite National Board + International Board Schools in Tier 1