RURAL MARKETING

The real India continues to live in the village, owing to it being the domain of over 70 per cent of the country's total population. The current size of the rural market indeed speaks for itself. There are about 6, 00,000 villages in the country, as against about 300 cities and 4,600 towns. Consumer culture, spurred by rapid economic growth, is spreading to the vast rural areas where two-thirds of India's 1.23 billion people still live. The trend is creating new opportunities not just for big businesses, which have long focused on the urban middle class, but also for India's upcoming small and medium enterprises. What makes rural marketing so attractive is its size of nearly 742 million people. Moreover, the buying behavior of the rural consumer is nowadays on a major growth tangent. The increased income and purchasing power of the rural consumer, and the improved income distribution have enhanced rural demand for several products. Rural consumers have been trading up, and their consumption basket is beginning to mirror that of the urban consumer. Premium products are replacing entry-level versions, and commodities are giving way to branded products. Besides, the penetration level is insignificant in comparison to the urban market, thereby resulting in very less competition. Also, with a growing number of banks being set up in semi-urban and rural areas, credit is easily and readily available. Moreover, in the recent years, with the expansion of the overall economy and increased purchasing power of the rural communities, rural markets have gained considerable significance. It is not that it has not been thought of before but rural marketing is gradually being taken very seriously and in an organized manner. Therefore, companies have recognized that to build real sales volumes, they will have to reach outside the big cities. The enormous potential of the untapped rural market can be realized by one look at its estimated annual size of Rs.1, 23,000 crore through FMCG, consumer durables, agriculture inputs and 2/4 wheelers. The huge untouched needs of the rural mass, the growing rural economy and the increasing media penetration and brand

awareness make this market extremely attractive to marketers. MART, the specialist rural marketing and rural development consultancy, has found that 53 per cent of FMCG sales and 59 per cent of consumer durable sales lie in the rural areas. Of two million BSNL mobile connections, 50 per cent went to small towns and villages; of 20 million Rediffmail subscriptions, 60 per cent came from small towns; so did half the transactions on Rediff's shopping site. According to a study by Chennai-based Francis Kanoi Marketing Planning Services Pvt Ltd, the rural market for FMCG is worth Rs.65,000 crore, for durables Rs.5000 crore, for tractors and agri-inputs Rs.45,000 crore and twoand four-wheelers, Rs.8000 crore, in total, a whopping Rs.123, 000 crore. This could be doubled if corporate understood the rural buying behavior and got their distribution and pricing right. The growth rates of lot of FMCG are higher in rural markets than urban markets. In product categories like toilet soaps, talcum powder, cooking oil, vanaspati ghee, tea, cigarettes and hair oil, the share of rural market is more than 50%. The estimated annual business from rural markets was Rs.1, 23,000 crore, comprising Rs.65, 000 crore of FMCG, Rs.5, 000 crore of durables, Rs.45, 000 crore of agricultural inputs including tractors and Rs.8, 000 crore of two-wheelers and four-wheelers. Understanding the characteristics that make the people and the market in rural India unique can help companies to enter this market with success. With an average income of less than Rs.2000/- per month (Rs.24, 000/- per annum), rural Indians have a very low disposable income. Most rural homes have minimal storage space and no refrigeration. Very few people own or have access to cars. As a result, rural Indian purchasing habits tend to be of an "earn today, spend today" mentality. Rather than buying in bulk, which would mean paying more for a large quantity upfront, rural Indians tend to buy what they need for short segments of time. These factors result in consumers buying products locally, in small quantity on a daily basis.