Rural markets are tomorrow’s markets in India. They are big attractions for producers and marketers. For instance, Hindustan Unilever Ltd. (HUL), ITC, Parley Foods, and many other companies are concentrating on the rural markets as the urban markets have become saturated. The scope of future expansion lies in the development of rural markets. In fact, rural marketing should be recognized as developmental marketing by big business firms.
In India it has gained greater significance these days as the overall growth of the economy has resulted in a substantial increase in the purchasing power of the rural communities. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and consumer products produced near the urban areas. In this context, a special marketing strategy, namely, rural marketing has replaced agricultural marketing which was confined merely to selling farm machines and other inputs.
Due to competition in the urban market, the market is more or less saturated as most of the capacity of the purchasers have been targeted by the marketers. So the marketers are looking for extending their product categories to an explored market, i.e., the rural market. This has also led to the CSR activities being done by corporates to help the poor people attain some wealth to spend on the product they want. For instance, HUL’s Project Shakti is not only helping the company earn some revenues but also helping the poor women of the village to earn some money which is surely going to increase their purchasing power. Similarly, ITC’s e-Chaupal is helping the poor farmers get all the information about the weather as well as the market price of the food grains they are producing and those of inputs (seeds, fertilizers, etc.) they want to buy.
The Indian rural economy has not been impacted by the global economic slowdown, according to a recent study by the Rural Marketing Association of India (RMAI). The study found that the rural and small-town economy which accounts for 60% of India’s income has remained insulated from the economic slowdown. Moreover, rural incomes are on the rise was driven largely due to continuous growth in agriculture over the years and increase in employment opportunities in the rural areas.
According to the Technopak study, rural demand for fast moving consumer goods (FMCG), pharma, auto, and consumer durables is estimated to match sales generated in urban areas soon. While durable’s market shrunk in urban India, rural market is seeing a 15% growth rate. FMCG sales are up 23% and telecom is growing at 13%.
40% of the revenue of Maruti Suzuki comes from rural India. That is why the company is opening new showrooms in rural and semi-urban areas. Mahindra & Mahindra is bullish on the rural and semi-urban markets, with its utility vehicle, Scorpio clocking over 60% sales in 2011-12 from the rural markets as against 20% earlier. TVS Motor also registered around 50% of its sales from the rural and semi-urban markets during 2011-12.
Many leading consumer durable companies are now increasing their presence in rural India. Recently, LG set up 45 area offices and 59 rural and remote offices. Moreover, it has outlined plans to invest around US$ 40 million towards the development of entry-level products targeted at rural markets.