Rural markets can boost the Indian Economy

26 Apr 2019

Rural India houses approximately 83 crores of its citizens in its six and a half lakh villages. Off late, the increasing purchasing power of this 70% rural population has been attracting the attention of marketers who have initiated rural marketing strategies to tap into this market, which for some is much larger than their urban market.

With rising income levels, it is anticipated that by 2025 the FMCG sector alone in rural and semi-urban India will notch up sales exceeding USD 100 billion. Reducing unemployment rates and significant Government projects at the rural level have been contributory factors in unlocking this market potential.

Marketing companies are getting attracted to rural markets primarily due to its enormous size, increasing purchasing capacity, growth in the requirements of various products such as branded goods coupled with the improvement and development in infrastructure facilities. Many of them are re-orienting their product mix to factor in the low standard of living of rural folk and their traditional outlook comprising of old customs and traditions. They have been quick to comprehend that a 1% increase in rural income translates into an approximate buying power of Rs 10,000 crore.

Though their initial marketing strategy for rural India was based on awareness, availability, affordability, and acceptability, there has been a change in perspectives in the last ten years. The saturation of urban markets and its intense competition resulting in wafer thin margins prompted marketing companies to look rural. The proliferation of micro-financing in rural India further abetted this rural drive which did not seem unviable anymore.

Rivalling urban incomes, farm incomes are rising backed by the Governments hike in the minimum support price for wheat & paddy and the rising prices of pulses, oilseeds and milk. Rural disposable incomes are definitely on the rise. Financial sops of loan waivers and no income tax on agricultural incomes are additional factors scripting the success of the rural India story.

The marketing of products in small sachets was yet another tweak to rural marketing. This incidentally has subsequently even caught the fancy of urban consumers, quite a few of whom seem to prefer smaller packing ranging from shampoos to biscuits.

Even product advertisements, hitherto pitched for urban populations were re-oriented to suit rural sensibilities. Rural India’s branding story received its biggest shot in the arm with the introduction of e-choupal and subsequently laid the foundation for higher brand consciousness. A distinct shift in the adoption of higher levels of products over its traditional rural cousins has become more prevalent. For example, the adoption of tooth-powders and paste have replaced indigenous teeth-cleaning ingredients. Local unbranded products are giving way to national brands as consumerism is setting in. Rural India, having overcome its production and distribution challenges, is now entering into its third wave of branding.

Despite the huge rural marketing potential, there are quite a few challenges that confronts marketers. Rural India’s per capita disposable income is half that of the urban disposable income; it comprises of a significant number of daily wage earners; is dependant on monsoon vagaries; consumption is seasonally linked to harvests, festivals and special occasions; constraints of poor road infrastructure and erratic power situation besides the challenges of availability of traditional advertising media.

Yet the allure of the rural market is drawing some of the biggest names in India towards itself. Each is configuring its marketing plan to enter this hitherto untapped market which beholds great economic benefits to these companies and well as to the Indian economy.  

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