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Rural RevolutionBY: Raja Vikram | Category: Sales-Marketing | Submitted: 2010-03-14 17:03:20
Article Summary: "This article is about the Change in rural market and business with the entrance of corporates..."
The Rural market is growing since 1980's . A growth in every decade in rural market than in urban Market. Companies have realized that the market is good enough in rural than in Urban. The Rural market is very big than urban market , as one third of Indian population lives in rural only. Even the requirement or need is huge in rural. if we consider the FMCG and Durables market where the turnover is huge from rural market only. As estimated the FMCG market is going to have a Rs. 50,000 crore, Durables Rs.5,000 crores, Agri- inputs Rs. 45,000 crores , and last but not least the Automobile is going to have Rs.8,000 crore of market size in rural. So from this we can say that there is a huge scope for the companies to reach their annual target . The FMCG market takes a 50-53% and Durables 52-57% of rural market, Even there is a lot of scope for other players to grab the market.
The leader in FMCG segment HUL's gets half of its turnover from the rural market. Which is a clear cut example of the growth in rural market. Apart from these the cassette ,CD and DVD, Wrist watches segment also good in the Market. So there is a plenty of opportunity for each player in the rural market . leaving these behind , Even the players like ITC , Insurance, NOKIA, LG have done a great change in the rural market. So what is that happened to move all the players to rural market? If we discuss on it , then it is not that much easy to reach the rural market. There are some of the challenges that should be taken care of. And, there are some points from where we can say that yes,rural market is the place of business. Those can be
1. The number of rural haats are more than 42,000 .
2. LIC sold its insurance more than 55% in rural market.
3. The service players like BSNL and Air-tel have captured lot of market size.
4. The Highest number of Rediff mail users are from rural areas.
5. 24 million of Kissan Credit Cards in the rural area .
6. The number of middle class and Higher Income families are from rural market , that is more than Rs. 70,000+ income.
7. Electricity consumption is also more in rural market .
So by looking all of the above we can say that yes , there is a lot of opportunity for companies . But , what does rural market means to a company? According to the FMCG companies a place more than 20,000 population or A place More than 50,000 population (Durables) is called as a rural market. So, if we see like this then there are lot of places in India which can be said as Rural Market. That means there is not only profit but also lot of challenges need to be face by companies.
1. The first one is "Knowing the customer" - or Understanding the Mindset of the consumer, which is really a tough task.
2. Reaching Products or Services to the remote locations of rural market. ( Infrastructure)
4. reaching the Heterogeneous rural consumer. (Rural Promotions)
So , if we discuss on the above points it is really tough for the companies to understand the consumer of rural market . But , The companies which have understood have done well and become successful.
There are some basic points which we need to think of for understanding the customer.
1. They buy Cheap products and look for Long term prospect, they does not care for Brand.
2. Different region have different region or rural specific strategies.
3. The male or head of the family takes the purchasing decision.
4. Community Decision Making
5. Apart from all these because of strong caste feeling and Low literacy levels as well as Social Structures have made them to think differently.
So if any company can understand these basic points then they can easily reach the consumer. The companies which have given these steps route for other competitors have done well . The Tiger Biscuits from Britania, HUL,ITC, LG, Pumps , Pesticide have done a great job in terms of understanding their customer.
If the Infrastructure is one of the issue then we can say it is difficult task to handle with, because there is a diversification in the geographical region . But from the government investment plans there is a lot of chance to connect more than 2 lakh of villages. So, the distribution part will be easy. The Companies Like HUL and ITC have changed the definition if reaching the customer. They have completely worked through Maandis and odd locations to reach the customer. Each company which are successful in the rural market have done a great task in reaching the remote locations.
The rural promotions have done in the fashions like haats where people can touch,feel and care for the product. there becomes a mindset for the company's brand . So reaching and Understanding the customer is not only a point for the companies but there is a need to cater each segment of rural market or to make aware them . these things have been done by Successful companies in the rural market.
The role of IT played very much for the Player like ITC with their e-choupal strategy to reach the farmer and Their families by Retail Segment. The Establishment of e-choupal has done a great change in the rural consumers mindset for the connectivity and Spending patterns. Even the Communication team of BSNL and basic phones of NOKIA have brought a different scenario in terms of Money, Mindset and Life style patterns. Leaving these behind the Retail Franchise are shifting from Urban Market to the Rural market to grab the Percentage of profits . So , there become a changing nature in the rural areas so as to make a development. In an Overall manner there is huge revolution in rural area because of the Corporates and their Strategies.
About Author / Additional Info:
An MBA from GITAM University, India.
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