Growth Scenario of “Rural Marketing” in India

Topics: Rural, Corporation, Dutch East India Company Pages: 10 (3477 words) Published: February 8, 2011
A debate continued for a long time amongst the Indian marketers, both practitioners & academicians, on the justification for the existence of the distinct discipline of rural marketing. Consequently, two schools of thought emerged. The first school belived that the products/services, marketing tools & strategies that are successful in urban areas, could be transplanted with little or no more modifications in rural areas. However, the second school saw a clear distinction between urban & rural India, & suggested a different approach, skills, tools & strategies to be successful in rural markets.

What differentiates the two markets is not mere income, but a host of other infrastructural & socio-cultural factors. The rural market cannot be tapped successfully with an urban marketing mindset & would definitely require its thorough understanding. In other words, the approach toward rural markets needs to be distinct from the one adopted for the urban markets. Increased telecom broadband penetration, clean energy investments, Foreign Direct Investment (FDI) in rural development, PURA (Providing Urban Facilities in Rural Areas), growth in food processing industry and several new initiatives are set to transform India rural and make it an even bigger market place for the global corporates to pounce upon.

Several management studies have proven the strength of rural markets over urban. “Rural market potential in India is so huge that a mere one percent increase in India’s rural income translates to Rs 100,000 million of buying power,” according to a study quoted in Marketing to Rural Consumers- Understanding and tapping rural market potential’ by Sanal Kumar Velayudhan and Gudha Sridhar (Excel Books). Rural market is already bigh for FMCG (53%) and durables (59%). Money available to spend on FMCG products by urban India in 2001 was Rs 495,000 mn as against Rs 635,0000 mn in rural India, the book quoting another research study said. Thus, in a large rural economy like India’s, rural marketing has emerged as an important & distinct internal sub-division within the marketing discipline. This sub-division clearly highlights the differences between rural marketing & mainstream marketing. Key Words: rural marketting, urban marketting

Ten years ago, foreign consumer products were scarce in India and only available to the affluent. Import restrictions prevented or severely hindered foreign consumer goods from entrance to India. With the economic liberalization that ensued, foreign brands are now prevalent across India (Luce, 2002). Today, multinational corporations view emerging markets such as India as prime opportunities for growth. According to Shanthi Kanaan, writer for The Hindu, rural markets are growing twice as fast as the urban markets (2001). With a rural population equal to just under 2.5 times the population of the entire United States as of the 2000 census, the potential consumer base is astounding. But generally speaking, success in India’s rural markets for multinational corporations has been mediocre at best. It is from these struggles and failures, however, that multinational corporations seeking to enter the rural Indian market can learn how to do so more wisely. Kellogg’s‚ is an excellent example of a company that has struggled in the Indian market. Kellogg’s entered the Indian market in the mid-1990’s. They had the intentions of finding a new market, which would consist of over a million people, many of whom did not eat cereal. What Kellogg’s discovered was that they were introducing a completely new product category. This meant they would have to invest large sums of money to create new eating habits in consumers. The most common Indian breakfast consists of biscuits and tea (Dawar and Chattopadhyay, 2002). While Kellogg’s was busy creating new eating habits, local competitors were able to snatch away portions of India’s already small...
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