This paper is an attempt to look into the rural market of India particularly with the focus of FMCG sector ( market ). The Fast Moving Consumer Goods (FMCG) sector is a corner stone of the Indian economy. This sector touches every aspect of human life. This sector is excited about the rural population whose incomes are rising and the lifestyles are changing. There are as many middle income households in the rural areas as there are in the urban. Thus the rural marketing has been growing steadily over the years and is now bigger than the urban market for FMCGs. Globally, the FMCG sector has been successful in selling products to the lower and middle income groups and the same is true in India. Over 70% of sales is made to middle class households today and over 50% of the middle class is in rural India. With a near saturation and cut throat competition in urban market, many producers of FMCGs are driven to chalk out bold new strategies for targeting the rural consumers. Many companies including MNCs and regional players started developing marketing strategies to lure the untapped rural market. While developing the strategies, the marketers need to treat the rural consumers differently from the urban consumers because they are economically, socially and psycho-graphically different to each other. The key reasons that has urged the FMCG companies to enter the rural market are- Large population, Effectiveness of communication, Rising income of people, growth projections of rural market.
From the strict marketing point of view, the market structure in India is dichotomous having rural and urban markets. There are certain unique characteristic features which call for separate marketing strategies to be distinctively developed to suit the rural and urban market behaviour.1 The Indian Fast Moving Consumer Goods (FMCG) industry began to shape during the last fifty odd years. The FMCG sector is a cornerstone of the Indian economy. This sector touches every aspect of human life. Indian FMCG market has been divided for a long time between the organized sector and the unorganized sector. Globally, the FMCG sector has been successful in selling products to the lower and middle income groups, and the same is true in India. Over 70% of sales is made to middle class households today and over 50% is in rural India. 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. 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 two- and four-wheelers, Rs.8000 crore.2 SCOPE OF FMCG SECTOR
As per a recent analysis — FMCG on perspective — reveals the fast moving consumable goods (FMCG) market size in rural segment is likely to jump by 10 per cent by 2010. The study conducted by the Associated Chambers of Commerce and Industry of India (Assocham) cites that the younger population comprising of nearly 180 million is the reason for this hike. As the income levels are rising and life patterns changing rapidly, people have developed a fascination for such kind of products. Currently, FMCG products command a rural market size of 52 per cent which is projected to reach 57 per cent and grow by 10 per cent in next three years. Interestingly, in urban India where size of FMCG market is currently estimated at 29 per cent is likely to come down to 22 per cent, registering a fall of 7 per cent. One of the reasons for this is growing health consciousness among consumers, the study reveals. As per estimates made by the analysis, currently the total size of domestic FMCG in terms of volume is $15 billion of which $7.9 billion is rural contribution as against $...
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