K Arul Rajan
Gone were the days when a rural consumer went to a nearby city to buy “Branded” products and services. The impact of globalization has made significant change in the rural markets and is felt as much as in urban. Trends indicate that the rural markets are coming up in a big way and growing twice as fast as the urban, witnessing a rise in sales. Today, rural markets are critical for every marketer - be it for a branded shampoo or batteries.
According to a National Council for Applied Economic Research, there are as many 'middle income and above' households in the rural areas as there are in the urban areas. Similarly there are almost twice as many 'lower middle income' households in rural areas as in the urban areas. Hindustan Lever Limited had identified that the money available to spend on FMCG products by urban India is Rs. 49,500 crore as against is Rs.63,500 crore in rural India. Also the projected study by NCAER suggests that the number of middle and high income households in rural India is expected to grow from 80 million to 111 million by 2007; whereas in urban India, the same is expected to grow from 46 million to 59 million. Also, 40% percentage of students graduating from colleges are from rural areas, they become the decision makers and are similar in education, exposure, attitudes and aspirations to their counterparts at least in smaller cities and towns.
Our research aims at identifying whether the globalization has an effect on the shops in rural markets; whether the rural shops are selling global brands in a market or still sticking to the products made at local markets (the unbranded products and especially by informal sector). Towards the end the researchers also try to understand some of the purchase and distribution aspects.
Rural marketing is the recent buzzword for majority of the FMCG Majors, of course India providing the plethora of opportunities to be harvested. That’s evident that the FMCG majors like HLL, Pepsi, Coca-Cola, LG Electronics, Britannia, Standard life, Philips, Colgate Palmolive have started smelling the aroma of rural market.
If one looks at India, almost 70 percent of the population lives in 627000 villages in rural areas. In that, almost 90 percent of the population is concentrated in the villages with a population of less than 2000.
As per National Council for Applied Economic Research (NCAER) identifies a significant proportion of “middle income and above” households in the rural areas as in the urban areas; “lower middle income” households are twice that of the urban. Comparing the highest income level, there are 2.3 million urban households as against 1.6 million households in rural areas. The projected estimation shows that, the number of middle and high income households in rural India is expected to grow from 80 million to 111 million by 2007. In urban, this is expected to grow from 46 million to 59 million. So by looking the absolute size, the rural India is expected to be double that of urban.
THE INDUSTRY TREND - THE CURRENT SCENARIO:
Gone were the days where the rural consumer travels and purchases the branded products and services from a far away city. Nowadays the MNC’s have flocked the rural market and started establishing its brands. For any marketer the rural market is very vital whether to sell a shampoo or a television. According to Mr.D.Shivakumar of HLL, the money available for spending on FMCG by urban India is Rs.49,500 crores as against Rs.63,500 crores in rural India. Rural FMCG market projections are given below:
%2001-20022006Rural market share
TotalRural shareTotalRural share
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