Understanding Rural Consumer Behaviour Tapping the Future Market

Topics: Marketing, Marketing research, City Pages: 5 (1376 words) Published: June 25, 2013


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It is widely acclaimed that India is one of the largest consumer market in the world. Estimation signs that the Indian consumer market is likely to grow four times by 2025. (McKinsey Report - 'The Rise of Indian Consumer Market'). India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a Compound Annual Growth Rate (CAGR) of 10 percent.

Real India lives in villages. About 75 percent of Indian population lives in rural area. In the country we have 6.45 lacs villages out of which only 13 percent villages have population above 2000. More than 50 percent of the sales of FMCG and Durable companies come from the rural areas. The McKinsey Report on “the Rise on Consumer Market in India” predicts that in twenty years the rural Indian market will be larger than the total consumer markets in countries such as South Korea or Canada today, and almost four times the size of today’s urban Indian market and estimated the size of the rural market at $577 Billion. The urban areas constitute the fastest-growing part of the Indian market. Presently, the rural market accounts for a hefty share in most market segments– 55 percent of LIC policies, 70 percent of toilet soaps, 50 percent of TV, fans, bicycles, tea and wrist watches. With urban markets getting saturated, most companies are looking at huge potential in rural markets. Major corporations have seen great success with innovative strategies such as smaller packaging. Fast Moving Consumer Goods (FMCG) companies have creams and soaps priced at 5, hair oil and shampoo sachets at 2 and small Coke at 8. Companies have developed special products for the rural market, like Chic Shampoo sachets priced at 1, Parle G Tikki Packs at 2, customised televisions by LG, Shanti Amla oil by Marico. Even with increasing urbanization and migration, 63 percent of India’s population will still live in rural areas in 2025. Thus, the rural market has been, and will remain, vitally important to the Indian economy. Rural consumption will be nearly tripled by 2025, creating a large potential market worth over 26 trillion Indian rupees ($577 billion). In the next 20 years the rural Indian market will be almost four times the size of today’s urban Indian market. (Mckinsey Report). 2.1 Myth about the rural sector

• The belief that rural people do not buy brands.
• The belief that rural customer buy cheap products. In reality they seek value for money. • The belief that the rural market is homogenous mass. In fact it is fascinatingly heterogeneous. 2.2 Increase in purchasing power of rural consumer

. Purchasing power of rural consumer increased in the last few decades with increase in farm and non-farm income. Initially the impact of green revolution could be seen only in the prosperous agricultural states of the country but now slowly its influence has spread across the country with the increase in irrigation (Bhalla and Singh 2001). Facts reveal that rural consumers have low disposable income but as the time goes there are changes in the rising of their income and standard of living which happens because of different types of government schemes such as MNREGA(Mahatma Gandhi National Rural Employment Guarantee Act) , Rural Credit, Microfinance ,Encouragement to Cottage and Micro industry 3.REVIEW OF LITERATURE

"Rural Market: Currently, it's a black hole, there's not enough data; we will try to create a knowledge base," ‐ Mr Pradeep Kashyap (CEO of Mart). Dilip Bobb (2010) says better prices, enhanced connectivity, proper rural schemes, new crops and technology are among a host of factors which have changed the face of rural India and brought urban life styles and aspirations. Awadesh Kumar Singh & Satyaprakash Pandey (2005) feel Indian rural market can be called a „sleeping...

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Sinha, M
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