Untapped Indian Rural Markets - Mr. Pradeep Kumar & - Mr. Hemant Kothari

By 2020, Indian Rural Economy is set to touch a staggering $1 Lac Cr. - or to set perspective equivalent to the economy of the 2nd largest country in the world -

Canada.

Often companies estimate or in other words underestimate rural economy in terms its potential, its size and its prosperity index. Rural economy is distinct in most aspects. Though rural economy consists of the breadth and width in terms of heterogeneous markets available for durable, FMCG and other industries it is mostly untouched in terms of brand penetration. This untapped market can only be penetrated through products and services developed after a deep understanding of rural consumer’s needs and habits. For example – With the understanding of the disposable income and weekly salary pattern of the rural consumer; CavinKare offered Chik Shampoo in a small single use pouch at 50p. There have been initiatives from the Govt. to develop rural markets. In later part of this article, we will discuss about the Govt. initiatives with strengths and weakness of the same.

Rural Market contributes to the 56% of the country’s GDP with 70% of population. As per recent research it was found that 70% of Indian population is from villages and they account for 60%, 50% and 40% sales of FMCG, TV Sets & Two wheelers markets respectively. Maximum of these sales happen from 17% of the villages which is mainly in population bracket of 2000 to 5000 people. Recently, we came across an interview of Mr. Ajay Chaturvedi, CEO – Harvay the first rural BPO of India, where he has mentioned that only imparting training to rural population for his business was not enough but handholding with them in practical application of those trainings as a critical aspect. Difference between Rural and Urban Psychology:

Urban and rural consumers differ in many ways due to their upbringing, their perspective towards luxury and their social set-up. An urban consumer is in touch with his social group on a frequent basis, though not in a face to face manner. Compared to urban social occasions of parties, social gatherings, the rural community is more close-knit with its Choupal, community meetings, where people interact with each other on a daily basis.

Symbols of status for rural and urban users also vary significantly. Car for urban users gets replaced by a more utilitarian tractor for rural audiences. In terms of real estate - land holding is more crucial for a rural consumer compared to luxury amenity like air-conditioner for urban consumers. This is also seen for travel preferences - while the urban consumer would aspire for a holiday abroad, the rural consumer aspires for an once-in-a-lifetime pilgrimage.

Strong Difference is Purchase Decision Making:

Buyer psychology distinctly varies between urban and rural consumer. At various points of time different people influence the rural consumer on aspects like decision making on whether to purchase, evaluation among brands, finance to complete the transaction, usage and maintenance tips. The urban consumer is more independent when it comes to the purchase process than the rural consumer.

Due to legacy of political history and social environments in this country, there are big hurdles created between rural and urban environments (i.e.) hurdle of inequality of income, development, basic infrastructure to live in, etc. These hurdles somehow were built by the Govt. policy in early 1990s as focus was only on urban development and industrialization, thereby reforms not reaching rural masses.

We have discussed the differences in basic psychology in urban and rural environments. All forms of communication to rural population should be different than

that of urban. To increase the effectiveness of all communication in rural should have different mode of communication (like rural Jatras, community Baithak etc)

Current need in Rural India

Improve Reach of Govt. Initiatives:

Even after sixty years of independence, we have still not addressed the real problems faced by the rural citizen (i.e.) basic infrastructure, training, lack of basic systems in place and high level of corruption, where benefits doesn’t reach to the target population. In recent past, we have seen some big scams like Commonwealth scam, 2-G Spectrum, etc. These have some how built disbelief of rural citizen on Govt. Agencies and their work on rural development. The potential of those benefits have not being even tasted by target population like NREGA schemes of GOI.

Making Products more accessible:

In recent research done by MART, it has been seen that number of products in a category found in rural market is far less than urban. Compared to urban markets where brands are constantly fighting with each other for shelf space, in rural markets brands can win the battle of the markets by just being present at the right place. A recent study of MART revealed that the rural retailer has access to only three brands of Hair Oils, Biscuits and Toothpaste each, in comparison to the urban retailer who stocks 7 brands of Hair Oils, 9 Brands of Biscuits and 6 Brands of Toothpaste on an Average. It has been also experienced that most of these rural brands are local brands manufactured near to these markets than in urban markets.

Future Potential:

The population of rural India is 800 million - which is a staggering 12% of the World’s Population. And rising incomes and increasing opportunities have ensured that the bottom of the pyramid is slowly changing the shape of how we have traditionally viewed them to shape of a diamond. Road Blocks to Growth: Growth in rural Indian markets is at mercy of Govt. intervention, issues in infrastructure, political instability and climatic influences (early or late monsoon can affect FMCG markets) Lot of Govt. initiatives has been taken in last five years which influenced large numbers of rural masses to be more bankable and help them to have sustainable livelihood. There are many efficient Govt. reforms which have unfortunately not reached the grassroots due to high corruption at all levels of Govt. entities. Some of those initiatives are Banking Correspondence (BC) for all PSU banks by RBI, Bharat Nirman under NeGP program from GOI (providing all Govt. Services and other services through IT enabled kiosk). These initiatives have somehow brought sustainability to rural population by making them entrepreneurs. Many private organizations have contributed to the welfare of rural Indians and gained immense monetary and brand currency by being meaningfully present in their lives. Popular example is the Project Shakti of Unilever Limited - which has empowered many rural women financially. Most of the companies never actively participate in demand generation activities in rural India through rural acceptable mode of communication. This makes rural market less attractive to them. In recent survey from MART, it was found that 17% of rural masses contribute 60% of wealth to the expenditures. It is also important to do these rural acceptable activities to generate demand for their products/services.