The Concept Of

The concept of Rural Marketing in India Economy has always played an influential role in the lives of people. In India, leaving out a few metropolitan cities, all the districts and industrial townships are connected with rural markets. The rural market in India is not a separate entity in itself and it is highly influenced by the sociological and behavioral factors operating in the country. The rural population in India accounts for around 627 million, which is exactly 74.3 percent of the total population. The rural market in India brings in bigger revenues in the country, as the rural regions comprise of the maximum consumers in this country. The rural market in Indian economy generates almost more than half of the country's income. Rural marketing in Indian economy can be classified under two broad categories. These are: •

The market for consumer goods that comprise of both durable and non-durable goods

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The market for agricultural inputs that include fertilizers, pesticides, seeds, and so on

The concept of rural marketing in India is often been found to form ambiguity in the minds of people who think rural marketing is all about agricultural marketing. However, rural marketing determines the carrying out of business activities bringing in the flow of goods from urban sectors to the rural regions of the country as well as the marketing of various products manufactured by the nonagricultural workers from rural to urban areas. To be precise, Rural Marketing in India Economy covers two broad sections, namely: •

Selling of agricultural items in the urban areas

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Selling of manufactured products in the rural regions

Some of the important features or characteristics of Rural Marketing in India Economy are being listed below:

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With the initiation of various rural development programmes there have been an upsurge of employment opportunities for the rural poor. One of the biggest cause behind the steady growth of rural market is that it is not exploited and also yet to be explored.

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The rural market in India is vast and scattered and offers a plethora of opportunities in comparison to the urban sector. It covers the maximum population and regions and thereby, the maximum number of consumers.

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The social status of the rural regions is precarious as the income level and literacy is extremely low along with the range of traditional values and superstitious beliefs that have always been a major impediment in the progression of this sector.

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The steps taken by the Government of India to initiate proper irrigation, infrastructural developments, prevention of flood, grants for fertilizers, and various schemes to cut down the poverty line have improved the condition of the rural masses.

Highlights: •

Indian Rural sector has not been impacted by the global economic slowdown

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India‘s Fast Moving Consumer Goods (FMCG) sector has grown consistently during the last three to four years, reaching a size of US$ 25 billion, thanks to rural markets

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The Indian growth story has now spread to India's hinterlands. Rural India, home to about two-thirds of the country's 1 billion population, is not just witnessing an increase in its income but also in consumption and production. Additionally, the rural economy has not been impacted by the global economic slowdown, according to a recent study by the Rural Marketing Association of India (RMAI). The study found that the rural and small town economy which accounts for 60 per cent of India's income has remained insulated from the economic slowdown. Moreover, rural incomes are on the rise driven largely due to continuous growth in agriculture for four consecutive years. Lets look at some key sectors that benefit from this trend FMCG FICCI says that in a clear defiance of the economic slowdown of the past 12 months, India's Fast Moving Consumer Goods (FMCG) sector has grown consistently during the last three to four years, reaching a size of US$ 25 billion (Rs. 120,000 crore) Rural consumers spend around 13 per cent of their income, the second highest after food (35 per cent), on fast moving consumer goods (FMCG), as per a RMAI study. The FMCG industry in India was worth around US$ 16.03 billion in August 2008 and the rural market accounted for a robust 57 per cent share of the total FMCG market in India. Most FMCG companies are now working on increasing their distribution in smaller

towns and focusing on marketing and operations program for semi-urban and rural markets. Industry analysts state that the increased consumption is also the result of a growing middle class base in these markets. The total number of rural household is expected to rise to 153 million in 2009-10 from 135 million in 2001-02, suggesting a huge market. Retail The rural retail market is currently estimated at US$112 billion, or around 40 per cent of the US$ 280 billion retail market. Major domestic retailers like AV Birla, ITC, Godrej, Reliance and many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar are established rural retail hubs. Pharmaceuticals According to a report by McKinsey, the rural and tier-2 pharma market will account for almost half of the growth till 2015. The tier-2 market will grow to 44 per cent by 2015, amounting to US$ 8.8 billion. Telecommunication A Gartner forecast revealed that Indian cellular services revenue will grow at a compound annual growth rate (CAGR) of 18.4 per cent to touch US$ 25.6 billion by 2011, with most of the growth coming from rural markets. Also, a joint Confederation of Indian Industries (CII) and Ernst & Young report reveals that of the next 250 million Indian wireless users, approximately 100 million (40 per cent) are likely to be from rural areas, and by 2012, rural users will account for over 60 per cent of the total telecom subscriber base in India. Automobiles Passenger car and two-wheeler companies are driving on rural roads to push sales. While growth in urban markets has been flat or negative, the rural markets are booming, insulated from economic downturn. Rural markets' share in Maruti's overall sales during April-January 2009 has gone up to 8.5 per cent from 3.5 per cent in the same period last year. Consumer durables A survey carried out by RMAI has revealed that 59 per cent of durables sales come from rural markets. According to FICCI, Consumer goods segment were also observed to post negative growth of 3% during February 2009 compared to positive 11.7% in the corresponding month of previous year. The growth in total consumer goods is seen to erode due to fall in the growth of consumer non durables category.