rural market potential.docx

7/29/2019 rural market potential.docx

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POTENTIAL OF RURAL MARKETS

Large Size of Rural Markets

A look at some facts, which will clear the doubts of sceptics about the potential of rural

markets in India:

The Indian rural market is almost twice as large as the entire market of USA or Russia. As

per Census 2001, there are totally 638667 villages in India. 25% of all villages account for

65% of the total rural population.

So you can contact 65% of 680 million or 700 million population by simply contacting

150000 villages - that's a very large market. The number of middle income and high-income

household in rural India is expected to grow from 80 million to 111 million by 2007 while

urban India is expected to grow from 46 million to 59 million. As a consuming class, there is

none as promising as this across the world.

Improving Infrastructure

The rural Infrastructure is improving rapidly. In 50 years only 40% villages was connected by

road, in next 10 years another 30%. More than 90 % villages electrified, though only 44%rural homes have electric connections.

Marketers can make effective use of the large available infrastructure

Post offices - 1,56,000 Haats (periodic markets) - 42,000 Melas (exhibitions) - 25,000 Mandis (agri-markets) - 7,000 Public distribution shops - 3,80,000 Bank branches - 32,000 Rural telephone density has gone up by 300% in the last 10 years; every 1000+

population is connected by STD.

More than 3/4th of India's villages had access to electricity. The growth of telecommunication in India is driven by wireless telephony, with

currently 85 million subscribers, and a targeted growth of 250 million subscribers by2008.


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Over the last twenty years, the trend in house types have changes dramatically, from less

permanent semi pucca or kuchha houses to more permanent pucca houses. Number of

"pucca" houses doubled from 22% to 41% and "kuccha" houses halved (41% to 23%).

Transformation of Rural Economy

High disposable income

The number of middle class households (annual income of Rs.45,000 -Rs.215000 per

year) has been increasing. Rural income CAGR (compounded annual growth rate)

was 10.95 percent compared to 10.74 in urban areas between 1970-71 and 1993-94.

(Source: ETIG-2002-03)

Rural Income Dispersal (projections based on 7.2. percentage GDP growth)

Source: FICCI Rural Marketing Summit 2005

From the above figure, it can be noted that climbers and consuming class has shown a

marked increase from 1995-96.

Table: 2 RURAL SHARES IN STOCKS OF CONSUMER DEMAND


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The above table shows the rural share in the stock of consumer goods like scooters,

motorcycle, mopeds, cars/jeeps, automotive, television, other white goods, fans and other low

cost items. From the table it is clear that the percentage of rural share in the stock of

consumer goods has been rising since 1995-96 to 2009-10. The rural share for scooters was

25.2% 1995-96 which increased to 32% in 2009-10, followed by motorcycles, i.e., from

45.8% to 55.4%, mopeds from 37.3% to 46.6%. However in cars/jeeps it has increased from

7.4% to 9.3% only. Similarly, in television it has registered an increase from 40.7% to 44.9%.

Thus, we can see that the percentage of rural share in stock of consumer goods has increased

of the period of 15 years i.e. from 1995-96 to 2009-10.

Issues in Rural Marketing

The major issues faced by companies are:

* Unorganized and dispersed Markets,

* Lack of proper infrastructure and other physical communication facilities,

* Media for Rural Communication,

* Many Languages and Dialects,

* Low Per Capita Income,

* Low Levels of Literacy,

* Availability of duplicate and cheap brands.

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