Printed from

Companies that fail to recognize rural market will do so at their own peril

25 Jul 2010, 0314 hrs IST, Pradeep Kashyap,

The first change I see among companies is that instead of flirting with rural markets by doing a short-term pilot here or

there, they have realised that they need to marry the rural market through a more long-term engagement. They need to

understand the market, the people, their needs and usage of products that can be very different, at times, from the urban

consumer.

Secondly, lot of Indian and MNC companies are recognising the need to innovate and customise product offerings for

greater success. They are no more merely pushing urban products into the rural markets. Regional companies like Ghadi

detergent, Priyagold biscuits, Cavinkare have been more successful in rural markets for this very reason.

Technology companies have been the most proactive in challenging the 'one size fits all' conventional approach adopted by

most consumer goods companies. Global giants like GE, Honeywell, Intel and Dupont are all spending money and time in

understanding the specific needs of rural consumers and customising their products accordingly. Today the rural market is

bigger than urban for FMCG, durables, two-wheelers companies and several services as well.

In fact rural now accounts for 55% of India's total income. The number of middle-class households in rural nearly equals

urban and is expected to grow six times from 32 million in 2005 to 208 million by 2020. Interestingly, rural accounts for

65% of the country's annual spending. So there is a huge market waiting out there to be tapped. For example by 2012, rural

share of mobile subscribers will be 60% with 440 million subscribers from the current share of 31%.

The aspiration levels of the younger generation in the rural market are not any different from their urban counterparts.

They aspire for urban lifestyles and with the rapid spread of TV, cable and DTH, they are no more in awe of their urban

counterparts. They want to acquire the same brands and better quality products.

Women in rural India have got empowered through the five million micro finance groups with 50 million women

members. Similarly 50% reservation for women in panchayats has made them more confident and aware of their needs.

Today women are much more involved in purchase decisions, so companies need to target women in their communication.

Healthcare, education and construction are the fastest growing sectors in rural India. Distribution still remains a big

challenge for all companies because of lack of road infrastructure and the sheer number of villages—over half a million.

Communication also remains a challenge particularly in media dark areas where companies have to adopt traditional

methods of promotions such as vans, haats and melas, which are slow and time consuming.

Companies need to find more innovative ways to communicate with their target audience. Another problem is that urban

marketers do not understand their rural consumers, their aspirations, lifestyles, environment and hence are unable to offer

appropriate solutions. In conclusion I will say companies that fail to take the rural market seriously will do so at their own

peril.

(The author is founder & MD of MARTRural, a Noida-based research firm that works in the rural markets)