Page 148 - DMGT509_RURAL MARKETING

Unit 8: Rural Product Strategy

A rapid urbanization, increase in demands, presence of large number of young population, a Notes
large number of opportunities is available in the FMCG sector. The Finance Minister has proposed
to introduce an integrated Goods and Service Tax by April 2010. This is an exceptionally good
move because the growth of consumption, production, and employment is directly proportionate
to reduction in indirect taxes which constitute no less than 35% of the total cost of consumer
products - the highest in Asia.. The bottom line is that Indian market is changing rapidly and is
showing unprecedented consumer business opportunity.

Consumer Durables

India’s rural consumer durable market will witness an annual growth of 40 per cent in the next
fiscal 2011-12, as against the current growth rate of 30 per cent owing to the change in lifestyle
and higher disposable income of rural India which has fascinated the consumer durable market
according to a study “Rise of Consumer Durables in Rural India” undertaken by the Associated
Chambers of Commerce and Industry of India (ASSOCHAM).
”Around 35 per cent of the total sales of consumer durable items come from rural and semi-
urban markets, which will grow by 40 to 45 per cent in the near future. The consumer durable
industry is growing at a fast pace and sees a strong demand in the coming period with the
growing affordability of products as well as general buoyancy in the economy”, said Mr. Dilip
Modi, President of ASSOCHAM.
The market for consumer durables is estimated at 300 billion and is expected to reach 500
billion by 2015. The urban consumer durables market is growing at an annual rate of nine to 12
per cent, the rural durables market is growing at 30 per cent annually. Some high-growth
categories within this segment include mobile phones, TVs (LEDs) and music systems (IPODs).
He said the rural market in is growing faster than the urban market and the urban market has
now largely become a product replacement market. The consumer durables industry in rural
and semi-urban areas has witnessed a considerable change during the last few years. The
consumer durables sector is characterized by the emergence of MNCs, exchange offers, discounts
and stiff competition in the market to attract the growing middle class.
With being the second fastest growing economy with a rate of more than 9 per cent, with a huge
consumer class nearly 70 per cent in rural areas, consumer durables have emerged as one of the
fastest growing industries in especially in rural. Now the consumer durable industry is paying
more attention to attract rural community by promoting their products and services in their
local languages.
The consumer durable sector which contributes around 8 per cent in the Index of Industrial
Production (IIP) and which provides jobs to professionals, skilled, semi skilled and unskilled
workers, particularly women in the rural and semi-urban areas every year. The segment improves
the quality of life of people by providing entertainment/information/education/comfort and
also helps to reduce daily chores. But the importance of the sector in national economy remains
unnoticed.
The consumer durable market is set to grow by up to 45 per cent in rural and semi-urban India
in the next fiscal, thanks to the changing lifestyle and higher disposable income among the rural
people, as per a study by Assocham.
According to a study ‘Rise of Consumer Durables in Rural India’ by the industry body, the rural
durables market is growing at 30 per cent annually while the urban consumer durables market
is growing at 9 to 12 per cent every year.

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