Page 266 - DMGT509_RURAL MARKETING

Unit 14: Corporate Sector in Agri-Business

14.5 Rural Marketing of FMCG’s Notes

There was a time when the FMCG companies ignores rural market, they took no any interest to
produced or sell products in rural market in India. It was the initial stage of FMCG companies in
India. As per as the time had passed, the strategy and marketing style of FMCG companies had
been changed.
Background of the Study

In 1970, Nirma was the first FMCG Company to initiate and produced goods according to rural
consumers. In the early 1970s, when Nirma washing powder was introduced in the low-income
market, Hindustan Lever Limited reacted in a way typical of many multinational companies.
However, Nirma’s entry changed the whole Indian FMCG scene. It became a great success story
and laid the roadmap for others to follow. MNC’s like HUL, which were sitting pretty till then,
woke up to new market realities and noticed the latent rural potential of India. 1983, C K
Ranganathan started selling shampoos in a sachet with an investment of 15,000 and dared to
take on the multinationals, Lever and P&G, the unquestioned leaders in that segment. He targeted
rural and small-town consumers who used soaps to wash their hair. He introduced the sachet at
90 paise and then reduced it to 50-paise. And that’s when the multinationals sat up and noticed
him.

Sales zoomed from 35,000 sachets to 12 lakhs. Initially they took any sachet, but after three
months they restricted to Chik sachets.
Now at the present time, rural market is one of the best opportunity and focusing sector for the
major FMCG companies in India. Each and every company is set to invest a huge capital for
competition in rural market. According to the Federation of Indian Chambers of Commerce and
Industry, the number of rural households using FMCG products has grown from 136 million in
2004 to 143 million in 2007, a clear indication that rural consumers are shifting from commodities
to branded products. Urban consumers, on other hand, could go slow on FMCG expenses,
thanks for inflation spiral, rise in fuel cost and costlier credit. Evidence suggests that for the first
time, the rural market has grown faster than the urban market in key product categories in
April-May 2008, the latest months for which such information is available, according to market
research firm AC Nielsen.

Need for the Study

In those days, the rural market is the one of the best opportunity for the FMCG sector in the
India. It is more wide and less competitive market for the FMCG. As the income level of the
rural consumers increasing, the demand of FMCG is increasing continuously. The various need
of the study is given as follows:

1. To determine the raising demand of FMCG products in rural area.
2. Know about the different choices of rural consumers.
The study of opportunity for FMCG products in the rural market is a sum total of different
analytical survey of different FMCG products in the rural area. In one sense, we can say that it is
determination of how much market captured by

Scope of Study

With a population of 1 billion people, India is a big market for FMCG companies. Around 70%
of the total households in India reside in the rural areas. The total number of rural households

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