Page 267 - DMGT509_RURAL MARKETING

Rural Marketing

Notes is expected to rise from 135 m in 2002 to 153 m in 2010, which represents the largest potential
market in the world.

14.6 Rural and Urban Potential

For many years, rural India was not much acknowledged by the retailers. But as the ‘bottom of
the pyramid’ is getting empowered with education, higher purchasing power and awareness,
companies are looking for opportunities in hinterlands.

Urban Rural

An average Indian spends around 40% of his income on groceries and 8% on personal care
products. A larger part of the total spending pie along with a large base (in terms of population)
makes India one of the largest FMCG markets.
Changing Lifestyles

Rising per capita income, increased literacy and rapid urbanisation have caused rapid growth
and change in demand patterns. The rising aspiration levels, increase in spending power has led
to a change in the consumption pattern.

14.7 Low Penetration and Low Per Capita Consumption

Due to the large size of the market, penetration level in most product categories like jams,
toothpaste, skin care, hair wash etc. in India is low. This is more visible when comparison is
done between the rural and the urban areas. The average consumption by rural households is
much lower than their urban counterparts. Existence of unsaturated markets provides an excellent
opportunity for the industry players in the form of a vastly untapped market as the income rises.
India’s growth trajectory is highly driven by the development of the rural clan. Players in
various industries such as retail, fast moving consumer goods (FMCG), consumer durables,
automobiles et al., are looking towards the untapped potential hinterlands possess.
The household consumer expenditure survey for 2009-10, released by the National Sample
Survey Office (NSSO), reveals that rural Indian households are spending more on consumer
goods like durables, beverages and services as compared to their expenses on such things five
years back. The 66th round of the National Sample Survey showed that monthly per capita
expenditure (MPCE) in rural India was 953.05 (US$ 20.69) in 2009-10, an increase of 64.6 per cent
from 2004-05.
The Indian consumer base is highly supported by the rural population (about 70 per cent of the
country’s population), which drives revenues for many major conglomerates operating in diverse
markets in India. Key developments and investments pertaining to various sectors are discussed
hereafter.

14.8 Retail in Rural India

‘Aadhar’, the Future Group and Godrej Agrovet’s joint venture (JV) in agri-service-cum-rural
retailing is undergoing a revamp, wherein the model will follow hub-n-spoke concept to drive
higher profits for the company.
DCM Shriram Consolidated Limited (DSCL), which operates 270 stores of Hariyali Kisaan
Bazaar (one of the largest national rural retail chains of India), plans to open 20 more outlets by
the end of 2011.

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