Page 273 - DMGT509_RURAL MARKETING

Rural Marketing

Notes and rural definitions is unlikely to yield consumer behavior nuances. For example, district
headquarters [towns] in Tamil Nadu are likely to be significantly different from those in
Karnataka or Maharashtra.”
Many others agree that census-style definitions are no longer enough. “My understanding of
rural India is a less developed countryside where the infrastructure is primitive, houses are of
mud or brick but rarely painted well, the primary source of livelihood is agriculture, employment
opportunities in the organized sector are negligible, eating choices are restricted to home-
cooked, simple food, schools are far away, health facilities are rudimentary and — importantly —
the youth, while energetic and ambitious, are to be seen playing cards the whole day,” says
Gupta of ruralnaukri.com.
“We recognize rural India by certain characteristics,” says B.N. Garudachar, general manager,
corporate communication and investor relations at Voltas, a Tata group company in air-
conditioning and engineering services. “These are: low population numbers, low median income,
poor infrastructure [roads, electricity, communications], and agrarian rather than industrial
activity. Such rural areas are within the sphere of influence of neighboring cities and metros.
This influence determines their aspiration levels and their viability as markets.”

14.13 Massive Market

View it as you may, few people dispute that the rural market is massive. According to Singh,
12.2% of the world’s consumers live in India. “Rural households form 72% of the total households.
This puts the rural market at roughly 720 million customers.” Gupta of TSMG extrapolates the
Census 2001 numbers and comes up with an estimate of 790 million. “Total income in rural India
(about 43% of total national income) is expected to increase from around US$220 billion in 2004-
2005 to US$425 billion by 2010-2011, a CAGR of 12%,” he says.
Bijoor explains that this is entirely disposable income unlike what it would be in urban India.
“If a farmer in rural Holenarsipura earns US$1, all of it is his to dispose off as he pleases. The
same income in the hands of an urban person, who is possibly a tech worker, is actually not US$1
of disposable income. It is most likely 67 cents; the rest goes as tax. The farm economy, with
zero-tax on farm income, creates far more disposable income. Buying power in the hands of the
rural rich is higher than the buying power of the urban rich.”

Gupta of rural naukri.com provides some telling statistics. “The purchasing power of rural India
is more than half for fast moving consumer goods [US$17 billion],” he says. “The durables and
automobile sectors contribute US$2.5 billion each, and agri-inputs (including tractors) about
US$1 billion. Some 42 million rural households [use] banking services against 27 million urban
households. There are 41 million Kisan credit cardholders [credit cards issued to farmers for
purchase of agricultural goods] against some 22 million card users in urban markets. Be it
automobile, telecom, insurance, retail, real estate or banking, the future drivers of growth are
rural. No marketer can afford to ignore the possibilities of rural India.”
Bijoor adds some growth numbers. “Our rural folk have bought a lot more of FMCG; this part
of the market has grown at a robust rate of 23% [last year],” he says. “As durables shrink in urban
India, the rural market is witnessing a 15% growth rate. Some 60% of the durables market lies in
rural India. Telecom in rural India is growing at 31%.” It depends on the product, of course. “Just
the sheer population numbers don’t mean very much from a marketing point of view,” says
Garudachar of Voltas.
Across product categories, however, there seems to be a lot of action. Media — particularly
TV — has been a great leveler. Even in small villages, people who have seen the urban lifestyle
on television seem to want similar goods and services. Companies have realized this and are
going all out to tap this latent demand.

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