Page 277 - DMGT509_RURAL MARKETING

Rural Marketing

Notes According to a recent study, “Rise of Consumer Durables in Rural India”, by Associated Chambers
of Commerce and Industry of India (ASSOCHAM), the Indian rural consumer durables market,
with the current growth rate of 30 per cent, is expected to witness an annual growth of 40 per cent
in the ongoing fiscal (FY12).
This growth, the study says, is fuelled by the change in lifestyle and higher disposable incomes
of rural India. “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
durables 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 the general buoyancy in the economy,”
ASSOCHAM president Dilip Modi said while releasing the report in December 2010.
On the growing significance of the rural market for CDIT players, Sunil Mehta, CEO of Next
Retail, the CDIT retail format of Videocon Industries, says, “A major [share of] growth has to
come from rural markets as metros and bigger towns have nearly touched peak.”
He adds further, “The existing share of the rural market is 35 per cent with a CAGR of more than
30 per cent.”

Low Penetration

So, what is stopping the growth of CDIT in the rural market? A poor distribution network in
semi-urban and rural areas and low awareness of consumer electronics products in rural India
are major factors hindering the overall growth in this lucrative market.
While a 25 per cent share in the TV category, as mentioned above, may appear good, the fact is
that the penetration level of consumer durables is quite low in rural India. Consider this: two-
thirds of Indian consumers live in rural areas and almost half of the national income is generated
here!
The biggest challenges, Mehta of Next Retail, feels are issues pertaining to distribution and
infrastructure.
“There is lack of a well developed distribution network in the rural markets and this makes it
difficult to achieve growth in the sector,” says Mehta, adding, “there are also issues of power
cuts and poor road linkages in these areas.”
The low penetration of CDIT is unlike that of FMCG products, which have managed to make
strong inroads in rural India. On this, Vinay Bysani, vice-president, projects & marketing, Viveks,
a Chennai-based regional CDIT retailer, opines that FMCG covers essentials for a home and
these products touch the lives of people. CDIT products, on the other hand, are at the next level
of aspiration and power availability determines the ability to use these products.
Talking about the reasons for low CDIT penetration, he says, “From the point of view of
distribution, infrastructure is important. Also, national chains will look for critical mass of
business to sustain their formats, regardless of the size of the format. This can be a deterrent.”
Finance companies restricts dramatic growth in consumption.
Mehta, however, feels the rural consumer today is well aware of the trends in metros and aspire
to get the latest products packed with various features. He further says price sensitivity is still
high and the reach of finance companies restricts dramatic growth in consumption.

Ways to Increase Rural Reach

ASSOCHAM suggests that for deeper penetration in the rural markets, the industry needs to
create proper channels and inform the community about the products through local language
advertising as well as other tools such as local exhibitions and mobile vans to tap the rural

272 LOVELY PROFESSIONAL UNIVERSITY