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"The future lies with those companies who see the poor as their customers."                                                                                                        -C.

K. Prahalad
                                             Addressing Indian CEOs, Jan 2000.

Concept

In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities.

On account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing, has emerged. But often, rural marketing is confused with agricultural marketing - the latter denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers.

What Makes Rural Markets Attractive?

Rural market has following attributes and the following facts substantiate this: -

742 million people

Estimated annual size of the rural market -

                              FMCG                                                                     Rs. 65,000 Crore

                              Durables                                                               Rs. 5,000 Crore
                              Agri-Inputs (including tractors)                       Rs. 45,000 Crore
                              2 / 4 Wheelers                                                     Rs. 8,000 Crore

In 2001-02, LIC sold 55% of its policies in rural India.

Of two million BSNL mobile connections, 50% are in small towns / villages. 

Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone (VPT).

41 million Kisan Credit Cards have been issued (against 22 million credit-plus-debit cards in urban), with cumulative credit of Rs. 977 billion resulting in tremendous liquidity.

Of the 20 million Rediffmail sign-ups, 60% are from small towns. 50% of transactions from these towns are on Rediff online shopping site.

42 million rural households (HHs) are availing banking services in comparison to 27 million urban HHs.

Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs in urban.

Opportunities

1. Infrastructure is improving rapidly -

In 50 years only, 40% villages have been connected by road, in next 10 years another 30% would be connected.

More than 90% villages are electrified, though only 44% rural homes have electric connections.

Rural telephone density has gone up by 300% in the last 10 years; every 1000+ pop is connected by STD.

Social indicators have improved a lot between 1981 and 2001 -

Number of "pucca" houses doubled from 22% to 41% and "kuccha" houses halved (41% to 23%).

Percentage of BPL families declined from 46% to 27%.

Rural literacy level improved from 36% to 59%.

Low penetration rates in rural areas, so there are many marketing opportunities -

• DSCL Haryali Stores
• M & M Shubh Labh Stores
• TATA / Rallis Kisan Kendras
• Escorts Rural Stores
• Warnabazaar, Maharashtra (Annual Sale Rs. 40 crore)

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