630 million people

Estimated annual size of the rural market

      * FMCG Rs 85,000 Crore
      * Durables Rs 12,000 Crore
      * Agri-inputs (incl. tractors) Rs. 5,000 Crore
      * 2/4 wheeler vehicles Rs. 12,000 Crore

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

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

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

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

42 million rural households are availing banking services in comparison to 27 million urban households

Investment in formal savings instruments: 6.6 million households in rural and 6.7 million in urban India

Nano-Marketing or sachets worked well in rural India and there is ample scope for the products to be accepted by consumers if the price is competitive

The rural market is highly fragmented and the supply chain for the FMCG goods has to be strong

4 P's of Rural Marketing

FMCG and consumer durable companies have, in the past, tried tinkering with all the four 'P's - product, pricing, promotion and place - of the marketing mix. The area where innovation has moved to center-stage is in the fourth P - place (or distribution). Infrastructure has always been the bug-bear of the Indian marketer.

Distribution channels can make or break a company's rural marketing efforts. To sell in villages, products must be priced low, profit margins must be kept to the minimum, and the marketing message must be kept simple. Rural marketing seems to be essentially a problem of price and place (distribution). And products designed for the urban market seem to do decently in rural India as well. Perhaps the urban / rural divide is not as large as most people believe it to be.

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* Contributed by: -
Sri Lakshmi K. & Sri Rama Murty D.,
Students of PGDM,
Institute of Public Enterprise (IPE), Hyderabad.
Article posted on December 14, 2008.