The rural market has by and large been insulated from the slowdown because this part of the Indian economy has been untouched by credit cards, mortgages and the like. Add to this, waiver of agricultural loans, pumping money into the system through NREGA, raising Minimum Support Prices (MSPs) for crops etc. have helped in growing consumption when the rest of the world is reeling under the economic crisis. In effect, the rural economy is going back to its roots as a self-sufficient village economy.
The biggest bottleneck towards development in the rural markets is the excessive dependence on agriculture and consequently on rainfall as India does not have extensive penetration of irrigation in the hinterland. There is overall slowdown of GDP growth every time there is poor rainfall. The rural consumer is unique, and it requires long painstaking efforts to understand, relate to and be accepted by him. Rural marketing involves more intensive personal selling efforts compared to urban marketing. To effectively tap the rural market, a brand must have associations that the rural consumer can relate to.
There are several other challenges; Infrastructure related such as power, water, roads etc. Health & Hygiene continues to remain a concern & Education continues to suffer due to the lack of proper enforcement / misuse of funds etc. in Government educational institutions.
Large companies are realizing benefits from CSR initiatives, with quantified improvements in revenue, market access, productivity & increased brand awareness. Marketing strategies have evolved into movements where the stated objective was of poverty alleviation & women empowerment, and one such movement grew to become one of the most lauded & effective CSR-cum-market penetration exercises in the world.
Similarly, several other far-sighted companies focused on the bottom of the pyramid, and brought a huge untapped population within the purview of organised retailing thereby, increasing the size of the total market.
Such movements have been equally lauded for finally giving farmers a fair price for their crops, and for taking the extra initiative in partnering with farmers in producing higher & better crop yields.
Opportunities are available for both private and government sector players for leveraging on the low cost of infrastructure, manpower & government subsidies.
Scope for unskilled rural employment remains large, with the number of development schemes initiated by the Government such as the NREGA, Pradhan Mantri Gram Sadak Yojna etc.
Indian cellular services are expected to grow at a CAGR of 18.4%, with most of the growth coming from the rural markets. Internet usage finds lesser awareness amongst the lower SECs in rural areas, but this again is changing because of utility services provided to rural consumers such as booking of train tickets, real-time crop prices, weather forecasts etc.
Education is a major contributor in incorporating the rural consumer into the developing economy, and thus magnifying chances for a higher quality of life.
The FMCG, Pharmaceuticals, Automobiles & Consumer durables industries are all forecasted to grow to the extent that they match or are close to the sales generated in urban areas as well.
For companies, who understand the dynamics of the rural markets across India’s 600,000 villages, the efforts taken would be more than worth it, they can continue a sustainable, profitable & scalable business serving the rural population. It would demand intense effort, highly innovative business models, and not a duplication of marketing strategies used in urban India.
The rural markets in India are passing through unprecedented changes, with more power passing into the hands of the rural consumer due to increase in disposable incomes through microfinance products, the impact of NREGA, ever-increasing mass media penetration, government intervention in market mechanism, investment in infrastructure, and structural factors such as shifts in acreage to higher value crops, introduction of the modified APMC law etc.
However, the principal means of livelihood for almost 70% of India’s population is agriculture, the success of which is dependent on good rainfall. The proportion of population directly dependent on agriculture for their livelihood has been decreasing over the years, but still remains a cause of concern for the potential success story in Rural India.
The rural consumer has a high degree of price-value orientation. He still remains value conscious to both personal and household categories.
Having said that, the rural consumer is also upgrading from traditionally used / locally available options like using sand mix for washing hands to convenience products like soaps. This signifies an effort to move towards better and branded products.
The rural consumer is also ever more aware of national trends and has become highly inspirational due to the extensive penetration of media into the rural hinterland, exposing him to largely the same media content available to the rest of urban India.