Indian Rural Market

What is Rural?
Census of India 2011 defines rural as any
habitation with a population density less
than 400 per sq. km, where at least 75
percent of the male working population is
engaged in agriculture and where there
exits no municipality or board.

Rural market
833 million people in rural India . In
comparison to just 5,161 towns in India
there are 6, 38,365 villages in India.
India literacy rate has increased to 74.04%
in 2011 due to better education facilities.
Rural urban literacy gap has come down
to 16.1 percentage points in 2011
Increase in MSP, good monsoons ,
NREGA, Bharat Nirman Project

Reasons for improvement of

business in rural area
Socio-economic changes (lifestyle, habits
and tastes, economic status)
Infrastructure facilities (roads, electricity,
media)
Increase in income
Increase in expectations of People

Buying power
Despite a sharp slowdown in the economy
India's consumption story remains intact.
NSSO data on households consumer
expenditure in 2011-12 reveals that the
average rural MPCE went up by 35.7% in the
2-year period between 2009-10 to 2011-12.
The share of expenditure on food declined
from 53.6% to 48.6% in rural areas
suggesting a rise in wages. (Rs 299 a day)

 The Rural population is nearly three times the urban, so

Rural consumers have become the prime target market for
consumer durable and non-durable products, food,
construction, electrical, electronics, automobiles, banks,
insurance companies and other sectors besides hundred
per cent of agri-input products such as seeds, fertilizers,
pesticides and farm machinery
Discretionary spending of a typical rural household rose
from Rs 14,000 in 2004-05 to Rs 24,000 growing at the rate
of 11% which is higher than the inflation rate of 6% over that
time. Between 2009-10 and 2011-12, rural consumption per
person grew annually at 19 per cent two percentage
points higher than its urban counterpart. (NSSO 66 th
Round)

Why Rural India?

The urban consumer durable market for products like
colour TVs, washing machines, refrigerators and air
conditioners is growing annually at between 7 per cent
and 10 per cent.
More than half of Indias stock of consumer durables
such as television sets, electric fans and two-wheelers is
now in rural India. (CRISIL report 2012).
The rural market is zooming ahead at around 25 per cent
annually. "The rural market is growing faster than urban
India now," says Venugopal Dhoot, chairman of the Rs
989 crore (Rs billion) Videocon Appliances.

 Rural market generates 51% of the total

disposable income in India. However, the
fact that rural India forms 41% of Indias
middle class and a mere one percent
increase in Indias rural income translates
to a mind-boggling Rs 10,000 crore of
buying power is evidence enough to know
that this market holds promise.

Reasons for improvement of

business in rural area
Socio-economic changes (lifestyle, habits
and tastes, economic status)
Literacy level (25% before independence
more than 69% in 2011)
Infrastructure facilities (roads, electricity,
media)
Increase in income
Increase in expectations

Characteristics of Rural consumer

Seventy percent of Indias population, or approximately
844 million people, live in rural areas . As of the 2010
census, this equates to just under 2.5 times the
population of the U.S. A location is defined as rural if at
least 75 percent of the population is agrarian.
Earn today, spend today mentality-Rather than buying
in bulk, which would mean paying more for a large
quantity upfront, rural Indians tend to buy what they need
for short segments of time
Income levels are low, rural incomes also vary greatly
depending on the monsoons

 unique product and package needs of this

market
Methods of transportation used include
camels, bull drawn carts, bicycles, trucks,
and trains .In addition, poor roads and
unreliable electricity are two additional
obstacles common to the distribution
networks in rural communities

 With over 2.5 million kiranas throughout

Indias rural towns and villages, keeping
store shelves stocked is one of the main
challenges
to
consumer
goods
manufacturers . In order to reach these
local shops and establish a brand
presence in them, companies need
substantial amounts of working capital and
a large committed sales

 Think Small
Due to the fact that rural Indians have small
disposable incomes and very little storage
space, one of the most popular concepts to hit
the rural market has been sachets.
Visual Communication
The rural area is a market where large portions of
the population are illiterate. So, when packaging
consumer products for rural markets, companies
must use prominent logo symbols and logo
colors to assure that illiterate consumers will be
able to recognize the products . Therefore,
communicating brand values through the
package rather than with words becomes

Small sizes
It allow consumers to try new products. It also
caters to the fact that most rural Indians have
low disposable incomes and little storage space
at home.
Innovative media
Can be used to reach the rural customers.
Radio and television are the conventional media
that are reaching the rural audience effectively.
But horse cart, bullock cart and wall writing are
the other media, which can carry the message
effectively to the rural customers.

 Unelaborated packaging
Meeting the needs of consumers by packaging
products in small quantities increases the
packaging costs for a company in comparison to
a large bottle of product. One way companies
are able to keep the prices of sachet-type
packages down is partially due to lower
government duties on small packs. In some
instances, it can actually be cheaper for a
consumer to purchase sachets rather than a
bottle of product.

Rural India is not homogeneous and in

fact there is no one rural India. Even
within one state, rural areas have
demonstrated sharp differences by virtue
of their economy and exposure.
It is also important to recognize the
existence of developed and developing
rural India - differentiated by the
economic prosperity of certain States
such as Tamil nadu, Punjab, Haryana, and
now Gujarat where the fast improving ICT
infrastructure is helping to reduce the
urban-rural divide.