While urban demand for consumer products remains sluggish worldwide, rural markets are growing faster than ever in some of the largest emerging economies. Rising wages are creating a growing middle class, and in such countries as China, Mexico, and South Africa, rural residents report being more optimistic about future wage increases than their urban counterparts. In China, demand in the countryside has already begun to outstrip demand in the cities.
Nowhere is this phenomenon more evident than in India. From 2009 to 2012, spending by India’s 800+ million rural residents reached $69 billion, some 25% more than their urban counterparts spent over the same period. And projected growth rates are simply astounding: According to recent Nielsen estimates, consumption in rural areas is growing at 1.5 times the rate in urban areas, and today’s $12 billion consumer goods market in rural India is expected to hit $100 billion by 2025.
What’s more, rural Indians are trading up. Commodities are giving way to branded products, and more-expensive goods are replacing entry-level versions, as consumers gain more disposable income. Their increased purchasing power is largely due to the steady migration of manufacturing jobs to the countryside. Credit Suisse estimates that nearly 75% of the factories that opened in India in the past decade were built in rural areas; they now account for almost 55% of the country’s manufacturing GDP and 70% of all new manufacturing jobs. As a result, per capita GDP in the countryside has grown at a compound annual rate of 6.2% since 2000, eclipsing the 4.7% urban growth rate.
Many corporations are recognizing this enormous opportunity and stepping up efforts to gain a strong foothold in India’s rural markets. But they are meeting with mixed results. An undeveloped transportation infrastructure, unreliable telecommunications and electricity services, inadequate distribution networks, and widely dispersed consumers make it costly to establish a profitable presence at scale. And finding partners to help identify, sell to, and service rural customers is no simple matter either.
There is hardly any difference in consumer behaviour across rural and urban divide in India now, market researchers, advertising and marketing experts opined at the Rural Marketing Conclave “Brand Panchayat” organized by the Bengal Chamber of Commerce & Industry.
Arindam Sengupta, Principal Technologist – Consumer Insights, ITC Ltd, said that rural customers clearly asserted their position as equals along with their urban counterparts. “Being there and be counted has been the key behaviour of rural India in the recent years,” he added. MG Parameswaran, ED & CEO of ULKA, said rural India actually spurns differentiated products. “LG’s attempt at marketing such a differentiated TV set Sampurna flopped,” Parameswarn pointed out. They wanted similar product that was available in the urban market with facilities that could take care of power outages and voltage fluctuations. Marketers were now moving towards closer tracking of their preferences. TV viewerships or social media monitoring provides tools to understand their mind.
According to Pradeep Kashyap, CEO of MART, studies suggested that the growth of Facebook signing-ins in rural areas were now far greater than in urban India. Recent IMRB studies suggested that consumer behaviour in rural market was same that of urban market. “Like in urban market, consumers in the rural market are not averse to trying out new baby food to breakfast cereals,” said Gurpreet Wasi, Principal Consultant, Retail, at IMRB.
However, there are differences in case of certain products. For example, in northern rural market, Wasi said, there was a resistance in buying refrigerators. “Women in the family believed that food preserved in the freezer was stale and not worthy of human consumption or water stored in the freezer developed unwanted germs,” she explained.
Expansion of English education, intervention of technology in democratisation of the market and growing role of women and children in consumption decisions of family have helped marketers to target greater surplus income in the rural market more than in the urban market in recent years.
At the Conclave, relevant points with respect to,
• Changing Customer expectations over the last 10 years;
• Product Development (with respect to product Attributes, Packaging, Pricing, Promotions, Skilling, etc);
• How Go to Market Strategies & Synergistic & Alternative Distribution Strategies have evolved over the last decade;
• Changes in Media vehicles with respect to Communication; and
• Financial Inclusion for Rural Sectors
were discussed. Present at the Conclave were leading luminaries from the fields of Advertising, Media & Marketing – people like Dr MG Parameswaran (ED & CEO, Draft FCB Ulka), Mr Pradeep Kashyap (Founder CEO, MART Rural), Mr Mohit Hira (CEO & Publisher, OPEN Magazine), MA Parthasarathy (Chief Product Officer, Mindshare SA), Mr CS Ghosh (CMD, Bandhan Bank), Mr Rajat Wahi (Partner, Management Consulting, KPMG India), Mr Amitava Sinha (Group CEO, Genesis Advertising), Mr Supriyo Sinha (VP, Ananda Bazar Patrika) and many others.