Indian rural economy is getting stronger and stronger. According to Nielsen’s survey the rural market for FMCG (Rs 65,000 crore), Durables 5,000 crore), and clothing and Footwear (Rs 35,000 Crore) was as large as Rs 1, 05,000 crore in 2008. Certainly the size is much bigger now. According to Nielsen, by 2025, the rural FMCG sales is estimated to reach $ 100 billion from the current $12 billion.
Rural India offers sustainable sales and profit for growth. There are more enterprises in rural India than in urban today contributing significantly to the non-farm output. Following factors have contributed to the growth of rural marketing:
1. Employment Opportunities:
The income from new employment schemes and rural development efforts of the government and the corporate sector efforts has increased the purchasing power of rural people.
2. Agricultural Revolution:
Due to green revolution and white technological breakthrough in the form of green and white revolutions have taken place in rural India, which results into substantial wealth generation in these areas.
3. Favourable Government Policies:
Tax exemption in backward areas, subsidy, concession, incentives and heavy investment in rural development programmes have brought rapid growth of rural markets and capital investment plans of Consumer Goods Companies.
4. Literacy Growth:
Literacy rate is increasing in rural areas. According to Census 2011 it stood at 68.9% (2001 census 58.7%). There are now more graduates in rural than in urban India. This brings social and cultural changes in buying behaviour of the rural customers.
5. Rising Disposable Income:
Good monsoons, green revolution and Administered Pricing Mechanism (PAM), and NREGA have led to rising disposable income in rural areas. According to Advanced Estimates of National Income released by the Central Statistical Office (CSO) “The per capita income at current prices during 2011-12 is estimated to be Rs 60,972 compared to Rs 53,331 during 2010-11, showing a rise of 14.3 per cent,” Roughly 50 to 60% of people are employed in other businesses.
Many of the second generation are getting white collar jobs in nereby towns. They earn urban salaries but continue to live in self-owned homes in the villages, they have high purchasing power. Thus, with a growing middle class with a monthly income there is a drastic change free from monsoon or cropping pattern. The rural income pyramid is fast morphing into a diamond with 150 million people crossing BPL. These will be first time users of national brands and therefore, offer a huge opportunity to large companies.
6. Attraction of Higher Standard of Living:
Education, constant touch with urban areas, and Hindi Movies have motivated rural people to change their lifestyles and have higher standard of living.
7. Spread of Cable Television:
The growth of satellite TV channels has made a major impact on villages. This has led to a change in lifestyle and consumption pattern.
8. New growth avenues for the corporate:
It appears that the corporate will have to look at rural customers for increasing demand for their products, after all urban demand has its own limitations. Now manufacturers go in for forward innovation approach instead of ‘glocalisation’. It calls for developing products for rural consumers. Presently sale for Dabur, Jyothi Laboratories, and Wipro Consumer Care from rural areas comprises 50%.