Why Your Company Should Enter Rural Market

11 Dec, 2016 | 0 comments

rural market
In this present century, tapping the Indian rural markets would be considered as the most important marketing phenomenon for the companies to do business. Both manufacturers and marketers need to coordinate in product designing and marketing of products to get a grip over the burgeoning purchasing power, enormous size and demand base of the once neglected Indian rural economy.

It’s a demand of the economy to mould yourself to the rural culture in order to get access to their households. Be it consumer durables or non-durables, financial or non-financial, large corporate houses are making their products keeping in mind the rural population of India.

Why the companies should go rural

1. Urban markets are getting saturated: In the midst of cut throat competition and wide choice options it’s become harder for companies to make a good margin out of the products. In fact it’s throwing challenge over the company’s survival. So the only option stays with the companies to go for rural market where the competition is much lesser.

According to estimates FMCG sector in Rural and Semi-rural India likely to cross US$100 billion by 2025

Solvent Farmers

2. Rise in income: With better crop management, introduction of latest scientific technologies and better scope for exports, the farming industry is more stable and prosperous than ever before. The solvency parameters are satisfactory and ever growing so far as a farmer’s lifestyle is concerned. It is a bliss for the companies to sell products in rural India much more than their expectations.

3. Cost-benefit approach: The companies operating in India and especially Indian origin companies and start-ups have two options in terms of

Go Global or Go Rural

earning sizable margins- either go global or go rural. For companies to go global require huge investment outlay besides procedural and legal compliances. But, in case of rural penetration, the investment requirement is much lower and procedural obligations are almost nil. So, the rural market option is more feasible.

4. Huge untamed market: There is a huge untamed Indian rural market. About 70% of the total population resides in rural areas and only a few portions of the same have been partially covered by the big business houses. It’s a great opportunity for the beginners to concentrate on those areas to establish business.

5. Better banking facilities: It’s an added advantage for both the people residing in villages and the companies want to do business in those areas. Introduction farmer credit cards, affordable loan facilities etc. have improvised the lives of the farmers and it’s contributed in growing purchasing power too.

6. Rising literacy rate: The literacy rate among the village people are increasing. With the rise in school goers, the rural population has become aware and advanced of the changing world around them. Directly and indirectly it also generated a wave of rural demand for lifestyle and aspiration products.

rural literacy rate

7. Agricultural incomes are not taxed: About 90% of the rural populations are depending on agricultural income and out of which a large portion of farmers are solvent even to afford luxury. Most importantly agricultural incomes are out of the purview of income tax, which leads to the rising of disposable incomes in the villages. And your company should target that stake of income.

8. Media impact: Electronic media like TV ads, soaps and serials are impacting rural population very much and the result is rural people are spending more on lifestyle products than they used to be. Interestingly rural people take things seriously, shown over electronic media than the people living in cities. Hence, Companies showing TV ads for their products have better chance to enter the market and play dominantly.

dollar

9. Remittances from abroad: Survey showed India has the largest population in the world living abroad and out of which a considerable number of people are from villages. This means many households residing in rural areas get remittances from abroad which is an additional income for the family. Obviously this increases the purchasing power of the rural population.

10. Government policies: Due to favourable government policies there is an improvement in the socio-economic atmosphere of the villages. Schemes like rural electrification, rural road building, sanitation facilities etc. resulted in

better lifestyle of the people. This tends to create demand about the products of the companies usually marketed in urban areas and kept at distant reach of the rural population.

How to enter rural market

As soon as you realise the necessity of going to the rural market you need to have a strategy for doing so. A tailor-made sensitive approach different from urban areas should be adopted to

succeed in the rural market. A three-step strategy should be prepared in this regard; starting with planning, execution and lastly taking feedback.

Planning

Planning stage includes-

Preparing a profile of the target rural market and consumers covering the availability of the consumers and their affordability, age, sex, income slab etc.

Based on consumer profile, the company should study consumer behaviour and do research on their needs and tastes, so that it can be segmented and specifically attended.

The stage involves-
Designing the product keeping in mind the rural population of India.
Fix rural packaging and pricing.

Preparing distribution channels keeping in mind the inadequate infrastructure support and training the force to cater the needs of rural people.

A clear strategy for communication with the village people should be there. It should take into account the culture and tradition of the rural India different from its cities.

Execution and Implementation

Feedback

The final and most important stage in rural marketing strategy. As the process goes on the results keeps on coming and accordingly policy modification and alterations are done. Feedbacks are most essential elements in any marketing and the success and failure of a strategy depends on the speed the feedback are generated.

Every marketing strategy has its own aspects and targets, but in case of rural marketing strategy the vital thing is adaptability. Rural India dons innumerable colours, creeds, cultures,

languages and dialects. The hardest thing a Company would have to face this diversity and synchronise its marketing jobs in such a way that meets a large class of demands.

In this present century, tapping the Indian rural markets would be considered as the most important marketing phenomenon for the companies to do business. Both manufacturers and marketers need to coordinate in product designing and marketing of products to get a grip over the burgeoning purchasing power, enormous size and demand base of the once neglected Indian rural economy. It’s a demand of the economy to mould yourself to the rural culture in order to get access to their households. Be it consumer durables or non-durables, financial or non-financial, large corporate houses are making their products keeping in mind the rural population of India.

Why the companies should go rural

1. Urban markets are getting saturated: In the midst of cut throat competition and wide choice options it’s become harder for companies to make a good margin out of the products. In fact it’s throwing challenge over the company’s survival. So the only option stays with the companies to go for rural market where the competition is much lesser.

According to estimates FMCG sector in Rural and Semi-rural India likely to cross US$100 billion by 2025

2. Rise in income: With better crop management, introduction of latest scientific technologies and better scope for exports, the farming industry is more stable and prosperous than ever before. The solvency parameters are satisfactory and ever growing so far as a farmer’s lifestyle is concerned. It is a bliss for the companies to sell products in rural India much more than their expectations.

Solvent Farmers

3. Cost-benefit approach: The companies operating in India and especially Indian origin companies and start-ups have two options in terms of earning sizable margins- either go global or go rural. For companies to go global require huge investment outlay besides procedural and legal compliances. But, in case of rural penetration, the investment requirement is much lower and procedural obligations are almost nil. So, the rural market option is more feasible.

4. Huge untamed market: There is a huge untamed Indian rural market. About 70% of the total population resides in rural areas and only a few portions of the same have been partially covered by the big business houses. It’s a great opportunity for the beginners to concentrate on those areas to establish business.

5. Better banking facilities: It’s an added advantage for both the people residing in villages and the companies want to do business in those areas. Introduction farmer credit cards, affordable loan facilities etc. have improvised the lives of the farmers and it’s contributed in growing purchasing power too.

rural literacy rate

6. Rising literacy rate: The literacy rate among the village people are increasing. With the rise in school goers, the rural population has become aware and advanced of the changing world around them. Directly and indirectly it also generated a wave of rural demand for lifestyle and aspiration products.

7. Agricultural incomes are not taxed: About 90% of the rural populations are depending on agricultural income and out of which a large portion of farmers are solvent even to afford luxury. Most importantly agricultural incomes are out of the purview of income tax, which leads to the rising of disposable incomes in the villages. And your company should target that stake of income.

8. Media impact: Electronic media like TV ads, soaps and serials are impacting rural population very much and the result is rural people are spending more on lifestyle products than they used to be. Interestingly rural people take things seriously, shown over electronic media than the people living in cities. Hence, Companies showing TV ads for their products have better chance to enter the market and play dominantly.

dollar

9. Remittances from abroad: Survey showed India has the largest population in the world living abroad and out of which a considerable number of people are from villages. This means many households residing in rural areas get remittances from abroad which is an additional income for the family. Obviously this increases the purchasing power of the rural population.

10. Government policies: Due to favourable government policies there is an improvement in the socio-economic atmosphere of the villages. Schemes like rural electrification, rural road building, sanitation facilities etc. resulted in better lifestyle of the people. This tends to create demand about the products of the companies usually marketed in urban areas and kept at distant reach of the rural population.

How to enter rural market

As soon as you realise the necessity of going to the rural market you need to have a strategy for doing so. A tailor-made sensitive approach different from urban areas should be adopted to succeed in the rural market. A three-step strategy should be prepared in this regard; starting with planning, execution and lastly taking feedback.

Planning

Planning stage includes-

Preparing a profile of the target rural market and consumers covering the availability of the consumers and their affordability, age, sex, income slab etc.

Based on consumer profile, the company should study consumer behaviour and do research on their needs and tastes, so that it can be segmented and specifically attended.

Execution and Implementation

The stage involves-
Designing the product keeping in mind the rural population of India.
Fix rural packaging and pricing.

Preparing distribution channels keeping in mind the inadequate infrastructure support and training the force to cater the needs of rural people.

A clear strategy for communication with the village people should be there. It should take into account the culture and tradition of the rural India different from its cities.

Feedback

The final and most important stage in rural marketing strategy. As the process goes on the results keeps on coming and accordingly policy modification and alterations are done. Feedbacks are most essential elements in any marketing and the success and failure of a strategy depends on the speed the feedback are generated.

Every marketing strategy has its own aspects and targets, but in case of rural marketing strategy the vital thing is adaptability. Rural India dons innumerable colours, creeds, cultures, languages and dialects. The hardest thing a Company would have to face this diversity and synchronise its marketing jobs in such a way that meets a large class of demands.