Amar Ujala101 Markets: Bridging the Bengaluru-Bareilly divide

By Sapna Nair , afaqs!, Mumbai | In Marketing | September 17, 2010
Research has uncovered several myths and insights about the rural heartland. Shonali Ghosh from AC Nielsen threw light on a few of these at the event, 101 Markets, organised by afaqs! in Mumbai

The size of the non-metro opportunity is enormous, as 89 per cent of India's population lives outside the metros. The market is evolving, said Shonali Ghosh, director, Client Solutions, The Nielsen Company, as she took the audience through statistics and findings from the non-metro markets, which are essential to know for marketers.

Explaining the potential of non-metro markets, Ghosh brought out some statistics. There has been an 11 per cent increase in the total value of FMCG sales across India in the last one year. Of this, 9 per cent came from urban India and 15 per cent from rural India. The categories under FMCG that have driven growth are impulse food products, baby care products, contraceptives, packaged groceries and personal care products, all of which indicate an evolving trend.

In the durables segment, small towns are embracing new technologies, such as frost-free refrigerators, split air-conditioners and fully automatic washing machines. The growth of durables in the urban market is 10 per cent per annum; while in the rural market, it is 25 per cent per annum.

The perception of rural India is deceptive; as its actual potential remains unexplored. While rural India is perceived to be poor, illiterate, isolated and dependent on agriculture for revenue; in reality, rural India is poised for change. Ghosh said that not only does rural India house a sizeable population (higher than the US, the UK, France, Japan, Italy and Germany put together); but also boasts of a considerable GDP, higher than Switzerland's. A report estimates that by 2012, two-thirds of rural income will be non-farm.

Among the reasons for growth, accessibility is most significant. The number of FMCG outlets in 2009 increased by 6 per cent over 2007 in urban markets; while in rural India, this figure was 27 per cent. Development on the infrastructure front - road connectivity, education and sanitation -- has also led growth. Corporate initiatives, such as ITC e-Choupal, HUL's Shakti and Tata Kisan Sansar, have all worked towards empowerment of rural consumers.

Media (penetration of television and cable and satellite) has played a pivotal role too. The new content of TV programmes has focused on social and contemporary issues, such as child marriage, caste dynamics or extra-marital affairs, becoming a window for the rural women into the outside world and empowering them.

Ghosh added that marketers need to understand the psyche of the rural consumer to design the product, price, communication and distribution mix. A mobile phone company, she cited, had to change its communication strategy after its simple and low-priced phone failed to create a stir in the rural markets. The reason was that though rural consumers prefer user-friendliness; they are not looking for simplicity in mobile phones. There was a need to position the phone as a flashy one.

In another research, it was found that while for an urban consumer, a fridge serves as a frozen cupboard; for a rural consumer, its usage is limited to storing milk, water and ice, as storing leftover food is taboo. Ghosh emphasised on the need to understand priorities and customise products accordingly.

She added that this did not mean that non-metro audiences needed to be treated completely differently, because the markets are converging. She classified the market into rural, peripheral rural, peripheral urban and urban. Peripheral rural comprises those who travel to urban areas for livelihood or education; and hence, have urban contact. Peripheral urban includes those who live primarily in urban areas, but retain their rural base. With increasing media exposure, she said, the lines would blur further.

Ghosh said that the future would see rural markets growing, and marketing budgets also going up. As employment and income grow in small towns, so would the demand for products and services.

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