January 21, 2010
The Hindu
Small is not always big. While the FMCG industry has managed to bring about a revolution in rural market distribution with small pack sizes, consumer durables and automobile companies are still grappling with the issue.
With the percentage of rural purchasing power increasing significantly, players believe that innovation in distribution can largely solve the glitches in rural marketing.
“The aspiration of the rural consumer is the same as his urban counterpart. Therefore, when he comes to buy a product in the rural market he wants to see the same models as he has seen in a city outlet or popular mass media campaign. However, companies are unable to distribute all their range in a rural market due to logistics and supply chain challenges. We believe this issue is critical in improving the rural market,” said Mr Partha Rakshit, Managing Director (South Asia), The Nielsen Company, speaking at a rural marketing workshop organised by Rural Marketing Association of India.
According to him, the FMCG market grew at 14 per cent for the year ending November 2009 as compared to last year. The rural market grew at a higher rate of 18 per cent than urban (12 per cent).
“Rural areas in States such as Rajasthan, Uttar Pradesh and Eastern states such as Assam, Bihar and West Bengal posted high growth. Distribution increase, smaller packs of premium categories combined with rural consumer moving up the value chain are the key reasons for a healthy growth in rural FMCG sales,” he added.
Rural India reflects a CAGR of 11.6 per cent (volume at 7.9 per cent and price at 6.3 per cent). The growth in the last two years was fuelled by price increase in a large number of categories with higher growth in rural than in urban areas. Functional, specific purpose categories such as mosquito repellent, digestives and condoms, televisions and mobile were among products doing well.
According to Mr Rajeev Karwal, Founder Director, Milagrow Business & Knowledge Solutiions, as much as 26 per cent of durables growth came from rural areas. Interestingly, only five per cent of rural population brought from a rural outlet.
Experts also believed that rural consumers upgrade in a fashion similar to their urban counterparts as well as opt for premium products in smaller formats, and therefore communication needs to defined for such buyers. “Companies have to understand that rural buyers have a sustainable advantage as they take to brands slowly and give them up slowly. Rural branding and communication must be clear and cohesive for the market to grow. Therefore, reorienting the market segment to ensure rural gets adequate focus,” said Mr V. Swaminathan, Managing Director, Suhita Ethnic Marketing Services.
