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How does the Rural Market Stack up – An Insight

November 16, 2009


Rural India accounts to 45% of Indian GDP. Rural India accounts for 70% of all Indian Households and cloe to 40% of the total consumption pie. So we’ll see how the rural market in India stacks up.

Diversity Dispersed – The rural market comprises over 4,000 towns and more than half a million villages spread across India. This presents a significant challenge when decisions on store footprint and distribution need to be taken.

Market concentration – While a large number of villages exist, the size of individual markets and their market potential is significantly skewed. Of the 600,000 villages, 17% account for more than half the population and 60% of total rural wealth.

Categorization of Customers – It is widely assumed that rural market is homogeneous. However, there are significant variations, Multiple varieties of customer segments exist, each with distinct attributes relating to aspiration and purchasing decisions and patterns. For example – landlords with large landholdings, government / service personnel, traders and farmers.

Products Sought: – Typical rural consumers seek products with a low price point without compromising on product functionality. Nano [small] packaging is common. FMCG purchases are more frequent with a lower ticket size, so also the same saga in telecom – Low-value recharge coupons. Coke introduced Rs 5 small bottle to tap this consumer 🙂

Purchase Decision: – Unlike the Urban Consumer where you BUY what you Like, it is different in Rural India. Buying decisions are mostly collective, involving a varied set of people: the influencer, decider, buyer and the consumer. A big ticket consumer durables purchase will involve most family members, neighbors, creditor and of course the shop owner.

Isn’t it cool that how this Pyramid is structured and now how Retailers are trying to go where they are to get Business.

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