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Large, Diverse and Scattered Market: Rural Market in India Is Large, and

Rural India accounts for about 50% of India's GDP and nearly 70% of the country's population. It is a large and diverse market that is scattered across many regions with inadequate infrastructure. However, rising literacy rates, good monsoons, and government programs have increased rural incomes and changed traditional outlooks. Companies are recognizing the enormous growth opportunity in rural India by developing new go-to-market models tailored for rural consumers.

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Haarish Khan
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103 views3 pages

Large, Diverse and Scattered Market: Rural Market in India Is Large, and

Rural India accounts for about 50% of India's GDP and nearly 70% of the country's population. It is a large and diverse market that is scattered across many regions with inadequate infrastructure. However, rising literacy rates, good monsoons, and government programs have increased rural incomes and changed traditional outlooks. Companies are recognizing the enormous growth opportunity in rural India by developing new go-to-market models tailored for rural consumers.

Uploaded by

Haarish Khan
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Large, Diverse and Scattered Market: Rural market in India is large, and scattered into a number of regions.

There may be less number of shops available to market products. Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied with agriculture prosperity. In the event of a crop failure, the income of the rural masses is directly affected.
Standard of Living and rising disposable income of the rural customers: It is known that majority of the rural population lives below poverty line and has low

Literacy rate, low per capital income, societal backwardness, low savings, etc. But the new tax structure, good monsoon, government regulation on pricing has created disposable incomes. Today the rural customer spends money to get value and is aware of the happening around him. Traditional Outlook: Villages develop slowly and have a traditional outlook. Change is a continuous process but most rural people accept change gradually. This is gradually changing due to literacy especially in the youth who have begun to change the outlook in the villages. Rising literacy levels: It is documented that approximately 45% of rural Indians are literate. Hence awareness has increases and the farmers are well-informed about the world around them. They are also educating themselves on the new technology around them and aspiring for a better lifestyle. Diverse socioeconomic background: Due to dispersion of geographical areas and uneven land fertility, rural people have disparate socioeconomic background, which ultimately affects the rural market. Infrastructure Facilities: The infrastructure facilities like cemented roads, warehouses, communication system, and financial facilities are inadequate in rural areas. Hence physical distribution is a challenge to marketers who have found innovative ways to market their products.

Economy :::::India's economic change story of the last twenty years has made as much impact on its rural landscape as it has on its urban landscape. Collectively, all over India's rural heartland and in its teeming cities, India appears to be readying for an even more impressive era of economic growth.
GDP : Rural Indiaaccounts for about 50 per cent of Indias GDP and nearly 70 per cent of the countrys population. Since 2000, per capita GDP has grown faster in rural areas than in its urban centres

Inbvestments: Companies that recognise this enormous opportunity are experimenting with various go-to-market
models to garner their share of this growth. Example:Hero MOTOCORP : In the anticipation of the boost in the rural demand on the back of good

monsoon, Hero's stock has gained 24% in the past three months, while the stock of Bajaj Autom which has a relatively lesser rural exposure, has gained only 10%. In the two-wheeler industry Hero is the strongest brand in the rural India and has 5,000 distribution points in rural India, the highest in the industry. It derives nearly half of its sales from the rural markets, 20% more than its competitor Bajaj Auto. A strong growth in the rural vis-avis urban areas has helped Hero's stock outperform its competitor's stock in the year till date. The company's stock has gained 8% in the year till date, while Bajaj Auto's stock has remained flat. Emami In the consumer industry, Emami has one of the highest exposures to the rural markets. Around 60% of its sales and 50% of its profit is from the rural areas. Due to this higher rural exposure, Emami's sales growth has been in midteens over the past five quarters, higher than most of the other consumer companies. Because of this, the company's stock has given a return of 25% in the year till date compared to that of companies with lesser rural exposure such as Marico, Colgate-Palmolive and Godrej Consumer (25-30% of sales from rural). The stocks of these companies have given a return of only -3%, -20% and 8%, respectively, during the same period. A good monsoon means more money in the hands of the rural consumer. This will help the company continue its growth momentum going forward. At the current market price, the company's stock is trading at a P/E multiple of 25, which is much lower than the earnings multiple of most of the other consumer companies.

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