Opportunity for marketers in rural areas

Long considered a source of food, raw materials and cheap labor for cities, rural India is taking on a new hue. People in rural areas are now cottoning on to specialized services and marketers and corporate companies are more than eager to fill in the void.

There is very real evidence of escalating consumer demand, driven by increasing affluence, available credit and a growing propensity to spend.

Marketing pundits have echoed that a sound network and a thorough understanding of the village psyche are a sine qua non for making inroads into rural markets.

Since rural income levels are largely determined by the vagaries of monsoon, the demand there is not an easy horse to ride on.

Many villages have unquestionably grown beyond ‘rural’ in the broadly understood sense. A simple equation of direct-to-home (DTH) consumers will give an idea about the spread of consumerism in the so-called hinterland.

Increasing affluence and easy availability of credit is creating a growing propensity to spend among rural Indians.

Urban cable operators are signing up subscribers in rural areas by the droves. Guwahati is currently the second highest subscribing city in the country after Ludhiana.

A new prosperity is sprouting in rural India, with tens of millions entering the pressure-cooker and television owning class and tens of thousands becoming sippers of foreign liquor (no Indian Made Foreign Liquor for them), owners of premium tractors and drivers of multiple sedans.

According to the National Council for Applied Economic Research (NCAER), the leading collector of data on rural India, in the northern state of Haryana, rural folk are now nearly twice as likely to be millionaires as city folk in Bangalore, the high-tech hub.

Data suggests that India’s 700 million villagers now account for the majority of consumer spending in the country — more than $100 billion a year. Millions step into consumerism each year, graduating from the economics of necessity to the economies of instant gratification.

No doubt the set of consumers that a Jaeger LeCoultre, makers of luxury watches, caters to is minuscule, yet what is prompting marketers from across the globe to pitch their tents in the Indian hinterland is the fact that this group is only going to swell in the future.

It has also been reported that by 2009-10, the number of urban households is projected to grow by 4%, while rural households are expected to grow by 11%.

The total expenditure of urban India is almost equal to what has been spent by rural India. But what is being spent by urban India is being done by only a small percentage of the population.

About 25% of urban India is spending as much as 75% of what rural India is spending. This shows the potential exists in rural India. There is a huge market waiting to be tapped in rural India.