The Rural Demand

Here we are outlining the trends with regards to rural demand and highlighting the recent trends therein.

Steady Growth:

Rural demand has grown steadily over the years. Not only has the market grown in quantitative terms, but qualitatively too it has undergone a significant change.

Welcome change in the composition of Rural Demand:

The composition of rural demand has also been changing significantly and in a welcome manner in recent years. Many new products entered the consumption basket of the rural consumer and the relative shares of the different categories of product in the consumption basket have also recorded a welcome change. The upper segments in particular, have started buying and using a variety of modern consumers products, which were till recently unknown in the rural market.

Several products already well established in the rural market: It can be seen from the list that several products, including modern ones and durables are already well established in the rural market.

Marketers cannot go by the perception of yesteryears and assume that rural India consumes only certain traditionally/essential products and that its share in other product categories is meager. Rural now accounts for a sizeable share of the total consumption for a variety of consumer goods, such as packaged tea, washing products, including detergents, toiletries of various kinds, popular as well as premium bath soaps toothpaste, toothpowder, safety razor blades, shaving rounds, talcum powder, hair oil, OTC products, and durables like electric irons, bicycles, scooters ad motorcycles.

It is perhaps well known that products like packaged tea, bath soaps and washing products, including detergents / detergent cakes, are popular items of consumption in rural market. What is not known perhaps is that products like shampoo, toothpaste and talcum powder, and durables like electric irons, bicycles, mopeds, scooters and motorcycles have joined this category in recent years. The rural demand for electric irons, mopeds and motorcycles are now between 30 and 50 percent of the all-India demand.

In many products, rural consumption accounts for a larger share than urban: Interestingly in many products, rural consumption now accounts for a larger share than urban. In washing soaps (cakes/bars), the rural is over 60 percent. In popular bath soaps it is more than 50 percent and in batteries it is more than 56 percent. Similar is the case with packaged tea and hair oils.

Among durables, the rural market now accounts for a larger share of the total sales in

1. Sewing machines
2. Radio/transistors
3. Tape recorders
4. Wristwatches
5. Black and White television sets
6. Cassettes recorders
7. Bicycles
8. Table fans
9. Pressure cookers.

In many products, the rural market has overtaken the urban in growth rate: A survey by NCAER shows that the rural market is growing faster than the urban market in several products. These include packaged tea, analgesics, detergent powder washing soap, and detergents cake. Growth in Motorcycles too has been more in the rural market the urban market.

Position of durables: It will be worthwhile to examine separately the position of durables in the rural market. According to an NCAER survey, against seven consumer durables owned by urban households on an average, rural households own three. Rural India’s market for consumer durables is estimated at Rs 4,500 crore with an average annual growth rate of 8 percent.

Details of ownership of select durables by rural consumers:

It can be seen that now every other rural household has a bicycle, every third household has a fan, every sixth has a television set, and every seventh a pressure cooker. Also, nearly 80 percent of rural households own a mechanical wristwatch and 42 percent a radio/transistor. Rural India now purchases a third of the color television sets, a fourth of the mixers/grinders and a fifth of the refrigerators sold in the country.