Overview of rural market in India
Rural India generates around 50 per cent of India's gross domestic product (GDP) 70 per cent of the country's population
The market is a mix of growing incomes and aspirations of around 850 million consumers who inhabit 650,000 villages in the country Slide 2
The per capita GDP has grown at a compound annual growth rate (CAGR) of 6.2 per cent in India's rural regions, since 2000. Rural consumption per person is also increased by 19 per cent yearly in the period 2009-12 Major hub for investment by India Inc. In the period 2009-12, spending in rural India touched US$ 69 billion
Characteristics of India Rural Market
Large and diverse market
Agriculture is the major source of income
Diverse socio economic Background
Change in standard in living
* Large and Diverse Market
The Indian rural market is large and diverse. Therefore, the density of shops to market the products is less when compared to the total population.
* Agriculture is the major source of Income
The main source of income of the rural people is agriculture. If crops fail, then their income gets affected automatically and this reduces their purchasing power.
* Traditional Outlook
People in rural areas are traditional in their thinking; they are superstitious in their beliefs. This trend too is changing because of increasing literacy levels among the rural youth.
* Diverse Socioeconomic Background
Rural consumers are spread across different states in distant parts of India. Thus, their social norms and economic status differs widely from each other.
* Change in Standard of Living
Rural population has in general a low literacy rate, low per capita income and thus low savings. Many of the rural people's standards of living are below the poverty line and they are also socially backward. There is, however, a change for the better on these fronts as a result of reduced tax structures, Government subsidies and favorable regulations on pricing of farmers produce. Thus, their disposable income is increasing slowly.
Why are rural markets important?
Competition in urban market
Changing consumption pattern in rural India
Huge population base
Rapidly growing Market
Competition in Urban Markets - The level of competition in the urban markets has intensified and is increasing tremendously. It is also stated by many experts that the urban markets are almost saturated. Therefore, penetration into rural markets is inevitable for sustained business growth. The rural markets are relatively untapped and this provides better scope for growth.
Changing Consumption Pattern in Rural Areas - The consumption pattern in rural India and the demand for new products have shown an encouraging trend. The purchasing power of rural consumers has increased significantly over the past decade. This, in turn, has transformed the consumption pattern.
Improved Lifestyle - The rural consumer is no longer dependent only on traditional products. For instance, in most villages, shampoos have substantially replaced the traditional product shikakai which the rural people have been using since years. Similarly, the use of gas cylinders has become popular in place of conventional chulas. Today, the consumption basket of rural people is not limited to agricultural and allied products. They are keen on buying modern products that can augment their style of living. Huge Population Base - The huge population base in rural India provides a massive opportunity for the companies to sell their products and services on a sizeable scale. Apart from a large population, the increased presence of media and higher literacy level has created a lot of awareness amongst them.
Rapidly Growing Market - At a conference organized by the Confederation of Indian Industry (CII-Northern Region), Somak Ghosh, President, Corporate Finance and...
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