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The Great Rural Bazaar

Shantanu Guha Ray in New Delhi

The only thing you can say with certainty about the Indian rural market right now is that it is the best trading ground for both Indian and multinational corporations. A burgeoning, untapped market estimated at nearly 150 million stretching across the length and breadth of the Indian subcontinent.

The vision has long fascinated Indian organisations as well as MNCs. And now, the dream is blazing brighter than ever as the Indian rural bazaar is displaying a market trend towards consumerism, outpacing the urban market in its ever-increasing demand for durable products like wrist-watches, fans, televisions, video cassette recorders as also non-durables like nailpolish, lipstick, ice-cream, shampoo and mosquito repellants.

"It's astounding... the rural market is now speaking the voice of the city. Our sales have recorded a near hundred per cent jump in the countryside during the last year," remarked Maruti Udyog Limited's marketing director Jagdish Khattar.

Rural sales constituted more than 40 per cent of the combined sales for the financial year ending 1996-97. At the annual dealer conference in Hyderabad, MUL's management was pleased to hear success stories from hitherto unknown centres like Thiruvananthapuram, Rajkot, Patiala and Kota as compared to bigger cities like Bombay, Bangalore and Delhi.

"Our sales have recorded a 200 per cent increase over the last financial year," said an MUL dealer from Kota, Ram Bhatia, adding "and most of those who have purchased Maruti cars from us are from the countryside. The purchasing power in the Indian villages and smaller towns can only be understood once you are here," said a MUL dealer from Patiala.

Agrees Vazir Sultan Tobacco managing director Malcolm Fry. VST's lowly-priced Charminar cigarettes continue to notch up impressive sales in the countryside. "The most encouraging sign about the Indian rural market is that it has buyers who have tremendous purchasing power. And that they remain largely untapped," said Fry. His company -- thanks to the semi-urban market sales -- managed a near 13.3 per cent market share by producing 1.36 billion cigarette sticks compared to market leader ITC's 6.89 billion sticks that guaranteed the Calcutta-based giant a whopping 67.4 per cent market share -- more than 20 per cent of which is from the rural markets.

VST marketing director Arun Chogle added: "Though we are currently focussing on the premium brands with the launch of Blue Kings, the rural market remains an important segment which demands all attention. And we are not neglecting it at any cost."

Why only cars and cigarettes? Estimates are that the rural market is growing twice as fast as the urban market, witnessing a rise in sales of hitherto typical urban kitchen gadgets like refrigerators, mixer-grinders and pressure cookers. Not just this, the Indian rural tastes too are changing fast. Thereby reflecting a marked improvement in the purchasing power of village households.

At a recent seminar on rural marketing, organised in New Delhi, by the International Development Enterprise, speaker after speaker waxed eloquent over the stupendous growth of the market that many felt was largely the domain of the unorganised sector and a handful of consumer goods giants like Hindustan Lever Limited and Procter and Gamble.

"We are already experiencing a second revolution with the customers and these are customers from the countryside who have developed tastes matching that of the city," said Ashwin Dani, vice-chairman and single-largest shareholder of the Rs 8.33 billion Asian Paints, also South Asia's largest with more than 55 per cent market share.

Dani, whose company's image has been bolstered for more than two decades across the subcontinent by the lovable character of Gattu, the image of a young boy with a brush, drawn by celebrated cartoonist R K Laxman, said a large segment of buyers for the company's 1,150 shades were from villages and the countryside. "And the numbers are growing rapidly, thanks to our dealer network that also keeps increasing."

According to papers presented at the seminar, as opposed to urban markets, which are increasingly getting competitive and, in the process, saturated and thereby resulting in low-growth rates, the rural bazaar is booming beyond everyone's expectation.

Why? This has been primarily attributed to a spurt in the purchasing capacity of farmers now enjoying an increasing marketable surplus of farm produce. In addition, an estimated induction of Rs 140 billion in the rural sector through the government's rural development schemes in the Seventh Plan and about Rs 300 billion in the Eighth Plan is also believed to have significantly contributed to the rapid growth in demand.

Statistics presented at the meet assessed the market size for nailpolish at around Rs 270 million in rural areas as against only Rs 81 million in the cities. Similarly, the market for lipsticks is worth around Rs 250 million in rural areas, compared to only Rs 131 million in the urban segment. Face cream demand in villages estimated at about 1,099 tonnes far outstrips that in the cities at about 426 tonnes, shampoo too has more potential in rural bazaar (about 2,257 tonnes) than urban markets (about 718 tonnes). The rural market for mosquito repellents is reckoned at around Rs 173 million against a mere Rs 79 million in urban centres.

"Our way in understanding the rural market is most unique. We have exclusive data that suggests more than 30 per cent of our customers are from the villages. And, over the years, they have developed a certain taste and style. As a result, they are being taken seriously by one and all," said Koshika Telecom's vice-president, marketing, Navaid Khan. Koshika plans to focus cellular services primarily on the country's rural belt.

Among the items whose marketshare is on the rise in rural regions are colour and B&W television sets, cassette recorders, VCRs and VCPs, pressure cookers, mixer-grinders, refrigerators, ceiling and table fans and sewing machines. Geysers, which had almost no takers in the countryside till the middle of 1980s, have made an inroad into this market with an estimated share of little less than 1 per cent.

And not just cosmetics and consumer goods items, even bigger players like Reliance have also got into the fray to attract the rural customer. RueRel, its latest product, is primarily intended to increase the penetration level of polyrich suiting segment. "It was decided to create a fighting brand based on the assumption that RueRel will partake some of the Reliance polyrich suitings market but the combined sale of the two brands would be greater than the sale of polyrich as it existed before the introduction of RueRel," said a company spokesman in Bombay.

Marketers say the idea of the brand germinated from the survey reports which suggested a tremendous opportunity in the form of niche for a low-priced polyrich fabric particularly in the towns and smaller cities. Thus was born Rue-Rel. The suitings have been priced most competitively and with an aim to cater to the mass market.

Company officials are ecstatic. Over 900 designs which keep getting updated and added to can satisfy just about any taste and pocket. RueRel is strictly sold on cash-and-carry terms. The benefits of the reduced working capital helped in the competitive prices of RueRel. On the first day of the launch more than 150 new distributors were appointed which is a record of sorts.

"In my opinion, the basic surge in the purchases of consumer products is not confined to the people with high levels of income in India. Even those who appear to be poor, and have amongst the lowest levels of income, buy and use such products," remarked S L Rao, former director general of the National Council for Advanced Economic Research.

"The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product," remarked Coca-Cola India's marketing director Sanjeev Gupta, while answering queries on the multinational's attempts to paint the holy city of Haridwar red.

The mood in the holy city and the neighbouring town -- where rival Pepsi had a complete sway -- underlined the fact that the cola giants would do almost anything and everything to grab both consumer attention and a slice of the market that is estimated at a whopping 206 million cases and growing at an encouraging pace of 16 per cent per annum.

Coca-Cola India currently leads the table with a 54.7 per cent market share followed by Pepsi's 40.4 per cent.

"The Indian market is constantly changing and is now fiercely competitive today. And in the process of understanding the market, we have segmented the rural Indians a key factor. Primarily because that market is growing in a much larger proportion as compared to the urban scenario," said) PepsiCo India's vice-president (corporate communications Deepak Jolly.

Not just this, aware of the power-starved Indian summer, Coca-Cola has found a unique tool for the Indian market. Metal boxes containing a base of ice, thereby eliminating the need for electricity. And the price Rs 5 for a 200 ml cup. As many as 3,000 of such 15 kg carts rolled out in the dusty, pot-holded streets of the price-conscious rural markets of Bihar, Uttar Pradesh, Gujarat and West Bengal this summer.

"Events like the Kumbh Mela where more than 10 million visit are once in a lifetime marketing opportunities that enables a company -- either Indian or multinational -- to understand the importance of the rural market. And companies are getting extremely excited about the huge numbers that rural India presents," remarked Delhi-based rural marketing firm, RC&M's Rajesh Monga.

Significantly, most of the purchases are made from the household's own income. Hire-purchase schemes and loans account for only around ten per cent of rural buying. As a result, an increasing number of companies are making a beeline for the villages and smaller towns. According to data presented at the seminar, watches continued to be the most preferred gift items in the countryside. Another emerging trend was the rural buyers' disenchantment for second-hand items, unless it was something like a radio, cassette recorder or a table fan.

Kind courtesy: Sunday