India still lives in villages. Around 68. 84% of Indian population lives in 6, 40,867 villages (2001 – 6, 38,588 villages – 72.2% population). In 1901, the rural population in India comprised 89.2%, but in 2011 it has gone down to 68.8%. Growth in Rural Population in India is steadily declining since 1991.
According to Census 2011, of the Indian Population (121 crore), rural population comprised 83.3 crore (2001 – 74.3 crore). For the first time since independence, the absolute increase (as well as in terms of percentage Urban areas 9.1% and for rural areas 9%) in population is greater in urban areas than rural areas. In terms of household rural household comprise 166 million (urban – 71 million). Traditional households in rural areas were joint families. But due to rise in population, pressure on land, increasing literacy, and separate sources of income, migration, etc. have given birth to more and more nuclear families.
1. Large and scattered market:
According to 2011 census rural population is 68.4% (2001 – 72%) of total population and it is scattered over a wide range of geographical area. With regard to size, still more than 2/3 of the population lives in rural India and the 170 million household consumers. The sheer size is equal to US, UK, Germany, France, Japan and Italy together. To reach 6.00.000+ villages is really a challenge. A few new rural distribution and procurement models have been innovated by ITC e-chaupal and HUL Project Shakti.
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2. Diverse socio-economic background:
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This is different in different parts of the country and brings diversity in rural markets.
3. Changing demand pattern:
Demand pattern of rural customer is fast changing due to increase in income and credit facilities offered by the banks like ‘kisan credit card’. In terms of India’s GDP, 54%, equal to that of Switzerland, is contributed by rural India. In India’s monthly expenditure, about 55% comes from rural India.
Non-food spending is equal to that of urban India. Consumerism is certainly on a rise and the spending on lifestyle products is emerging. Consumer durables market is growing at 10% per annum in urban areas, but the growth rate in rural India is 25%. Of the 40% of the sale in auto industry comes from rural India.
4. Major income comes from agriculture:
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About 60% of the rural income is from agriculture and hence the demand for consumer goods is high during harvesting season.
5. Saving habits:
Rural consumer is now having saving habits due to the efforts of cooperative and commercial banks. Presently more than 33% of India’s savings comes from rural India.
6. Traditional outlook:
Rural customer values old customs and traditions and are interested in deriving core benefit from the product. They believe in price-performance paradigm. It is because of this reason that ‘Ghari’ detergent has replaced ‘Wheel’ as the no. 1 laundry brand.
7. Low standard of living:
Rural consumer have low standard of living because of low literacy, low per capita income and social backwardness. However, roughly 34% of FMCG manufacturers’ total sales comes from rural areas.
8. Infrastructure facilities:
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Facilities like roads, warehouses, communication system, etc. are inadequate in rural areas. Hence, physical distribution becomes costly affair. Electrification is yet not complete in all the villages. The Literacy rate in rural areas has gone up from 58.7% in 2001 to 68.9% in 2011. During this period the improvement in literacy rate in rural area is twice that of urban areas (rural: 10.2% and urban: 5.1%). Improvement in female literacy is more than males in both rural and urban areas.
The telephone service is not available in all the villages, especially where there is no post office. Radio network has increased considerably. From 6 radio stations at the time of independence, All India Radio covers 98.8% population spread over 90% of the country. Infrastructure or lack of it has not deterred the telecom companies to reach rural areas through their wireless telephony.
The cellphone users’ number is more than 200 million. The number is more than the subscribers in Brazil, Indonesia and Russia. The number of account holders in banks in rural areas is greater than urban India. In case of LIC half the policies are from the rural area.