Recent research by market research firm TechSci Research has indicated that India’s rural markets will be the next “frontier” for consumer goods companies. While some, including Godrej and Unilever, have already implemented rural marketing strategies, increasing rural consumption and purchasing power parity means that companies will likely have to shift or expand their focus on rural Indian customers and establish rural distribution channels. According to TechSci Research, rural markets will emerge as the next battle ground for consumer goods companies in India. The traditional focus on urban markets will now be replaced by unexplored rural territory, with regional consumer base aligned marketing and product offering strategies. These companies have now realised the importance of more than 600 Million consumer base, in order to maintain their growth momentum and to overcome their concerns in an already crowded urban market.
In the opinion of Neeraj Chawla, Sr. Retail Consultant at TechSci Research, the market dynamics of rural India has drifted towards reach or supply chain issues, rather than the initial concern of product pricing. Today, the rural consumer has the requisite purchasing power to consume and is more aware of product availability in the market through increasing penetration of electronic and print media in his surrounding environment. The main concern for the consumer goods company is how to tackle the logistic and supply chain issues in order to offer their product lines at the doorstep of the consumer.
Most of the companies have already designed and implemented their rural market-specific strategies in order to gain first-mover advantage. Companies like Hindustan Unilever and Godrej Consumer Products Ltd (GCPL) have initiated projects like Shakti (2005) and Dharti (2009) respectively in order to penetrate the rural market. These projects have been implemented successfully and have contributed towards the company top line, as well as, bottom line growth.
As per TechSci Research, the rural market in India will witness the fastest growth trajectory as compared to urban markets in the coming years. The rural consumer is expected to account for a major chunk of multiple product lines driven by improving economic condition and an increasing focus of companies in strengthening their rural distribution networks. Consumer goods companies need to spend more on educating the rural consumer and inducting them as their partners rather than restricting them to an end point of consumption.
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