The decision of liberalization of the Indian Economy in 1991 had far reaching consequences, which is still continued into the new millennium also. From the marketing move, there was arrival of many well-known Multi National Companies especially FMCG product. In the initial phase of liberalization the focus was on the easily accessible well developed urban markets but soon they got saturated because of proliferation of brands and intense competition, resulting in the near saturation of the urban market. This result in shifting of focus of the companies now they eyed for new markets i.e. rural market. The MNCs oozed to the world’s most promising potential markets of around 750 million rural consumers who had yet to taste the fruits of modernity, a promise that seemed ready to be fulfilled because of explosion in buying capacity in rural sector. Rural markets are proving to be vital for growth of the corporate. Priority to develop the rural markets and sincere efforts to overcome the hurdles would open the avenues for these companies, offering tremendous potential for their growth. This paper will highlights such opportunities existing in rural sector for many major retail players and how they can cash the present and future gains out of that.
Key words: rural market; urban market; FMCG products
*Asso Prof & HoD ** Prof & Director
JP School of Business JP School of Business
Mawana Road, Meerut Mawana Road, Meerut
Introduction
Even after independence, the Indian economy is still dominated by agriculture sector and the major reasons behind this are- Firstly because of its contribution in food grain produ...
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...as its target customer. It operates through more than thousand company-owned vans and has over 4,000 distributors to directly providing service to 6, 00,000 retail outlets.
According to the IMD report 1998 of NCAER (National Council of Applied Economic Research), the consuming class households (annual income between Rs.45, 001-2, 15,000) in rural India equal the number in urban India. It is well known that for the same level of income, the purchasing power in rural areas is much higher as the expenditure on basic necessities is relatively much lesser/subsidized or free in comparison to the urban India. Thus rural markets are immensely attractive for most companies. The best example is Hindustan Unilever a largest FMCG company, more than half of its sale of Rs.11, 800 crores comes from rural market. The following figures shows the lucrative picture of rural sector-
The Economy is really bad in parts of India, people are usually not using technology, the way they cook is unsanitary, and houses are not modern. Indian farmers used to use seeds that required only cow poop for fertilizer. The Jai BT seeds that Monsanto created requires two different fertilizers, Jai BT seeds are more expensive than the old seeds, so farmers have to pay extra for the fertilizer and seeds. The Jai BT seeds did not germinate in the soil and rotted, causing the farmer much stress. The farmers pay a high amount of money for the land. If their farm does not grow, the farmer doesn't get any money and will eventuall...
In the Introduction, Patel outlines some of the major issues he addresses in the ten chapters of his book. The most important of them being: the abundance of food in the world vs. the starvation that is evident in countries such as India and Mexico, reduced prices on crops and how farmers compensate by working harder and producing more, and how the number of people involved in the food economy is gargantuan compared to the number of people who actually make decisions and control what happens in our global food system.
has identified two market segments to focus on, Travel and Workhorse. One key ingredient to help drive business is to have a brand champion for these markets. While we currently have at least one at each location, more will be hired and trained to take care of these key markets. Both of the markets identified, want easy to access service location with well-trained employees. If a customer comes in and has a question about the product we will have more than enough staff there ready and able to assist them.
Likewise, in article 2 the author is very specific about the target. He has tried to fill the gap that had been created due to lack of research on the small retail shop which shares a very large portion of Indian market. I assume there are more to research in this area and the article could have conducted some practical test to enhance the report.
Capitalism in the new world developed at a rapid rate. Of course, it did not evolve on its own. Capitalism involved sugar, tobacco, cotton, etc. The Indians, however, could not further improve capitalism. “In addition, the supply of Indians was insufficient” (Capitalism and Slavery, 1944, page 9). There were not enough Indians available. The future of the “new world, sugar and cotton, required strength” (Capitalism and Slavery, 1944, page 9). The Indians were not strong enough either. On the other hand, the negros were capable of handling the relevant tasks. Negros did not tire out easily like the other groups. They were able to work long periods of time without fatigue. Economically, the colonies could also afford them. They were cheaper
[6] Kripalani, Majeet & Egnardio, Pete. The Rise Of India. Business Week Online. December 8, 2003. http://www.businessweek.com/magazine/content/03_49/b3861001_mz001.htm
This in turn results in a large amount of malnourishment among the impoverished people of India. Food insecurity is mainly due to lack of advance in agricultural productivity owing to inadequate means and marketplaces needed to obtain necessary agricultural stability. India has seen impressive economic growth in recent years, but the country still struggles with extensive hunger and poverty. India’s food policy provide farmers with more eminent and more consistent prices for their crops than they would receive in the private market, and to sell food grains to the poor at lower costs than they would pay at the private open marketplaces. In spite of surplus food-grains, and stock, it is also a reality that a huge number of people do not have adequate money to buy food for their family. “Pursuing food security and supporting farmers also comes at significant financial cost. The government keeps prices low for consumers and high for farmers by paying for the difference. Already, India spends more on food subsidies, price support and price stabilization programs than it does on other pressing needs such as health, education and child development.” (Meltzer
Market Size- India’s retail market is expected to nearly double to US$ 1 trillion by 2020 from US$ 600 billion in 2015, driven by income growth, urbanisation and attitudinal shifts. While the overall retail market is expected to grow at 12 per cent per annum, modern trade would expand twice as fast at 20 per cent per annum and traditional trade at 10 per cent.
despite of all the threats some of the multinationals are able to gain success in serving this group of economy which are living their daily lives on a few dollars only. Companies still consider that profits in this market are vague and not consistent. The successful industries in this market include the telecommunications, fast moving consumer goods industry (FMCGs) and medicine industry. These corporations were unable to reduce the costs and prices to serve poor consumers. The research studies have shown that only of the corporations who served poor population were able to establish the business with 100,000 or customers in different regions like Africa and these corporations served 1 million customers in India. For example Procter & Gamble invested the amount of more than $10 million in its pure water brand “PUR” for serving bottom of pyramid market. Eventually the sales were not enough therefore Procter & Gamble has to shift the number of products as charitable items. Sourcing the producers from bottom of pyramid is also not an easy task. Large companies use to integrate small suppliers in their value chains in order to access the bottom of pyramid market (Karamchandani, Kubzansky and Lalwani,
3. Distribution Depth - Rural Penetration: There are 5500 towns and 6.38 Lacs villages with 2.5Mln and 5Mln outlets respectively. Due to saturation and cut throat competition in urban India, many FMCG companies are devising strategies for targeting rural consumers in a big way. Many FMCG companies are focusing on increasing their distribution network to penetrate with a step by step plan. This is the reason that FMCG urban market size has dropped from 50% to 29% in last 5 years. The FMCG market size for semi-urban and rural segment was 19% and 52% respectively for the year 2006-07. As per FICCI, the FMCG market size for urban, semi-urban and rural for year 2007-08 was expected to be 57%, 21% and 22%, which clearly shows that rural market is the growth engine for FMCG growth. Though the urban markets are growing too, the incremental addition in consumer’s households is much more in rural space as compared to urban markets. The planned development of roads, ports, railways and airports, will increase FMCG penetration in the long term.
As a massive provider of consumer goods in India, Hindustan Lever Limited (HLL), is attempting to penetrate the rural markets where there is a massive opportunity for growth. HLL’s current operating sectors are becoming increasingly competitive and crowded. Their best opportunities now lie in developing new markets and rising to the top of that market. They are attempting to do this with a program for developing entrepreneurs, named Shaktis. Met with initial success the program now needs to grow without increasing costs.
Vasco da Gama landed at Calicut, sailing via the Cape of Good Hope in 1498. This marked the beginning of
As agriculture has become more intensive, farmers have become capable of producing higher yields using less labour and less land. Growth of the agriculture has not, however, been an unmixed blessing. It, like every other thing, has its pros and cons. Topsoil depletion, groundwater contamination, the decline of family farms, continued neglect of the living and working conditions for farm labourers, increasing costs of production, and the disintegration of economic and social conditions in rural communities. These are the cons of the new improved agriculture.
There are two kinds of factors why rural people seek for urban life. The first one is urban pull factor. They dream for higher wages, better housing and utilities, better school and hospital, more jobs opportunity, and more experience that they can get it all from a living in big cities as they think. The second one is urban push factor. We know that most of rural areas people are farmers. There’,s not much else to do anymore in the village but wait for harvest time and without higher level of education, availability of media, or facilities that they need, they might be stimulated to move to urban areas.
1. Market survey to identify the existing products and processing companies in India to understand the market