As per the 2001 census, 72.22% of people live in more than 5,50,000 villages in India. The Indian rural population has an estimated number of 115 million households which is more than 68.01% of the total households of the country (Wikipedia, 2007). In such a scenario, even a fraction of the rural consumers is a big market to generate revenues and profits. It is now an established fact that rural markets are growing in India. As has been shown by Parameswaran (2008), while in 1998-99 over 83% of rural households fell in the lower and lower middle classes, the number has fallen to 70% in 2006-07; the comparative fall for urban India is from 53% to 27%. And if experts are to be believed, the number is set to fall at a rapid rate over the next 20 years.
As quoted by Pitman (2007) in her article "Research Indicates Growth Potential in Rural India", the total market share of Fast Moving Consumer Goods (FMCG) in India within rural populations in 2007 is estimated at 52%, a figure that is estimated to reach 57% by 2010. Likewise, the market share for the semi-urban population is expected to increase from 19% (2007) to 21% (2010) in the time-frame. The growth in market share in these areas is expected to impact the urban Indian market, where the size is expected to fall from 29% (2007) to 22% (2010). Hence, the upward economic mobility of the huge village population is an opportunity no business can afford to miss. Coupled with that, stagnation of sales in the urban market and cut-throat competition are forcing marketers to shift their focus towards rural markets. |