India's rural market holds high potential for increased consumer buying, as per the reports prepared by the National Council for Applied Economic Research (NCAER). This paper explains the potential of the rural market and the issues of concern with regard to rural marketing, with supportive data. A research framework is presented, followed by the cases of Hindustan Lever Ltd. (HLL) and Coca-Cola. The cases cover the strategies employed by these companies for the rural market. An analysis of the research framework and the data presented in the cases has been carried out.

The Fast Moving Consumer Goods (FMCG) sector in India was estimated at Rs. 48,000 cr. in 2005, and according to an analysis conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), the rural and semi-urban areas are expected to grow by more than 50% by 2010 AD. Thus, at a compounded annual growth rate of 10%, the size of the sector is estimated to be worth Rs. 100,000 cr. in 2010 (www.thehindubusinessline.com, 2005).

According to an NCAER report, rural India accounts for about 128 million households and a population of about 742 million. As per this report, the rural markets are growing at twice the rate of the urban markets, and constitute around 58% of the disposable income. The NCAER projections suggest that the number of middle and high income households in rural India is expected to grow from 80 million to 111 million by 2007 (Kannan Shanti, 2001). It also points out that though about half of the households that earned between Rs. 90,000 and Rs. 200,000, per annum, lived in the rural areas in 2001-02—by 2010, this figure is expected to rise by more than 60% (Jain Sunil, 2005). Also, the demand for washing soaps and detergents from rural areas accounted for about 50-70%, whereas demand for durables like scooters, motorcycles and televisions was around 40-50%.Many companies (both Indian and multinational) have been attracted by the potential that the rural market holds, and the strategies adopted by them are worth studying and analyzing to unearth learning issue.

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