As urban demand for consumer products is low worldwide, rural markets are growing at a rapid pace than ever in India. Showcasing a growth rate of 25% more than their urban counterparts. According to recent Nielsen estimates, consumption in rural areas is growing at 1.5 times the rate in urban areas, and the consumer goods market in rural India is expected to reach around $100 billion by 2025.
Recognizing this enormous opportunity several corporates are upscaling their efforts to achieve a strong foothold in India’s rural markets. While there are infinite opportunities of business growth, there are some glaring challenges as well-an underdeveloped transportation infrastructure, unreliable telecommunications and electricity services, inadequate distribution networks, and widely dispersed consumers make it costly to establish a profitable setup.
Businesses that are taking innovative steps to gain profitable rural market share are reporting higher revenue growth in rural markets than the urban ones. Their success can be attributed to their better understanding of how to craft viable distribution paths into rural India, identify profitable new customer segments, earn the loyalty of channel partners, and create durable ties with customers to build a strong first-in advantage.
1. Unique Distribution Strategy
Establishing cost-effective ways to deliver goods to rural dwellers is the vital measure to succeed in these markets. Distribution occupies the key focus area for smart companies even before identifying and approaching target customers. They are using various strategies to extend their distribution networks into the countryside.
2. Effective Rural Distribution & Sales
Scarcely populated areas (5,000 to 10,000 people) with good roads are served by vans that bypass distributors and supply products to retailers directly. The retailers use mobile technology to order appropriate stock for their local customers, and the vans make regular visits up to three times a week. Still smaller and less accessible micro markets (with populations below 5,000 and no paved roads) are served by two- or three-wheelers. The drivers deliver one, two, or three times weekly to retail kiosks that generally carry goods in small sizes for lower prices. In this way a major corporate increases exposure for its products in highly remote areas and creates demand. Some companies have adopted the village entrepreneur model, partnering with (and sometimes helping establish) independent businesses.
Once a distribution path is defined for a region, firms focus on expansion by targeting clusters of villages within the region. Companies are investing considerable resources in detailed market surveys to identify promising clusters with sufficient demand to bolster profits quickly. A few large clusters in four or five big states could have the same market potential as a large number of villages scattered across the country which can be served with minimal cost of delivery. As a result, they are discovering novel customer segments.
3. GIS mapping: A tool to tap rural markets
Companies use sophisticated technologies to build a comprehensive and multidimensional picture of prospect markets. GIS mapping makes it possible to combine and analyze a wealth of information: demographic data from government sources and private vendors; physical indicators of community wealth, such as post offices, bank branches, schools, and hospitals; and data on different groups’ values, attitudes, and behaviour.
4.Strong relationships with Rural Channel Partners
Building strong relationships with capable channel partners becomes extremely important. Positive engagement helps successful companies develop valuable partners, retain them, and keep them motivated. Since to a larger extent, rural residents base their purchase decisions on mutual trust.
5. Understanding the rural social fabric
Trust-building through rural stakeholders. The most successful firms have engaged with a wide set of community members to build a reputation for caring about consumers’ needs, rather than just corporate profits. Leading companies determine which stakeholders are likely to be the most influential in the rural markets and then find methods to earn their loyalty.
6. Word of Mouth: Teaming up with influencers
Gaining the trust of respected teachers, health care professionals, and others with high standing in the community can reinforce marketing messages. In rural India, word of mouth plays a strong role in building brands, far more so than in urban markets.
7. Well structured organizations to serve rural markets
An organizational structure with either a central unit or regional units dedicated to rural sales mechanisms to develop employee support is essential. Companies successful in reaching, acquiring, and retaining rural customers tend to have certain organizational and management practices in common. Highlighting rural initiatives in internal newsletters, at conferences, and in the broader media communicates the value of rural markets to the company. The development of local talent is something of immense value and all leading companies never fail to encourage their frontline employees by inviting them to their headquarters and rewarding them for their endeavours in rural markets.
These are some of the proven ways aspiring brands can adopt to penetrate the rural markets in India. The opportunities are unlimited though the competition is tough, the brand that succeeds in portraying itself as a genuine product or service provider will gain its share across rural markets in India.