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Decoding Rural Markets: Day One sees ways to bridge the rural and urban divide

Decoding Rural Markets: Day One sees ways to bridge the rural and urban divide

Author | Pritie S Jadhav | Wednesday, Sep 28,2005 8:19 AM

Decoding Rural Markets: Day One sees ways to bridge the rural and urban divide

The two-day national conference on rural markets organised by CII kicked off in Mumbai on September 27. Eminent personalities from the corporate world made their presence felt at this seminar and discussed the plausible and myriad opportunities the rural market had to offer. The theme for the conference was ‘Decoding Rural Markets’.

Anand Mahindra, past President of CII and Vice-Chairman and Managing Director, Mahindra & Mahindra Ltd, inaugurated the conference by saying that though many people said that nothing had changed in rural India, the fact was that much had indeed changed.

“Rural India is the enigma code, which we as marketers have to crack, and thus we have to look through the seven veils. Which comprises – the terms of trade between the rural and urban Indians are 20 per cent in favour of the former. This 20 per cent acceleration explains the increasing share of rural markets in the total consumption,” he said.

“Indian agricultural productivity is higher than we think. In fact, we produce 10-15 per cent of world’s food production and also though we have only 2 per cent of the land mass, we have created 10 per cent of agricultural land. The Indian economy is becoming more monsoon proof and Indian farmers are learning to cope with vagaries of monsoon,” Mahindra pointed out.

“Companies can thrive entirely on rural markets. It is a difficult market for those who see rural India through the prism of the urban market. Rural India isn’t only about agriculture and the opportunities lie beyond the traditional agricultural sector. There are now new areas of economic endeavour and the non-traditional village industries are the sources of non-agricultural income. Over here sectors like transportation, hotels and trade is growing. The rural-urban divide is slowly but inexorably vanishing. Rural markets have more buying capacity then ever before,” he insisted.

The colloquium for the day began with Govindraj Ethiraj as the moderator and Ashok Sinha, Chairman & Managing Director, Bharat Petroleum Corporation Ltd; Uday Kotak, Executive Vice-Chairman & Managing Director, Kotak Mahindra Bank; Adi B Godrej, Chairman, the Godrej Group; Nachiket Mor, Executive Director, ICICI Bank; and Ranjivit Singh, Group Director, Consumer Business, Microsoft India as speakers.

The discussion revolved mainly around five points – Is rural urban divide black/white or grey; Do we think rural and emote rural; Discovering opportunities in rural markets to tap and unlock them; Challenges of scaling up; and partnerships as the way ahead.

Microsoft’s Singh said, “Realising the potential within rural India is the reason for bridging the divide and is the key for GDP growth. There is absolutely no shortage of talent in India. Also, there is no shortage to create an intellectual property, but the challenge is to maintain it. Our vision till 2010 is to provide access to both television and radio. Our project – Shiksha – is doing a lot of work in the rural markets and Microsoft India continuously keeps doing research. We are hence, localising in India and low cost is the key for us.”

BPCL’s Sinha exemplified by saying that the need and aspirations of rural and urban India were not the same and the difference would be in packaging and presentations. “Because of the fragmentation, none of urban India’s distribution is going to work to reach the last mile. So, the fun is to work on the pricing points as at the end of the day rural markets are looking for differentiated value and pricing is just one part of it. We are striving to crack the rural code and there is a lot more,” he added.

Giving a financial perspective to the colloquium Uday Kotak said, “The rural areas and semi urban branches are moving faster towards break even and rural India, in particular, getting transformed from being the nation of savers to the nation of investors.”

Speaking on the opportunities Kotak said, “It is important to know our vision as to how we want to see rural India, whether as totally urbanised or part of it to still have the local favour. Most of urban India is cluttered so the thing with rural markets is that there is advantage of building small cities in parts of the country without the baggage of urban problems.”

Adi Godrej spoke on the less dependability on monsoons and its good effects. “Rural economy in the western half is much more affluent than the eastern half of India. Thus, for India to become a developed country in three decades – employment in agriculture must fall.”

“Having said that, one can’t sacrifice quality for rural markets, but can sacrifice frills. One must understand the peculiarity of rural India,” he stressed.

Echoing the views of the earlier speakers, ICICI Banks’ Mor said, “Rural opportunity is large, especially in banking as about 500 million to 600 million people do not have access to financial facility. We are in a highly regulated sector where the rural business is worth Rs 650 crore and the Y-o-Y growth is 70-80 per cent. The challenge thus has just begun. There are several missing markets and we have to collaborate to get these right.”

As a collective thought, the way forward for building a strong rural India for marketers clearly lie in partnerships and thus, avail the benefits of scale. Along with this the marketers will need to innovate and customise for the rural markets.

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