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FMCGs now eye countryside for sales

FMCGs now eye countryside for sales

Author | Source: The Economic Times | Thursday, Oct 20,2005 8:22 AM

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FMCGs  now eye countryside for sales

It's there all right. But consumer goods makers who have hit the dustroads out of the cities are finding rural buyers a bundle of contradictions and paradoxes.

Some beginnings have been made, but experts say they are too skewed and superficial to be consistent. At the moment. there's only ITC and HLL's e-choupal and Project Shakti, respectively, and there seems to be some enthusiasm about them at the moment.

But the problems are larger that stem from the under-developed markets. The awareness of rural consumers about products is obviously lesser than the urban markets and therefore, more purchasing power is not enough. Also, urban and semi-urban-based salesmen are not able to tap the full potential in the villages.

“We have strongly suggested that marketers select and employ educated unemployed from villages and venture into wider areas” said Piruz Kambhatta, CMD of Rasna.

Along with soaps, detergents and toothpaste, ITC's e-choupal sagar sells almost everything - TVs, DVD players, pressure cookers, room heaters, watches, sewing machines and grinders.

And, of course, cigarettes. Farmers can also buy motorbikes, or even tractors. ITC has launched its own rural range of clothing and shoes too - trousers at Rs 166 a pair tailored for the village folk. ITC officials claim that the mall is doing brisk business.

There's also a question of population shifts and tough competition from local brands in the rural market, which baffles the urban-based marketing people. Rural consumers are far less homogeneous than their urban counterparts and differ from region to region. The Indian rural market of India consists of about 80% of the population of the country.

Apparently in terms of the number of people, the Indian rural market is almost twice as large as the entire US market or Russia. This market is large, but scattered and diverse. It exhibits linguistic, regional and cultural diversities and economic disparities, and hence, it can easily be considered as being more complex than the market of a continent as a whole.

The prices of rural marketing pose many problems due to the vastness of the country and a high potential for providing an effective marketing system. Another myth is that purchasing power is low. He said that at 15.6m 'middle class' households, the rural areas compared well with 16.4m urban households.

For the same income level, disposable surplus in villages is much higher than in urban India, he said. Companies have begun offering urban-like shopping experience at venues where rural business transactions are undertaken.

But rural consumers are more value-conscious than the urban consumer and market watchers are wondering whether marketers can retain the interest once the novelty runs out. As a long-term measure, these initiatives will bear fruit, but experts say there's no concerted effort by other companies to make inroads.

Rural at the moment is still the semi-urban markets. Auto makers indicate that bikes and cars are not impulse products but 'considered' products. Besides most manufacturers, over the last few years have penetrated into most of the rural markets.

Says RL Ravichandran, CEO of Eicher, “Malls like e-choupal will increase awareness, but not lead to actual sales. Manufacturers are trying to rope in finance companies into malls as more than 70% of the goods bought in the rural markets are financed.”

Companies need to step up investments in wider distribution systems. “We have been in the smaller markets for several years now and have found they have more money.

The question is what attempts are being made to localise your marketing strategies and offer products fine-tuned to meet their tastes. The rural markets will be more complicated than the urban markets” said Ramesh Iyer, MD of Mahindra & Mahindra Financial Services. But the number of people who will go to the malls to buy big-ticket items, where deliberation is usually done will be fewer in volume terms.

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