Challenges and 

opportunities of FMCD in rural marketing

Our country is endowed with a good degree of ethnic and regional diversity. About three-fourth
of the total population resides in the rural areas and majority of them are dependent upon
agriculture for their subsistence. Agriculture contributes about 24.7% to the Gross Domestic
Product (GDP) of the country. It also contributes about 13.1% to the total Indian exports. This
sector provides employment to 58.4% of the country's workforce and livelihood to more than
650 million people. Despite this fact, the condition of these people has not shown any significant
improvement.

The development of the nation largely depends upon the development of the rural population.
Mahatma Gandhi had once said: "India's way is not Europe's. India is not Calcutta and Bombay.
India lives in her several hundreds of villages".

Rural Market Potential

India is an agro-based economy and the growth of most of the other sectors of economy is driven
by rural demand. Urban market is reaching towards the saturation point, thus bringing in and
urgent need to focus on rural development. Moreover, more than 70% of India's population lives
in villages and constitutions a big market for industry because of increasing disposal incomes
and awareness level.

In comparison to just 5,161 towns in India there are 6,38,365 villages in India. This in itself is an
indicator where the real India resides. Companies are realizing slowly but surely that the key to
gain true market leadership lies in tapping the rural potential. However, the rural sector in India
suffers from different kinds of problems. Some areas are having enough money but their level of
awareness and hence consumerism is very low. But there are many areas where economic
empowerment, education, health etc., are major problems.

Challenges in Rural Marketing

Though rural markets are a huge attraction to marketers, it is not easy to enter the market and
take a sizeable share of the market, in the short time due to the following reasons.

Low Literacy

There are not enough opportunities for education in rural areas. The literacy level is as low
(36%) when compared to all- India average of 52%.

Seasonal Demand

Demand for goods in rural markets depends upon agricultural situation, as agriculture is the main
source of income. Agriculture to a large extent depends upon monsoon and, therefore, the
demand or buying capacity is not stable or regular.
Transportation

Many rural areas are not connected by rail transport. Kacha roads become unserviceable during
the monsoon and interior villages get isolated.

Distribution

An effective distribution system requires village-level shopkeeper, Mandal/ Taluka- level

wholesaler or preferred dealer, distributor or stockiest at district level and company-owned depot
or consignment distribution at state level. The presence of too many tiers in the distribution
system increases the cost of distribution.

Communication Problems

Facilities such as telephone, fax and telegram are rather poor in rural areas.

Traditional Life

Life in rural areas is still governed by customs and traditions and people do not easily adapt new
practices. For example, even rich and educated class of farmers does not wear jeans or branded
shoes.

Buying Decisions

Rural consumers are cautious in buying and decisions are slow and delayed. They like to give a trial and
only after being personally satisfied, do they buy the product.

Media for Promotions

Television has made a great impact and large audience has been exposed to this medium. Radio reaches
large population in rural areas at a relatively low cost. However, reach of formal media is low in rural
households; therefore, the market has to undertake specific sales promotion activities in rural areas like
participating in melas or fairs.

New tend of rural market

Markets which are not able to face the stiff competition posed by MNCs, can restore their profits
in the rural sector. The market share of urban market when compared to the rural market is low,
hence if Indian industries concentrate on rural markets their sales will increase. If rural markets
are brought into the limelight of development, they gave way to prosperity. Prosperity of India
lies in the prosperity of every Indian, hence no rural segment should be left untapped..

Reasons for improvement of business in rural area

• Socio-economic changes (lifestyle, habits and tastes, economic status)

• Literacy level (25% before independence – more than 65% in 2001)

• Infrastructure facilities (roads, electricity, media)

• Increase in income

• Increase in expectations

MART, the specialist rural marketing and rural development consultancy has found that 53 per
cent of FMCG sales lie in the rural areas, as do 59 per cent of consumer durable sales, said its
head Pradeep Kashyap at the seminar.

Current scenario of rural market

LIC sold 55% of its policies in rural India. Of two million BSNL mobile connections, 50% are in
small towns / villages. Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone
(VPT).41 million Kisan Credit Cards have been issued (against 22 million credit-plus-debit cards
in urban), with cumulative credit of Rs. 977 billion resulting in tremendous liquidity. Of the 20
million Rediffmail sign-ups, 60% are from small towns. 50% of transactions from these towns
are on Rediff online shopping site.42 million rural households (HHs) are availing banking
services in comparison to 27 million urban HHs. Investment in formal savings instruments is 6.6
million HHs in rural and 6.7 million HHs in urban.

Opportunities

Infrastructure is improving rapidly -In 50 years only, 40% villages have been connected by road,
in next 10 years another 30% would be connected. More than 90% villages are electrified,
though only 44% rural homes have electric connections. Rural telephone density has gone up by
300% in the last 10 years; every 1000+ pop is connected by STD. Social indicators have
improved a lot between 1981 and 2001 -Number of "pucca" houses doubled from 22% to 41%
and "kuccha" houses halved (41% to 23%).Percentage of BPL families declined from 46% to
27%.Rural literacy level improved from 36% to 59%.

Low penetration rates in rural areas, so there are many marketing opportunities –

Durables Urban Rural Total (% of Rural HH)

  CTV 30.4   4.8   12.1  
  Refrigerator 33.5   3.5   12.0  

FMCGs Urban Rural Total (% of Rural HH)

  Shampoo 66.3   35.2                  44.2  
  Toothpaste 82.2   44.9                 55.6  

Rural infrastructure
     Post Offices 1,38,000    
    Haats (periodic markets) 42,000    
    Melas (exhibitions) 25,000    
    Mandis (agri markets) 7,000    
    Public Distribution Shops 3,80,000    
    Bank Branches 32,000    

Proliferation of large format Rural Retail Stores, which have been successful also -

• DSCL Haryali Stores

• M & M Shubh Labh Stores

• TATA / Rallis Kisan Kendras

• Escorts Rural Stores

• Warnabazaar, Maharashtra (Annual Sale Rs. 40 crore

FMCD S OPPERTUNITY

Above the current data we can understand that the rural market is growing market. Now people are
being educated, they keep information about the national and international market. Being educated
also growing their interest to learn more. Lead the life with urban people’s life style. They are using now
internet, watching t.v program, using mobile to contact with cities. So their develop need and wants also
increased more expectation .they want to use all technical facilities and technical improvement means
opening FMCD market and availability of products.

Now central govt taken new new project to developed rural areas and investing more money to
developed rural infrastructure, increasing school, colleges, road, hospital etc and opening new branch of
every department. Jobs will be more in rural areas; with all facilities people life style will be change more
an more. Changing life style give a hungrily of modern technology, which will bring demand of fmcd
products.

Subsidiaries of government to developed the rural business have given more scope to expend the
business ,and for it need developed communication ,by the telecom services network is working so
increasing the demand for mobile phone ,internet, computers .

RURAL areas people are more depended on agriculture but now they are getting another income
sources so developing their economic condition its result can effort to bring modern technology to
their home. Lastly we can say now fmcd have a growing market in rural areas with fmcg, may have few
challenges to promote or extend the business for traditional factors but most of then we can ignore
.because life have been changed of rural people.