How Big is India’s Rural Market?

Dinesh Kumar was a former Associate Professor (Marketing), Birla Institute of Management Technology (BIMTECH), Greater Noida. After finishing his MBA from Panjab University, he gained a wide experience in sales, marketing and rural distribution for over 15 years. He switched to teaching in 1995 on receiving a teaching fellowship from Norway. SAGE is the proud publisher of his book “Rural Marketing”, co-authored with Punam Gupta. SAGE has a fast-growing list of high-quality textbooks in Marketing.

There are a number of myths about Rural Marketing. One of the myths relates to the size of India’s rural markets. Since two-thirds of India’s population of 1.3 billion people live in rural areas, it is said to constitute a huge market. Many people write that India’s rural markets represent huge marketing opportunities in the face of saturated urban markets.

Many writers and consultancies suggest that rural marketing an easy task since it represents a large proportion of under-served markets. McKinsey’s report Bird of Gold, for instance, expects incomes to triple by 2025, and while “the new wealth and consumption will be created in urban areas, rural households will benefit too.”

While researching for our book, Rural Marketing (Sage, 2017), we found this to be a rather simplistic understanding of the subject. Many companies have discovered that marketing in rural areas is not as simple as tapping into a virgin market. Our analysis shows that the rural market is not very easy to exploit. If we look closely, we find that rural marketing cannot be thought of as simply marketing in rural areas. Since even large companies struggle to get their rural marketing approach right, there is a need for a proper understanding of the subject and to redefine strategy based on market realities.

Economic projections apart, poverty, indebtedness, and isolation persist in rural markets. The fact is that much of India’s rural population is poor and lacks purchasing power. There is great inequality of income and certain segments lack access to resources. Thus, while a rural inhabitant of the USA can afford a comfortable lifestyle, many people barely subsist in rural India. Those living below the poverty line and marginally above it, also lack resources for market participation. If we exclude the poor and those barely above the poverty line in rural areas, the size of the rural market is considerably reduced and is not as large as it looks in census figures.

Poverty, broken roads, lack of jobs, inaccessibility – these problems reduce the number of people who can actually buy the wonderful products that modern marketing offers.

In fact, a big challenge in rural marketing is how to reach markets and to supply to retailers who are usually poor and lack resources to buy stocks of goods. If companies realize this, it will prevent them from making the mistakes that many companies have made in rural India.

Read the SAGE textbook Rural Marketing by Dinesh Kumar and Punam Gupta closely analyses two crucial components of the rural market—marketing to rural areas and empowering the ‘bottom-of-pyramid’ (BoP) markets to create successful business ventures.

You can check out the book here!

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