Role and effectiveness of branding in rural markets

Abstract

From a scenario of low agro production, poor purchasing capacity, lack of basic infrastructure, poor communication and transport links, the rural market has seen a marked transformation over the past four decades.

Various factors like adoption of new agronomic practices, selective mechanisation, multiple cropping to include non-food crops and development of commercial activities like dairying, which have resulted in substantial increases in the disposable incomes of rural consumers, are responsible for this. Development of infrastructure and communication links, coupled with seasonal migration to urban settlements have resulted in rural buyers having enhanced access to product offerings in the market place.

In this backdrop, with the new wave of liberalisation in the early eighties, the Indian economy and the Indian consumer came face to face with the goodies basket the world had to offer. The companies started feeling the heat of competition with new peaks of marketing warfare in urban markets. The rural market presented an exciting opportunity to develop brands in to generic product association.

Unchanged for centuries, villages have caught the attention of the commercial and non-commercial organisations. The end result of these changes is being felt in terms of growing consumerism, an increase in demand for goods that have upto now been out of reach, both in financial and geographic terms. The rural market for packaged consumer goods has grown from around Rs 700 crore in 1984 to over Rs 20,000 crore in 1989. In 1984 rural areas had contributed 28% to the all India market for packaged consumer products. In five years this share has climbed to 37% which is amazingly rapid growth rate.

Household products like toilet soaps, dental hygiene products, washing products and tea have penetrated fairly deep into rural households, particularly in to the upper and middle income lifestyle households. Some other premium products such as milk food drinks (which cannot be classified as necessities) have also penetrated into a large proportion of affluent households. Quasi-medical products like rubs and balms and medical products like OTC drugs are being used in as many as 15 crore to 4 crore rural households. This user base is comparable to, if not more than urban households.

Though the potential offered by the rural market is great but there are variety of problems in the rural markets for which the firms have to develop the ingenious solutions to he successful in tapping the rural markets_ In the past only a few firms like Hindustan Lever Limited, Philips, ITC have invested in rural marketing but now the trend is changing. This study aims at understanding the key drivers of the rural markets by studying the present situation and the changes occuring in the rural India The primary information is collected from he students who are from the rural background, and are expected to be reflecting and augmenting the change in the rural consumption patterns. The outcome of the report is in form of recommendations as to what the companies should do to expand the rural market and increase their market share in the rural market