Rural India

Transformation in rural india is also in the mind of the consumer

Reaching 600,000 villages poses operational challenges

Jeevitesh Sethi
Research Intern
Kantar Millward Brown

In the last 25 years, our villages have witnessed tremendous transformation. Through government initiatives, most villages have benefited from the construction of paved roads, electrification, and proper housing. But crucially, these changes have brought rural and urban India more than physically closer. In their thoughts and ideas, rural consumers now are similar to urban consumers. Today, rural India describes a mindset rather than geography.

The other big leap is in the awareness of brands in rural India, a leap which has been fueled by advertisements. Having achieved a good level of awareness, the marketing challenge for brands is to create relevance with a range of products available at different price points. The opportunity is large. Although consumption, penetration, and purchasing frequency are much lower in rural areas than they are in urban areas, it is important to note that rural India has much more disposable income than urban India. The ability to consume and the willingness to consume are evolving constantly.

Rural youth share similar dreams and aspirations with their urban counterparts, and they imitate much that their urban peers are doing. Today, rural consumers want exactly what is available in the urban markets. They won’t settle for anything less or different in functionality and overall quality. This has made the job of consumer goods companies easier; instead of reinventing products for rural markets, all they have to do is create relevance, and reach more and more villages.

The other important aspect of rural markets is that they tend to be community driven. In short, if a few members of a community adopt a brand, word of mouth makes it easier for the brand to reach out to a larger audience. People in rural markets have an intrinsic sense of optimism. They are attracted to the ads that carry a positive message. Also, the sampling-and-trial generation should be a big focus for leading brands.

One of the big levers for creating relevance in rural markets is festivals. Festivals play a very important role, and a festival provides a good time to introduce a new product. People tend to spend more during this time, and they are more open to try new products. Moreover, if the household budget permits, rural consumers will continue to buy the new product after the festival ends.

Most of the key challenges brands face in rural India are operational—that is, in reaching over 600,000 villages. In urban India, a sales person can spend 85 percent of his or her time in stores and 15 percent traveling. This situation is dramatically reversed in rural markets. The process of generating reach is tedious. Some brands manage this challenge by working through wholesalers. Others identify high-potential villages and serve them directly.

Brands that solve the operational challenges and serve India’s villages well may be richly rewarded. Because of improved infrastructure, physical access to villages is no longer a significant barrier for brands. And rising brand awareness and disposable income make rural India a great opportunity that is still waiting to be tapped.