Urban India Vs Rural India - Market Potential

Marketers realize the potential of rural India. But, What is the Indian market scenario like? How is rural India compared to urban India? What part of rural India is better?

For a thumb rule, this is the present market scenario.

Urban India : Rural India

Population - 1 : 2

Market Potential - 1 : 1

Developed Rural : Developing Rural

Population - 1 : 3

Market Potential - 2 : 1

This stands true for most of the major companies and products/categories in India. If you analyze the figures above the market potential in rural India and urban India is similar except that the rural population is almost double that of urban one spread over a very vast area.

The second major distinction is the developed rural and developing rural. Developed Rural consists of Punjab, Haryana, Gujarat, Maharashtra, Karnataka, kerala. This terminology was first used by Rama Bijapurakar, a professor at IIM-A. The gap is far more pronounced here. The developed rural states account for about one-third of the rural population and have shown higher penetration in most categories.

An article which explains the growing understanding of the Bottom of the Pyramid markets among business organizations in rural India.

For years, Vishnu Choudhary, a resident of remote Siwan Kala village in Uttar Pradesh, used to trudge 15 km over a dirt track to sell milk in the neighbouring town.

Late last year it all changed, for the better. During a visit to the weekly town market, Choudhary, 46, came across a Hero Honda motorbike displayed on an open truck as part of a road show organised by the company.

"Even today I can't realise that I really own this bike. The company people themselves helped me to get loan from a bank and took care of other formalities," reminisces Choudhary.

Enthused by Choudhary's newly acquired status, his childhood friend and neighbour Hari Singh has acquired a Bajaj scooter to ferry stuff from the town for his grocery shop.

Siwan Kala is not quite a marketing battleground for the country's two biggest two-wheelers makers, but the village certainly is a reflection of the local companies newfound love for rural India.

India's 70 percent population of over one billion lives in rural areas. This translates into a potential consumer base of about 700 million individuals, more than the population of the US and European Union.

Experts say growing agricultural prosperity and improved incomes has increased the purchasing power of the rural customer. Today, there are millions of potential customers waiting to become part of the market economy.

Little wonder then from home grown companies like Hero Honda, Bajaj Auto and consumer foods maker Dabur to multinational firms like Unilever, Procter and Gamble, Coca-Cola and Pepsi are rushing to the villages.

"Semi-urban and rural markets accounts for nearly half of our company's annual sales," said Deepak Mokashi, general manager (sales) of Hero Honda Motors, a joint venture between the Hero group and Japan's Honda Motor.

-- Suhit Anantula | Deeshaa Ventures | Rural Development
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