Rural India- Game for economy

Spread across 650,000 villages, with an average population of 1,100 rural villagers were long regarded by city dwellers as backward and impoverished and irrelevant, something to drive past on the way to something else. That is no longer the case. Rural India is now becoming a major market for India Inc. It is not to forget that India lives in its villages. That's because roughly three-fourths of the country's population resides in the rural interiors of the country.

According to a new report by the Internet and Mobile Association of India (IAMAI), rural India has 3.3 million active internet users. The research - part of the ongoing I-Cube 2008 being jointly undertaken by IMRB International and IAMAI - also notes there are 5.5 million people who claim to have used internet at some point. For the first time rural India was mapped. IAMAI president Subho Ray says that the penetration of internet in rural India is directly related to the activities of the government and NGOs. India's 700 million villagers now account for a massive $100 billion a year consumer spending in the country. Millions step into consumerism each year, graduating from the economics of necessity to the economics of gratification, buying themselves motorcycles, televisions, mobile handsets and four-wheelers.

The National Council of Applied Economic Research, or NCAER, has pared its demand forecasts for automobiles, refrigerators and television (TV) sets for this fiscal year and the next, signalling that a slowdown in demand for these products, which make up a quarter of India's manufacturing output, may drag on longer than foreseen by industry executives. NCAER is, however, bullish on untapped potential in rural areas and believes demand in the countryside will continue to clock double-digit growth.

Korean consumer electronics firms LG Electronics India and Samsung, two-wheeler maker Hero Honda, pharma products maker Nicholas Piramal, mobile services provider Bharti Airtel are among a handful of well-established companies making a concerted push into rural India in recent months to boost flagging sales. They are joining some notable segment leaders like Bajaj Electricals and Bajaj Auto that have had a strong presence in rural areas. Now, the largest consumer electronics company in India by sales, LG, plans to focus heavily on rural markets through channel expansion, set up a services network and roll out a slew of entry-level products. Earlier Airtel and Samsung tied up with IFFCO to sell their mobiles and services. IFFCO is the world's largest farmers co-operative of fertilizers.

The challenges
The rural market holds tremendous potential for any media. However, for the internet to flourish in rural India, the applications need to be in vernacular languages, preferably with Text to Speech capabilities. It would be better if visual symbols, graphics and rich media applications are used. The key question is, whether we have the right infrastructure to support these applications.

The first challenge is to ensure availability of the product or service. India's 650,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy. However, given the poor state of roads; it is an even greater challenge to regularly reach products to the far-flung villages. Any serious marketer must strive to reach at least 13,113 villages with a population of more than 5,000. Marketers must trade off the distribution cost with incremental market penetration. For marketers, the challenge is to ensure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of who are on daily wages.

Parag Rastogi

PGPABM-II

MANAGE, Hyderabad