The document discusses trends in rural vs urban markets in India. Some key points: 1) Rural markets are growing twice as fast as urban markets and rural consumers are purchasing more appliances like refrigerators and mixers. 2) Rural purchasing power is increasing, with the average rural household owning 3 durables vs 7 for urban households. 3) FMCG, consumer durables, apparel, pharmaceuticals, and food/grocery sectors see over 50% of sales coming from rural India.

1. Rural Bazaar Vs. Urban Bazaar
Presenters: Hemank, Harsh

2. Introduction
• Rural market is going at a rate which is twice to that of the urban
market.
• Rural markets have witnessed an increase in sales of erst-wile urban
kitchen gadgets like refrigerators, mixer grinders and pressure
cookers.
• This clearly indicates that rural tastes are changing at a fast rate.
• This is a marked transition in the purchasing power of the rural
households.
• According to a survey by NCAER, an average rural household owned
three consumer durables as compared to seven consumer durables
owned by an average household.
• Mere one per-cent increase in India‘s rural income translates to a
large buying power of Rs. 10,000 crores.
• MART, the specialist rural marketing and rural development
consultancy, has found that 53 per cent of FMCG sales and 59 per
cent of consumer durable sales lie in the rural areas.

3. • It is also seen that purchase and use of certain durables and non-
durables by consumers in rural areas is more than that of the
consumers in urban areas in the following products :-
PRODUCTS
SEWING MACHINES
RADIO/TRANSISTORS
WRIST WATCHES
BLACK AND WHITE TELEVISION SETS
CASSETTES
BICYCLES
PRESSURE COOKERS

4. Rural retail Growth story :-
PRODUCT CATEGORY MARKET SIZE($ Billion)
FOOD AND GROCERY 152
CONSUMERS DURABLES 20
APPAREL 19.15
PHARMACEUTICALS 5.5
OTHERS 83.12
Source :- Nitin Shrivastava, 2008, Perspectives on retailing in India and Rural
marketing

5. • The rural population is largely self dependent and is able to produce
most of its consumption needs locally.
• According to a study on the impact of the slowdown on rural markets
commissioned by the Rural Marketing Association of India (RMAI) and
conducted by MART, the rural economy has not been impacted by the
global economic slowdown that took place during the last two years.
• Infact, the rural economy grew at a phenomenal 25% in 2008 when
the demand in urban areas across the globe slowed because of the
global meltdown.
• Rural population due to its irregular income and limited resources is
highly price sensitive. Ensuring a high market share and deep
penetration will ensure large volumes thereby achieving overall
economies.
• According to a report by Crisil, Discretionary spending of a typical
rural Indian household rose from`14,000 in 2004-05 to `24,000 in
2009-10, growing at about 11% every year, and faster than the
inflation rate of nearly 6% a year over that period

6. • This overall price benefit has to be passed on to the consumer who
requires value for money products.
Some examples :-
GODREJ Launched HUL Launched a variant
Cinthol, Fair Glow and of its largest selling
Godrej in 50 gm. SKU at soap Lifebuoy in Rs.2
Rs.4-5 packs
Coca-Cola also
launched Sunfill, a
COKE launched it’s Rs.5
ready to drink
bottle
concentrate at Rs.2(25
gm) and Rs.15(200 gm)
Philip developed a TV
“Vardaan” for rural
markets. This TV can
work on the voltage
90-270 volts

7. Sector :-FMCG
• The products are branded and backed by marketing, heavy advertising, slick
packaging and strong distribution networks.
• Despite the strong presence of MNC players, the unorganized sector has a
significant presence in this industry.
• Rural markets account for 56% of the total domestic FMCG demand.
• The FMCG market is set to double from USD 14.7 billion in 2008-09 to USD 30
billion in 2012.
• According to various estimates, FMCG sector has witnessed more than 60%
growth in rural and semi-urban India as of 2010.
• Rural India accounts for more than 40% consumption in major FMCG
categories such as personal care, fabric care, and hot beverages

8. Present Trends in FMCG
Source:-Mint

9. • Fast Moving Consumer Goods (FMCG) are witnessing more than 50% of growth in its Rural and
Semi-Urban Segments as of 2012.
• It is projected to grow at an CAGR of 10% throughout 2012 to carry forward its market size to over
Rs.1,06,300 crore from present level of Rs.87,900 crore, according to an analysis carried out by the
Associated Chambers of Commerce and Industry of India (ASSOCHAM).
• ASSOCHAM also analysed that the FMCG products, which will attract the eyes of rural and semi-
urban folks, will mainly comprise soaps, detergents, cold drinks, consumer durables, toothpastes,
batteries, biscuits, namkeens, mosquito repellents, refined oil, and hair oil.
• The market size for nail polish at around Rs.270 million in rural areas as against only Rs.81 million in
the cities.
• Similarly, the market for lipsticks is worth around Rs.250 million in rural areas, compared to only
Rs.131 million in the urban segment.
• Face cream demand in villages estimated at about 1,099 tonnes far outstrips that in the cities at
about 426 tonnes, shampoo too has more potential in rural bazaar (about 2,257 tonnes) than urban
markets (about 718 tonnes).
• The rural market for mosquito repellents is reckoned at around Rs 173 million against a mere Rs 79
million in urban centres.

10. SHARE OF RURAL SALES
Source :-ASSOCHAM
COMPANY SALES BY VOLUME
HINDUSTAN UNILEVER LTD. 50%
DABUR INDIA LTD. 50%
COLGATE PALMOLIVE INDIA 37%
MARICO 36%
GSK 25%
NESTLE INDIA LTD. 25%
GODREJ(GCPL) 30%
CADBURY’S 25%

11. FUTURE OUTLOOK
• With relatively lesser capital and technological requirements, a number of
new brands emerged domestically as well while the relaxed FDI conditions
led to induction of many global players in the segment.
• Both these factors resulted in leading to rapid development of the FMCG
market in India.
• Riding on a rapidly growing economy, increasing per-capita incomes, and
rising trend of urbanization, the FMCG market in India is expected to
further expand to Rs 1,80,000 crore by 2015.

12. SECTOR : AUTOMOBILE
• Passenger Vehicles
• Commercial Vehicles
• Two Wheelers
• Tractors

13. PENETRATION AND TRENDS IN PASSENGER VEHICLES

14. PENETRATION AND TRENDS IN2W VEHICLES

15. TREND IN YEARLY TRACTOR SALES
The tractor industry reported a strong 28.3%growth in sales volumes during 2009-
10, thereby ending the phase of cyclical correction that had pulled down tractor
sales during the preceding two years(2007-09). Significantly, the revival of 2009-
10happened despite the drought-like conditions n many States during the
Kharif season dampening sentiments (Source ICRA Estimates)

16. TRENDS THAT MAY BE EXPECTED
• Slowdown in rural demand due to slowing of the government’s cash
transfers including MGNREGA (Mahatma Gandhi National Rural
Employment Guarantee), limited increase in minimum support prices and
a higher cost of production due to wage inflation and rising energy costs
resulting in shrinking margins and worsening terms of trade for farmers.
• The monsoon season a key event to watch
• High cost of production imply shrinking margins for farmers
• Rural demand should weaken, due to subdued farm produce prices, urban
demand would be be impacted by weak consumer sentiment.
• Moreover, as the penetration increases, growth rate shall start seeing a
decline

17. TRENDS IN BANKING
Rural Retail Banking
• Reserve Bank of India (RBI) to promote rural credit and banking primary
agricultural credit societies (PACS)1 also provide other agricultural inputs
to the farmers.
• Current, Estimates >> number of rural bank branches 31,727. 39.7% of
total bank branches in country. The number of no-frill accounts is 28.23
million. only 54 savings accounts for every 100 persons in rural areas and
only 26% of rural citizens with an annual income of less than Rs. 50000
have a bank account.
• Number of innovations and experiments have been initiated to bridge
the gap between the rural population and the formal retail banking
system.

18. INNOVATIONS AS OF TODAY
• Local area banks (LABs) mobilize rural savings by local institutions
and make them available for investment locally.
• Self-help groups (SHGs). Being a savings - first model, credit
discipline is a norm of the group; besides joint liability and social
collateral make such groups bankable in the eyes of bankers. The
linkages are achieved through non-governmental organizations
(NGOs) and other intermediaries, and this has formed the basis of
the micro-finance movement in India.
• Kisan Credit Card--enables the farmer to get loans over a three to
five year period as a revolving credit entitlement, thus, providing
them control over their cash flows and reduced transaction costs
for both the banks and the farmers.

19. EXPECTED/PROBABLE TRENDS
• Customers in rural India also get a highly customized services as in
urban areas.
• UID Project provides primary database for providing services in
rural
• Use of Tablets /Mobile/internet Banking services
• Use of mobiles for quick money transfer lie M-Pesa (Kenya)