With 73% of the population living in the 6,00,000 villages of India out of a total population of 1.06 billion, marketers cannot afford to ignore the potential of rural markets. The principal hurdles for any company trying to make inroads into rural markets have been poor infrastructure and limited purchasing power. However, there is progressive improvement on both these fronts. A survey by McKinsey & Co., projects that the potential of the Indian rural market will touch $500 bn by the year 2020.

Corporate India drew its attention towards the unexplored potential of the Indian rural market more than two decades ago, when many of the FMCG companies started reaching out to the rural areas with their products—soaps, detergents, toothpaste, soft drinks, etc. These companies moved into the rural frontiers which were till then unserviced in view of their supposedly uneconomical size and difficulty of access.

However, the situation has now changed considerably. The Delhi-based research organization, MART, states in a report that rural India buys 59% of cigarettes, 46% of soft drinks and 49% of motor cycles. Eleven per cent of the women in rural India use lipstick. The design of products and the strategies for marketing reflected their fine understanding of the nuances of the rural market, which further enabled them to capture significant market share. Now the rural market accounts for 100% of agricultural products, 53% of FMCG items and 59% of the consumer durables market.

The FMCG and consumer durable companies were the earliest ones to turn their attention towards the rural market; and now in the second phase of rural marketing, telecom, banking, finance, insurance and retail companies have found their way in. Hindustan Unilever Ltd. (HUL), (former Hindustan Lever Ltd.), is still at the top when it comes to the reach and business volume achieved in the rural areas, thanks to its successful marketing strategies.

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