As urban demand cools down and rural markets heat up, there is nse distinct shift in strategy of major FMCG players to tap the fortune in rural India. But, first, why so much of hype about rural demand.
What spurred rural demand?
There are several factors working for the rural Indian markets. Last year saw a robust Kharif and Rabi, and this year is likely to see another strong Kharif crop. In addition, government has made MSP lucrative, so farmers are actually rural markets in india getting money and purchasing power. For rural India, the propensity to consume such FMCG products is quite high, especially the aspirational value. A slew of various government schemes to boost the rural connectivity and infrastructure has also indirectly translated into higher buying power for rural India. That just adds up.
Who is going the rural way?
Interestingly, it is not just the traditional players like Marico and Dabur that are going aggressive on rural India. Even the likes of ITC and Britannia are tapping the rural markets in a big way. ITC is offering premium cookies and snacks in compact packs of ₹10 to make them affordable to the rural markets. Rural buyers see less of risk in small packs and are willing to try them out. Even Britannia is adding to its rural reach and frequency, and now caters to nearly 31,000 distributors that solely cater to rural India. This is being driven by two very important trends.
Miniaturization holds the key
Whether you sell shampoos, hair oil, or even snack packets; the key to tapping the rural markets lies in miniaturizing the product very effectively. When ITC sells cookies and snacks fmcg companies in india in packets of ₹10 or when shampoo sachets are sold at a price point of ₹1, then the rural market automatically opens up in a big way. The rural buyers are averse to committing to buying aspirational products in large quantities due to their natural urge to save money. However, if properly and effectively miniaturized, then there is a big rural market waiting to happen. That is what products from biscuits, snacks, shampoos, face powder are doing now. They are miniaturizing their offerings and with a compelling idea for rural India.
Adopting hyperlocal marketing
The second thing FMCG companies are doing is to adopt a hyperlocal approach to cater to rural markets. This includes tailoring their messages not just to rural India at a macro level, but fine tuning it to regional needs. It includes language, culture, geography etc. With the spread of smartphones, “near me” communities work very well in rural areas. The rural community is more attracted to creation of jobs, so they prefer to walk into their local Kirana fmcg market share in india store and buy. Hence, a big chunk of hyperlocal marketing is about appealing to the Kirana store. SEO also works very well in rural areas. Clearly, FMCG players are now fully tuned in!
