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February 25, 2007

More on Marketing to Rural India

Business Today has an in depth article on rural marketing.
India's rural population, at 742 million-larger than the population of the EU and the US put together-lives in six lakh-plus villages. A lakh of these hold 50 per cent of the rural population and 60 per cent of its total wealth. Clearly, the fortune for marketers may be at the bottom of the pyramid but-with due apologies to C.K. Prahalad-the wealth in rural India, as Kashyap points out, is at the top of the pyramid and not at the bottom.

The upshot? Roughly 320 million of the population residing in five lakh villages are not target customers for marketers, simply because it isn't viable to cater to them. Most of these villages, like Horapalli, have a population of less than 2,000, and every marketer's mojo -'critical mass'-is tough to attain. As Ali Harris, Britannia's Brand Manager for Tiger Biscuits, says: "If I go to a shop in Mumbai, I will sell Rs 5,000 worth of stock and my cost to reach that outlet is next to nothing. If I need to reach an interior village, I would have to hire a van from the nearest town, and then probably sell Rs 50 worth of stock in the village."

The other reason for brands not being able to penetrate the rural boondocks has got to do with the sheer physical effort involved. According to a nationwide survey conducted by consultants McKinsey & Co, of 593 rural districts, 248 are "deprived" and lack basic infrastructure like all-weather roads.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.