India, the fastest growing large economy in the world, is still popularly known as the country of villages. Around 70% Indians are still staying in 6.5 lakhs villages with 50% of nation’s population heavily dependent on agriculture.
Heavy dependence on agriculture is one of the reasons of poverty in rural India. This can be very well observed from the big gap in per capita income of urban and rural parts of India. As per statistics of 2012-13, urban per capita income was INR 1,01,313 while rural per capita income was INR 40,772. Most of the businesses and consumer demand were concentrated in urban areas which have very small pie of total population.
Improvements in Rural India
With improvement in infrastructure, villages came closer to cities. Mobile and, to some extent, internet brought villages closer to urban population further and hence, rural India became familiar to urban lifestyle. This motivated rural people to increase prosperity and improve their lifestyle.
This motivation along with availability of easy capital through micro finances and governments’ schemes helped rural India to set up side businesses related to agriculture. Notable examples of these businesses are Poultry, Milk, honey etc. These activities have started bridging the gap between per capita income of urban and rural India. Consequently, disposable income in hands of rural Indians increased thereby increasing demand of various products which were being sold in urban India only.
Revenue opportunities in rural India for businesses
Post-independence, economic growth happened mostly in and around metro cities like Mumbai, Delhi, Chennai, Kolkata, Bangalore, Pune etc. Post liberalization, small cities like Indore, Bhopal, Nashik etc. started growing. Most of the consumer companies till 2005 were more focused only on urban area. As cities started saturating due to high population and low opportunities, many consumer product companies faced stagnant revenues.
Hence, it became important for organizations to enter into rural areas to sell their products and achieve targeted revenue growth. Companies introduced their products in new (rural) geographies to create new product cycles as existing product cycles in urban areas had reached saturation for many products. Firms came up with many rural specific programme, for ex, Shakti by HUL. FMCGs also came up with rural specific small packs and advertised them in yearly rural fun fairs to generate product demand. To cater growing rural demand, auto companies like TATA Motors started ‘Neev’ which is rural specific programme.
How will digital marketing help businesses?
10 years back, it was very difficult to get mobile network in rural India. With rising competition in telecom industry, need of increasing customer base and high band width, mobile usage has grown in villages. No. of mobile users in rural India has gone up. Though feature phone volumes are higher than smart phone volumes, we can easily observe the shift towards smart phones with entry of next generation in rural employment. Social media tools like Facebook and YouTube are at nascent stage but have started gaining momentum (though twitter has long way to go in rural India).
Also, rural market brings lot of demand for consumer products. Between 2009-2016, this industry has grown by 13% annually. With consecutive above average monsoon seasons, incomes in rural India will rise steadily and it will become difficult for companies to grab the available market.
For such cases, digital can be a good option as people using internet will become influencers in most of the villagers as people using smart phone and internet are considered as smart and intelligent ones in the village. Companies, especially in consumer goods place, should start targeting people with smart phones and internet connections who in turn will spread word of mouth across locations. Businesses should start taking every Facebook user seriously as she/ he will be a big influencer in near future.
How will rural India benefit from digital?
With digital, information flow to rural people will become easier. Info regarding weather, daily rates of crops, milk and milk products, poultry etc. can be made available on mobile phone either by government or by NGOs. This will increase not only farm efficiencies but also the market understanding of farmers. In addition, training on advanced farming techniques and use of proper fertilizers can be done across many villages at a time.
Many Indian villagers have capability to produce user specific products but they cannot be sold in cities where demand for such products is available. Online merchandizers can extend their services for such products so that they can be sold in cities. ‘Okhai’ is one such initiative by TATA trusts to connect Gujrati rural women with cities where rural products can be sold directly.
In long term, digital will help to increase the consumption in rural India and will also create employment opportunities, thereby increasing disposable income- this in turn will have positive effect on economic growth of the country.