STUDY OF FMCG IN RURAL MARKET

There was a time when the FMCG companies ignores rural market, they took no any interest to produced or sell products in rural market in India. It was the initial stage of FMCG companies in India. As per as the time had passed, the strategy and marketing style of FMCG companies had been changed.

Background of the study:-

In 1970, Nirma was the first FMCG Company to initiate and produced goods according to rural consumers. In the early 1970s, when Nirma washing powder was introduced in the low-income market, Hindustan Lever Limited reacted in a way typical of many multinational companies. However, Nirma’s entry changed the whole Indian FMCG scene .It became a great success story and laid the roadmap for others to follow. MNC’s like HLL, which were sitting pretty till then, woke up to new market realities and noticed the latent rural potential of India. 1983, C K Ranganathan started selling shampoos in a sachet with an investment of Rs 15,000 and dared to take on the multinationals, Lever and P&G, the unquestioned leaders in that segment. . He targeted rural and small-town consumers who used soaps to wash their hair. He introduced the sachet at 90 paise and then reduced it to 50-paise. And that’s when the multinationals sat up and noticed him.Sales zoomed from 35,000 sachets to 12 lakhs. Initally they took any sachet, but after three months they restricted to Chik sachets.


Now at the present time, rural market is one of the best opportunity and focusing sector for the major FMCG companies in India. Each and every company is set to invest a huge capital for competition in rural market. According to the Federation of Indian Chambers of Commerce and Industry, the number of rural households using FMCG products has grown from 136 million in 2004 to 143 million in 2007, a clear indication that rural consumers are shifting from commodities to branded products. Urban consumers, on other hand, could go slow on FMCG expenses, thanks for inflation spiral, rise in fuel cost and costlier credit. Evidence suggests that for the first time, the rural market has grown faster than the urban market in key product categories in April-May 2008, the latest months for which such information is available, according to market research firm AC Nielsen.

Need for the Study:-

In those days, the rural market is the one of the best opportunity for the FMCG sector in the India. It is more wide and less competitive market for the FMCG. As the income level of the rural consumers increasing, the demand of FMCG is increasing continuously. The various need of the study is given as follows:-
Ø To determine the raising demand of FMCG products in rural area.
Ø Know about the different choices of rural consumers.
Ø





Definition of the Problem:-

The study of opportunity for FMCG products in the rural market is a sum total of different analytical survey of different FMCG products in the rural area. In one sense, we can say that it is determination of how much market captured by different FMCG companies.
Scope of study:-


With a population of 1 bn people, India is a big market for FMCG companies. Around 70% of the total households in India reside in the rural areas. The total number of rural households is expected to rise from 135 m in 2002 to 153 m in 2010, which represents the largest potential market in the world.

Rural and urban potential

Urban
Rural
Population 2001-02 (m household)
53
135
Population 2009-10 (m household)
69
153
% Distribution (2001-02)
28
72
Market (Towns/Villages)
3,768
627,000
Source: Statistical Outline of India (2001-02), NCAER

An average Indian spends around 40% of his income on groceries and 8% on personal care products. A larger part of the total spending pie along with a large base (in terms of population) makes India one of the largest FMCG markets.
Changing lifestyles: Rising per capita income, increased literacy and rapid urbanisation have caused rapid growth and change in demand patterns. The rising aspiration levels, increase in spending power has led to a change in the consumption pattern .


Low penetration and low per capita consumption: Due to the large size of the market, penetration level in most product categories like jams, toothpaste, skin care, hair wash etc. in India is low. This is more visible when comparison is done between the rural and the urban areas. The average consumption by rural households is much lower than their urban counterparts. Existence of unsaturated markets provides an excellent opportunity for the industry players in the form of a vastly untapped market as the income rises.

Rural market shows a good improvement. In the presence of some product categories like, toilet soap, detergent bar, washing powder etc, it is same as in the urban level. Rural market is also improving in the other products category