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Rural is bigger than Urban India: Kashyap

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MUMBAI: Rural India is now bigger than urban India, triggered by growth in the hinterland and rise in smaller towns.

“Indian rural economy is a $1 trillion economy. Hence no company can now afford to ignore rural India. Whole rural India is moving from poverty to prosperity. In times to come, there will be a huge upsurge of demand in rural India in durables, consumer electronics etc. In past two years, the urban growth has been by 10 per cent while that of rural has been by 30 per cent. Rural GDP now equals urban GDP,” Mart founder and CEO Kashyap said, while speaking at Mindshare Brand Equity Compass here today.

Marketers are waiting to tap into this expanding market, particularly those dealing with consumer durables.

“Small towns are deeply linked to rural areas. Rural India is transforming from agricultural economy to non-farming economy, from non-farming economy to services economy. Service is 65 per cent of India’s GDP,” said Kashyap.

Government schemes have been the growth drivers for rural India. “In the last 3-4 years, the government‘s spend on the various schemes has increased by 460 per cent. There is a special focus on education,” Kashyap added.

Consults CEO Haish Bijoor believes rural is the new buzz word. “You can’t ignore them no matter where you are and what you do. Rural market embraces every category today. There is a gradual, clear, perceptible shift of power from Urban to rural. Rural is no smaller. It is bigger than urban today. Rural market is completely dispersed. Marketers have to develop the understanding of customers. There has been a pomposity surrounding our marketing lives. Bigger cities are more homogenous than smaller towns.”

Youth is another main reason for rural India’s growth. “They have been going to nearby towns for higher education. It’s they who bring urban aspirations to life and are users of products that are used by urban India,” Kashyap averred.

Service, rather than brand, loyalty is the new reality. Said Bijoor, “Most emerging markets are peopled by the young. 22.7 per cent of rural children go to private school while 50 per cent of urban children go to private. Rural India comprises of more than 75 per cent of the people of the country so this shows how many people are getting education from private school in rural India. But at the same time young are difficult to understand.”

Marketers need to understand the local eco-system and develop appropriate product. They should develop solution through a community co-creation process.

Bijoor said that there are three types of consumers in rural India: one who buys everything for self; second are those who buy 70 per cent for self and re-sell 30 per cent in villages; and the third set of people are the ones who sell 100 per cent.

“The last two are the future of rural reach, distribution and penetration,” Bijoor concluded.

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