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Marketing And Strategy

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Marketing and Strategy

May, 2010

With market liberalisation, increasing consumerism and the entry of more foreign players, Indian markets are exhibiting revolutionary changes. The Indian consumer is rapidly evolving and is exposing the consumer to a host of new choices by international brands selling their products at competitive prices.

According to a study by the McKinsey Global Institute (MGI), released in May 2007, India's middle class will swell by more than ten times—from 50 million in 2007 to 583 million people by 2025. By 2025, India will also become the 5th largest consumer market, surpassing Germany, moving up from the 12th position it occupied in 2007.

Moreover, for the fourth time in five years, India has been ranked as the most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm A T Kearney in its eighth annual Global Retail Development Index (GRDI) 2009 published in June 2009.

Rural Market: The Next Big Opportunity

The rural consumer market, which grew 25 per cent in 2008, when demand in urban areas slowed due to the global recession, is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers, according to a white paper prepared by CII-Technopak. That will be double the 2004-05 market size of US$ 220 billion. According to the study, the rural market is seeing a 15 per cent growth rate. Fast moving consumer goods (FMCGs) sales are up 23 per cent and telecom is growing at 13 per cent.

The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the US$ 280 billion Indian retail market, according to a study paper, 'The Rise of Rural India', released in April 2009 by an industry body.

Most FMCG companies are now working on increasing their distribution in smaller towns and focussing on marketing and operations programme for semi-urban and rural markets.

For instance, GlaxoSmithKline Consumer Healthcare is not only launching smaller packs at lower prices but is also developing products at appropriate price points for rural consumers.

Similarly, HMT Watches is planning to strengthen its brand in the rural market and will invest on brand-building strategies including advertising in 2010-11.

Car makers are making greater inroads into rural markets with industry majors reporting 50-100 per cent rise in sales in such regions in 2009-10.