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Marketing And Strategy

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Marketing and Strategy

December, 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 the market is exposing the consumer to a host of new choices by international brands selling their products at competitive prices.

According to a McKinsey Global Institute (MGI) study titled 'Bird of Gold': The Rise of India's Consumer Market, the total consumption in India is likely to quadruple making India the fifth largest consumer market by 2025. Urban India will account for nearly 68 per cent of consumption growth while rural consumption will grow by 32 per cent by 2025.

India ranks first in the Nielsen Global Consumer Confidence survey released in October 2010. "India is one of the fastest growing markets in the world and the current consumer belief that recession would soon be a thing of the past has filled Indians with confidence," said Piyush Mathur, Managing Director, South Asia, The Nielsen Co. With 129 index points, India ranked number one in the recent round of the survey, followed by Thailand (117) and Australia (115).

Rural Market: The Next Big Opportunity

According to a study by research firm The Nielson Company, the fast moving consumer goods market (FMCG) in rural India is tipped to touch US$ 100 billion by 2025 on the back of "unrelenting" demand driven by rising income levels. According to the study, rural India accounts for more than half of sales in some of the largest FMCG categories.

At present, rural consumers spend about US$ 9 billion per annum on FMCG items and product categories such as instant noodles, deodorant and fabric, with the pace of consumption growing much faster than urban areas, as per the findings.

Hindustan Unilever (HUL) is planning to significantly increase its rural reach. Currently, the HUL products reach is approximately 250,000 rural retail outlets and the company intends to scale it up to nearly 750,000 outlets in a span of two years.

Swiss FMCG giant, Nestle plans to make further inroads into the rural markets. The company has asked its sales team to deliver “6,000 new sales points every month in rural areas” to expand presence in Indian villages, according to Antonio Helio Waszyk, Chairman and Managing Director, Nestle India.

Car makers are foraying into rural markets with industry majors reporting 50-100 per cent rise in sales in such regions.

Further, Mahindra & Mahindra (M&M) is now selling more Scorpios in rural and semi-urban markets. The rural footprint for the super utility vehicle (SUV), Scorpio sales have increased from 35 per cent to nearly 50 per cent in the last two years.

Yamaha plans to double the number of its sales outlets in India in the next five years to tap the growing demand in villages as economic growth boosts incomes. India Yamaha Motor Pvt. may increase showrooms to 2,000, mostly in small towns and rural hubs, according to Koji Arai, director and chief sales officer. The company is refurbishing some of the existing outlets in small towns and rural hubs and adding new ones called Yamaha Bike Corners, organising free motorcycle service camps and test rides.