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Marketing And Strategy

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Marketing and Strategy

February, 2011

Indian markets are touted to become the best-rewarding markets for both-domestic and international investors. With market liberalisation, increasing consumerism and the entry of more foreign players, Indian markets are exhibiting exemplary progress. 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 January 2011. “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 131 index points, India ranked number one in the recent round of the survey, followed by Philippines (120) and Norway (119).

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) has launched a multi-brand rural engagement module- Khushiyon ki Doli- that provides various personal care and home care brands such as Wheel, Surf Excel, Fair & Lovely, Sunsilk, Vim, Lifebuoy and Close Up. Launched in August 2010 in Uttar Pradesh, Andhra Pradesh and Maharashtra, the main objective of the campaign is to reach out to media dark villages with HUL brand messages to inculcate good personal hygiene habits.

India’s rural consumer durable market will witness an annual growth of 45 per cent in the next fiscal 2011-12, as against the current growth rate of 30 per cent owing to the change in lifestyle and higher disposable income of rural India which has fascinated the consumer durable market according to a study “Rise of Consumer Durables in Rural India” by an industry body.

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.