Indian Consumer and Marketing: Rural & Urban context

Introduction

Families, rural and urban both are the most important organizations in the society that influences consumer buying behavior, and family members constitute the most influential primary reference group. Family as a unit has been researched extensively. We can distinguish between two types of families and their influence on buyer behavior: the family of orientation and the family procreation. The family of orientation consists of parents and siblings. A person acquires an orientation towards religion, politics, economics, and a sense of personal ambition, self-worth and love from his or her parents. Even if the buyer no longer interacts with his or her parents, their influence on the buyer’s behavior can be significant. In countries where parents live with their grown children, it is seen that their influence can be substantial. A more direct influence on everyday buying is from the family of procreation, namely, one’s spouse and children. This research paper is a comprehensive study that centers on differences in urban and rural families in the context of purchase decision making.

Rural Market

A vast majority of Indians live in villages whose behavior as consumers is believed to be largely different from urbanites. Consumer is the pivot around which the entire business revolves and consumers differ in how they make purchase decision, owing to variables like type of family, income, occupation, status, etc. and the role the individual play in the decision process. Understanding of consumer behavior, which leads to purchase, is therefore, very important. From marketing point of view, investigating family as consumption unit becomes crucial as attitude towards saving and spending, and even brands and products are molded quite often by the family. Therefore, decision making in families are complex phenomena to understand and quality as a bulk of decision are made in a group in order to have a choice suitable to all.

India population went up from 683 million in 1981 to 1029 million in 2001. During this period, rural population remained between 76.7 and 72.2 per cent of total population. Thus, the size of rural consumer group is quite large which about three-fourths of the total population is.

Rural Marketing

Rural marketing is a fashionable subject today, though it is far more important for a developing economy like that of India. Different people have different definitions of rural marketing. The opening up of the domestic economy to external competition and the emergence of purchasing power in the rural areas, business and development professional calls for a better understanding of the concept and processes of rural marketing. Rural marketing is the process of developing, pricing, promoting, distributing rural specific goods and services leading to exchanges between urban and rural markets which satisfies consumer demand and also achieves organizational objectives.

Urban Marketing
Urban and rural communities have historically had different demographics, interests and opportunities. While the communications boom of the late 20th century, most notably the advent of the Internet, is blurring the lines somewhat, there are still broad differences. These differences often necessitate varied marketing strategies for companies wishing to sell to both markets.

Urban areas account for about two-thirds of total sales in the sector

• Urban markets accounted for the major share (67 per cent) of total revenues in the consumer durables sector in India in FY15
• Demand in urban markets is likely to increase for non essential products such as LED TVs, laptops, split ACs and, beauty and wellness products
• India stands at 4th position in the top ten global smart phones market

Market Size

India’s urban population would increase to 38 per cent by 2026, compared to in the country, which is 28 per cent in 2001 as per Census 2001. The growth in urban population is estimated to make up for over two-thirds (67 per cent) of total population increase by 2026. Out of the total population increase of 371 million during 2001-2026 in India, the increase in urban population is expected to be 249 million.

Online retailing, both direct and through channels such as eBay, will grow threefold and become a Rs 50,000 crore (US$ 7.46 billion) industry by 2016, increasing at 50-55 per cent annually, as per Crisil. By 2030, cities will generate 70 per cent of net new jobs creation, more than 70 per cent of the country's Gross Domestic Product (GDP), and drive a fourfold increase of per capita income across India, as per research by McKinsey & Company.

Key Developments

Companies and a new generation of entrepreneurs are aiming to tap into unmet needs of urban population. The emergence and rapid growth of app-based cab service companies such as Uber and Ola are examples in the transportation sector. Similarly, several internet and mobile based services – from grocery deliveries to finding doctors – are all trying hard to secure a foothold in the high potential urban market. Apart from basic services, several niche players with designer products and premium offerings are also trying hard to establish themselves in the urban consumer market. The growing customer base for luxury products coupled with the awareness of international labels and discounts are driving the business of premium products online.

Government Initiatives

Prime Minister Mr Narendra Modi had launched three government flagship schemes in June, 2015 aimed at changing the face of urban India—Smart Cities mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Housing for All mission with an expected expenditure of around Rs 4 trillion (US$ 59.65 billion) over the next few years. The government has completed stage one of the Smart Cities Mission worth Rs 1 trillion (US$ 14.91 billion) by shortlisting 100 cities across India for the plan. The Government of India plans to spend Rs 50,000 crore (US$ 7.46 billion) to develop 100 smart cities in the country, with each selected city to receive assistance of Rs 100 crore (US$ 14.91 million) per year for five years.