Rural American Market

Economic crises that the American people are facing and the entire world in general, a strong review of rural policy makers over the future economic status of the rural region is strongly recommended. The reason being, the rural businesses have few sources of capital compared to the urban markets. A survey conducted by the “federal reserves board of governors”, proved that; only a fifth of rural small business use financial institutions such as, finance and leasing. Meaning, the only primary source of capital for rural American markets remain community banks.Infact, rural business are nearly 33 percent more likely to depend on commercial banks for credits. Many rural banks face limited supply of loan -able funds thus thinning and reducing the rank of community lenders and reducing the availability of credit to community borrowers.

Another reasonable way to improving liquidity for rural community is co-operation, collective investment and team work amongst rural lenders and business owners thus granting community banks new access to credit. This system would require a new partnership be forged among banks since these institutions are already competing for business in rural markets.

Rural secondary markets are poorly developed and therefore it’s little used. Meaning if Secondary markets could put rural borrowers in touch with the national investors like homeowners ­who are eligible to participate in mortgages secondary markets which allow lenders to sell their homes, but it appears that relatively few do so. And this has had difficulty developing since its creation in 1987.

Another major aspect of boosting rural American market is the increased rural presence of secondary market outlets ‘like Fannie Mae, Freddie Mac and farmer Mac. Bank access to loan funds from the federal Home Loan Bank. These faraway areas are slowly getting more integrated into the main stream financial grid. Thus alleviating their liquidity problems by allowing them to originate loans that are not funded by the local deposits. With that in place policy makers must still weigh the potential costs of the increased public involment including Taxpayer liability, against what is, at this point a hazy public goal for rural American Market.

Rural Consumers

Many experts around the world always pay attention to  strategy  adopted by MNCs and Indian companies for rural consumers. It is vital to understand the consumer behaviour in rural areas in order to make the appropriate strategy for rural consumers.

Turn some of the pages of history, there you will find that companies like Philips and Colgate have been very successful in rural areas for past 50 years. They made investment in rural India at the beginning when no one ever even thought that these rural consumers can be highly profitable as well. They understand the nitty-gritty of rural India by focusing on the market value, development and design of products that suit the needs of these rural consumers. Rural market provided them the right platform to build their sales volume and with their strong distribution systems, these companies achieved much more than what they expected from rural India.

What about MNCs in Rural India? Companies like Hero Honda whose 40% of total sales come from rural market has been the leader in achieving the feat in rural areas. Historically, even Godrej has been very strongly positioned in rural market along with ITC which is now an Indian company.

Whether MNCs have failed in their approach to enter rural markets? This question gives very good insight to consultant, experts and professors across the globe. Using the term ‘Failure’ would be quite harsh on MNCs, we may say that they had slightly weak start and some companies were not bold enough to pursue their dream of entering into rural market. Take for instance, Kellogg had a pretty weak start and same with Procter & Gamble, these players never got their foot inside the true market of rural India. Other than Colgate, statistics prove that majority of the MNCs could not perform well in rural markets.

The biggest mistake which MNCs have done so far in Rural market is by equating value consciousness and price consciousness. They need to understand the fact that rural market prefers value to price. They can’t afford to spend a dollar as it pinches them as compared to spending a dollar for an urban consumer. Hence, they can’t go wrong in buying stuff for them which has no value to derive from.

MNCs need to learn the rural market game soon otherwise, Indian companies are moving aggressively to lure rural consumers under their belt.

Rural Market

Today, the main industries that are targeting the rural market are FMCG, Agriculture and infrastructure development. The reason for this is the unbalanced growth that has been seen in almost all of the global rural markets recently. These markets are growing but need a lot of guidelines and financial & strategic support which is provided by these companies.

Off late, rural markets have assumed an important position in developing countries like India and China. This is because of the steady rise in the economic status of the rural areas in these countries which increased the spending power of the rural population.

Rural marketing strategies differ from those used in urban and semi-urban areas. This is because the dynamics of the former are highly different from the latter two places. The rural marketing strategists mainly need to keep in mind the following aspects

-          Location and client specific promotion of services and goods

-          Proper management of demand

-          Employing developmental rural marketing strategies

-          Employing co-operative strategies for marketing, sales as well as promotion

-          Ethical operation of businesses

-          Maintaining sustainable partnerships with rural entities

It is these rural marketing strategies that will lead to successful growth and expansion for the companies and this in turn will lead to smooth and swift rural development. This approach has been employed by most of the countries today, especially the developing countries as they are looking for a steady and sustained development and an increase in the per capita standard of living for its masses.

In conclusion, rural marketing strategies are a must for all countries both developed as well as developing for achieving all round economic growth and development.

Rural tourism means the tourism activities occurring in the rural areas. It gives the tourists an opportunity to experience different cultures. Moreover, it provides a source of income for the people in the rural areas. Furthermore, the income thus generated can be utilized for use in reviving the lost folk arts and crafts. Nowadays, rural tourism is the one of the fastest growing area in the tourism sector.

There are numerous benefits of promoting the rural tourism sector. Some of them are discussed in this article:

Apart from creating employment opportunities and generating income, the rural tourism contributes greatly in creating a market and an appreciation platform for the locally produced items. Rural tourism also helps in reducing the urban drift by giving better economic opportunities for the people in the rural areas.

Rural tourism also tends to help increase the sales of the local crafts. Moreover, it promotes the environment conservations programs; thus saving valuable natural resources. People tend to value them more when these resources are helping them in income generation.

Furthermore, rural tourism creates a mutual sharing environment among the rural dwellers and the tourists. People care for and value each other when they understand each other’s cultures better.

To determine the potential of development of rural tourism in a particular area, some factors need to be considered:

The area intended to be used for rural tourism should have a few tourists’ attraction places worth visiting. The local people of that area should willingly agree to show hospitality to the incoming tourists. The area should have a good infrastructure for accommodating the tourists in the peak season. Moreover, the area should be easily accessible.

But rural tourism can also have a negative impact on the environment if not properly catered to. Environmentally sensitive areas can be deeply affected by the development of tourism infrastructure.

Tourism has become synonymous with big city attractions . More and more people than ever before land at big glittering airports and spend most of their time in yet another big city. But is that all there is to tourism ? One way of exploring the heart of a country is to try and spend some time in the rural areas.

The concept of attracting tourists to rural areas has come to be known as rural tourism. This is becoming more and more popular as tourists want to devour the real sights and sounds of rural life of the country they are visiting. Rural tourism plays a much greater role than just attracting tourists to the place. It is slowly becoming an area of income to rural people and farming in the countryside becomes more and more mechanized.

With the advent of technology , farming has become more mechanized and this has meant more people leaving the countryside to look for employment opportunities elsewhere. Rural tourism bridges a fine gap here and could well be the income generating machine for the rural folk.

A survey will reveal that many of the famous tourist attractions are really located in rural locations . The idea of rural tourism is to induce the tourists to spend a few days at such locations and  see the life of the countryside. It is often said that rural people are a friendly lot . Spending time with them can open up more windows to understanding a country.

One form of rural tourism is eco tourism. Far away from the steel and concrete towers of today’s cities people can savor the delight of the greenery and the fresh air that rural areas bring. Rural tourism can also shift focus to tourism relating to flora and fauna of a place.

The spin offs from rural tourism are many. It has been estimated that revenue from such tourism is a significant part of the GDP of a country. The arrival of tourists in a rural environment also has the spin off effects of local development in terms of facilities and generating new employment opportunities and lots and lots of scope for self employment.

In many countries of the world a sizeable percentage of the population lives in rural areas. With a shift of population to urban areas rural areas often feel the pinch in terms of facilities such as communication and transportation. Rural tourism could fill the void and make rural areas refreshing places to visit. Rural tourism could also focus on such themes like hiking , biking and mountain climbing.

All said and done rural tourism should be activated  with some amount of caution. The idea behind rural tourism should not be to convert rural areas into yet another small city with all modern facilities. Instead visits to rural areas should bring with them the novelty of something new. Rural areas should remain what they are if rural tourism is to survive and grow.

Rural Consumers

Every Company whether domestic or MNC know the fact that Rural Consumers are hard to understand. It is always difficult to get access to rural consumers due to several issues related to rural market. The major problem which causes headache to each and every Rural Market Strategist is the Communication with Rural Consumers.

No doubt that every single company is betting on rural markets in developing economies of world whether it is Bangladesh, China, India, Indonesia or Pakistan. All are interested in having a small chunk of this major pie of Rural Market.

This article will give you a direction to how to communicate with Rural Consumers in a nutshell. Communication with consumers whether Rural Consumers or Urban Consumers is a major strategy to tap any market. The way you deal with this is what differentiates you from the rest of the competition.

It is an altogether different ball game. All marketers need to re-invent the way they communicate with Rural Consumers. It is vital for every marketer or advertiser to understand the characteristics of rural folks before taking any decision. You can’t ignore the specific characteristics of these unreached people. For instance, you can’t ignore entertainment as they are always starving for it, community related influences, exposure to technology, apprehension towards accepting new product or service, price-sensitivity and literacy levels.  All these factors contribute to the success of the marketing or advertising campaign of any company willing to enter into rural India.

It is important for corporates to understand five Es which go a  long way in developing a solid rural communication strategy. They are not only essential but they also decide the future of your company in this huge untapped market.

There is a need to think about these five Es of Rural Communication tratefgy- Education, Empathy, Ease , Entertainment and Evidence. I hope these five Es will provide you good food for thought.

Looking  forward to discuss five Es in length in my next post.

Its a another day for a Corporate powerhouse to enter rural market and Guess what…Haier Group, parent of Qingdao Haier and Haier Electronics, has entered into rural market for not selling their own products but to sell GE appliances. The reknowned Chinese appliance maker is going to jointly sell GE appliances, confirmed Mr. Yang Mianmian, President of Haier Group.

The Worlds’ fourth largest White Goods manufacturer’s sales buoyed by more than 30 percent wherein government program had huge role to play. In these programs, subsidies are offered to rural dwellers who deal/trade with old appliances in order to buy new ones. The focus of these subsidies is to boost spending of rural families.

These comments were made during the annual session of the National People’s Congress and it is widely reported on several Chinese Websites. However, there is no remarks about this proposed program from GE officials.

How often do we see competitors coming together? But here this cooperation agreement between two strong competitors suggests a way to milk from this fastest growing market in the world wherein demand is buoyed by subsidies provided by government.

One of the biggest job recruitment sites on the planet, Monster.com, has forayed into Rural India with launch of website “rozgarduniya.com”  in collaboration with ITC, one of the biggest names in FMCG industry. The launch of job engine in Rural India has been instrumental for people who want to devote their career in rural sector. This site is currently readable in both english and hindi and can be accessed at echoupal centres of ITC in selected states- Maharashtra, Uttar Pradesh, Rajasthan and Madhya Pradesh. The Monsterindia.com is now planning to extend this concept to all the e-choupal kiosks of ITC. ITC is having more than 6500 kiosks across the India.

The Rozgarduiniya.com always opens in Hindi and supports user friendly instructions. You can easily browse this website. It offers various job opportunities in medical, finance, industrial, education, administrative, manual etc.

People working at kiosk will act as a guide in case any help is required for registration process or other related matters. The Company is in talks with some of the top employers and they are positive about the feedback from them. Since various companies are planning to enter into rural market, it is for sure that they are going to employ major chunk for Rural India’s operations.

This initiative could prove to be the blessing in disguise for the Company as it is not only going to help Monsterindia.com but also the employers who have already chalked out major expansion plans in Rural India.  In collaboration with established player like ITC e-choupal, the Company is going to get an added advantage to scale up this initiative. Only the time will tell, how bigger Impact rozgarduniya.com has made in the lives of rural folks.

Roche Diagnostics India Pvt. Ltd. , a 100 percent subsidiary of F Hoffman La Roche Ltd- Switzerland based healthcare group, is entering the Rural India through Public-Private Partnership route. India’s largest diagnostics company, Roche is partnering several state governments to tap the untapped markets in semi-urban as well as rural areas. This initiative is not very new to the industry as several healthcare groups like Wockhardt Hospitals Ltd., Max Healthcare Ltd, Apollo Healthcare, etc have already put their foot forward in partnerships with municipal hospitals and state hospitals. In this case, investment would come both  from the Company as well as concerned states for products sourcing and infrastructure.

The initiative is taken up keeping in mind the future of offering healthcare services where healthcare companies are looking to take full care of patients thereby meeting their overall requirements.Roche Diagnostics India Ltd. is already in talks with various state government to provide required infrastructure and to offer unending support to make this movement in Rural India happen. According to the Company official, most of the state authorities did show some hesitancy to come forward and provide the necessary support. He continued, it is a tedious process to get the proposal sanctioned from various state departments. But now he is hopeful of taking this to the next level.

The Company would be installing some of the modern diagnostic devices, for instance, “near patient testing” machines which can provide instant output of diagnosis. These machines come with price in the range starting from Rs. 40,000 to more than Rs. 3.5 lakhs per unit. The major offering would include cardiac makers, clinical chemistry, blood gas and coagulation. A physician would be in a position to perform almost 17 tests to check symptoms related to above solutions.

Through this initiative, Roche Diagnostics India Ltd. has highlighted their image of being the innovator in healthcare. This might be the alarming signal to those healthcare companies who are just talking about Rural India in their future plans but not acting smartly.