Think Small, Gain Big

Monday, December 14, 2009

The bottom of the pyramid in India is where the next big growth story lies. And Indian companies are waking up to this fact. The latest low-cost offering of high-end durables targeted at households in small-town and rural India is a water purifier from the house of Tatas, which revolutionised the domestic automobile market by rolling out the Nano. The new water purifier blends indigenous and advanced technologies and is priced at below a thousand rupees. Other players in the water purifier business like Eureka Forbes and Unilever have also come up with low-cost, non-electrical versions priced below a couple of thousand rupees. It makes good business sense: while the water purifier market is growing at 17 per cent per annum country-wide, it is growing at a whopping 60 per cent in rural India. And this high consumption pattern in rural India is not limited to water purifiers alone.

Contrary to popular perception, it is not just SEC A or B (jargon used by marketing professionals to mean the elite and more affluent sections of our society) but also the semi-urban and rural markets that are fuelling demand in India. Rural India accounts for almost two-thirds of India’s domestic market and about 60 per cent of its income, according to the Rural Marketing Association of India. Which is why companies are tailoring their products to fit non-urban specifications. Innovation is the key to success as the products and services must take into account the differentiated needs and conditions of rural and semi-urban consumers, who are both brand and price-conscious.

Source: Times of India (link opens in a new window)