interestingly i have been reading a lot of articles, reports, discussions on rural spending. But i remember studying 'Fortune at the Bottom of the Pyramid' theory way back in 2005-06 when i was in b-school and now all of a sudden its back again. with real numbers and figures and growing leaps and bounds.
So an article by Wharton says that rural spending in india has bypassed urban spending.In absolute terms, the spending by urban India during this period was pegged at Rs. 2,994 billion (US$53,607 million) and spending by rural India at Rs. 3,750 billion (US$67,144 million)These findings are part of a recent report titled, “Sustaining the Rural Consumption Boom,” published by Crisil, a Mumbai-based global research and analytics company.
The Crisil report says that ownership of TVs in rural india went up to 42% in 2010-11 from 26% five years ago.Also one in every two households has a mobile phone. WOW. It also says that the consumption pattern is shifting from necessities to discretionary goods. Which means they are spending less on food and more on so called "new necessity" goods. It also says they expect spending to rise on education, healthcare and entertainment but that's yet to be seen.
So suddenly companies have increased their rural spending budget and who are these companies? FMCG, durables, 2/4 wheelers etc. Suddenly the fortune is becoming real, the treasure stories true and all the Indiana Jones's of the world are hitting the villages.But it makes one sit back and wonder.Is the rural india hit by the consumerism virus and are they aping to be like their urban counterparts?
We all have the image of our villages (our great-grandfathers definitely remember) being simple and easy living. A place for quiet and peaceful living without the car horns or kids glued to their tv or videogames or having home cooked meal instead of pizzas for dinner. I know its easy for me to say as am a city kid and has grown up with all the little goodies around me and now am acting like an uptight idiot and saying all the goodies i had are bad for them. Thats not my point.
MY point is that are we pushing our mindless consumerism to people who are better off without it? Yes let them have cable tv and refrigeration and bikes and cars. But are they spending money on that instead of buying healthy food like veggies and fruits? are they spending less to send a child to school or provide proper sanitation to family members? Is having a TV more important than having a clean toilet? Are they spending money on coke and pepsi rather than making sure they have clean drinking water? The Chhotu Maggi ad is a classic example of a small and low priced product launched for the rural market. But do we really want their kids to also forgo wholesome meals like urban kids and join the obesity rates?
I may be over-reacting and everyone can think their own good but does a anyone can sell anywhere do the concerned good. I dont know. But i think that in the race to get toplines, bottomlines , market share, global presence etc companies are not looking beyond their balance sheets and trying to squeeze the man for all his worth. The government should get these companies to in turn also develop employment opportunities, education, awareness, clean sanitation and many more too.
Wrong or right but doesn't seem right to me.
A small point to be noted. My husband pointed out that 'Bottom of the pyramid' refers to people with less disposable income and they may not necessarily be rural. They can be urban too. And through the years the rural population has actually emerged to have more disposable income than many of the their urban counterparts.
Thus, i am making a note of this and also saying that i have assumed the 'Fortune at the bottom of the pyramid' to refer to the original Kotler definition of rural market and un-utilized disposable income that they have due to lack of options to spend on.
Comments, corrections, suggestions, inputs etcetra etcetra are all welcome. Pls contribute guys.
Consumerism catches on very fast and sooner or later the rural India will be caught in its grips. With the FDI in retail opening up we will see exponential growth in consumption in urban as well as rural. this is because of the discounts that will be offered by retail giants such as walmart. consumerism is good for the economy, but to a certain extent.increased consumption leads to growth in the manufacturing sector. the reason as to why our govt. has the 30 % local sourcing norm (from MSME). Even though it may not be in rural India's best interest, we cannot stop consumerism. The Indian culture is to live a simple life and consumerism is changing that culture fast. In the end although it may lead the rural India to spend on things they consider unnecessary now, but at the same time will lead to growth of the economy as a whole.
This is a perfect thought. These advts seem attractive and create that push. Financial literacy is grossly zero and also negative. They understand selling land and buying a car, but buggers don't understand investing the same money and growing it. If farmers have a good season, they will splurge money on cars, clothes whitegoods, etc which they don't actually NEED, but not all will avoid that spending and invest that money as buffer hard times.
Lets admit one fact that the so called philosophies like "Bottom of the Pyramid" are definitely good pointers towards trends. But these are to be taken with a pinch of salt. Management experts and gurus come out with the theories and make it convincing given that it comes from the brains from creamy institutes. Once we see the practical world we know that these should not be taken at face value.
Most of the philosophies are just fancy models of research mixed with common sense (majority of the latter) so it needs to be taken lightly.....businessmen and companies know the pros and cons and adapt different strategies rather than following some outdated theories. Ultimately what is right or wrong depends on what works in the markets.