Is Real Indian market at the bottom of the pyramid?

Does anyone doubt this reality? Its a fact. See the telecom sector which grew rapidly in India and has entered deep hinterlands to the bottom of the pyramid and is tasting its success. Need was there, ultimately all human beings have the needs and wants and its just that the econimic conditions does not permit them that they are confined to think in alimited way and live by their means. Bu the need to communicate wal alsys there and initially the telecom companies thought to enter ths market casually and even genrously as per the social obligation but after sometime they started making money in this segment. This example is repeated in many segments whether FMCG or finacial serices or banking or autos or fertilisers, etc. After all those living at the bottom of the pyramid do have thier feelings , they also have to marry thier daughters, they also have to invite people in receptions they also have to travel from one place to another, they also have to quench their thirst, they also aspire that their children study in good schools. So we see that the market is there. Its just that to finetune the products and its delivery that its become a viable business proposition. BUt once you have mastered the art, the sky is the limit. The market is huge. The good news is that NREGA has ensure that the money is reaching them, the RTI will further strengthen the governance, the Unique Identity will again further strengthen this process and on top of it each day the govt is trying to digitise the datas as much as possible. Also not to mention several NGOs making a beeline to offer to help the teeming millions in hinterlands of Bimaru states of India (though Bihar has registered 11.03% growth rate, 2nd only to Gujarat). This segment will further get a leg-up with various foreign investors dying to come to India and they all are finding the market at the bottom of the pyramid. SO any marketer who has not realised this reality, better wake up now, beacuse this is real India.

'Financial Inclusion' is on top priorities of any financial institution or bank and FMCG is introducing new packages of small quantities for their existing and new products. These are some of the initiatives taken by strong corporates to enter the rural market or so called 'bottom of the pyramid'.

More than 60% of the total Indian population in the rural areas, this does not mean that their purchasing power is also in the bottom bracket. It is assumed that since they are in rural areas, their purchasing power is also less, this is a debatable topic and this is where lies the opportunity for exploring a new market or maybe a new business.

The perception of these people is a lot different from the urban residents based on the fact that the literacy rate is very low and minimum exposure to the current trends of the urban market(including media). Awareness about products is a big issue in such markets as they are unreachable by most of the marketing campaigns done by big corporates. Thus, if someone is not aware about a certain product or service then a demand will also not exist.

Purchasing power is debatable topic and the figures will vary across regions. I will take the example of Andhra Pradesh, even before and after the emergence of IT sector, the agriculture sector remains the backbone of AP's revenue figures. Major funds which are invested in Hyderabad, come from small coastal towns; but, being a Grade 'A' city, Hyderabad enjoys all the publicity and focus. This means, their is a market available which has been untapped. Let also consider the mining sector, the people working in the mines receive a good pay but since they lack the knowledge or awareness about personal finance or consumer goods, they are unable to come out of it.

I would end this by saying that there is a huge opportunity in the bottom pyramid and special initiative and activities need to be taken to cater this customer segment. 'Rural marketing' is a very important subject which is being studied and researched. Hopefully, in the coming years we may have another debate saying ' Which is a bigger market: Rural or Urban'............. 

Effort is required to INNOVATE the products to suit the BOTTOM OF THE PYRAMID consumer & you can win the size of economic consumption resulting a large volumes of revenue. The lot of examples are mobile phones,Soaps,Ditergents,sechets of shampoos, small food items packs etc. As I feel that BOP is not rural population only contrary to that all tier ii & iii C class cities are falling under this

Given the kind of initiatives the UPA government has taken in recent years, for rural upliftment and development, no doubt the most promising market today lies at the bottom of the pyramid. Various schemes like minimum employment gaurantee, NREGA Schemes, Agricultural subsidies, Health schems, credit schemes, agricultural capacity building schemes etc., have all contributed to the overall economic and social development of rural India. The potential lies within the rural mass. But the major challenge is reaching the target. The rural areas being mostly fragmented and the infrastructure not being very good, providing goods and services at best prices is a bit difficult task.  

Yeah i agree with the statement, because the distribution of income in India is not equal means income inequality in India is major problem. Due to this a major part of population belongs to low income group. That is why we can say the real Indian market at the BOP...........

Bottom of the pyramid is the real India. It showcases the culture, tradition of people. Traditional people of India believed in value for money. This is the major factor that the successful marketers used in tapping the Rural India. For example, look at Cavin Care, they were the first to start the sachet revolution. Even MNC’s haven’t been able to understand the rural market and were unable to compete with local companies. So what I intend to say is that, Indians understand Indians better and the market is huge so the marketers should look at their own market before going out of India.

Let me be a little more precise on Mr. Suryakumar has said.

1. The market is huge and servicing is a big task as there are inadequate infrastructure facilities, communication language and media (Language because the dialects varies for every 100m), Literacy levels are low.

2. Consumption is in low quantities mainly because of low disposable incomes and high affinity towards alcohol.

3. Once loyal to a brand they are loyal forever.  But there is a major problem, that is they are sticky loyals that is once they become loyal changing them to another brand is a task that will take a lot of money and time. So RM is Gem for those companies that reach the market first.

4. Seeking value for money. Here, also we have a major lock that is RM is a kind of market where in people actually spend their time to an extent of checking price for all the volumes(50gm, 100gm, 500gm, 1kg, etc) and then determine their best buy.

5.Word of mouth. The word of the mouth happens with knowledgeable people. For example the panchayat head influence people, owner of a shop influences people,etc..

See,this is just a concept firstly propounded by late CK Prahalad but seeing the recent dead realities of rural indian econmy this seems like crying for the moon at present.We keep harping on our GDP growth 7-9% but those getting its benefit are only 25% of entire indian populace.The measures of poverty alleviation are flawed in india,thoughgovernment has now gird up its loins and efficient measures are being executed.But,its outcome is yet to come up.At present these talks about market at bottom of pyramid doesnt hold true.

The cream in terms of volume is at the BOP as far as Indian Market is concerned.

There are many example in the good old days Cycle used to be the mode of transport then came scoter and now Motor Clcle. Similarly the Maruti Car and the television where in Doordarshan has the maximum viewership because of its reach at the BOP and more recently Mobile phone which is currently 370 millions and growing by allmost 12% per annum.

So the REAL MARKET IS BOP in INDIA.

If like most developed nations we produced most of our things to consume ourselves then we will still be producing very less.

Indian economy is primarily made up of low cost Outsourced Jobs which is growing at a fast pace(7-8 pc). Our own consumption figures have risen but much slower. Thanks to the low cost nature of our outsourced jobs people dont want to afford products that seem absolutely normal in many nations. Like a normal family car in US/Europe/Japan will be a Accord sized car but A family car in India was a Zen/M800(ideally designed to transport 2) 5 years back and has grown to WagonR sized cars now a days. Alto Still remain as the best seller. Manufacturers are not able to push people to buy bigger, safer, comfortable cars.

This is only an example. Most other markets too show similar trend. Only low cost products will be able to garner lots of interest in India for many years to come.

I agree with the concept of developing Tier II and III cities in the rural econony .The development of Infractural activities will push the growth line further and thus allow to reach the bottom level of pyramid .This will open a new concept of taping the untaped market.

I agree with suryakumar

Yes, because tier II & tier III cities still have a lot of potential. Being a fraction of this pyramid. I would say companies are coming & sustaining, by inducing consumers in their unique ways. And also because we people have a good trait of saving & then consuming in future.

Be it FMCG, or Consumer Durables, or Auto Sector,or Health-care, or Media, or Banks, or Telecom, or Retail, or Consumer Finance, or ITeS (BPO's).

Everyone wants to grab their pie & to give momentum to the Economy.

And even the major companies viz. Nokia, Google, Mercedes enjoy their share.

(I wouldnt have even thought seeing BMW, Mercs, Audi in my city)

Well Mr.Suryakumar, you have thrown light on important aspects which are acceptable. 

There is a paradigm shift in the think tank of FMCG and telecom companies. They have identified the tier II towns as the next best destination for opening up retail store formats that would suit the buying powers of the rural Indian market and telcom also has seen the potential to sink deeper into the rural terrain.

I would go ahead and say that every 1 1/2 Inidan would have a cell phone ;D (Take into account the small bachcha party to have one too!!) This is a very positive shift and it is also a step towards getting the infrastructure being made available to the rural markets albeit indirectly. Not a government initiative which i would have loved to applaud but nevertheless a positive shift!! Thanks once again for a very interesting debate and the referral Jayant :))

This stand taken is not agreeable to a greater extent, may be up to some extent.

The real back born for our economy is being emerged from the people in the bottom of the pyramid or the rural economy. Our country is able to sustain several contraints because of the rural economy. Hence, it should spread every nook and corner of our country to have better reachability and also to improve their life style to motivate them for the growth of our economy as whole.

In economic sense markets should not be segregated. But somehow in India it is a different story thanks to our failed policies which is a road block in developing India as a homogeneous market, everyone consuming similar products and services.

Look at America, they have an economicaly feasible market. Growth is sustained by Immigrants 3.5 million of them coming in every year with 450 million of tourists poring in every year. So companies can grow away from their existing consumers supplying their marginal level production to this dynamic market. This probably is the only way businesses can grow finding new buyers and depending on existing buyers in the normal sense of supplying them when they need.

So considering these factors the Indian businesses can grow only if they develope this huge market at the bottom of the pyrmaid meaning rural areas slowly or as much they can afford to do.

I agree with Mr.Jayant Vishnu and also MS.Priya Varadhan.

The good examble will be of the Reliance group in their retail segment as well as telecom, the BSNL in telecommunication, and almost all other industries of home appliances, two wheelers and minicars, are focussing to target this segment.

today all are available through financing under EMI payments. The people comes under this bottom of the pyramid are able to elevate their life style. 

Those who are at the top of the pyramid cannot just ignore the 200 plus million (or even 456 million) Indians who are at the absolute bottom of the economic ladder. They consume mainly the food sector and the retail sector of the market which has very good opportunity in this area i.e, the bottom of pyramid. Also, another important market is growing and that is the Telecom market specially the Mobile revolution in India. I think all the Mobile operators are targeting the rural market and as the tariff's goes down the penetration will also increase. According to estimate by TRAI in 2012 every alternate Indian will be having a mobile. This must be targeted to the bottom of the pyramid.

I agree, telecom companies, espacially Airtel show cases it.. perhaps, what Jayant has said is  future mantra for all corporates