PERF RMANCE 04 - The Performance Portal - Ernst & Young

Competing for market share in
rural India
This article discusses how the project team assisted a
manufacturing company to improve its market share performance
by focusing on growth opportunities in semi-urban and rural
markets in India. It highlights an approach which has successfully
enhanced market share performance and could be adopted by
other product-based businesses.
India is among the few markets
which has shown some resilience to
the general slowdown in the global
economy and is on track to continue
in this direction, with high growth
rates anticipated over the next
few years.
A key contributor to India’s strength has
been the significant growth in consumption
from its rural market. Estimates put the
Indian rural market close to 45% of the total
Indian GDP. The rural population is defined
as those who live outside the top 400
cities/towns 1 (see Table 1).
1 NCAER (National Council of Applied Economic
Research, India) reports, Industry classification,
Ernst & Young Analysis
2 Industry reports, NCAER data, Ernst & Young Analysis
3
NSSO (National Sample Survey Organisation, NCAER
reports
Table 1. Population distribution in India
Number % of population Typical population (in 100,000)
Metros 8 7 50+
Cities 19 4 10+
Towns 396 9 1 to 10
Semi-urban towns 4,738 8 Less than 1
Villages 600,000 72 Less than 5
Categorised as rural India
Rural India accounts for more than 70% of the total number of Indian households and close
to two-fifths of total consumption 2 3 (see Table 2).
Table 2. Rural vs. urban population
Rural Urban Total
Households 145m 61m 206m
Population 732m 295m 1,027m
Earners/
household
1.4m 1.3m -
59