Infrastructure Development and Changing Market Penetration of Consumer Durables in Rural India: An Empirical Investigation

Infrastructure Development and Changing Market Penetration of Consumer Durables in Rural India: An Empirical Investigation

Debabrata Mukhopadhyay (West Bengal State University, India) and Arun Kumar Mandal (West Bengal State University, India)
DOI: 10.4018/978-1-5225-2364-2.ch013

Abstract

In recent years, Indian rural market has been gaining increasing attention from researchers in view of its growing importance in huge potential marketing for various consumer durables such as white goods, brown goods and consumer electronics. India has a vast rural market, which consists of around 833 million potential consumers constituting 68.84% of the total population spread over 6.40 Lac villages. Rural India is now exhibiting changing living standard with higher income, modern education and infrastructure development. This is leading to higher demand for several consumer durables such as colour television, refrigerator, two wheelers etc. The urban consumer's durable market is growing annually 10% to 20%. The corresponding rural market is zooming ahead 20% to 40% annually. Thus, this chapter attempts to investigate the changing market penetration of consumer durables in rural India during 1995-96 to 2009-10. This work also finds out the role of per capita income, rural infrastructure in market penetration of consumer durables.
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Introduction

After the opening up of the Indian economy in 1991 by the government of India, there has been some improvement in the purchasing power of rural people as agriculture the main livelihood of the rural community, has witnessed a phenomenal change during this period through the introduction of market mechanism, export outlook etc. Apart from this institutional change, the major technological change also has taken place in Indian agriculture in the early 1960’s which is popularly known as ‘Green Revaluation’ through Varity(HYV) of seeds, fertilizers, water resources, pesticides, better quality seeds, modern farm equipments and methods of farming have changed the village far better. As a result the rural economy has witnessed increased per capita income and development in basic infrastructure. This overall change in the rural economy has important implications for rural consumption pattern in particular; consumer durables are exhibiting tremendous growth for the rural areas.

Consumer durable is a category of consumer products that is not purchased frequently as it lasts for an extended period of time. Penetration of consumer durables in rural market is generating huge demand for first time buyer and not the replacement market. Improving rural infrastructure, agricultural reforms and power availability are boosting this growth of rural consumer durables, in which durables manufacturers are looking to strengthen their presence in rural India to leverage their opportunity. Rural India is now witnessing higher income with changing demographic pattern including higher literacy rate. Rapid proliferation of communication technology has also changed the consumer awareness and the overall aspirations of the millions of rural people living in India which is leading to higher penetration of consumer durables in rural market which is changing more rapidly compared to urban market.

The perception about the rural consumer is now changing. Now rural consumers are choosy in their purchase, they are not sticking only to essential items. Apart from food and consumable items, they are now interested in buying consumer durables like radio, TV set, Two wheelers, mostly bicycles and motorcycles, wrist watches, Table fan and ceiling fan, refrigerators etc. For this change in purchasing behavior, consumer durables market in rural India is growing very fast. Consumer durable market players like LG, Sony, Samsung, and Whirlpool are having the major share in rural and suburban market. Rural infrastructure development is the key component of rural development as well as marketing improvement. Proper rural development improves rural economy, poverty reduction, quality of life. It promotes better productivity, increase agricultural income, adequate employment and so on and forth. Various infrastructure projects like irrigation, rural road, rural housing, rural water supply, rural electrification, rural telecommunication & Internet etc. under Bharat Nirman have become lifeline to new income, new market, new business and new opportunities for all things. Since the two and half decades of economic liberalization India has focusing on foreign direct investments(FDI) with the recent campaign of ‘Make in India’ program. Under this backdrop it is very interesting and pertinent to investigate the penetration of the consumer durables in rural market for the overall manufacturing sector growth of the Indian economy.

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