Two-thirds of companies doing business in India plan to expand their operations in rural markets

Updated on: Wednesday, March 20, 2013

According to new research by Accenture, more than two-thirds of companies doing business in India plan to expand their operations in rural markets.

Around 67 per cent of companies doing business in India plan to rapidly accelerate the expansion of their businesses in rural markets, the report said, adding that the challenges that are affecting the profitable growth of businesses in the rural areas high cost and limited talent.

More than half (53 per cent) of respondents cited the high cost to serve rural customer as a key factor that limits profitability; 43 per cent identified recruiting and selecting channel partners and 38 per cent identified sales force competency as key limiting factors.

Accenture's business consulting practice in India senior managing director Sanjay Dawar said, "Rural markets lack adequate physical and social infrastructure and therefore distribution of goods and services across these markets is very costly and challenging."

According to the survey, three-quarters of respondents indicate that developing collaborative channelspartnering with non-competing companies or other entities to share the cost of distributionwill be the key for growth in the rural markets in the near future.

"Companies expanding in rural markets should therefore focus their geographic reach and more effectively invest in understanding the segment-specific nuances in those areas. They should then prioritise their channel partnership strategy to strengthen the capabilities and reliability needed to reach customers in the last mile," Dawar said.

Dawar further said that "engaging individuals with a high standing in rural communities as influencer must be a key component of a companyâ€™s plan to acquire and retain rural customers.

"Meanwhile, after-sales support strengthens a company's rural bonds and commitments, which drives increased customer loyalty across all stages of the product life cycle."

The research, Profitably Selling to India's Rural Customers: Hidden Lessons From the Masters, includes qualitative surveys of 40 business leaders and 20 industry experts and academicians and a quantitative survey of 70 businesses operating in rural Indian markets across sectors.

Two-thirds of companies doing business in India plan to expand their operations in rural markets

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