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67% of Indian companies plan to expand in rural areas: Survey

Last Updated: Tuesday, March 19, 2013 - 17:49

New Delhi: More than two-thirds of companies doing business in India plan to expand their operations in rural markets, according to new research by Accenture.

Around 67 percent 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 percent) of respondents cited the high cost to serve rural customer as a key factor that limits profitability; 43 percent identified recruiting and selecting channel partners and 38 percent identified sales force competency as key limiting factors.

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

According to the survey, three-quarters of respondents indicate that developing collaborative channels--partnering with non-competing companies or other entities to share the cost of distribution--will 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 company?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.


First Published: Tuesday, March 19, 2013 - 17:49
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