Thursday, February 10, 2011

The "haat" of Rural economy

Rural markets is where the action is for marketers, and haats are the best bet for companies to reach out to this burgeoning consumer segment. As these hubs emerge as the nerve centre of distribution and points of communication, an RMAI study on haats, available exclusively to FE, sheds interesting light on how India Inc can cash in on the opportunity.
Location and size matters

A haat is spread over 5-6 acres and located about 24 km from the nearest big town. The catchment area for a large haat is comparatively high in states of Madhya Pradesh (100 villages), Bihar (85 villages) and Orissa (79 villages), while it is lowest in Andhra Pradesh (14 villages). In case of small haats, the catchment area in MP is highest at an average of 32 villages, while it is lowest in AP (11 villages). In the past, haats in rural areas were organised by zamindars and the rulers of princely states and later by the panchayats. Today, in most regions, panchayats are the organisers and owners of haat land areas. However, in states such as Tamil Nadu (75%), Bihar (75%) and UP (55%), private parties are increasingly organising haats. The participation fee on the haat day averages Rs 13 per stall. It ranges as high as Rs 24 in Maharashtra and low at Rs 6-7 in Bihar and MP.
Money spin 

Though people from all rural socio-economic classes visit haats every week, the proportion of SEC R3 and R4 is comparatively higher than that of R1 and R2. Companies use haats as an awareness generation medium. Nearly three-fifth of FMCG sellers at haats purchase products on cash, while the rest two-fifth of them buy on credit. Sellers prefer to buy from cos that offer them longer credit periods and higher margins. In case of credit purchases, the credit period averages around 11 days. Average margin offered to FMCG sellers at haats is 9%, though it varies from state to state.

Market matrix
Haats sell almost all kinds of products that are needed for a rural lifestyle, from agricultural products to hair pins. Though agricultural products (53%) still have a major share, manufactured goods (19%) and processed foods (6%) have gradually found entry. On any haat day, an average buyer spends around Rs 40 on FMCG products. The spending amount varies from state to state. It nears Rs 60 in states of UP and Maharashtra, while is comparatively lower at Rs 22 in Orissa and Andhra Pradesh. The average amount of sale of branded products by an FMCG seller is around Rs 2,224, while his total sale (including unbranded FMCG products) adds up to around Rs 7,521. To increase their sales, a seller usually tries to visit several haats. On an average, a seller visits at least three haats per week. Though sellers in Maharashtra show a more aggressive trend of visiting six haats per week, those in Orissa and Bihar largely concentrate on two haats in a week.

original article from FE


No comments:

Post a Comment


Related Posts Plugin for WordPress, Blogger...