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DemandDemandCurveCurve
Glimpses into the Indian Economy andGlimpses into the Indian Economy andConsumersConsumersIndicus AnalyticsIndicus Analytics
 
1. Heterogeneity in rural markets
Unlike in urban marketswhere demand is highlyconcentrated, rural marketstend to be spread out. Thisincreases the sales effortsand costs
Most market size data on rural India takes the aggregatehouseholds or household spend for a predetermined geographicalboundary. District boundary is the most used definingcharacteristic, though some of the more research savvy look atmarket sizes down to the block level, and almost no one looks atup-to-date village level data for their sales and market planning.Unlike in urban markets where demand is highly concentrated,rural markets tend to be spread out. This, of course, dramaticallyincreases the sales efforts and costs. Consequently, though manyrural markets look good on paper, in reality they are quite costly toservice.The best way to compare rural locations is, therefore, to look atmarket density, or expenditure per unit area. The accompanyinggraphic provides the 10 best rural locations in India as per thisparameter. We find that markets that are otherwise quite large, donot show up as the best in terms of market density.Large parts of Gurgaon have highly educated households withorganized-sector jobs living in its rural areas. Moreover, high landvalues have also dramatically increased the wealth and incomes of its traditional residents. Gurgaon’s rural area, therefore, scoreshigh because of the growing suburbia.The story of Kerala is different. Cash crops combined withreturning international workers, continued repatriations and higheducational profiles make its rural markets similar to urbanmarkets.The story of Jharkhand and West Bengal’s districts is, however,different. These rural markets are characterized not by high per household expenditure, but a high population density.
Source: Market Skyline of India
 
The districts of Malda, Murshidabad andBirbhum in West Bengal and Sahibganj inJharkhand have extremely fertile land fed bythe Ganga that has contributed to the highpopulation densities in these areas. Cross-border trade with Bangladesh also contributesto the high market density levels.These four contiguous districts have a largenumber of poor, underprivileged tribalpopulation, and poor education levels. Theserural markets, therefore, are more agriculture-dominated, combined with low per capitaincomes. Consequently, these are notpremium markets such as the ones inGurgaon or Wayanad, Kollam or Kottayam.They are large markets characterized bygreater demand for low-quality, low-costgoods and services.
Unlike in urban marketswhere demand is highlyconcentrated, rural marketstend to be spread out. Thisincreases the sales effortsand costs
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