Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.
Last Published: 7/27/2017

Poor  infrastructure  is  a  major  problem  that  makes  distribution  difficult  and  reduces  demand  for some products in rural areas.  In order for sales techniques to be successful, distribution coverage is important. Indian consumers are serviced by an efficient, but highly fragmented, trade system consisting of over 12-15 million retail and wholesale outlets, spread over many urban and rural population centers.   India has the largest retail outlet density in the world, but the majority of these stores are very small in size and unorganized.

With  more  than  550  million people  under  the  age  of  25,  India’s  rapidly growing  population  appears  to present limitless opportunities, but many Indian and foreign companies have discovered that for many product categories, only a fraction of India’s 1.2 billion population can be regarded as potential customers.  Many companies have been disappointed with the response to products launched in India over the past few years. Initially, these companies grossly overestimated the depth and size of the Indian market for their products. Projections for the growing Indian middle-class range from 260-540 million by 2025, but these figures have proven to be off the mark for certain products as marketed to the typical Western middle class consumer. 

Transposing brands and products from other markets will not always work.   Suitability and adaptation to Indian preferences and conditions is regarded as a significant benefit to Indian consumers and is therefore an important factor to be considered while designing a sales strategy.

A successful sales strategy will recognize and deal with the existence of strong local competition - this exists in many product and service categories and should not be underestimated.  U.S. firms must also carefully compare customer needs and the quality of latent demand with the level of service that they want to offer in India.  Even among the affluent middle class, much of their money is still spent on need-based consumption rather than on luxury goods.

While selling in the Indian market can be a complicated and difficult experience for new entrants, this can be avoided  if,  at  the  outset,  the  market  opportunity  is  assessed  accurately  and  the  capabilities  of  local competition are not underestimated.   Only in unusual circumstances should new foreign entrants create a new and independent sales infrastructure, because it is very expensive in the short run and requires sustained investment to build over the long run even if the product is successful.

At first glance, the bulk of the purchasing power in India would appear to be concentrated in its urban markets. However, a majority of the Indian population lives in rural areas distributed over some 638,000 villages. The balance lives in 7,935 towns of which approximately 468 have a population of more than 100,000 inhabitants.

It is said that the “real” India lives in the villages.   All marketers, both Indian and foreign, have benefited by paying attention to the marketing potential of rural India.

Analysis of consumer purchase data over the last several years by various research agencies has shown that rural markets in India are growing as disposable income and literacy levels increase, and television access stimulates demand.   Analysts predict that Indian rural consumers, who will be worth $100 billion by 2025, will drive consumption in the near future. Due  to  the  influence  of  the  media,  consumption  patterns  in  rural households have also changed significantly in recent years.   Indians in rural areas are far more brand conscious, and this is generating demand for some products that were previously unfamiliar.  Growing brand awareness makes it all the more important for U.S. companies entering the Indian market to register their brand name with the Indian trademark office
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



India Trade Development and Promotion