Rural Market: Shelter for Crisis-hit Enterprises

The countryside is home to 76.5 per cent of Vietnamese population and the number of consumers trebled urban areas. However, domestic enterprises mainly focus on urban markets and ignore this potential market until the economic crisis hits their budgets.

 

The rural market plays very important roles in the national social and economic development. This is the supplier of foods for local and foreign markets and materials for processing industries. The rural market also consumes large volumes of agricultural materials and consumer goods.

 

Living standards have been significantly heightened in rural areas, especially where the industrialisation and modernisation have accelerated. Rural consumers not only purchase essential goods but also other nonessential items like computers, electric cookers, mobile phones, fridges, TV sets and internet services. More and more people receive monthly income of over VND1.5 million and they are spending more on nonessential goods and foods. According to many independent surveys, up to 95 per cent of rural households are willing to buy TV sets, 92 per cent can support electric and LPG cookers, 33 per cent are affordable for cassette players and radio sets, 30 per cent want to buy fridges, 9 per cent wish to own personal computers and 1 per cent expect to connect to the internet. Thus, many specialists recommend producers to focus on the rural market where consumers need higher quality products. The rural market has narrower rooms for cheap and imitated products.

 

At a market day held by the Business Studies and Assistance Centre (BSA) in Chau Thanh district, An Giang province, local residents spent much although the event was not organised immediately after the harvesting season when famers usually had more money at hand. Within two hours, all exhibited goods were sold out. Many consumers even spent up to VND700,000 to buy goods at Co.op Mart booths. Attending enterprises acknowledged that the demand was much higher than they had forecast.

 

According to BSA, the rural market accounts for 70 per cent of total goods sold in Vietnam. Although the potentiality of rural market was known, not many enterprises focused their investment strategy in that area. Distribution networks of local enterprises are not strong enough in rural areas and this is the chance for bad quality goods to penetrate and flood this market.

 

According to experts, crisis is the golden time for domestic enterprises to return to exploit rural markets which have been disregarded for a long time. Previously, enterprises relied on high quality products with large added values to make big profit; they now have to change their business disciplines to boost sales to exist in the times of global economic crisis. This is a good chance for domestic firms to seek footholds in their home market after much of time focusing on export markets which are shrinking on falling demand. The rural market now lacks supermarkets, commercial centres, wholesales markets, traffic and other infrastructure to develop. Meanwhile, the approach to rural markets is an effective way-out for enterprises maintain growth and stabilise production in the times of economic crisis. To deepen their roots in this market, enterprises need to expand distribution networks, build more shops and supermarkets to meet the shopping demand.

Besides, they need to focus more on the demands for goods from countryside consumers. They need to learn more about the tastes in different localities and in different times in the year. They should also launch promotion programmes to boost consumption in this market. Besides, Vietnamese enterprises must change their business methods and attitudes to deepen its footholds on rural and mountainous markets. Specially, they must pay attention to product quality because this is a decisive factor in winning the trust of consumers and making inroads in this market.

 

Most importantly, enterprises need to launch marketing campaigns via mass media like newspaper, radio and TV to draw the attention of consumers and stimulate purchasing power in rural markets. At the same time, they need to conduct careful studies to grasp demands and tastes to know more about income, consumption habits and tastes of the people to launch timely plans. According to experience of good performers in rural markets, enterprises need to have a good stock of goods to meet the market demand and train selling disciplines for their staffs. Peddling, supported by inclusive marketing programmes and promotions, seems an effective method in rural areas. This method needs to be organised regularly to make a familiar presence in this market.

 

The rural market has a lot of opportunities and potentialities; thus, enterprises need long-term investment strategies. Trademarks only exist for a long time when enterprises have honesty and enthusiasm.