7/27/2019 Rural Marketing in India- Final

1/18

RURAL MARKETING IN INDIA: RETAILING

THROUGH MICROFINANCE INSTITUTIONS

Group Member

Ayushi Deriya

Rajkumar Bhalodia

Tanmay Garg

Prajesh Borkar

Omnath Koyande

Gaurav Kumar

7/27/2019 Rural Marketing in India- Final

2/18

7/27/2019 Rural Marketing in India- Final

3/18

7/27/2019 Rural Marketing in India- Final

4/18

CHANGING LANDSCAPE OF RURALMARKETS IN INDIA

India lives in its villages. Mahatma Gandhi

6.27lakhs- villages, 70%-population, 3.2 million sp.km-area.

Agriculture lynch-pinof Indian economy.

Ability to generate employment opportunities (2003, 60%of the total labor from agricultural sector) and contributionto Indian GDP (in 2008 at 17.2%).

Net Domestic Product (NDP) shares comprised agriculture

at 46%, industry at 21% and services at 33%.

Total income in rural India (about 43% of total nationalincome) is expected to increase from around $220 billionin 20042005 to $425 billion by 20102011, a CAGR of

12%.

7/27/2019 Rural Marketing in India- Final

5/18

60% road connectivity, 90% electrified, 44% homehave electricity, growth in the literacy rate from12.10% in 1951 to 59.40% in 2001.

These developments, apart from the awareness

through media like radio, television, etc., led tochanging lifestyles of rural individuals.

Especially in terms of product demand, buyingpatterns and consumer behavior.

Rural markets account for half the total market forFMCGs like TV sets, fans, pressure cookers, bicycles,washing soap, blades, tea, salt, toothpowder etc.

7/27/2019 Rural Marketing in India- Final

6/18

National Sample Survey 20032004, rural Indiaaccounts for 62% of consumer expenditure incomparison with 38% of urban India.

Increasing demand- attributable to factors like growthin income and increase in purchasing power.

Factor- increase in procurement prices, goodmonsoons, government schemes, loan waivers.

Increase in awareness Media Increase Demand.

Companies like HUL, Britannia, Colgate Palmolive,Coca-Cola, etc., started catering to the needs of rural

consumers. 17% of villages account

for 50% of rural population

and 60% rural wealth

7/27/2019 Rural Marketing in India- Final

7/18

CHALLANGES IN RURAL DISTRIBUTION

Large number of small markets Dispersed population and trade Poor road connectivity Multiple tiers Poor availability of suitable dealers Low density of shops per village Inadequate banks and credit facilities Poor storage system

Low investment capacity of retailers Poor visibility & display of products

on rural shop shelves. Poor communication of offers

7/27/2019 Rural Marketing in India- Final

8/18

RURAL DISTRIBUTION CHANNELS

Five layers of distribution channels for the

movement of products from the company depot tothe interior village markets.

Layer Channel partner Location

Layer 1 Company depot / C&F A National/state level

Layer 2 Distributor/van operator/ super

stockiest/ rural distributor

District level

Layer 3 Sub-distributor/ retail stockiest/

sub-stockiest/ star seller /Shakti dealer

Tehsil HQ, towns and large

villages

Layer 4 Wholesaler Feeder towns, large villages,

haats

Layer 5 Retailer Villages, haats

7/27/2019 Rural Marketing in India- Final

9/18

SUPER MARKET OF INDIA

Mob ile Trader

7/27/2019 Rural Marketing in India- Final

10/18

7/27/2019 Rural Marketing in India- Final

11/18

CORPORATES NEW CHANNEL FOR

REACHING RURAL CUSTOMERS

In 2001, HUL came out with Project Shakti, with a vision to

reach over 100,000 villages and 100 million consumers. HUL partnered with women from Self Help Group (SHGs) and

made them direct-to-consumers sales distributors (direct-to-home distributors) under Project Shakti.

The Shakti entrepreneur was trained by HUL for 3 months, ontechniques of marketing and business management.

Shakti entrepreneur conducted business of INR 15,000 permonth, which gave her an income in excess of INR 1,000 permonth.

Shakti entrepreneur, a rural woman borrowed money from herSHG or a micro-finance bank.

SHG comprises of 1020 members, who were mostly poor andunderprivileged people.

7/27/2019 Rural Marketing in India- Final

12/18

After 2 years of initiating this project, in 2003, ProjectShakti contributed to 10%15% ofHULs rural sales.

This initiative made HULs products available in the areas,which lacked access and also increased brand visibility.

2008, Godrej & Boyce, developed a Nano refrigeratorcalled ChotuKool for village segment.

On the basis of feedback given by MFI distributors, theprice was brought down from INR 3,700 to INR 3,200.

The sale of each refrigerator is generating commission ofINR 150 for SHG member and INR 100 for Sakhi Retail.

Many other MFIs like SKS Microfinance, SpandanaSphoorty are coming forward to tie-up with companies, fordistributing their products.

7/27/2019 Rural Marketing in India- Final

13/18

7/27/2019 Rural Marketing in India- Final

14/18

7/27/2019 Rural Marketing in India- Final

15/18

HULS DISTRIBUTION NETWORK

Products are distributed through a network of7000 redistribution stockists.

1 million retail outlets

250 million rural consumers

35 C&FAs in the country Who feed theseredistribution stockists regularly.

Provide tailor made services to each of itschannel partners.

2000 suppliers and associates 40 manufacturingplants decentralized across 2 million miles ofterritory

7/27/2019 Rural Marketing in India- Final

16/18

7/27/2019 Rural Marketing in India- Final

17/18

EVOLUTION OF HUL DISTRIBUTION MODEL

Phase 1A

Direct Coverage

Phase 1B

Indirect Coverage

Phase 2

Operation Streamline

Phase 3

Operation Shakti Phase 4

Operation Bharat

7/27/2019 Rural Marketing in India- Final

18/18