RURAL MARKETING

“The future lies with those companies who see the poor as their customers”

~C.K.Prahalad

The Potential of the The Potential of the

UnreachedUnreached

What makes Rural markets What makes Rural markets attractiveattractive

•Substantial increase in purchasing power of rural communities.

•Due to the effect of Green revolution, rural areas are consuming a large quantity of industrial and urban manufactured products.

•Rural marketing initiatives are driving manufactured or processed inputs or services to rural producers or consumers.

What makes Rural markets What makes Rural markets attractiveattractive

RuralMarkets

FMCGRs 65000 crs

DurablesRs 5000 crs

Agri-inputsRs 45000 crs

2/4 wheelersRs 8000 crs

Estimated annual size of the rural market

742 million people

What makes Rural markets What makes Rural markets attractiveattractive

RuralMarkets

6.6 million households have formal savings

investments

2005-06 LICsold 55% policies

in rural India

41 millionKisan Credit Cards

issued

42 million householdsuse banking service

6 lac villageswith Public Tel.

What makes Rural markets What makes Rural markets attractiveattractive

– Of 20 million Rediffmail signups, 60 % are from small towns. Similarly the 1,00,000 who have transacted on Rediff online shopping site, 50 per cent are from small towns

Rural marketing

• Two thirds of the countries live in rural areas and almost half of the National Income is generated here.

• Rural market accounts for 56 % of the total FMCG demand, the tobacco major is moving fast to add 31,000 villages to its market – and all by leveraging its web of 6,000 e- choupals

CHARACTERISTICS OF RURAL CONSUMER GROUP

LOCATION PATTERN:-

SCATTERED MARKET •Rural market is a scattered market. Rural population is scattered across 5,70,000 villages. •Unlike urban demand, which is highly concentrator rural demand is scattered over a larger area.

SOCIO-ECONOMIC POSITION:-

Rural consumers continue to be marked by low purchasing power/low per capita income. They continue to be tradition based community.•60% of rural income comes from agriculture.

CHARACTERISTICS……CONTD.• CULTURALLY A DIVERSE AND HETEROGENOUS MARKET Rural markets are diverse in terms of religious, social, cultural and

linguistic factors. Heterogeneity is the no.1 hallmark of the rural market- 5,70,000 villages, half dozen religions, 33 languages, 1,650 dialects and diverse sub-cultures characterize the market.

LIFESTYLE Conservative and tradition bound lifestyle. Lifestyle undergoes major change which may be contributed to several

factors: 1. Growth in income and change in income distribution. 2. Growth in education 3. Enhanced media reach. 4. Growing interaction with urban communities. 5. Marketer’s efforts to reach out the rural market.

RURAL DEMAND• STEADY GROWTH Welcome change in the composition of rural demand. Many new products have entered the consumption basket of

the rural consumer and relative shares of different categories of products have recorded welcome change.

Several products already well established in rural market. Textiles, bath soaps, medicines and hygiene products, fans ,

TVs, packaged tea etc.

In many products rural consumption account for larger share than urban.

In washing soaps, rural share is over 60%, in bath soaps, more than 50% etc..

• In several products rural market has overtaken the urban in growth rate

A survey by National Council of Applied

Economic Research (NCAER) shows that rural market is growing faster than urban market in several products.

These include packaged tea, analgesics, detergent powder, washing soap and detergent cake.

Marketing mix for rural markets• Product strategy - Induce rural customers to buy and try the new

product

i.e trial by low unit packs , Sachets(HLL),Cavin Care -Chik, P&G-Vicks Vaporub, Godrej with 6ml sachet , HUl – 75gm lifebuoy & 100gm Wheel Detergent , One Rasna schet can make six glasses

Social & Cultural variations – ITC sells its Gold Flake Cigarette pack in yellow cover in South India : Purity & same brand in Golden color in North India .

Visual Patten on Packing : Red soap signifies Lifebuoy soap

• Combi- Packs – Colgate offers toothbrush with small toothpaste

• Family Packs-Britannia , Priyagold

Product that are fairing well are Parle G , Lifebuoy ,Lux ,Nirma ,and Ghari ,Amul , Coca Cola ,Colgate , Eveready batteries , LG Electronics ,Philips , BSNL , Life Insurance Corporation , Cavin care , Britannia , Hero Honda

Sunfeast and Ashirwad which today contribute to 60% of ITC’s FMCG’s business find a place in all its rural shop shelves

Marketing mix for rural markets• Specifically Designed Product – Rajdoot , Eveready brass torch- Jeevan

sathi , BATA introduced PVC shoes• Sturdy Product- HLL – Lesancy (big soap)• Brand Names- Pilli tikki forn washing soaps , Logos inserted so that

consumers recall the product, Britannia launched economy Glucose biscuits –Tiger

• Utility oriented products- Philips introduced ‘Bahadur’ in rural area – a 2 band trasistor which covered entertainment channels as well

• Brand names – Britannia ‘s Glucose biscuits as Tiger with red background symbolizing energy.

Samsung’s CTV’s for rural markets in the 14” and 20” categories ,semi-automatic machine below Rs 10,000/-

Salora International , LG Electronics launched Sampoorana , India’s first TV with Devnagri script on screen display

LG’s Golden eye and Onida’s KY Thunder

Marketing mix for rural markets• Pricing Strategy- Low cost products i.e Clinic-plus in

50 paisa, one rupee , two rupee pack, Colgate at Rs. 50 /-

HLL derives 50% of its revenue from rural areas, sells Lux shampoo in a four militer sachet priced at 50

Paisa and six-milliliter sachet priced at one rupee ,• Quality products – Marico - Indian Edible Oil Company• Substitute costly parts with cheaper parts and materials –(

Milk proteins with Soya protein) Britannia-Probisk• No steady monthly income –LG electricals• Seconds sale – Akai in India- sales increase

Marketing mix for rural markets• Place or Distribution- Co-operative societies Utilization of petrol pumps Feeder markets / Mandi towns Delivery vans- HLL( Operation Harvest ) fleet of vans regularly visiting

remote village and ITC Project Shakti is HLL’s rural initiative which is an attempt to use self help

groups as an alternate distribution channelSamsung- Van displays all the products , the company has tied up with

local distributors to showcase the Samsung range in local melas and fairs

Marketing mix for rural markets

• Promotion – Television Cinema- 36% of the population view cinema radio Print Media – 9% read newspaper , 5%

publications reach rural areaHoardings , Posters , Banners- in Melas and puppet

shows e.g. HLL,ITC,Godrej,Nirma ,P&G are major FMCG players who book their stalls

Gift Schemes etc, Unilever – Video Vans

Arvind Mills

• When Arvind Mills discovered even the cheapest brand could not make dent in the rural markets .

• It introduced ready-to-stitch Ruf&Tuf Jeans with price as low as 195 a Piece .

• The Jeans were distributed using local retail outlets in villages with population up to 5,000 .

• Tailors were trained and given Machine accessories needed to stitch heavy denim

• In about year and a half Arvind sold 50 Lakh Rug & Tuf kits because it had beaten the lowest-priced organized sector jeans around Rs. 300 at that time

Coca Cola

• When Coca –Cola re-entered the Indian Market in the mid-1990’s , it took the high road to marketing and got nowhere.

• More recently it re-invented itself and its TV commercial showed Bollywood star Aamir Khan first as a Punjabi Farmer and also in other rustic roles in different parts of India .

• Coca –Cola available at Rs. 5 a bottle • Result was within months Coke was able to

reach out to rural audiences in large numbers all over India .

Cavin Care • Cavin Care ( Chik shampoo fame ) found that

many rural consumers are using bathing soap for washing hair since it was practice followed for years

• The rural consumer was aware that shampoo cleaned hair better , but at Rs. 2 a sachet it was still beyond reach .

• Cavin Care therefore launched Chik in sachet prices very cheap .

• Today it is a huge success in rural markets .

RURAL MARKETING IS DEVELOPMENTAL MARKETING

• FACINATING AND CHALLENGING

Challenges• Lack of understanding of rural customers

and data

• Poor infrastructure

CHANNEL MANAGEMENT

• Non availability of dealers.• Inadequate banking and credit facilities

• The Village shop is the key to Rural Distribution.

Sales Force Management

Rural Marketing Calls for Some Special Traits on the Part of Salesmen.

• Willingness to be located in rural areas.• Cultural congruence.• Attitude factors.• Knowledge of local language.• Ability to handle several product lines• Creativity.

India- Rural Market Opportunities

Opportunities• The rural market in India constitutes 740+

million people, and is by far the largest potential market in the world

• Rural annual household income averages Rs.56,630 with high savings rates

• Changing rural aspirations in consumption patterns and lifestyle unfolds opportunities for rural marketing

• Literacy levels are rising steadily