RURAL INDIA…A NEW DAWN India needs creative solutions to start a revolution which can take its India needs creative solutions to start a revolution which can take its villages fast forward in time – converting them into economically viable villages fast forward in time – converting them into economically viable units and growth engines, harnessing the power of the villagers, and units and growth engines, harnessing the power of the villagers, and opening up new horizons with the promise of a better tomorrow. opening up new horizons with the promise of a better tomorrow.
Transcript
RURAL INDIA…A NEW DAWN
India needs creative solutions to start a revolution which can take its villagesIndia needs creative solutions to start a revolution which can take its villages fast forward in time – converting them into economically viable units andfast forward in time – converting them into economically viable units and growth engines, harnessing the power of the villagers, and opening up newgrowth engines, harnessing the power of the villagers, and opening up new horizons with the promise of a better tomorrow.horizons with the promise of a better tomorrow.
4)4) Some Myths about Rural MarketSome Myths about Rural Market 99
5)5) Why Different Strategies?Why Different Strategies? 1010
Company – TATA TeaCompany – TATA Tea
6)6) Company ProfileCompany Profile 1212
7)7) Products & BrandsProducts & Brands 1313
8)8) Vision & MissionVision & Mission 1414
9)9) Activities of Tata teaActivities of Tata tea 1515
10)10) Community welfareCommunity welfare 1616
11)11) 4P’s of Marketing4P’s of Marketing 1717
12)12) Why go rural?Why go rural? 2323
13)13) Press ReleasePress Release 2424
14)14) Rural rushRural rush 2626
15)15) Some examplesSome examples 2727
16)16) ConclusionConclusion 2828
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INTRODUCTION: Before gamboling into issues like where the Indian rural market stands and the opportunities for corporate’s to explore there... let's look at the definition of urban and rural India. The Census defined urban India as - "All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board etc or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square kilometer. Rural India, on the other hand, comprises all places that are not urban!"Now for some facts and figures The Indian rural market today accounts for only about Rs 8 billion (53 per cent - FMCG sector, 59 per cent durables sale, 100 per cent agricultural products) of the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a long way ahead.Time and again marketing practitioners have waxed eloquent about the potential of the rural market. But when one zeroes in on the companies that focus on the rural market, a mere handful names come to mind. Hindustan Lever Limited (HLL) is top of the mind with their successful rural marketing projects like 'Project Shakti' and 'Operation Bharat'. The lynchpin of HLL's strategy has been to focus on penetrating the market down the line and focusing on price point. Amul is another case in point of aggressive rural marketing. Some of the other corporates that are slowly making headway in this area are Coca Cola India, Colgate, Eveready Batteries, LG Electronics, Philips, BSNL, Life Insurance Corporation, Cavin Kare, Britannia and Hero Honda to name a few.
Khaitan fans' ad on a horse cart wheel's wall painting
We can safely say that until some years ago, the rural market was being given a step-motherly treatment by many companies and advertising to rural consumers was usually a hit and miss affair. More often than not, the agenda being to take a short-cut route by pushing urban communication to the rural market by merely
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transliterating the ad copy. Hence advertising that is rooted in urban sensitivities didn't touch the hearts and minds of the rural consumer. While, this is definitely changing, the process is slow. The greatest challenge for advertisers and marketers continues to be in finding the right mix that will have a pan-Indian rural appeal. Coca Cola, with their Aamir Khan Ad campaign succeeded in providing just that.
Corporates are still apprehensive to "Go Rural." A few agencies that are trying to create awareness about the rural market and its importance are Anugrah Madison, Sampark Marketing and Advertising Solutions Pvt Ltd, MART, Rural Relations, O&M Outreach, Linterland and RC&M, to name a few. Also, the first four agencies mentioned above have come together to form The Rural Network. The paramount objective of the Network is to get clients who are looking for a national strategy in rural marketing and help them in executing it across different regions.Interestingly, the rural market is growing at a far greater speed than its urban counterpart. "All the data provided by various agencies like NCAER, Francis Kanoi etc shows that
rural markets are growing faster than urban markets in certain product categories at least. The share of FMCG products in rural markets is 53 per cent, durables boasts of 59 per cent market share. Therefore one can claim that rural markets are growing faster than urban markets," says Sampark Marketing and Advertising Solutions Pvt Ltd managing director R A Patankar.
Coca-Cola India tapped the rural market in a big way when it introduced bottles priced at Rs 5 and backed it with the Aamir Khan ads. The company, on its behalf, has also been
investing steadily to build their infrastructure to meet the growing needs of the rural market, which reiterates the fact that this multinational has realized the potential of the rural market is going strength to strength to tap the same.Clearly the main challenge that one faces while dealing with rural marketing is the basic understanding of the rural consumer who is very
Lifebuoy's wall painting in rural India
"Yaara da Tashan..." McCann Erickson's ads with Aamir Khan created universal appeal for Coca Cola
In 2000, ITC took an initiative to develop direct contact with farmers who lived in far-flung villages in Madhya Pradesh. ITC's E-choupal was the result of this initiative.
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different from his urban counterpart. Also distribution remains to be the single largest problem marketers face today when it comes to going rural. "Reaching your product to remote locations spread over 600,000 villages and poor infrastructure - roads, telecommunication etc and lower levels of literacy are a few hinges that come in the way of marketers to reach the rural market," says MART managing director Pradeep Kashyap.Citing other challenges in rural marketing, Patankar says, "Campaigns have to be tailor made for each product category and each of the regions where the campaign is to be executed. Therefore a thorough knowledge of the nuances of language, dialects and familiarity with prevailing customs in the regions that you want to work for is essential. The other challenge is the reach and the available means of reaching out to these markets, hence the video van is one of the very effective means of reaching out physically to the rural consumers."The fact of the matter remains that when compared to the Indian urban society, which is turning into a consumerism society; the rural consumer will always remain driven by his needs first and will therefore be cost conscious and thrifty in his spending habits. "Decision-making is still conscious and deliberated among the rural community. But nevertheless, the future no doubt lies in the rural markets, since the size of the rural market is growing at a good pace. There was a time when market predictions were made on the basis of the state of the monsoon but this trend has changed over the years; there is a large non farming sector, which generates almost 40 per cent of the rural wealth. Hence the growth in the rural markets will be sustained to a large extent by this class in addition to the farmer who will always be the mainstay of the rural economy," affirms Patankar."Although the melting of the urban - rural divide will take a while, this is not for want of the availability of the means but for want of the rural consumer's mindset to change; which has its own logic, which is driven by tradition, custom and values that are difficult to shed," he points out.
Fulcrum's Gowthaman says, "The biggest impending factor or deterrent on rural monies going up is that there is a general sense of trying to benchmark cost per contact (CPC). The television CPC is going to anyways be cheaper to rural CPC and unless and until the volume - value equation turns the other way round, you will not be able to spend disproportionate monies in the rural market."
Satellite dish antennas reach rural India
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For HLL, a one rupee or a five rupee sachet or the Kutti Hamam (the small Hamam) helps in giving the consumers a trial opportunity. While it does help in generate volume but not in terms of values. "Till the time that volume - value equation is managed better, the CPC is preventing anybody to look at rural at a large scale activation programme," reiterates Gowthaman.Ultimately, the ball lies in the court of rural marketers. It's all about how one approaches the market, takes up the challenge of selling products and concepts through innovative media design and
more importantly interactivity.Anugrah Madison's chairman and managing director RV Rajan sums up, "There is better scope for language writers who understands the rural and regional pulse better. I also see great scope for regional specialists in the areas of rural marketing - specialists like Event Managers, Wall painters, folk artists, audio visual production houses. In fact all those people who have specialized knowledge of a region are bound to do well, thanks to the demands of the rural marketers."So the fact remains that the rural market in India has great potential, which is just waiting to be tapped. Progress has been made in this area by some, but there seems to be a long way for marketers to go in order to derive and reap maximum benefits. Moreover, rural India is not as poor as it used to be a decade or so back. Things are sure a changing!
RURAL MARKETING – CONCEPT In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has emerged. But often, rural marketing is confused with agricultural marketing – the latter denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured
or processed inputs or services to rural producers or consumers.
Typical shop in rural India stocked with sachets, etc
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WHAT MAKES RURAL MARKET ATTRACTIVE? Rural market has following arrived and the following facts substantiate this:
742 million people Estimated annual size of the rural market
In 2001-02, LIC sold 55 % of its policies in rural India. Of two million BSNL mobile connections, 50% in small towns/villages Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT) 41 million Kisan Credit Cards issued (against 22 million credit-plus-debit
cards in urban) with cumulative credit of Rs 977 billion resulting in tremendous liquidity.
Of 20 million Rediffmail signups, 60 % are from small towns. 50% transactions from these towns on Rediff online shopping site
Investment in formal savings instruments: 6.6 million HHs in rural and 6.7 million in urban.
RURAL CONSUMER INSIGHT Rural India buys:
o Products more often (mostly weekly)o Buys small packs, low unit price more important than economy
In rural India, brands rarely fight with each other; they just have to be present at the right place
Many brands are building strong rural base without much advertising support
o Chik shampoo, second largest shampoo brando Ghadi detergent, third largest brand
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Fewer brand choices in rural: number of FMCG brand in rural is half that of urban
Buy value for money, not cheap products
SOME MYTHS ABOUT RURAL MARKETS I. Myth-1: Rural Market Is a Homogeneous MassReality: It’s a heterogeneous population. Various Tiers are present depending on the incomes like Big Landlords; Traders, small farmers; Marginal farmers: Labors, artisans. State wise variations in rural demographics are present viz. Literacy (Kerala 90%, Bihar 44%) and Population below poverty line (Orissa 48%, Punjab 6%)
II. Myth-2: Disposable Income Is LowReality: Number of middle class HHs (annual income Rs 45,000- 2, 15,000) for rural sector is 27.4 million as compared to the figure of 29.5 million for urban
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sector. Rural incomes CAGR was 10.95% compared to 10.74% in urban between 1970-71 and 1993-94.
III. Myth-3: Individuals Decide About PurchasesReality: Decision making process is collective. Purchase process- influencer, decider, and buyer, one who pays can all be different. So marketers must address brand message at several levels. Rural youth brings brand knowledge to Households (HH).
WHY DIFFERENT STRATEGIES? Rural markets, as part of any economy, have untapped potential. There are several difficulties confronting the effort to fully explore rural markets. The concept of rural markets in India is still in evolving shape, and the sector poses a variety of challenges. Distribution costs and non availability of retail outlets are major problems faced by the marketers. The success of a brand in the Indian rural market is as unpredictable as rain. Many brands, which should have been successful, have failed miserably. This is because, most firms try to extend marketing plans that they use in urban areas to the rural markets. The unique consumption patterns, tastes, and needs of the rural consumers should be analyzed at the product planning stage so that they match the needs of the rural people. Therefore, marketers need to understand the social dynamics and
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attitude variations within each village though nationally it follows a consistent pattern. The main problems in rural marketing are:
Understanding the rural consumer Poor infrastructure Physical Distribution Channel Management Promotion and Marketing Communication
Dynamics of rural markets differ from other market types, and similarly rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or industrial consumer.
OpportunitiesOpportunities::
Infrastructure is improving rapidly.o In 50 years only 40% villages connected by road, in next 10 years
another 30%o More than 90 % villages electrified, though only 44% rural homes
have electric connectionso Rural telephone density has gone up by 300% in the last 10 years;
every 1000+ pop is connected by STD Social Indicators have improved a lot between 1981 and 2001
o Number of “pucca” houses doubled from 22% to 41% and “kuccha” houses halved (41% to 23%)
o Percentage of BPL(Below Poverty Line) families declined from 46% to 27%
o Rural Literacy level improved from 36% to 59% Low penetration rates in rural so there are many marketing opportunities
Durables Urban Rural Total (% of rural HH)
CTV 30.4 4.8 12.1
Refrigerator 33.5 3.5 12.0
FMCGs
Shampoo 66.3 35.2 44.2
Toothpaste 82.2 44.9 55.6
Marketers can make effective use of the large available infrastructureo Post offices 1,38,000o Haats (periodic markets) 42,000o Melas (exhibitions) 25,000o Mandis (agri markets) 7,000
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o Public distribution shops 3,80,000o Bank branches 32,000
Proliferation of large format rural retail stores which have been successful also.
o DSCL Haryali storeso M & M Shubh Labh storeso TATA/Rallis Kisan Kendraso Escorts rural storeso Warnabazaar, Maharashtra (annual sale Rs 40 crore)
COMPANY PROFILE Set up in 1964 as a joint venture with UK-based James Finlay and Company to develop value-added tea, the Tata Tea Group of Companies, which includes Tata Tea and the UK-based Tetley Group, today represent the world's second largest global branded tea operation with product and brand presence in 40 countries. Among India's first multinational companies, the operations of Tata
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Tea and its subsidiaries focus on branded product offerings in tea but with a significant presence in plantation activity in India and Sri Lanka.The consolidated worldwide branded tea business of the Tata Tea Group contributes to around 86 per cent of its consolidated turnover with the remaining 14 per cent coming from Bulk Tea, Coffee, and Investment Income. The Company is headquartered in Kolkata and owns 27 tea estates in the states of Assam and West Bengal in eastern India, and Kerala in the south. The company earns about 60 per cent of its total revenue from rural markets.
"Time for you and time for me,"Time for you and time for me,And time yet for a hundred in decisions,And time yet for a hundred in decisions,And for a hundred visions and revisions,And for a hundred visions and revisions,Before the taking of a cup of tea"Before the taking of a cup of tea"
PRODUCTS & BRANDS The company has five major brands in the Indian market - Tata Tea, Tetley, Kanan Devan, Chakra Gold and Gemini -- catering to all major consumer segments for tea. The Tata Tea brand leads market share in terms of value and volume in India and the Tata Tea brand is accorded "Super Brand" recognition in the country. Tata Tea's distribution network in the country with 38 C&F agents and 2500 stockists caters to over 1.7 million retail outlets (ORG Marg Retail Audit) in India. The company has a 100% export-oriented unit (KOSHER & HACCP certified) manufacturing Instant Tea in Munnar, Kerala, which is the largest such facility outside the United States. The unit's product is made from a unique process, developed in-house, of extraction from tea leaves, giving it a distinctive
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liquoring and taste profile. Instant Tea is used for light density 100% Teas, Iced Tea Mixes and in the preparation of Ready-to- drink (RTD) beverages. With an area of approx 15,900 hectares under tea cultivation, Tata Tea produces around 30 million kg of Black Tea annually.
Vision: Be India’s foremost tea based beverage company.
Mission: Achieve market and thought leadership for branded tea in India.
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Be recognized as the foremost innovator in tea and tea based beverage solutions.
Drive long term profitable growth. Co-create enhanced value for all stakeholders. Make Tata tea a great place to work.
Values: Integrity: conduct business fairly, honestly, and with transparency -
all our actions must stand the test of public scrutiny. Innovations: creativity, experimentation, risk taking capability, lead
and not is led, thought and process leadership. Excellence: strive to achieve the highest possible standard in day
to day work and in quality of our products/services. Unity: work co-hesively with colleagues across the group and our
customer/partner around the world to build strong relationships, based on mutual co-operation and team work.
Responsibility: be responsible and sensitive in the countries, communities and environment where we work, ensuring what comes from the people goes back to the people many times over. Work for the benefits of the communities we serve.
Understanding: be caring, show respect, compassion and humanity to colleagues, customers and other stakeholders.
ACTIVITIES OF TATA TEA INCLUDES:
The activities of Tata Tea Limited include: Research and Development Tea Cultivation Manufacture of Black and Instant Tea Blending Packaging Branding Marketing and Sales Distribution
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RESEARCH AND DEVELOPMENT
Tata Tea and the Tetley Group have full-fledged R&D Centre’s that focus on the branded business. In addition, Tata Tea has an R&D Centre at Teok (Assam) and a product development centre at Bangalore focused on the entire gamut of tea operations from cultivation to manufacture and also the packaging operations. The comprehensiveness of the R&D programme gives the company confidence to technologically brace itself for developing critical capabilities, and meeting global challenges head on. With full fledged Research and Development Centre’s manned by a truly dedicated team of scientists, at Teok in Assam and a product development laboratory at Bangalore.
Optimization of pruning cycle Integrated shear harvesting Rationalization of fertilizer application Irrigation based on soil moisture deficit method New schedule for weed control Waste heat recovery units Process controls
COMMUNITY WELFARE
Tata Tea contributes significantly to social and community development on its estates through comprehensive labour welfare programmes that offer free housing, healthcare and other benefits. The company has set-up and manages hospitals, adult-literacy centres, childcare centre’s and schools to educate the children of its nearly 34,000 employees. In addition, the company has special facilities to look after "differently abled" children of the workers who are taught how to operate in the environment by enhancing their skills and abilities. Tata Tea has institutionalized a process of Annual Welfare Audit conducted by renowned WHO experts, among the first Indian companies
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to do so. The Tetley business is managed in the spirit of trust and good corporate citizenship for which Tata Group companies are justly renowned. We are committed to running the business responsibly; understanding and improving our social, environmental and ethical impacts is central to the way we work and this is evident in the growing programme of local and corporate activities - from waste management programmes at our Eaglescliffe Tea Factory to the provision of safe water for 10,000 people in the tea growing areas of Malawi. Our environment policy is focused on managing the nature and quantity of waste we create, and on the energy we use in our facilities and in the movement of goods and people. It was a significant achievement for our UK-based sites when they were awarded ISO 14001 certification for environment management systems in March 2005. We manage our social impacts by building partnerships with charities and non government organizations, focusing on causes with a clear relevance to our business. These partnerships go beyond traditional corporate fundraising, involving activities that change both the Tetley business and the partner organization for the better. This means encouraging our staff to become personally involved in the partnerships, donating their time and skills, as well as money.
As on date there are 5 major Tea Brands of Tata Tea along with their variants in the Indian marketplace and it is the responsibility of this department to ensure that the requirements across all parameters for Tea Quality, Packaging Materials and Shop floor processes are met.
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Bulk TeaAll grades of CTC Teas
All grades of Orthodox TeasOrganic Tea - Orthodox grades Teas
Are supplied in packaging as per ISO norms as well as customer requirements viz. 4-ply Kraft Paper Sacks, Multiwall Paper Sacks, Rigid T--Sacks, Polywoven Sacks, Corrugated Fibre Carlons, and Polylined Jute Bags etc.
Instant TeaInstant Tea Division caters to customer specific product and is used for light density 100% Teas, Iced Tea Mixes and in the preparation of Ready to Drink (RTD) beverages. Instant Tea powder is packed in bulk packages of 20/25/35 kg each.
Instant tea powder - heavy density
Instant tea powder - institutional density
Instant tea powder - grocery density
Micro milled instant tea powder
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PRICE :Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, “melas” and other activities where they assemble. All the prices of the products depend upon the package i.e. 50gms or 100gms.Normally a Penetrating Strategy is used frequently.
PLACE: (DISTRIBUTION) One of the ways could be using company delivery vans which can serve two purposes- it can take the products to the customers in every nook and corner of the market and it also enables the firm to establish direct contact with them and thereby facilitate sales promotion.However, only the bigwigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Annual “melas” organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases. According to the India n Market Research Bureau, around 8000 such melas are held in rural India every year.Rural markets have the practice of fixing specific days in a week as Market Days (often called “Haats’) when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as “Mandis” or Agri-markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns they will easily be able to cover a large section of the rural population.
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PROMOTION: Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns.Various promotional strategies such as:
Radio:
Radio reaches large population in rural areas at a relatively low cost. There are specific programmes for farmers like Farm and Home/Krishi Darshan in regional languages. The farmers have a habit of listening to regional news/agricultural news in the morning and the late evening. The advertisement has to be released during this time to get maximum coverage in rural areas. Another advantage is that the radio commercial can be prepared at short notice to meet the changing needs of the rural folk.
Outdoor advertisements:
This form of media, which includes signboards, wall painting, hoarding, tree boards, bus boards, dealer boards, product display boards etc, is cost effective in rural areas. Symbols, pictures and colours should be used in POPs meant for rural markets so that they can easily identify the products. Generally rural people prefer bright colours and the marketer should utilize such cues.
Farm-to-Farm/House-to-House visit:
Rural people prefer face-to-face communication and farm visits facilitate two-way communication. The advantage is that the sales person can understand the needs and wants of the rural customer by directly discussing with him and answer his queries on products and services.Potential customers in the village are identified and the company’s/distributor’s representative makes farm-to-farm visits and highlight the benefits of the products. The person carries with him literature in local language and also samples of products. The person does not sell the product but only promotes the use of the product. Very often the local dealer also joins the representative in making farm-to-farm
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visits. The dealer clarifies the terms and conditions of sale and also makes independent follow up visits for securing orders. Example: This approach has been found to be very effective for agricultural machinery, animal health products and agricultural inputs. Many LIC agents and companies dealing with high value consumer durables have tried this method with success in rich rural areas.
Group meetings of rural customers as well as prospects are an important part of interpersonal media. The company is able to pass on the message regarding benefits of the products to a large number of customers through such meetings. Group meeting of key customers are conducted by banks, agricultural inputs and machinery companies in rural areas. The bankers visit an identified village, get the village people in a common place and explain the various schemes to the villagers. Such meetings could be organized in prosperous villages for promoting consumer durables and two wheelers also.
The Melas :
Melas are of different types i.e. commodity fairs, cattle fairs and religious fairs and may be held only for a day or may extend over a week. Many companies have come out with creative ideas for participating in such melas.
The Haats :
Traditionally on certain days of week, both the sellers and buyers meet in the village to buy and sell goods and services. These are the haats that are being held regularly in all rural areas. The sellers arrive in the morning in the haat and remain till late in the evening. Next day they move to another haat. The reason being that in villages the wages are paid on weekly basis and haat is conducted on the day when the villages get their wages. For the marketer, the haat can be an ideal platform for advertising and selling of goods. By participating in haats and melas, the company can not only promote and sell the products but also understand the shared values, beliefs and perceptions of rural customers that influence his buying behaviour.
Audio Visual Publicity Vans (AVP Vans):
AV unit is one of the effective tools for rural communication. The van is a mobile promotion station having facilities for screening films slides and mike publicity. The sales person makes a brief talk about situation in the village, the products and the benefits. The ad film is screened along with some popular film shots and this continues for about 30 minutes. At the
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end of the film show, he distributes handbills and answers queries of the customers. The whole operation takes about 1-2 hours depending upon the products under promotion, number of participants in the meeting and time taken for question and answers. The vans move to the next village for the second show. The cost of running a fully equipped AVP unit is about Rs.4000 per day and AVP van operation has to be considered as an investment for business development in rural areas.
WHY GO RURAL? Little has changed in the villages of India in the past decades. Schools have been built, but many still lack teachers and appropriate teaching methods. There are phone lines in many villages, but getting a dial tone is still a challenge. Electricity supply is at best intermittent. Health care is still limited in its availability. India’s villages are dependent on agriculture for much of their sustenance. Drought is a common occurrence across much of India. As a result, villagers, for the most part, remain a poor lot - the per capita income of India’s villages is perhaps no more than Rs 12-18,000 (USD 240-360, USD1 = INR50) per annum, as compared to the national average of Rs 25,000 (USD 500). Perhaps, most importantly, the opportunities available to villagers are not dramatically different from what they were many years ago. Villages in India are where you live if you have no other option. And yet, India is in its villages. 70% of Indians live there. Even as one India races ahead with optimism towards the future, there is another India which seems to be stuck in the past. If India as a nation has to progress, there is little doubt that India’s villages too have to progress.
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PRESS RELEASE: October 01, 2007 | Business Standard
# Tata Tea on rural thrust with Jaago ReTata Tea, one of the country's leading tea companies, has launched Jaago Re, a holistic 360-degree advertisement campaign. The company plans to expand in smaller towns and villages through the campaign, which is created by advertisement agency Lowe Lintas.
Percy Siganporia, managing director, Tata Tea, said, "The company wants to associate the campaign with social apathy and create awareness about the social problems in the country."
The company executives claimed that Tata Tea is the largest volume player in the packed tea market, which is growing by 3-4 per cent. In June this year, Tata Tea has attained 19.2 per cent market share against 18.6 per cent that of its nearest competitor.
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According to Sangeeta Talwar, executive director, Tata Tea, the company's game plan includes increased focus on rural markets (value packs strategy), hike in ad budget and modern trade initiatives to woo urban consumers. To start with, Tata Tea is re-launching its high-voltage campaign Jaago Re with a new theme and format. "Our new format is a 360 degree ad campaign focusing on rural markets with value-packs prices at Rs 1, 5 and 10 in rural markets. Also, we are increasing our focus on modern trade to pump up volumes", she added. As part of its marketing strategy, Tata Tea is increasing its advertising budget by 15% in Q2 FY 10.
# Tata Tea reaches out to UP villages through NGOs :
To challenge the unorganized players in the rural market, Tata Tea, one of the biggest tea producers and sellers in India (and owners of the UK brand Tetley) has chalked out a unique strategy that helps the rural populace with income generation as well.
The rural initiative was launched in December 2005. Named Gaon Chalo,The rural initiative was launched in December 2005. Named Gaon Chalo, meaning “let’s go to the villages”, the initiative saw Tata Tea joining with 12meaning “let’s go to the villages”, the initiative saw Tata Tea joining with 12 NGOs to spread its reach across rural Uttar Pradesh, India’s most populous, yetNGOs to spread its reach across rural Uttar Pradesh, India’s most populous, yet one of the most backward and poor state. By the end of 2006 Tata Tea addedone of the most backward and poor state. By the end of 2006 Tata Tea added more than 20,000 retailers, including 500 new rural distributors, in 10,000more than 20,000 retailers, including 500 new rural distributors, in 10,000 villages across UP to its distribution network. “The whole problem with anyvillages across UP to its distribution network. “The whole problem with any rural initiative is that people think it’s unviable since a lot depends on retailers’rural initiative is that people think it’s unviable since a lot depends on retailers’ sincerity and integrity,” says Vyas. “You need large investments and thesincerity and integrity,” says Vyas. “You need large investments and the creation of a feasible infrastructure.”creation of a feasible infrastructure.”
Agreements were signed with NGOs (Rural Dealer-1) to act as main distributorsAgreements were signed with NGOs (Rural Dealer-1) to act as main distributors at a district level, collecting various products from Tata Tea on credit beforeat a district level, collecting various products from Tata Tea on credit before giving them to mobile rural distributors (RD-2), also on credit, who would thengiving them to mobile rural distributors (RD-2), also on credit, who would then visit a fixed number of villages periodically to supply tea to small rural retailersvisit a fixed number of villages periodically to supply tea to small rural retailers
(RD-3), who in turn sold to rural consumers. RD-3s made payments to the RD-(RD-3), who in turn sold to rural consumers. RD-3s made payments to the RD-2s on subsequent visits to replenish stock, and so on up the chain. An average2s on subsequent visits to replenish stock, and so on up the chain. An average RD3 now earns an additional monthly income of Rs 300-1,000, while an RD2RD3 now earns an additional monthly income of Rs 300-1,000, while an RD2 earns Rs 5,000-7,000. Eventually, NGOs made payments and took suppliesearns Rs 5,000-7,000. Eventually, NGOs made payments and took supplies from the company.from the company.
This money makes the difference between hope and despair for many ruralThis money makes the difference between hope and despair for many rural families. It also increases goodwill for Tata Tea, apart from increasing itsfamilies. It also increases goodwill for Tata Tea, apart from increasing its penetration. “Our status as facilitators of rural income has improved our imagepenetration. “Our status as facilitators of rural income has improved our image and financial position,” says Raj Shekhar of Irada, an Allahabad (UP)-basedand financial position,” says Raj Shekhar of Irada, an Allahabad (UP)-based NGO. And Meenu Tyagi of Sabla, a Rae Bareilly (UP)-based NGO, notes that aNGO. And Meenu Tyagi of Sabla, a Rae Bareilly (UP)-based NGO, notes that a steady, locally-earned income curbs migration to urban areas to a large extent.steady, locally-earned income curbs migration to urban areas to a large extent. “My value and status in society has increased because of the Tata name,” says“My value and status in society has increased because of the Tata name,” says Sanjeev Kaushik, an RD2 supervisor in Muzzafarnagar.Sanjeev Kaushik, an RD2 supervisor in Muzzafarnagar.
A Gaon Chalo pilot is now being attempted in the state of Madhya Pradesh. TheA Gaon Chalo pilot is now being attempted in the state of Madhya Pradesh. The next phase is expected to see most group products (automotives, salt, consumernext phase is expected to see most group products (automotives, salt, consumer goods, telecom, insurance) being introduced to this permanent, exclusivegoods, telecom, insurance) being introduced to this permanent, exclusive distribution chain under a programme called Tata Hut.distribution chain under a programme called Tata Hut.
RURAL RUSH :
Tata Tea’s market share in terms of volume has been consistently higher than itsTata Tea’s market share in terms of volume has been consistently higher than its competitor Hindustan Unilever since June. Tata Tea’s share in August was 20.4competitor Hindustan Unilever since June. Tata Tea’s share in August was 20.4 per cent, as against 19.6 per cent for Hindustan Unilever.per cent, as against 19.6 per cent for Hindustan Unilever.
The company attributes this high share to its diversified portfolio with productsThe company attributes this high share to its diversified portfolio with products at various price points.Tata Tea Premium, a medium segment product, is theat various price points.Tata Tea Premium, a medium segment product, is the highest selling tea brand in India with a market share of 10.4 per cent.highest selling tea brand in India with a market share of 10.4 per cent.
However, Tata Tea’s market share in value terms is lower at 22.1 per cent, asHowever, Tata Tea’s market share in value terms is lower at 22.1 per cent, as against Hindustan Unilever’s 25.2 per cent.against Hindustan Unilever’s 25.2 per cent.
Tata Tea is also pushing sales in rural areas, which account for nearly 40 perTata Tea is also pushing sales in rural areas, which account for nearly 40 per cent of its sales. It has implemented a rural marketing project in Uttar Pradeshcent of its sales. It has implemented a rural marketing project in Uttar Pradesh and is scaling up capacities and expanding its reach in low-penetration statesand is scaling up capacities and expanding its reach in low-penetration states such as Rajasthan and Gujarat.such as Rajasthan and Gujarat.
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SOME EXAMPLES :1. One very fine example can be quoted of Escorts where they focused on
deeper penetration. They did not rely on T.V or press advertisements rather concentrated on focused approach depending on geographical and market parameters like fares, melas etc. Looking at the ‘kuchha’ roads of village they positioned their bike as tough vehicle. Their advertisements showed Dharmendra riding Escort with the punch line ‘Jandar Sawari, Shandar Sawari’. Thus, they achieved whopping sales of 95000 vehicles annually.
2. HLL started ‘Operation Bharat’ to tap the rural markets. Under this operation it passed out low–priced sample packets of its toothpaste, fairness cream, Clinic plus shampoo, and Ponds cream to twenty million households.
3. ITC is setting up e-Choupals which offers the farmers all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access latest local and global information on weather, scientific farming practices as well as market prices at the village itself through this web portal - all in Hindi. It also facilitates supply of high quality farm inputs as well as purchase of commodities at their doorstep.
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4. BPCL Introduced Rural Marketing Vehicle (RMV) as their strategy for rural marketing. It moves from village to village and fills cylinders on the spot for the rural customers. BPCL considered low-income of rural population and therefore introduced a smaller size cylinder to reduce both the initial deposit cost as well as the recurring refill cost.
CONCLUSION :Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.
Most companies are now looking at the huge potential offered by the rural markets and recalibrating their focus away from the already saturated urban markets. A study done by Nielsen (April-Sept '08), has indicated that FMCG sectors including skin creams and lotions, hair oils, toothpaste and candies have seen significantly higher value and volume growth in rural India as compared to urban India. The rural consumer is very discerning and in many cases, is far more discerning and demanding than his urban counterparts.
Rural markets are for marketers with perseverance and creativity. The market is extremely attractive with its vast potential but also provides challenges. It is a classic case of risk return situation. It is a high risk area but with the promise of
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a large customer following as the prize for those who succeed. The key to reducing the risk is to understand the market, the consumer need and behaviors.
A marketer needs to understand that rural consumers are not a homogeneous lot. The rural market is not synonymous with the farmer. The consumer groups here differs by occupation, income, social and cultural grouping. The rural marketer will find it useful to identify consumer groups who require products purchased in the urban market.
Adaptation to consumer needs of the rural market is reflected in products offered and the message used. Understanding and communication in the language that the rural consumer comprehends is a challenge the market has to face. The communication strategy that allows flexibility and autonomy to meet the local situation is important. Consumer purchase behavior is also reflected in distribution decisions. The periodic markets are an important social institution that marketers can user to supplement reaching the rural consumer.
Simultaneously, Tata tea was determined to grow as a branded international tea business. The company believes that there is scope to grow volumes with increased penetration in rural and semi-urban areas. The steady growth of the modern retail format had benefited the leading brands and private labels at the cost of regional and local brands. The company's national and regional brands grew by nearly 8 per cent over the past year. The highest growth in volumes was achieved by Tata Tea Gold.
