The Rural Market is not Sleeping any Longer

-Adi Godrej,M.D. Godrej Soaps

Rural Marketing - Introduction

Rural Marketing Often Confused With Agricultural Marketing Rural Marketing involves Delivering Manufactured Or Processed Inputs or Services to Rural Consumers On Account Of Green Revolution the Consumption Of Rural Areas Has Increased Hence the Need for Rural Marketing Rural Markets Has Acquired Significance As overall Economy has Increased

Rural Marketing
2/3 rd of Indias Population stays in Rural Area Almost half of the National Income is generated from Rural Area India is classified in
450 Districts 630,000 Villages (approx.)

Rural Marketing
Division by Income Level : At Highest Income : Urban : 2.3 Mio Rural : 1.6 Mio

At Middle & High Income : Urban : 59 Mio Rural : 111 Mio

Rural Marketing
Rural Market accounts for : 58% of Total Disposable Income 70% of Toilet Soap Users 38% of Two Wheeler Users 50% of Total Market for TV sets, Fans, Cookers, Bicycles, Tea, salt etc.

Rural Marketing
Features of Indian Rural Market : Large & Scattered Market Major Income from Agriculture Low Standard of Living Low Literacy Traditional Outlook Infrastructure Facilities

Rural Marketing
Problems in Booming Rural Market : Underdeveloped people / Market Lack of Proper Physical Communication Media for Rural Communication Many Language and Dialects Dispersed Market Low per Capita Income Low level of Literacy Spurious brands & Seasonal Demand

Rural Marketing
Other Problems in Rural Market : Lower disposable income Large number of daily wage earners Acute dependence on vagaries of Monsoon Seasonal Consumption Poor roads / infrastructure Power problems

Rural Marketing
4 As Approach : Availability Affordability Acceptability Awareness

Rural Marketing
Availability : In order to reach the entire market the company has to have a strong distribution network in place. Stockiest may have to use all possible means of transport like Auto-rickshaw, Bus, Bullock cart, Boat etc. to ensure the product reaches every consumer

Rural Marketing
Affordability : Lower disposable income, hence affordability is very important Small packs is the solution
Soaps in 50 gm pack Coca Cola (200 ml) in glass bottle for Rs.5/-

Rural Marketing
Acceptability : This is one of the big challenge Hence need for a product to suit the rural market LG could sell 100,000 TV sets Sampoorna in the first year of launch Coca cola provided low cost ice boxes for new outlets

Rural Marketing
Awareness : Mass media reaches only 57% of the rural market 41% watch TV Events like Fairs, Festivals, Haats etc are used for communication Road shows, Van campaign, Wall Painting are the Promotional ways

Rural Marketing
Role of Rural Retailing Rural retailers effect 35% of purchase decisions Product availability can affect the decisions like brand choice, volumes and market share India offers a huge, sustainable growth in Rural market

Choupal Sagar

ITC has unveiled the first 'Choupal Sagar' near Sehore in Madhya Pradesh. The 'Choupal Sagar' is a rural hypermarket which provides multiple services under one roof. It creates a platform for farmers to sell their produce. Farmers can also buy quality products for their farm and household consumption from 'Choupal Sagar'.

Choupal Sagar
Games
Children Farmer & his family Choupal Sagar

Sale
Wife Purchases

Cash

Make Agricultural Purchases & Fill fuel

Home

Rural Marketing
Rural Retailing - Developments
Rural Mall - Chaupal Sagar One of the first organised retail outlet ITC introduced this as Rural shopping cum information center in M.P. ITC spent 3 years and Rs. 80 crore in R & D of this concept including investment in echaupal

Rural Marketing
Rural Mall - Chaupal Sagar
Objective To create a high quality, low-cost fulfillment channel for Rural India. ITC has very effectively integrated its profit and social objectives A pioneering venture with all under one roof concept

Rural Marketing
Rural Mall - Chaupal Sagar
Facilities shopping from 6 am to 9 pm Banking / ATM at the malls Parking for Tractors Various products from grocery to Apparels to Consumer durable are available Information center Training on Modern farm techniques

e-Choupal
Creating Sustainable Rural Livelihoods

Model
The e-Choupal model has been specifically designed to tackle the challenges:
Fragmented farms. Weak infrastructure. Various intermediaries.

Why e-Choupal
ITC Mandi Broker Trader Adat Farmer
Recieved

Paid

High Price

Low Price

Why e-Choupal
ITC
Pays
Direct Interaction

Farmer
Recieves

Lower Price

Higher Price

Linking Farmers to Remunerative Markets

Eg: Wheat

Grades Farmer Wheat Grains are sorted Average quality

Receives

Mandi

Farmer

Average Price

Linking Farmers to Remunerative Markets

Eg: Wheat

Website

Provides:

Knowledge Prices

Farmer

ITC

Storage Segregation

Farmer
Receives

Higher Price

Rural Marketing
E - Chaupal : Business Model
First layer provides farmers the necessary information about weather & prices This gives farmers the platform to sell their produce and purchase necessary farm and household goods under same roof. Pilot project started in Year 2000 at M.P. Plan to cover 15 states with 20,000 chaupals by year 2010.

Rural Marketing
E - Chaupal : Business Model
Equipped with PC with Internet connectivity, Printer and UPS. Desired to cater to 600 farmers in 10 surrounding villages in radius of 5 KM Host farmer is know as SANCHALAK. Typical investment is Rs. 1.3 Lakhs and is expected to be recovered in 4 - 5 years. Sanchalak gets a commission for all the transactions at e - chaupal

Rural Marketing
E - Chaupal : Farmers BEnefit
can track local as well as global prices / trends. Farmers, if illiterate, can take help from Sanchalak to operate PC. Accurate weighing Faster processing Prompt payment Wide range of information Typically earn 2.5% more than selling through Mandi system.

Rural Marketing
ITC - Strategy for Success
Use of ITC warehouse - better utilisation of space Targets Farmers as customers by making the goods available where they earn cash To capture the rural people out-of-village shopping Retail channel for ITC brands

Rural Marketing
ITC - Financing Schemes
Initial investment is Rs. 30 Mio per mall Looking for Samyojak or middleman co-opted by ITC to manage these shops as part owners With assistance from ITC, Samyojaks will assess the demand, JIT delivery & Accounts. Uniqueness lies in WIN - WIN for both. ITC is buying the farm produce and selling the desirables to the same farmers

Rural Marketing
Hindustan Lever - Shakti Project
A similar to ITC, HUL started Project Shakti in late 2000 to tap the Rural Market. Got the women from Self Help Group to be turned as distributor and where by they could bring about a social angle while making sure the commercial angle of Lever was kept intact. Concept was to reach the areas which are otherwise inaccessible

Other Companies in Rural Markets

In 2001-02, LIC sold 55 % of its policies in rural India. Of two million BSNL mobile connections, 50% in small towns/villages 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. Similarly the 1,00,000 who have transacted on Rediff online shopping site, 50 per cent are from small towns

Rural Marketing
Rural marketing can be successful iff the profit and social motives are integrated The social angle must be seen The marketing should be done by empowering rural consumer and at the same time take advantage of the same through creating the demand for its own products As the market is still evolving, there is no set format to understand the consumer.

Coca Cola

"Yaara da Tashan..." ad with Aamir Khan created Rural appeal for Coca Cola

HLLs Operation Bharat

Typical shop in rural India stocked with sachets, etc

Typical Advertisements in Rural Areas

Khaitan fans' ad on a horse cart

Lifebuoy's wall painting in rural India