RURAL MARKETING

Reference

New Perspective in Rural & Agricultural Marketing

Y Ramkishen

Rural Marketing Book – Pradeep Kashap & Siddhartha Raut

Cases In Rural Marketing – An Integrated Approach
CGS Krishnmacharyulu & Llith Ramkrishnan
 TOPICS

PROFILE OF RURAL MARKET

RURAL CONSUMER

MARKETING RESEARCH

RURAL MARKET RESEARCH

RURAL SEGMENTATION –TARGETING & POSITIONING

RURAL MARKETING STRATEGY

RURAL PRODUCT

RURAL PRICE

RURAL DISTRIBUTION

RURAL SALES FORCE MANAGEMENT

RURAL COMMUNICATION
What is Rural

Government agencies like IRDA (Insurance Regulatory

And Development Agency and NCAER (National Council
for applied Economic Research) define Rural as villages
with a population <5000 with 75% male population engaged
In agriculture etc”
Towns are actually rural areas but satisfy
Census The following criteria
Minimum Population>=5000
75% of the mail population engaged in
Non –agri activity

Location with population up to 10000

RB1
Considered Rural
Semi Urban 10000 to 100000

All locations upto a population of 10000

NABARD Will be considered Rural

All locations having shops/establishments’

Sahara Upto 10000 (not population related) are
Treated as Rural

The rural and semi urban area is defined

LG Elect. As all cities other than major metros

Concept of Rural from the perspective of marketing has

Indeed been dynamic.- gradually changed over the times
Was not India a so called Village/Rural for the world a
couple of decades back
NABARD National Bank for Agriculture & Rural Dev
 What is Rural Marketing

Developing of the market in the area as defined as Rural

Hence it could be aptly said that it encompasses the
Activities such as developing the process to meet this
Objective – Right product at the right price to the right people
at the right time. Exchange between rural and Urban is a
Factor . Could be Urban to Rural: Rural to Urban, Rural to
Rural
 Size of the market

Largely Untapped

Too crowded Urban Market

Income on the
rise/disposable income

Reasons Income from other than

for agriculture
Going Rural Income flow from urban
/abroad
Better exposure - media

Great success stories

HLL 50%
Colgate 50%
LG 50%
Asian Paints 60%
Dabur 40%
Videocon 40%
Cadbury’s 25%
Hero Hona 40%
Sorce ORG Marg and Fransis
Kanoi
Points to Note with Regard to Rural Markets

Extremely Diverse Market

Villages – Size,
Population,
Spread,
Income
Literacy levels ,
awareness level,
languages

Urban Market – scope and saturation

Flow of funds – from Urban National /International

Literacy levels on the rise

Media Penetration
Encouraging Indicators/Initiatives for Rural Market Growth

Scientific methods – major impetus to Production of

food grains

Export on the rise – Increase in agriculture and handicrafts

Initiatives taken by banks for more branches and Kisan

credit card to buy seeds, fertilizers, consumer goods on
installment basis

Reputed Companies helping in changing lifestyles – Levers

Britania ,Dabur, LG, Honda,Videocon

Media creating an impact-creating awareness levels

Government Policies – White Revolution – Milk products

Yellow Revolution (poultry and edible oils)
Blue Revolution – Aqua culture

Employment Schemes – JRY(Jawahar Rojgar Yojna,

PMRY,Small Industries Training,

Ruiral Electrification, Spend on Health and Sanitation,

Medical and Health, Primary Education,

Credit card for farmers

Waiver of Loans

 Initiatives by leading organization in spreading awareness

Hindustan Levels Shakti, ITC Reliance etc
Move to Rural Market …encouraging Data

Rural India buys

Soft Drinks approx 45% of all soft drinks

Almost 50% motor cycles
Approx 55% of cigarettes
Half the total market for TV,
Fans,
pressure cooker,
bicycles
Washing soap,
tea,
blades,
salt,
toothpowder

Coca Cola is growing over 35% in Rural areas compared to

Over 22 % in Urban

According to Hasna Research , a market research farm that

Has published a Guide to Indian Markets 2006
Consumer durables in Indian Villages risen sharply
TV Sales up by 200%
Motorcycle by 77%

There are 3000 households in rural area that earn > 50 lakhs

We have come some way ahead – but there is a long way to go

 Low per capita income

Low disposable income

Inadequate fixed income

(daily wages)

PROBLEMS Majority – depends on Agricultural

Income
IN Acute dependence on monsoon
Consumption linked to harvest
RURAL
Infrastructure problems
MARKETING
Roads, power

Low awareness

Communication- difficult & expensive

Too many languages

Geographic Spread

Digging for Diamond

Urban & Rural Markets

Key Differences

Per capita Income

Disposable Income

Literacy levels

Infrastructure

Communication

Geographical Spread

Customer has many choices

Pro fil e of th e Ru ra l Co nsu mer
Prof il e of the Ru ra l Consum er

>Low Literacy Level

>Low Income Level
>Massive Geographic Spread
Urban population concentrated 3200 cities town
Rural scattered over 630000 villages

>Reference Group
Health Workers
Doctors
Teachers
Panchayat Members
Rural Bank Managers
District Managers

Occupation – Principal Farming

Trading
Handicrafts
Cattle & Poultry Farming
>Media Habits Fond of music T.V Radio Video Films

Generally they have a lot of reservation/inhibition

rigid in their behaviour
 RURAL CONSUMER CLASS

The Affluent Class

The Middle Class

The Poor

RURAL CONSUMER BEHAVIOR

How does an individual decide to spread his

Available resources (time,money effort) on
Consumption-related products.

That is – what they buy

why they buy
when they buy
where they buy it
how often they buy it
how often they use it

Very Rich

Well Off
Climbers
Aspirant
Poor
Simple Model of Rural Consumer Behaviour

Need Recognition

Pre Purchase Search

Evaluation of Alternatives

Purchase Decision

Post purchase behaviour

 Factors that Influence Rural Behaviour

Stimuli Attitude
>Consumer belief
Inputs to any senses
Consumer feelings
Products
Package
Commercials
Brand image
Reference
Information cues about
the characteristics of the
product
Perception
Depends on

Exposure
Eg IFB had not adequately Educated
farmers about the Washing machine
-they thought It was a churn for making
large quantities of lassi (prosperous
village of Punjab)
Interpretation
Iodex – muscular pain
Reliever used on animals
After hard days work in MP
Godrej hair dye on Buffaloes
To make them look better in
Village haats in Raichur
 Awareness
Key
Affordability
Challenges
Availability
4A
Acceptability

4 Ps 4 As

Promotion Awareness

Price Affordable

Product Acceptable

Place Available
RURAL MARKET RESEARCH
Marketing Research is a formalized means of obtaining
Information to be used in making marketing decisions

Market research

Issue Information Required to address

Design Method of Collecting Information

Manage The data collection process

Analyze The results

Communicate Finding and implication

 Primary Sources

Retail shops/STD booths

Tea Stalls

Playgrounds/schools

Chaupals (meeting point

SOURCES
old/middle aged/
FOR influential)

Haats & Melas

CONDUCTING
Influence Group
RURAL

MARKET Secondary Sources

RESEARCH Government website

www.censusindia.com
www.indiastat.com
www agroindia.com

Private bodies (market research

advertising agencies
Indian Market Research Bureau
Thompson Rural Index
Guide to Rural Markets

Publications
Tool Kits Used for Rural Market Research
 Tool Kits Used for Rural Market Research

Faces Happy ………Sad

Same Color – Different shades

Color Wheel
Different Color

Number of Coins

Ladder

Playing Cards
 POINTS TO REMEMBER

FOR

RURAL MARKETING RESEARCH

 Remember …

Build Rapport - ***

Greet – need to be informal

Speak local language

Do not jump to survey –speak of other

matters of interest

Gradually lead to the objective of the interview

Explain the benefit of the survey – how it will gain

Interviewer should be aware of the rural area

Never make the respondent uneasy –

if he offers tea do not refuse
 RURAL MARKET

SEGMENTATION TARGETING & POSITIONING

SEGMENTATION

Very Varied –hence proper segmentation very essential

Geographic:
Region North, East, West and South
Village size
Climate

Demographic
Age
Family Size
Gender
Income
Occupation
Education
Caste

Psychographics
(consists of psychological: sociology: anthropological)
Lifestyle Rigid ,changing attitude, urban influence
Personality Authoritarian, Ambitious

Behavioral
Occasions Regular, special occasion
Benefits
User status regular user, first time user, non user
Usage rate Light, medium, heavy
Loyalty None, medium, strong
Attitude to ) positive, negative, hostile
Product )

Different variables could be used.. multilevel segmentation

 1995-
Class Rural Consumer Classification 96 2006=2007

The Affluent/Very Rich Households owning 1.60% 5.60%

personal cars/jeep with other products

The Well Off Household owning any/all of the foll. 2.70% 5.80%

A.C/Motorcycle/scooter/washing m/c

color TV with other durable (No car/jeep)

The Climbers Households owning any/all of the foll 8.30% 22.40%

VCR/VCP,mixer grinder sewing m/c

audio equip, B/W TV,geyser with other durables

(not those mentioned in above 2 categories)

The Aspirants Households owning any/all of the foll 26.00% 44.60%

bicycle,electric fans, electric iron with other durab

(not those mentioned in above 3 categories)

The Destitutes/Poor Households other than those classified above 61.40% 20.20%

Households owning any/all of the foll

wristwatch,pressure cooker,cassette recorder

transistor/radio

Source - NCAER
DEVELOP THE PROFILE

Select the Target Market

Evaluate the Market
Evaluate the Segment
size
growth rate
profitability
accessible
compatible with firm’s resources & capabilities

High

Value
to Rural
Customer

Low

Easy Hard

Ease of Implementation
TARGETING

>Select Target Segment

>Formulate Market a marketing strategy for the target market

POSITIONING
One shoe fits all !!!! …….

Everything for Everyone !!!

It is “Something for Someone”
How to Position
USP of the product – uniqueness of the product
Special needs – either address partially/ unaddressed
Noticeable gap in the products available

Positioning Concept

Study the possible motives of the rural customer

Then figure out how to appeal to them
(USP, Price Quality Uses, Class, Culture etc
Select & Develop the Concept

Bridge gap between the product and the target market.

Communicate the Concept
Advertise and Reach (Media)

Offer Product
After STP (Segmentation, Targeting and Positioning)

Post Sales Feedback & After Sales Service

RURAL MARKETING STRATEGY
 New Entrant
Company starts Rural
Market first & then
ventures in Urban
Market
(eg Cavin Kare Chik &
Meera Shampoo)
ENTERINING
Mid- Entrant
THE
Company starts Rural
RURAL Market after success in
Urban Market
MARKET
(eg HLL, LG)

Late - Entrant
Company starts Rural
Market after success in
Urban Market for long
(eg Cadbury)

R Retain
Purpose G the market
Grow
A Add
 RURAL MARKETING STRATEGY

P Profile the Rural Market

L
A Profile the Consumer
1 N
N Market Behaviour & MR
I
N
Segmentation Targeting Positioning
G
---------------------------------------------------------------------------------
E Rural Product
X
E Rural Pricing

2 C
Rural Distribution
U
T
Rural Sales Force Management
I
O
N Rural Communication
---------------------------------------------------------------------------------

F Monitor the Rural Strategy

E
3 E
D
Feedback & Control
B
A
C
K
 DEVELOPMENTAL MARKETING
Developmental marketing is a process through which
awareness is created

>could be demonstration
>could be presentation
>Free samples
>could be through up eg tie up with Bank
tie up with Petrol/Diesel pumps
(Hyndai did with IOC and PNB and SBI subsidiaries
>30% sale of Hyndai from Rural/Semi Urban areas)

Awareness

Trial

Purchase

Post-Purchase Satisfaction

Colgate – program Operation Jagruti

Switch from Charcoal to Colgate tooth powder

HLL - Free samples of Lifebuoy

Cavin Kare – Free sample of Chik Champoo

Marico Industries – Parachute coconut oil

“Sudhata ki pehchan” –smell to differentiate between real and
spurious
RURAL PRODUCT

RURAL PRICE

RURAL DISTRIBUTION

RURAL SALES FORCE MANAGEMENT

RURAL COMMUNICATION
Rural Product

Product to be marketed with the requirements of the Rural Consumer

should not be an extension of urban offerings
(Philips launched Free Power Radio – does not require
Battery/electricity you wind it with a lever and radio runs
For approximately 30 min.

FMCG
(HLL, Dabur, Marico, Colgate=Palmolive
Coke, Pepsi)
Classification Consumer Durables
TV ,Fridge, Fan, Presssure Cooker,
Of Cycle, Two wheelers, Sewing machines,
watch, mixer grinder, radio, music system,
Rural Fans, Washing machines
(Philips, LG, Videocon, Onida )
Products
Services
Telecom, Banking, Health care ,Insurance
(Airtel, BSNL, SBI, PNB,Dena bank,)
Agri-inputs
Seeds, pesticides, tractors
(Rallis India, Bayer,)

Maturity
Product
Life Take Off
Cycle Decline
(PLC)
Launch
 Points to note
Rural Products
Easy to Use
After sales support
Conveniently packed- success of Sachets
Product literature to be simple
Have a logo – easy to identify eg Thums Up
Rural Packaging
Packaging material –plastics, poly packs, unbreakable materials
Looks - attractive colors (like all tea companies)
Size and convenience- small is beautiful

Rural Branding

1. Brand Name
2 Create Brand Identity
3 Enhance Recognition
4 Build a Brand Image
5 Countering Spurious brands
Look alike
Spell alike
Duplicates

Enhancing Brand Strategies with Social Perspective

Soaps for Hygiene
Cooking gas for environment
Creating need by more awareness

Partnering with a long term perspective requires total belief and

Commitment - to the people, to the processes, to their own employee.
Need to work for a cause – ITC, Hindustan Petroleum, HLL ,
Colgate Palmolive , Several Banks are a few such examples
RURAL PRICE

Pricing In Rural Market plays a key role in the success of a product

RURAL PRICING OBJECTIVES

 Have a long run perspective

Idea is to penetrate first

Increase Volume
Make using the product a habit
Volumes to take care of the Margins
Keep eye on Competition Price

The following may help in addressing the issue

Low cost –less amount (small packages- sachets)
Simple but colorful packaging – eg. success of biscuits
Refill packs
Value engineering – eg soya protein in place of milk protein

METHODS OF PRICING

23. Cost –Plus Pricing = cost of product +distribution +profit

24. Value Pricing (VFM-Value for Money) High Benefit
25. Power Price – eg Re 1, Rs 2, 3, 5,10
26. Penetration Price – Introduce at low and hike price after success
27. Differential Pricing –Different price for different market
28. Price Gap – Comp prices – range
 RURAL DISTRIBUTION

Physical Distribution Channel of Distribution

PHYSICAL DISTRIBUTION

Transportation

Warehousing Communication

Transportation Railways, Roads ,Waterways, Animals

Communication ITC using internet, Mobile users by fisherman

Warehousing (Three Tier Rural Warehousing Set Up)

Central/State Warehousing
Cooperatives
Rural Godowns
WHY CHANNELS OF DISTRIBUTION

Geographical Spread
Dealers are few – hence required to bank on a number of resources
Financial Viability
Inadequate Bank and Credit Facilities
TO ADDRESS THE ABOVE CHALLENGES
Rely on Private Village Shops
Supply Chain Stores

Rural Super Market

Small companies tie up with large companies – Leverage/Syndicate
Distribution network of Marico to sell Tide by P&G
Satellite Distribution

SD SD
R
D

SD SD
SD SD SD SD

Whole- SD
D Saler D
Town

SD SD
SD SD
SD SD

D D-dealer
SD- Sub Dealer
SD SD R-Retailer
 PLANNING FOR SALES FORCE MANAGEMENT

SET THE PERSONAL SELLING OBJECTIVES

FORMULATE THE SALES POLICIES

STRUCTURE THE SALES FORCE

SIZE OF THE SALES FORCE

ASSIGNING SALES TARGETS

CREATING SALES FORCE- SELECT, RECRUIT, TRAIN

SALES FORCE COMPENSATION, MOTIVATION, SUPERVISION

SALES COMMUNICATION & REPORTING

SALES COORDINATION/SALES CONTROL

TRAITS OF A RURAL SALESPERSON

Hardworking

Have Empathy

Enthusiastic Common to both

Urban & Rural Sales person
Perseverance

Knowledge

Attitude

Skills

Additional traits for making it Big in Rural Areas

Willingness to work in Rural Areas

Adopting to cultural differences

Down to earth approach

Fluent in local language

Developmental approach – Create not only Communicate

The Success of Organizations depends on lot on the Sales Force

They are the face of the Organization – the Ambassador

They are the ones who have direct interaction with

The Potential Consumer/Customer

The Users
The Dealers
The Distributors
The Retailers

They are a major link to the chain and establish the link

They are the ones who help in building Trust

They need to break the rigid ideas and preconceived notions

 RURAL COMMUNICATION

Effective Communication goes a long way in establishing the right

Messages and thereby more interaction with Potential Customers
Communication, however, is not complete if there is no feedback
It is very important to re enforce messages in Rural areas

Factors Affecting Rural Communication

Literacy level

Media Habits

Traditional approach

High resistance – more so initially

Lavish at occasions (eg Marriage)

Purchasing power also depending on weather- the crops

Inequitable distribution of wealth

Too many languages

Culture
 RURAL MEDIA

Mass Media Traditional Media

(Conventional) (Non Conventional)

T.V /Cable network Puppet Shows

Satellite Channels
Folk Theatre/Opera
Radio
Demonstration
Print

Cinema/ Haats and Mela

Theatre
Wall painting
Word of
Mouth
Post card and posters
Video on
Wheels
Booklets/Calendar

Advantages Advantages
>Excellent Reach >High involvement
Less expensive ,wider High Interest
coverage Localized administered at low
cost
Disadvantages
At times unnecessary Disadvantages
coverage Coverage
No customized messages Repeat /Re enforcement
Skill of performer
Companies using this medium
Levers, Onida, Videocon Companies using this medium
Mahindra Tractors, Eveready Bajaj, Levers, HUL, ITC
You are the Marketing Director of A Company dealing
in Consumer Durables (TV, Fridge, Washing Machine
Music System, Microwave etc).
Your business has been growing steadily in the
Urban Market – however, you are aware that the
Business will grow manifold if you also cater to the
Rural market. (Present growth rate has been 8%.
You are targeting a growth of 14%)
Present your case to the Managing Director and the
Board – How you intend going achieving the desired
Objective – with your plans for opening up the
Rural Market

Take into account the following

The Target Audience
The Product proposition
Distribution Strategies and Sales Forecast
Pricing Strategies
Promotional Strategies

How the above strategies will help in achieving the

Business Objectives.

While making the presentation – you need to be clear on

12. Why you chose to launch the particular product
13. Why did you chose the particular location
(Opportunity Assessment)