RURAL MARKETING

Jayesh Aagja
Assistant Professor
Institute Of Management
Nirma University
RURAL MARKETING
The Potential of the Unreached

“The future lies with those

companies who see the poor as
their customers”
~C.K.Prahalad
What makes Rural markets attractive

• 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 attractive
Estimated annual size of the rural market

Durables Agri-inputs
Rs 5000 crs Rs 45000 crs

Rural
Markets

FMCG 2/4 wheelers

742 million Rs 8000 crs
Rs 65000 crs
people
What makes Rural markets attractive
2005-06 LIC 41 million
sold 55% policies Kisan Credit Cards
in rural India
issued

Rural
Markets

6.6 million
households have 6 lac villages 42 million households
formal savings with Public Tel. use banking service
investments
 What makes Rural markets
attractive
– 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 marketing
• 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
Many rural Indias within rural Indias
CTV ownership, top 1/3rd , 12% own; 2/3rd just 3%
SCATTERED MARKET
Rural market is a scattered market. Rural population is scattered across 5,70,000 villages
Popoulation size class.doc
Unlike urban demand, which is highly concentrated, rural demand is scattered over a larger
area
A heterogeneous lot
•Demographics, socio-cultural
Mixed picture in income and socio-eco position
•More than 50% low disposable income; insigni has large income
•More than 50% of very rich + well-off are in rural India; 41% of middle class in rural
Age: 25% 5-14; more than 48% less than 20 years; 25% 20-35
State to state variation; BIMARU states; villages in india avg 33 develop index points; Kerala
88 points; Bihar 22; Maha, Haryana Karna 40 to 50

60% of rural income comes from agriculture; Green, white & Blue revolution; Bharat
Nirman
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.
 Situation in which consumption
occurs
 Availability of electricity
 Place of purchase: towns/haats/melas/RO
 Influence by youngsters/bahus (ORG-M)
 Influence of community
 Development marketing - discriminating
buyers
 RURAL DEMAND
• STEADY GROWTHPopoulation size class.doc

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.
 washing soaps & batteries, rural share is over 60%,
 bath soaps, packaged tea & hair oils more than 50%;
 among durables like sewing m/c, wristwatches, table fans & pressure
cookers ; colour tv more than 65%;
 Telecom turnover will be 40% 2025
• 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.
 Tapping The Rural Markets
• Unique strategy in every function of
marketing
– Segmentation
– Channel
– Product
– Sales Force
– Physical Distribution
– Marketing communication
 Tapping The Rural Markets

 Segmentation
 Geographic
• Climate/irrigation level
• Nearness to town
 Demographic
• Population concentration
• 40% lives in 7% of villages
• Age
• 16-30 years : 25 crores; greater literacy & exposure
• SEC Classification
• Income
 Micromapping will reveal underserved pockets
 Data Sources
• Census/ NCAER/NSSO/CSO
• Thompson rural market index
• MICA Rural market ratings on districts
• Ruralscan, quarterly newsletter
 Marketing mix for rural markets
• Product strategy - Induce rural customers to buy and try the new
product
 trial by low unit packs , Sachets(HLL),Cavin Care -Chik, P&G-Vicks Vaporub, Godrej
with 6ml sachet , HUl – 75gm lifebuoy & 100gm Wheel Detergent
 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 for washing soaps ,
 Brand names – Britannia ‘s Glucose biscuits as Tiger with red background
symbolizing energy
 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 transistor which covered entertainment channels as well; hand
wound radio;
 smokeless chulhas
 Samsung’s CTV’s for rural markets in the 14” and 20” categories l
 LG Electronics launched Sampoorana , India’s first TV with Devnagri
script on screen display, equally accepted in urban LG’s Golden eye
and Onida’s KY Thunder
 Sell value brands, not cheap brands
 Ruf & Tuf – Aravind; Lifebuoy – HUL; Tiger Biscuits - Britannia
 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
 Seconds sale – Akai in India- sales increase
 Special occasion pricing: festivals
 Payment terms coinciding with harvest cycle
– Rich in rural buy by cash down payment
 Physical Distribution
 Problems in transportation & warehousing
 Parts of rural India outside rail network
 50% of villages not connected by proper roads
 Kachcha roads, inadequate warehouses; cold storage
 Cost service dilemma
 Guaranteed service in delivery increases the cost by
50% compared to urban area
 Delivery Van
 Cos/c&f agents/Stockists/distributors operates these
vans
 HLL, ITC & Eveready
 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 channel
Samsung- Van displays all the products , the company has tied up with
local distributors to showcase the Samsung range in local melas and
fairs
 Place: Channel Management
 Problems:
 Multiple tiers
 Non-availability of outlets
 Inadequate banking & credit facilities
 The village shop is the key
 Satellite distribution
 2,300 towns with a population of > 20,000
 Each stockists will service 100 outlets in 100 villages; can reach one
lakh of six lakhs villages
 Chain stores in rural
 DCM kisan hariyali kisan bazar 54 rural supermarket
 ITC choupal sagar – rural hypermarket chain across 15 states
 Aadhaar chain – Godrej Agrovet; floor space of 1,000 sq.ft
 Non-conventional delivery mechanisms
 ICICI Pru – e-mitra; network of computer kiosks in Raj/ Aponline-AP
 Marketing communications
 Constraints:
 Literacy rate is low
 Linguistic diversity
 Tradition bound nature, cultural barriers & taboos
 Local idiom
 Expensive,
• as elaborate and step by step; break existing deep-rooted
behaviour patterns
• Audience is fragmented, location-wise & in media habits
• Job: Find a media mix that will deliver the message in a cost-
effective manner to a pre-dominantlty illiterate target
audience
 Marketing communications
 Selecting the Media Mix
 TV
 Radio
 Cinema
• 33% of cinema earnings from rural
 Print (opinion leaders)
 Outdoors
• Hoardings, wall paintings, illumination & other such display (Haats, mandis & mela)
 POPs
• bright colours
 Audio-visual vans
• Philips, Colgate-Palmolive, Godrej
• Syndicated AV vans
 Puppet Shows, folk theatre, Harikatha
 Music cassettes/cds
 Demos
 Word of mouth
 Marketing mix for rural markets
• Promotion –
 Television
 Cinema- 36% of the population view cinema
 radio
 Print Media – 9% read newspaper , 5%
publications reach rural area
 Hoardings , 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
 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
 ICICI Pru hired 250 retired jawans of Air Force for selling
insurance
 HLL has largest rural salesforce
 AP Rural academy
 700 youth have graduated; retail majors like Future Group; Food
World; Reliance Retail; Spencer’s Mc Donald’s
 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 Amir 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
 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