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11 11 Final Rural Mrketing

11 11 Final Rural Mrketing

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Published by Prashant Gurjar

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Published by: Prashant Gurjar on Jul 02, 2011
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05/24/2012

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RURAL MARKETING
Before getting into issues like whether the Indian rural market stands and theopportunities for corporate’s to explore it or not ... let's look at the definition of rural India According to the census of India, villages with clear surveyedboundaries not having a municipality, corporation or board, with density of population not more than 400sq.km and at least 75 per cent of the male workingpopulation engaged in agriculture and allied activities would qualify as rural. So,from the above stated conditions, there are 638,000 villages in the country. Of these, only 0.5 cent has a population above 10,000 and 2 per cent havepopulation between 5,000 and 10,000..Now for some facts and figures The Indian rural market today accounts for onlyabout Rs 8 billion (53 per cent - FMCG sector, 59 per cent durables sale, 100 percent agricultural products) So clearly there seems to be a long way ahead.
Prospects for companies planning to enter rural market or what is thepotential of rural market
Seventy percent of India's population, or approximately 700 million people, livein rural areas. 75 percent of the population is agrarian. With such a largenumber of potential consumers, it is clear why multinational corporations wouldlike to successfully penetrate the rural Indian market.
Large, Diverse and Scattered Market:
Rural market in India is large,and scattered into a number of regions. There may be less number of shops available to market products.
Major Income of Rural consumers is from Agriculture:
RuralProsperity is tied with agriculture prosperity. In the event of a crop failure,the income of the rural masses is directly affected.
Standard of Living and rising disposable income of the ruralcustomers:
It is known that majority of the rural population lives belowpoverty line and has low literacy rate, low per capital income, societalbackwardness, low savings, etc. But the new tax structure, goodmonsoon, government regulation on pricing has created disposableincomes. Today the rural customer spends money to get value and isaware of the happening around him.
Changing Outlook:
Villagesvhave a traditional outlook. Change is acontinuous process but most rural people accept change gradually.
Rising literacy levels:
It is documented that approximately 45% of ruralIndians are literate. Hence awareness has increases and the farmers arewell-informed about the world around them. They are also educatingthemselves on the new technology around them and aspiring for a betterlifestyle.
Infrastructure Facilities:
The infrastructure facilities like cementedroads, warehouses, communication system, and financialfacilities,transportation facility are inadequate in rural areas. Hence
 
physical distribution is a challenge to marketers who have foundinnovative ways to market their products.1Large population2Rising prosperity3Growth in consumption4Life cycle changes5Life cycle advantages6Market growth rate higher than urban7Rural marketing is not expensive8Remoteness is no longer a problem 
1.Growth in consumption:2.Life style changes:
3.
Market growth rates higher:
Growth rates of the FMCG marketand the durable market are higher in rural areas for many products. Therural market share will be more than 50% for the products like toilet soaps,body talcum powder, cooking medium (oil), cooking medium (vanaspati),tea, cigarettes and hair oil.
4.
Rural
marketing is not expensive:
Conventional wisdom dictates thatsince rural consumers are dispersed, reaching them is costly. However, newresearch indicates that the selling in Rural India is not expensive.Thisincludes the expenses of advertising in vernacular newspapers, televisionspots, in-cinema advertising, radio, van operations and merchandising andpoint of purchase promotion. Campaign like this, which can reach millions,costs twice as much in urban area.
5.
Remoteness is no longer a problem:
Remoteness in a problem but notinsurmountable. The rural distribution is not much developed for thereasons,
Lack of proper infrastructure such as all-weather roads,electrification and sanitation, and
Lack of marketer’s imagination and initiative.Marketers have so far, failed in analyzing the rural side and exploiting ruralIndia’s traditional selling system-
Haats & Melas.
Their near obsession with justduplicating the urban-type network and that too with very limited success, haskept them blind to the potential of these two outlets.
Consumption pattern of rural india
The total number of rural households is expected to rise from 135 million in2001-02 to 153 million in 2009-10. Thus, this is likely to result in rural Indiabecoming the largest potential market in the world
 
An increase in the education level and media exposure has led to significantchanges in the consumption pattern of rural India.the share of milk and milk products, egg, fish, meat, fruits and nuts hasincreased by about one percentage point each, vegetables by 2.5 percentagepoints while that of beverages, refreshments and processed food has increasedby two percentage points since 1972-73 whereas it has decreased for cereals.In rural India, expenditure on cereals forms 18 per cent of the total consumptionexpenditure at present compared with 40 per cent in 1972-73, according to thereport.According to the National Council of Applied Economic Research (NCAER), anindependent, non-profit research institution, rural households form 71.7% of thetotal households in the country. Spending in this segment is growing rapidly andconsumption patterns are closing in on those of urban India."No consumer goods company today can afford to forget that the rural market isa very big part of the Indian consumer market. You can't build a presence for abrand in India unless you have a strategy for reaching the villages."however, the penetration is still low .the low penetration rates can be attributedto three major factors:low income levels,inadequate infrastructure facilities anddifferent lifestyles.But income levels are going up, infrastructure is improving and lifestyles arechanging. Almost a third of the rural population now uses shampoo comparedwith 13% in 2000,Indians have a very low disposable income. Most rural homes have minimalstorage space and no refrigeration. Very few people own or have access to cars.As a result, rural Indian purchasing habits tend to be of an "earn today, spendtoday" mentality.Rather than buying in bulk, which would mean paying more for a large quantityupfront, rural Indians tend to buy what they need for short segments of time.These factors result in consumers buying products locally, as well as on a dailybasis. In addition to the fact that income levels are low, rural incomes also varygreatly depending on the monsoons. When a monsoon hits, this devastates thelivelihood of most rural consumers because they are dependent on agriculturalwork for income. Corporations are also directly affected because this makes itdifficult to predict demand.Before a company considers entering the rural market, understanding the typesof products and packages that rural Indians typically use is crucial.For example, urban Indian consumers would typically use toothpaste forbrushing their teeth, while most rural Indians prefer using tooth powder .As a company seeking to enter India's market with an oral care product, thiswould be an important fact to know and consider during both the product and

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