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Rural Marketing

Rural Marketing

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Published by: itishri20103 on Apr 04, 2010
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ByGroup AG1 R1802 B31 10810504

Focusing on the poor represents an opportunity rather than a problem. C K Prahalad

There's incredible potential in rural markets. That's where the growth will come from. Sharat Dhall Director, HUL

What is Rural?
y Any habitation with a population density of less than 400

sq. km., where at least 75% of the male population is engaged in agriculture and where there exists no municipality or board (Census 2001). other than the 7 Metros (LG India).

y The rural and semi urban area is defined as all other cities y Locations having shops or commercial establishments with

up to 10,000 people are treated as rural (Sahara, ITC, HUL)

y 47% of the total population.(Urban- 28%, Semi urban- 25%). y More than 570 Million people. y The annual rural household income of Rs 56,630 (as per NCAER, IMDR 2005) y Changing consumption patterns and lifestyles y Unfold tremendous opportunities for rural marketing.

Some facts
y The average Monthly per capita Consumer Expenditure (MPCE) for rural areas is Rs 495 and that for urban areas is Rs 914. y 93% people in Rural Area live in their own houses as comparative to 61% of Urban. y Food Expenditure in Rural Area is 56% as in Urban it is 44%.

y 9 in 10 Rural households use branded washing powder or cakes y 2 in 5 uses more than 1 brand of soap y More than 1/2 of households use branded skin creams. y Rural contribution is 40% in sales to top 7 cities of Frost Free refrigerator y More than 70 Million Kisan Credit Cards are already issued by Banks to rural households.

(Source: ORG- MARG Survey / NSSO Survey).

Evolution Of Rural Marketing
y Phase 1 (Before 1960s) y Phase 2 (1960s-1990s) y Phase 3 (1990s to present)

Size of the Rural Market
y The total size of the rural market is estimated at Rs.

1,23,000 crore, which includes FMCGs, Durables, Agri products and 2/4 wheelers.
Estimated Annual Size : Rural Market FMCG Durables Agri- Inputs 2/4 Wheelers Total Rs.65000 crore Rs.5000 crore Rs.45000 crore Rs.8000 crore Rs.123000 crore

Source: Francis Kanoi 2002

Product Strategy and the 4As
y Availability y Affordability y Acceptability y Awareness

Companies like HUL, Colgate Palmolive, Coca Cola and LG have been able to address these challenges successfully.

Rural customer . Understand them Illiterate but not fools

An intelligent thinker
y Loyalty to regional brands. y Brand stickiness y Understand symbols and colours better

A hard bargainer

Has his own way of evaluation ( touch and feel of product)

Agro Advertising
y No brands, no advertising y Me too - communication y y y y

efforts Posters Farmer meets Leaflets Demo farms

Rural Marketing Common.. One follows other

What to do?
y Opinion leaders at the top of the hierarchy continue to play an important role in the decision making process. y In spite of multiple sources of communication few steps continues to dominate the communication process.

y Women and children are emerging as demand generators. y Word of mouth recommendation by users and sheer familiarity have a strong role to play in influencing decisions. y Apart from Opinion Leaders, educated village youths are increasingly influencing decisions especially of lifestyle products.

Care for every one .
Rich villagers Aspiring middle class Bottom of the pyramid

Ideal advertising Strategy

Know the local language
y Telgu y Orriya y Tamil y Etc..

Entry strategies

LG s advertising strategies for rural Market
LG launched its first low priced TV for rural consumers.. -Sampoorna- Rs.3000 -Cineplus- RS 4900 Promotion y Mobile Vans y Exhibition y Road Shows

Coca cola

y Project SHAKTI

Lux at Rs.5,
Lifebuoy at Rs.2,
Surf Excel sachet at Rs.1.50, Pond's Talc at Rs.5,
Pepsodent toothpaste at Rs. 5,
Fair & Lovely Skin Cream at Rs.5,


Key Success Factor Self Sufficient Infrastructure




y Has a customer base of over 17 million. y Promotional Strategy (An Idea can change your life!) y Idea as an instrument of democracy, bringing power to the


y Social messaging to reach the hearts and minds of rural


y Abhishek Bachchan- presented as a humble public servant,

an agent of change.

We don¶t consider other service providers, only IDEA works here«´

IDEA- What an idea sir ji?
y Combi pack- sim + mobile y At only Rs. 1199.00

y Variety of product y low Price y Airtel sim free with nokia cell y Teaching them how to use y Low price cell phones y Features useful to them


Hero Honda
y Free trials y On the spot finance y Broad servicing range

y In 2001-02, LIC sold 55% of its policies in rural India.
y Of two million BSNL mobile connections, 50% are in small

towns / villages. y Of the 20 million Rediffmail sign-ups, 60% are from small towns. 50% of transactions from these towns are on

Rediff online shopping site. y 42 million rural households (HHs) are availing banking services in comparison to 27 million urban HHs. y Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs in urban.

Rural Consumer Insights
y y y y y

Rural India buys Products more often (mostly weekly). Buys small packs, low unit price more important than economy Rural market involves more intensive personal selling efforts compared to urban marketing 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.

Current Scenario
y Rural India, which accounts for more than 70 per cent of the country¶s one

billion population is not just witnessing an increase in its income but also in consumption and production.
y The Union Budget for 2009-10 hiked the allocation for the National Rural

Employment Guarantee Act (NREGA) to US$ 8.03 billion, giving a boost to the rural economy. This is in addition to the ambitious Bharat Nirman Programme with an outlay of US$ 34.84 billion for improving rural infrastructure.
y According to a study on the impact of the slowdown on rural markets

commissioned by RMAI and conducted by MART, the rural and small town economy which accounts for 60 per cent of India s income has not been impacted by the global economic slowdown,

y The rural consumer market, which grew 25 per cent in 2008 when

demand in urban areas slowed due to the global recession, is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers

y Several FMCG companies such as Godrej Consumer Products, Dabur,

Marico and Hindustan Unilever (HUL) have increased their hiring in rural India and small towns in order to establish a local connect and increase visibility.

y GlaxoSmithkline Consumer Healthcare (GSK) and Nestle and are now

launching products specifically for rural markets

y At present 53 per cent of all FMCGs and 59 per cent of all consumer

durables are being sold in rural India. The biggest FMCG Company in India HLL derives more than half of its Rs. 12,000 crore revenues from the rural markets

Thank You!


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