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Rural Marketing

Rural Marketing

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Published by: singhsarabjeet on Nov 22, 2010
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Rural Marketing - Critical Review

The Rural population is nearly three times the urban, so that Rural consumers have become the prime target market for consumer durable and non-durable products, food,construction, electrical, electronics, automobiles, banks, insurance companies and other sectors besides hundred per cent of agri-input products such as seeds, fertilizers, pesticides and farm machinery. The Indian rural market today accounts for only about Rs 8 billion of the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share.

What rural market buys?
Rural India buys small packs, as they are received as value for money. There is brand stickiness, where a consumer buys a brand out of habit and not really by choice. Brands rarely fight for market share; they just have to be visible in the right place. Even expensive brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution, many brands are doing well without much advertising support Ghadi, a big detergent brand in North India, is an example.

Why Rural Market?
The Indian rural market has a huge demand base and offers great opportunities to marketers. Two-thirds of Indian consumers live in rural areas and almost half of the national income is generated here. The reasons for heading into the rural areas are fairly clear. The urban consumer durable market for products like colour TVs, washing machines, refrigerators and air conditioners is growing annually at between 7 per cent and 10 per cent. The rural market is zooming ahead at around 25 per cent annually. MART, the specialist rural marketing and rural development consultancy has found that 53 percent of FMCG sales lie in the rural areas, as do 59 per cent of consumer durable sales. million BSNL mobile connections, 50 per cent went to small towns and villages, of 20 million Rediffmail subscriptions, 60 per cent came from small towns, so did half the transactions on Rediff's shopping site.

Special features of rural market
y y The featured population is predominantly illiterate, have low income, characterized by irregular income, lack of monthly income and flow of income fluctuating with the monsoon winds. The rural consumer expects value for money and owing to has unsteady and meager status of weekly income; increasing the household income and improving distribution are the viable strategies that have to be adapted to tap the immense potential of the market. Media reach is a strong reason for the penetration of goods like cosmetics, mobile phones, etc.,which are only used by the urban people. Increasing awareness and knowledge on different products and brands accelerate the demand. Rural consumers are influenced by the life style they watch on television sets. Their less exposure to outside world makes them innocent and fascinated to novelties. The reach of mass television media, especially television has influenced the buying behavior greatly.



Media.6 crore in 2004 to 14. bullock cart and wall writing are the other media. in which several related items are sold to the target client. which can carry the message effectively to the rural customers. which use at least one FMCG product. The estimated number of households that are using FMCG products in rural India have grown from 13. Techniques that have proved to be successful are Van campaigns. Panchayat televisions in Tamilnadu carries message that are well received and contribute to community development.Creating brands for rural India A lot is already emphasized on adapting the product and price in terms of packaging. .etc and in sachets. Joint or co-operative promotion strategy involves participation between the marketing agencies and the client. after-sale service.3 crore in 2009. that promises to convert the first time customers to repeated customers. For some FMCG categories. both traditional as well as the modern media. Partnership for sustainability involves laying and building a foundation for continuous and long lasting relationship. The Wide reach of television has exposed the other wise conservative audience to westernization. priced to suit the economic status of the rural India in sizes like Rs. Radio and television are the conventional media that are reaching the rural audience effectively. The method of promotion needs to be tailored to suit the expectations of the market. which include: * Client and location specific promotion * Joint or cooperative promotion * Bundling of inputs * Partnership for sustainability Client and Location specific promotion involves a strategy designed to be suitable to the location and the client. Innovative media can be used to reach the rural customers. colour ful wall paintings. and so on. the penetration levels have remained stagnant over the past three years. Rural markets and rural marketing involve a number of strategies.1 packs that are perceived to be of value for money. including arrangements of credit. This is a typical penetration strategy. 'Bundling of inputs' denote a marketing strategy. the growth has been faster.8 per cent in the number of households. This growth was achieved on an average yearon. In others. generating word of mouth publicity through opinion leaders. is used as a marketing strategy to attract rural customers.5 packs and Re. flavouring.year growth of 1. edutainment films. But horse cart.

One way of meeting the intense competition in the passenger car segment by HM is through increased efforts in rural markets.Case Study ± Rural Marketing Introduction India s vast rural market offers a huge potential for a marketer facing stiff competition in the urban markets. The interactions between consumers and these unique institutions provide information for use in marketing decision. Rural consumers have customs and behaviors that the marketers may find difficult to contend with. Rural consumers who come to larger towns have access to Titan products.000. Corporate interest in rural marketing When rural customers discover the new and exiting choice f brands available in urban markets. expoiting the low prices. they formulated a marketing strategy tailored to the requirement of the large rural market. Reasons for interest Untapped Potential:Rural markets offer a great potential for marketing branded goods and services for two reasons. Their volumes and growth show the importance of the market understanding demographic profile of consumers and their response to brand offering is a useful approach to analyses the rural market. Haats and melas that are unique to rural markets. a demand for these brands is created in rural areas. Growing importance of rural markets Hindustan Motors (HM) launched a utility vehicle the RTV (Rural Transport Vehicle). It has over40% of this rural market. The rural market environment is very different from the familiar surroundings of the urban market. A pointer to this is the larger volume of sales of certain products in rural areas as compared to the sales of the same products in urban areas. . The opportunities in the rural market are demonstrated by comparing consumption levels in urban and rural market for different product categories. Titan intends to make in roads into the Indian hinterland with Sonata. supplement the retailer route to the rural market. The use of an existing network of channels in the rural market is the key to connecting with the rural heartland. The second one is large untapped market which is yet to be discovered. When Titan found rural consumers purchasing their Sonata brand of quartz watches. aimed at the rural market. The company s watches are available in towns with a population of 20. reliability and time tested rugged aspect of the Ambassador brand. Titan industries the country s largest watch maker is now set to aggressively woo the rural consumer. First one is the large number of consumers.

Market stated as the percentage of world population is 12. Entry strategy for a new player The entry of a new brand in the rural market is a difficult proposition. duplicates and imitation. Periodic markets mean that people assemble at a particular place at least once a week in order to buy and sell products. Competition for existing brands can be from other brands. This means 12. They serve the village in which it is located and also the surrounding village. especially in places where the product is new to the consumer. from new player s small unorganized sectors. One of the main reason is that the cost of reaching the outlets is higher for rural markets because of the geographical spread. Such situations are quite common in rural markets. Increasing income and purchasing power:The agricultural development programmes of the government have helped to increase income in the agriculture sector. In the case of the organization entering in the rural market for the first time the sheer size of the market in geographic terms poses a formidable challenge in accessing retailers. to establish a symbiotic relationship with an existing . Haat:Haats are periodic markets.2 percentage of the world s consumers live in rural India. Entry strategy in such situation includes. The road network has facilitates a systemized product distribution system to village. Each haat caters to the needs of a minimum of 10 to maximum of 50 villages from where an average of 4000 persons come to buy a range of daily necessity and services Consumers and traders who form a major part so the population attending these markets do not necessarily attach much importance to the population of the village in which the market is held. This is because in rural markets the pioneer creates a lasting impression and loyalty to such brands is higher. The task for a new player entering in the market is difficult given the advantage that entrenched brands have in rural markets. A distinct feature of the rural market is the presence of haats and rural fairs. efforts to create shelf space for the product. Channel variants in rural market The distribution in rural markets is different from urban markets for multiple reasons. Haats operate in a weekly cycle. In India the rural households form about 72 percentages of the total households.Market size and penetration:The estimated size of India s rural. In numbers this works out to about 120 million households. They may vary in the intensity of their transactions depending upon the season but they seem to have a fairly stable periodicity. This in turn has created greater purchasing power in rural markets.2 percentage. There is also a difference due to the type of channel available to the marketer. Competition in rural market Competition in rural markets is varied in nature and a marketer faces competition not only from other brands but also from substitutes.

Consumer pull creates a space for the brand on the retail shelf that is difficult to replace. The rural marketer will find it useful to identify consumer groups who require products purchased in the urban market. The periodic markets are an important social institution that marketers can user to supplement reaching the rural consumer. Conclusion Rural markets are for marketers with perseverance and creativity. The rural market is not synonymous with the farmer.marketer. the consumer need and behaviors. It is a high risk area but with the promise of a large customer following as the prize for those who succeed. The market is extremely attractive with its vast potential but also provides challenges. A marketer need to understand that rural consumers are not a homogeneous lot.In such a situation competitive efforts that rely on positioning alone are unlikely to create sufficient impact. The consumer groups here differs by occupation. Adaptation to consumer needs of the rural market is reflected in products offered and the message used. It is a classic case of risk return situation. Consumer purchase behavior is also reflected in distribution decisions. social and cultural grouping. Understanding and communication in the language that the rural consumer comprehends is a challenge the market has to face. . income. The key to reducing the risk is to understand the market.

the urban-rural wealth divide is also narrowing. increasing penetration of TV (specially after introduction of DTH). was bigger than the urban market. He is absolutely right.000 crore ($12 billion) in 2004. the balance 46% live in rural areas. estimated at over 12 million. among others increase inventories and. Further more the distributed settlement and high transportation cost makes it potentially less feasible for many companies to launch products for rural consumption. in total disposable income terms. Due to lack of scale and diversity in buying behaviour.000 ($12. The rural market is typically a seasonal market. Multiplicity of assortment adds up to the cost level of the product and works against adding experience effect to the production. says Ranjan Biswas.000.500.96% of them occupy retail space of less than 500 sq. according to the Ministry of Communications and IT. But it has its fair share of problems and challenges before any retail or marketing operations become successful and sustainable. and that too hardly connected by all weather roads.2 million square kilometers. even for Fast Moving Consumer Goods.Rural Market Potential Desppite Challenges Rural India Offers Huge Potential For Retailers Rural India. bridge gaps in behavioral patterns across the country. However. barring a ver y few.48.ft. Moreover. The consumption level goes high in post monsoon and dries up during non-crop period. 90% of whom are located in towns having population of less than 100. could in a short span of time may apart from improving infrastructure. Hence. added Biswas. while 54% of the rich and well-off households having an an annual income above Rs. Yet few success stories in Indian marketing histor y makes it a point to enter in to the rural market. costs. It is really a nightmare for any marketer to address the needs of 600. Yet there has not been substantial progress in this area. The rural market. therefore. marketers are also forced to not only create multilayered distribution networks but also develop new packaging and price points.9.000 plus villages spread over a geographical area of over 3. rural India offers great market potential.500) live in urban areas. restrictions on goods movement. The estimate is about three times that of the European Market. have found its physical and geographical expanse daunting.135 lakh crore ($228 billion). Ernst and Young and National Leader (retail and consumer products practice). Wooing Rural Customers! Since long Indian marketers are trying to consolidate their brands in the rural markets of India. Interestingly. each. Lack of infrastructure and logistics together with multiple tax rates. The reasons are well known. as despite almost all marketers and retailers agreeing on potential of rural India. The estimate speaks of the potential volume of business that can be generated in Indian Rural markets. India boasts of highest number of retailers. availability of broadband internet. rebirth of radio(through FM). The unit disposable consumption level is very low and the assortment has to be made in a different size compared to the urban market to make it suitable for the rural customer s pocket. Partner. and rural road development programmes. at Rs. according to a research report prepared by international consultancy Ernst and Young. accounts for 60% of the country s overall consumption amounting to Rs. fast spread of mobile phones. The pressure from . This apart.

the rural market. Companies like HLL. Companies can also use popular forms of entertainment like puppetry. ragini. nautanki. These rural melas and weekly haats have become more popular medium of rural advertising by the media planners. Corporations and advertising agencies have started working out in this area. The saturation of urban markets. It provides a wider audience at a fairly low cost. Britannia has entered in to the rural market by participating in rural melas and displaying its down market brand Britannia Tiger Biscuits. But rural market has its own inherent problems! One of them being the low level of education that creates problem in brand identification. . The success of a business in India will be decided in future by its success in the heart of India i. The rural advertising in India needs some innovative and alternative media to woo the customers So the vehicle as well as the message has to be in the liking of the rural customer. Baul songs in West Bengal for advertising insecticides are some of the examples.the multinationals in the urban markets is also forcing the domestic marketers to search for alternatives. qaualli. trial sales and sampling. These companies are following a typical media schedule and are always in march from one place to the other with our festival calendar and a collapsible arrangement of the exhibition setup. bhangra. Since they can not read the brand names and price tags it makes it easier for the clones to launch brands similar in label and design and spoil the brand image of the so called successful urban brands. Through this arrangement they can break the saddle of scant geographical distribution of customers in rural markets as people of number of villages assemble together to participate in the fair. So marketers and advertisers are looking for alternate medium for promoting brands through advertising. Folk media like Ragini in Haryana for communicating qualities of Virat cement.e. the demanding urban customers and intermediaries and frequent promotion schemes to break the brand loyalty level are factors forcing for an entry in to the rural market. The puppet shows in Punjab. It is a good ground for brand awareness building. Kumbhmela. Titan and Colgate Palmolive use festivals like Rathyatra. Unscrupulous retailers are taking the benefit and damaging the perception of the brands before they actually enter in to the rural market. Pala and Daskathia in Orissa for promoting safe electricity consumption and tooth pastes of Colgate Palmolive. and traditional dance shows to increase the brand experience. and Onam for brand promotion.

09BS0002082 Section:.Sarabjeet Singh Sharad Enrollment No:.Effective Branding In Rural India Project Write UP Submitted By:.G .

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