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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 Diretor HUL
What is Rural
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). The rural and semi urban area is defined as all other cities other than the 7 Metros (LG India). Locations having shops or commercial establishments with up to 10,000 people are treated as rural (Sahara, ITC, HUL)
3 Statistical Approach to Rural Marketing: Government agencies like IRDA (Insurance Regulatory and Development Authority) and NCAER (National Council for Applied Economic Research) define rural as villages with a population of less than 5.000. etc. 10 consecutive monsoons have led to 26% of GDP as returns from agriculture. and has 6. . of which 32% can be reached as they are connected by pucca roads. which are around 700 million people.38.1. This has increased their purchasing power. India is divided into 597 districts. and almost 26% of the National income is generated there. with 75% of the male population engaged in agriculture. Two-thirds of the country s consumers live in rural areas.667 villages.
68% of the rural market lies untapped due to various reasons ranging from inaccessibility to lack of awareness. As a result Rural India is becoming an important part of the market development strategies of all FMCG and consumer durables companies as well as service companies . It now accounts for close to 50% of the volume of consumption of fast-moving consumer goods in India.8 million retail outlets in rural India. adding more than 1 million new consumers every year.However. averaging 5. In all there are more than 3.8 shops per village The rural market has been growing at 3-4% per annum.
Semi urban.ABOUT INDIAN RURAL MARKET 47% of the total population.(Urban.28%. IMDR 2005) Changing consumption patterns and lifestyles Unfold tremendous opportunities for rural marketing.630 (as per NCAER. The annual rural household income of Rs 56.25%). . More than 570 Million people.
Evolution Of Rural Marketing Phase 1 (Before 1960s) Phase 2 (1960s-1990s) Phase 3 (1990s to present) .
In 1960 HLL saw rural markets as an opportunity and entered with lifebuoy soap. Cavinkare. in 80 s companies like Nirma. and Marico entered rural markets . Today HUL dominates rural markets and have its presence in more than 1 lakh villages. MNC s in rural markets like P&G (Proctor & Gamble) also found potential in rural markets . Asian Paints was the first company to enter rural markets. Major players like Colgate and Dabur followed in.The Glorious Past In 1949.
are launching a range of products to cater to the changing lifestyles in rural India. Revlon and insurance biggies like Birla Sun life. A 1% increase in their purchasing power can lead to an increase of Rs.10. MNC s like LG.The Pulse of the Present Around 70% of the population lives in rural India. Cos.000 crores in the government revenues. Max New York Life and Prulife are entering rural markets in a big way. which is almost 700 million in number. But till today these have altogether tapped only 1-lakh villages out of the 6-lakh odd villages . Samsung.
Size of the Rural Market The total size of the rural market is estimated at Rs. Agri products and 2/4 wheelers.8000 crore Rs. which includes FMCGs.000 crore. Estimated Annual Size : Rural Market FMCG Rs. Durables.65000 crore Durables Agri-Inputs 2/4 Wheelers Total Source: Francis Kanoi Rs. 1.45000 crore Rs.23.123000 crore .5000 crore Rs.
Understand them Illiterate but not fools .Rural customer .
it s better to target the rural market. The cost of going global is very high and also it s tough to penetrate markets in other countries. the rural markets provide better opportunities. I . Compared to urban markets. . it becomes difficult for existing companies to maintain their market share. companies operating in India are left with only two options. Marketers find a similarity between the criticality of rural as well as urban markets. either to go Global or to go Rural. Due to the wide variety of choices of products. Some reasons for the same are listed below: a) Saturation of urban markets: There is cutthroat competition in urban markets. So.The Reasons to Prefer Rural Areas Presently.e. Rural India is emerging as a large market for a number of goods and services.
melas etc. They did not rely on T.In September-98 they established rural marketing sales. Shandar Sawari'.One very fine example can be quoted of Escorts where they focused on deeper penetration . Thus. Looking at the 'kuchha' roads of village they positioned their mobike as tough vehicle. Their advertisements showed Dharmendra riding Escort with the punchline 'Jandar Sawari.V or press advertisements rather concentrated on focused approach depending on geographical and market parameters like fares. they achieved whopping sales of 95000 vehicles annually .
b) A huge untapped market: With a rural population of more than 700 million. . it has a huge potential and market areas as only around 1-lakh villages are tapped out of the 6-lakh odd villages. Another reason for the rising disposable incomes of the villages is that Agricultural income is non-taxable. It is a market that corporatists cannot afford to ignore. mostly in Gulf countries. d) Remittances from abroad: Many households in rural India have one of their family members abroad. Non-farm sectors now account for almost 50% of the total rural incomes. People working there send their savings to their families in India. . c) Rising disposable incomes: Good monsoons during the past 10 years have raised farmers incomes. which is an additional source of income .
25 crores.12 crores came from the urban market . Rural people are spending more on lifestyle products these days . Modi.e) Impact of the media: The growing reach of the electronic media has created a huge change in the lifestyles of rural consumers because of TV programmes . Revlon. for instance sells more lipsticks in the rural market than in urban areas. only Rs. Last year rural sales were Rs.
Characteristics of Rural Marketing: India is a big country and its rural markets have varied characteristics that change from people to people. Some of the main features of India s rural markets are: - . region to region.
Out of these 50% share a very small population of less than 500 and a limited purchasing power.1) Diverse Nature: There are 6. . There are at least 5 shops per village Lastly there are 60.000 villages with a population of more than 2000. . Many of these villages don t even have a single shop. mobility patterns and awareness levels. In the second category there are 2. Companies should try and focus on the last two categories more as they have high potential.50. Regional disparities heavily influence economic development.000 villages with a population between 500-2000.667 Indian villages in all. social interaction patterns.38.
. as there is equal number of households in rural areas as in urban areas.2) Urban Market Saturation There is a cut-throat competition in urban markets. which have reached a stage of saturation As a result. marketers are shifting focus to greener pastures in rural markets.
the green revolution and the Administered Pricing Mechanism (APM) have raised disposable incomes in rural areas It is ironic that rural people spend so lavishly on weddings. ceremonies and festivals amidst deficiency. . It is this income that the companies are going to tap in the near future.3) Rising Disposable Income of Rural Customers New tax structures. good monsoons. Today the rural consumer shop for value .
4) Rising Literacy Levels .
Every year produces 60 lakh literate people. The increased enrolment in schools has also generated a wave of rural demand for lifestyles and aspiration products. Around 12 crore people in villages are literate as compared to 12.5 crore in urban India.4) Rising Literacy Levels Nearly 45% of rural Indians are literate out of which 59% are men and 31% are women. Farmers are remarkably well informed about the changing world around them. .
. It has led to a change in lifestyle and consumption patterns Television has high capacity to raise interest levels as it has greater accessibility compared to other media. Rural consumers now aspire to buy brands rather than to just purchase commodities.5) Spread of Cable Television The growth of satellite TV channels has had a major impact on villagers.
Classification of Rural Marketing: URBAN ---------.RURAL .URBAN RURAL------------.RURAL RURAL -----------.
Personality & Psychological Factors Perception & Brand belief Characteristics of Rural Consumer Age & Stages of Lifestyle Economic Circumstances Personality & Self-concept Lifestyle Occupation & Income .
RURAL BELOW 12 YRS URBAN .
RURAL 13-19 Yrs URBAN .
RURAL 20-40 Yrs URBAN .
RURAL 40-60 Yrs URBAN .
telephone. house. alcohol. playing cards. health insurance. internet Car. stores/malls Below 12 Child Toys. branded clothing. pilgrimage 20-40 Young 40-60 Middle Aged Luxury car. kisan-credit card. haat Tractor. theatre. chocolates. parks Above 60 Old . Tailored/unbranded clothes. postal savings. ice candy. LPG. motorcycle. credit cards. holiday trips Clubs.CONSUMPTION BY AGE & STAGES OF LIFE CYCLE AGE LIFE-CYCLE STAGE RURAL URBAN Video games. daliya 13-19 Teenage Bicycle. beverages/health drinks Cell phones. PC. television. cinema Motorcycle. mela Chaupal. local liquor.
Self image is the way we perceive ourselves in a society. purchase depends on situation and person. Popcorn in urban . Tendency to buy the products which suit our personality. Pan Masala in rural. In the rural market.Personality Sum total of unique individual characteristics that determine how a person responds to the environment.eg.
The rural customer is content to satisfy basic needs. Peer pressure not very relevant High esteem but content with everyday life. . Persuasion necessary to convince a customer.
Barrier to level of trial and acceptance of products Rural customer trusts government services .Perception and Brands Perception plays a major role in purchase behavior for the rural consumer. Quality and price influence the perception of the consumer.
and Ponds cream to twenty million households. Clinic plus shampoo. .. A year back HUL started 'Operation Bharat' to tap the rural markets. fairness cream. Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. Under this operation it passed out low±priced sample packets of its toothpaste.
Project Shakti/Operation Bharat .
The company s main contributions include developing and using relevant technologies. . HUL has consciously woven India's imperatives with the company's strategies and operations. Over these decades. it has contributed equally to these developments. stimulating industrialization. boosting exports. (HUL) and its constituent companies have been in India since 1931. adding value to agriculture and generating productive employment and income opportunities. while HUL has benefited from the developments in the country.
This Programme now covers 500 villages in the district. HUL has been proactively engaged in rural development since 1976 with the initiation of the Integrated Rural Development Programme in the Etah district of Uttar Pradesh. in tandem with the company s dairy operations.These factory. Subsequently. health. hygiene and infrastructure development . The company has acquired a wealth of experience and learning from these activities . the factories that HUL continued establishing in less-developed regions of the country have been engaged in similar programmes in adjacent villages . generating alternative income. animal husbandry.centered activities mainly focus on training farmers.
Such initiatives are successful and sustainable when linked with the company¶s core business and is mutually beneficial to both the population for whom the programme is intended and for the company. . Based on these insights.The principal issue in rural development is to create income-generating opportunities for the rural population. in keeping with the purpose of integrating business interests with National interests. HLL launched Project Shakti in the Year 2001.
In 2002 2003. LIC sold 50 percent of its policies in rural India by doing street plays .
3 A s of rural marketing. .Coca Cola Affordability Acceptability Availability.
where life stands still waiting««. .the traditional village...
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