3 R

TheRse&RseofR ral ise iseof ural i i u

Copyright2010TheNielsenCompany.Confidentialandproprietary.

TheRise&RiseofRural R R R

Copyright2010TheNielsenCompany.Confidentialandproprietary.

EarlierPerception
Illiterate
Fewerschools Lowregistrationlevels Highdropoutratio Genderbias

NewReality
Sizable
742mlnpopulation,6Lacvillages, 47LacStores Bankaccountholdernumbers higherthanurban

Isolated
Poorroadconnectivity Lowtelephonedensity Insignificantmediareach

GrowthOpportunity
35%ofmonthlyFMCGturnover Foodcategoriesgrowingmuchfaster thanurban Durables&telecomgrowingfaster thansemiurban

LackofInfrastructure
Oneintwobigcompaniesconcerned abouteducationandsanitationlevels Oneinthreebigcompaniesconcerned aboutbraindrainduetomigrationto urbanareas

Sustainable
Rs.535billionallocatedforrural developmentin0910 90,000+NGOsworkingtowardsrural upliftment Corporatefocusingonit

Copyright2010TheNielsenCompany.Confidentialandproprietary.

$100Billionin2025

FMCGSalesEstimates inRural(BillionUSD)
New Zealand Tanzania GDP*

Ukraine

Source:Nielsen,IMF *inrealterms(PPP)

Source:Nielsen

Copyright2010TheNielsenCompany.Confidentialandproprietary.

$100Billionin2025
Togrow12Xin15years Notjustapenetrationgamerapidlyincreasingfrequencytoo
FMCGSalesEstimates inRural(BillionUSD)
ANZ+ Thailand

Penetrationalmostequalto Smalltowns
HairDyes/Colour SkinCare PremiumBiscuits CSD

Thailand FMCGSales

ConsumptionFrequency increasedathigherratethan Smalltowns

GlucoseBiscuits CSD Noodles

Source:Nielsen

Source:Nielsen

Copyright2010TheNielsenCompany.Confidentialandproprietary.

Amajorityofthelargestcategoriesare growingfasterinRuralthaninUrban
FMCGCompaniesthataregrowingnationally,arealsogrowinginRural
IodizedSalt Toffee/HBC MosquitoRep Shampoo Batteries ToothPastes Tea HairOils Laundry DetergentCake SaltySnacks Noodles InfantMilkFoods NonRefOil SoftDrinks MilkFoodDrinks ToiletSoaps Rubs Biscuits Chocolates# RefinedOil#
Source:Nielsen Top25Categories (80%ofFMCG) 2010over2008 #RuralContributionlessthan20%

Copyright2010TheNielsenCompany.Confidentialandproprietary.

GrowthDrivers

AWARENESS (Push+Pull)

ACCEPTABILITY (Pull)

AFFORDABILITY (Push+Pull)

AVAILABILITY (Push)

Copyright2010TheNielsenCompany.Confidentialandproprietary.

AWARENESS (Push+Pull)

RoleofEducation RiseofCommunication

Copyright2010TheNielsenCompany.Confidentialandproprietary.

RisingGovernmentSpendsleadtohigherliteracy
Newrulesformarketerstocommunicatewiththeeducatedruralconsumer
100 90 80 70 60 50 40 30 20 10 0 87 80 67 54 35 45 36 23 12 1951 1961 1971 1981 Urban 1991 Rural 2001 2010 2020 28 60 70 59 73 83 93

Year
200506 200910

Educationspend (000crores)
64.8 93.2

99%ofthevillageshaveprimary schoolinlessthan1kmwalkingdist.

RuralConsumersstate GettingGoodEducation fortheirchildrenasthe secondmostimportant aspect

Source:Nielsenstudy.GoI

Copyright2010TheNielsenCompany.Confidentialandproprietary.

EducationAVhyperlink

Education

Copyright2010TheNielsenCompany.Confidentialandproprietary.

10

CommunicatingConsumer, CommunicatingMarketer
NewAvenuesForCommunication:TargetedSMScampaigns,largeand growingwindowtoreachthroughthedigitalroute DigitalMedia
Source:TAM

RuralDTH(14million)faroutreachesurban(6million) Grownmuchfasterinpastyear ServiceprovidersinnovatingtogoDTHroute FMCGSalescontributionRural/Urbanis35:65,butTV owningHHsis52:48

MobileMedia
In4years,subscriberbase grown7timesinRuralversus 3timesinUrban Added100million subscribersbetweenQ109& Q110 InQ110,newsubscriber ratioforurban/ruralwas54:46

Source:TRAI

RuralSubscribers
Figuresareinmillion

200.8 122.2

Mar'09

Mar'10

Mar'11

Copyright2010TheNielsenCompany.Confidentialandproprietary.

11

AFFORDABILITY (Push+Pull) Governmentled AffordableConsumerism

ConsumerBuyingpower SmallerPricePoints(Manufacturer)

Copyright2010TheNielsenCompany.Confidentialandproprietary.

12

3XIncreaseinGovernmentSpendmakingaclear impactontheFMCGmarket
Costandeaseofdistributionmuchmorefavorableformarketerstoundertake thisjourney

Source:GoIRs.000Crore

Infrastructure

Currentstatus 14,454Kmroadsconstructed100% increasevs.2005

30 25 20 15 10 5 0

19

20

23

24 15

28 21

Road connectivity

12

Consumersstronglyechothe infrastructurestory
ConsumerSpeak:Changesinlast3years Infrastructurerelated Roadshavebeenmade Electricityhascome Wateravailable Housingconstructionincreased Rural 54 36 8 6 7 Source:Nielsen

200405 200506 200607 200708 200809 GovtExpenditure RuralFMCGSales

Copyright2010TheNielsenCompany.Confidentialandproprietary.

13

AffordableConsumerism
Ruralconsumerwantstospend,especiallyifthecostoutlayissmall
Expenditureas%ofincome

%GrowthrateofExpenditure last6quarters

SmallpacksRs 5andRs.10 Pricepointshave grownby100% inRuralvs.65% inUrban

Source:CMIE Source:Nielsen
Copyright2010TheNielsenCompany.Confidentialandproprietary.

SocialChangeAVhyperlink

14

InvestmentinRural

Copyright2010TheNielsenCompany.Confidentialandproprietary.

15

GrowthDrivers

AWARENESS (Push+Pull)

ACCEPTABILITY (Pull)

AFFORDABILITY (Push+Pull)

AVAILABILITY (Push)

Copyright2010TheNielsenCompany.Confidentialandproprietary.

16

EmergenceOftheDemandChain
PullFactorsleadtheway,propelmarketerstopushharder
): ush ion=8% (P lity xpans abi Rea ch

Ac c

ab ept

ility

ll) (P u

% 21

1 2:

il E Ava ortfolio 4% P =

AcceptabilityPerDealer OfftakeGrowth

Reach:DistributionGrowth PortfolioExpansion:No.ofSKUs perStoreGrowth

Copyright2010TheNielsenCompany.Confidentialandproprietary.

17

ACCEPTABILITY (Pull)

Externalization Emerfringetrendofpersonalsensuality Thesmartruralconsumer

Fusionofmodernscienceand traditionalwisdom Convenience&individualism
Copyright2010TheNielsenCompany.Confidentialandproprietary.

18

Externalization
Iwanttolookgoodtotheworld&feelconfident
Productsthatdriveexternalization growingfasterinruraldespitebeing premium
1. Groomingproductslikepowderhairdye andlipglossusagegrowingat1.2to1.5 timesinpast3yrsinruraloverurban. Shopkeeperinfluenceinruralfortrying newerproductsistwicecomparedto smalltowns. Saloonsinfluenceseentothetuneof13% incaseofPowderHairDyeUsage

1:2 1:3 2.

1:6.6

3. 1:1.6

%Used
1:0.8 1:1.3
UrbanGr :Rural GrYA

Urban 27

Rural 14

NonBlackColours
Source:Nielsen

Copyright2010TheNielsenCompany.Confidentialandproprietary.

19

EmerfringePersonalIntimate Sensuality
EmergingfringetrendinSouthcategoriesthatarebeingadoptedbytheevolvedsetsin thevillage.Functionofmindsetthandemographics.Fragranceplayingacentraltheme

Theretailerspeak Comfortfabricwashisa hit.Afemalelabourercame totheshopandaskedfor 1:4.1 theliquidthatgivesgood fragrancetotheclothesas shehadseenonTV.She usesitandtellsher immediatefriendsnext dayIgetordersfrom10 otherpeople.(Vizagrural)
Source:Nielsen

Ihadtrieddeoin Hyderabad.Iuseitbutnot alwaysinthevillageasit willmakemestandout.A 1:1.6 persondailygoingtofield doesnotusedeobutIuse itwhenIhavetogoout.I feelnicewhenIuseit (Male,1821yrs, Krishnapuram,low potential,R3)

Copyright2010TheNielsenCompany.Confidentialandproprietary.

GroomingAVhyperlink

20

Externalization

Copyright2010TheNielsenCompany.Confidentialandproprietary.

21

InsighttoAction
CreativeContent&Tonalityofmessagingandactivationimportant
Enableconsumerstolookgood/expresstheir confidencetotheouterworld e.g.DaburAmlaconductingbeautypageant

Alternateavenuesofinfluencinganddistributing: Saloonsasinfluencers e.g.Godrejundertookbrandingactivityat 50,000Saloonsacross9states

StoreOwnersasInfluencersTradeschemesfor retailersleadtorecommendationstoConsumer e.g.TVforretailersschemebyaleadingoral carecompany.

%influencers(Rural)
Familymembers/ Friends Shopkeeper AdonTV Beautyparlor/saloon

Powder hairdye 63 23 23 13

Haircolor 67 22 33

Copyright2010TheNielsenCompany.Confidentialandproprietary.

22

FusionOfScience&Traditional Wisdom
Coolingabenefitsoughtby consumers
Fuelledbytheperceptionthatheat causeshairfallorpimpleshence coolingproducts Onceamonththeentirefamily hascolddrinks.Itiscoolingand goodfordigestionaswellas gastricproblems.Whenwedrink itgetsgasout.Goodinsummers askeepsthebodycool

Earlierusedmustardoilbutwas toostickyandkepthairwarm. Myneighborsuggested Navratanoil.Itkeepshairasitis verygoodforhairfall

Source:Nielsen

Maggihasproteinsandvitamins asmentionedonthepack.Weeat itlikesubziwithriceanddaland addmuttertoit

Copyright2010TheNielsenCompany.Confidentialandproprietary.

23

InsighttoAction
NewanchorsforProductDevelopment.Productpositioningbecomesparamount:
Ingredientstoriesespeciallythosegroundedintraditionalwisdom,withhooks inscience

BajajAlmondDrops(effectof5 Almonds)andShantiBadamAmla modernscienceandtraditionalwisdom Ruralcontributesto~40%share. Stillgrowingat~1.5timesinrural comparedtourban Garnier2in1Oil+Shampoogrowing fasterinRuralinpast6monthsalready closeto~10%contirbution

Source:Nielsen

Copyright2010TheNielsenCompany.Confidentialandproprietary.

24

Convenience&Individualism
Expandingneeds&shrinkingtime: Leadingtoconsumptionofproductsreplacingtraditionalalternatives

1:3

1.
1:1.4 1:3 1:1.2

Breakfastasamealgaininganidentityin Rural.Kidsalsoplayingaroleexpressing theirchoicesIdli,dosa,upmaetc. Newoccasions:Aboutathirdconsume BiscuitsforBreakfastaswell. Instantnoodlesgrowingat1.7timesin ruralvsurban. Frequencyofconsumptionincreasing evenfaster>2timescomparedtourban

2.

1:1.4 1:3.6
CategoryGrowth UrbanGr:RuralGrYA

3.
1:1.8

Source:Nielsen

Copyright2010TheNielsenCompany.Confidentialandproprietary.

FoodbAVhyperlink

25

Convenience&Individualism

Copyright2010TheNielsenCompany.Confidentialandproprietary.

26

InsighttoAction
ProductandPortfoliostrategy,packagingformats,flavourskus CustomizedtoRural
NewTargetGroups E.g.FairnessforMen Offerproductsthatsimplify theirlifeRTCMeals

~40%RuralContribution, growingat40%inpast3years Source:Nielsen

Ruralaccountsfor10%sharebut growingat160%inlast1year Smallgeyserthatmanages spacewell

Copyright2010TheNielsenCompany.Confidentialandproprietary.

27

AVAILABILITY (Push)

TargetedRuralDistribution

Copyright2010TheNielsenCompany.Confidentialandproprietary.

28

Consumeracceptabilityacrosscategories
Marketerscanleveragebyimprovingdistributionandrange
IndiaRural ToiletSoaps Shampoo SkinCreams Noodles HairDyes Fragrance Biscuits(exclGlucose) GlucoseBiscuits
AffordabilityIncreaseinSmallerPricePointContributiontoCategory AvailabilityDistributionGrowth AcceptabilityPerDealerOfftakeGrowth NoChange ModerateChange HighChange

Affordability

Availability

Acceptability

Copyright2010TheNielsenCompany.Confidentialandproprietary.

29

FishWhereFishAre
Reachingvillagesthatofferbetterpotential

Copyright2010TheNielsenCompany.Confidentialandproprietary.

30

ProblemandGoal
Problem:
IncreasingdistributioninRural IndiaaBIGchallenge,with 6Lakhvillagestocaterto.

Goal:
IdentifyHighPotentialVillages, tomaketargeteddistribution possible. Buildalistofdistricts,tehsils andvillagestobetargetedfor ruraldistributionexpansion.

Istargetedapproachpossible? HowmanystoresdoIneedto reachfora20%target? Wherearethespecificvillages located?

Copyright2010TheNielsenCompany.Confidentialandproprietary.

31

VillageHitList@YourService
Advancedmodelingacrosssourcestoidentifylucrativehighpotentialvillages thatwouldhelprealizepotentialwithlowercostofreach
TierwiseTargeting

Population
(GOICensus)

Village Potential =fn (population, ListofHiPoVillages

RetailCensus
(Nielsen)

banking, education, health, recreation) HighPotentialDistrictList

Facilities
(GOICensus)

Copyright2010TheNielsenCompany.Confidentialandproprietary.

32

NettingOut

Copyright2010TheNielsenCompany.Confidentialandproprietary.

33

Synergyof3AForceMultiplier Effect
Push
AWARENESS (Push+Pull) Awareness ACCEPTABILITY Affordability (Pull) Availability

Macro Macro economic Facilitator

AFFORDABILITY Awareness (Push+Pull) Affordability AVAILABILITY Awareness (Push) Affordability Acceptability Acceptability

Pull

Copyright2010TheNielsenCompany.Confidentialandproprietary.

34

ThankYou!

Copyright2010TheNielsenCompany.Confidentialandproprietary.

35