Rural Marketing

Group 1
Gowri Deepti Prasenjit Jishnu Geo Arabinda Viral

The Call of Rural India

Rural Markets - Promising Venture

Indian Rural Market : Fortune at the Bottom of the Pyramid a)742 million rural customers b)42,000 rural supermarket c) Investment in savings instrument- 6.7m households d)Estimated annual size of rural markets FMCG Rs 65000cr Durables Rs 5000cr Agri-inputs(tractors also) Rs 45000cr 2/4 wheeler Vehicles Rs 8000cr

Growth Story
Liberalization of the economy arrival of well known FMCGs with greater distribution capabilities High growth in rural area in 1990s due to consecutively good monsoons 600% increase in the Five year plan outlay for rural developmental activities 230% increase in flow of institutional credit in 1997-98 and 2004-05

Growth Story

41 m Kisan Credit Cards issued- Rs. 97000cr Increase in crop area, production and yield, facilities like fertilizers, electricity, quality seeds Increased reach of Technological developments like cell phones etc.

Popular myths

Rural people dont buy brands Rural customers buy cheap products Rural market is homogenous

4 As of Rural Marketing

Availability Strong distribution Network, e.g. HLL, LG- widespread channels Coca Cola- Hub and spoke model Affordability- Godrej (Cinthol, Fair glow etc.) Acceptability LG TV Sampoorna Awareness

Challenges
Eleventh Five Year Plan: Special Focus on Agri & Rural To achieve 9 % growth projections - 4 % Farm growth is a must for self sufficiency, food security and for 2nd Green Revolution Deficit Areas for development of Rural Economy
Investment and Credit Deficit Infrastructure Deficit Market Economy Deficit Knowledge Deficit

1. 2. 3. 4.

Rural Distribution
Marketers need to understand where rural consumers buy their goods and products 90% of durables purchased from 20000+population towns

Rural Communication
Strong Need To Build Reassurance And Trust About Product Quality, Service Support And Company Credentials In The Mind Of Consumers Best Medium - Face To Face Interactive Communication

AICDA MODEL
Awareness

Interest

Conviction

Desire

Action

Developing Rural Markets Through Information Technology

e-Choupal by ITC Inagriline by EID Parry Dairy portal by Amul STD revolution

Rural Marketing Environment

Definition
 Rural Vs Urban 1951 Urban Population was 17.2 % 2001 Urban Population was 27.8 %

Census Definition
Rural Village:
Basic Unit for rural areas is the revenue village

Rural Town:
Minimum Population >= 5000 Population Density >= 400 per Sq.KM 75% of the male population engaged in non-agri activity

RBI Definition
Rural
Location with population up to 10,000

Semi Urban
Location with population between 10,000 and 1,00,000

Urban
More then 1,00,000

NABARD Definition
All Location with population up to 10,000 is RURAL

Urban India All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square kilometres

Corporate Houses

Sahara Shops and Commercial Establishments Up To 10,000

Evaluation of Rural Marketing



Phase I (Before 1960)

 Agricultural Marketing  Food Grains and Goods Like Cotton, Jute  Unorganized Market

 Phase II (1960 - 1990)  Green Revolution

 Agricultural Input  Emergence of Mahindra, Escorts, Eicher, Sriram Fertilizers

and IFFCO  Khadi and Village industries Commission (KVIC)  Shilpa Melas

Evaluation of Rural Marketing

 Phase
 Last

III (1990 Onwards)

2 Phase

of IRM was not visible  Infrastructure and Accessibility  Urban Focus  Extension of Urban Market
 LPG

 Potential

Definition of Rural Marketing

RM Is The Function That Manages All Activities Involved In Assessing, Stimulating And Converting The Purchase Power Of Rural Consumer Into An Effective Demand For Specific Product And Services And Moving A Better Standard Of Living And Thereby Achieving Organisational Goals.

Rural Market Structure

Rural Environment
Demographic Environment Physical Environment Economic Environment Political Environment Technological Environment

Demographic Environment
Population
1971 Total Population. (Million) Rural Population. (Million) Rural Proportion to Total Popn. (%) Source: Census 2001 548.2 1981 683.3 524.0 1991 848.3 628.8 2001 1026.9 741.6

80.1

76.7

74.3

72.2

 Rural proportion in population has come down. Absolute numbers of people living in rural areas have increased. Working population has increased. Purchasing power of the rural population has gone up from 40% in 1991 to 42% in 2001.

Distribution of Population by Age Groups

Age groups 04 05 14 15 19 20 34 35 54 55+ Total
Source: Census 2001

RURAL (%) 13 26 09 23 19 10 100

URBAN (%) 11 23 10 28 20 08 100

 Largest age group shapes marketing environment. School going children and young adults form the largest consumers of consumable and lifestyle products. Age group between 20 and 35 forms one fourth of Indias consumption base. 48% of the rural population is below the age of 20.

Education
Rural Literacy 1981 1991 2001

% of literates

36

45

59

Census 2001

 Level of literacy influences the effectiveness of communication and demand for educational products. Literacy rate has increased by 23% over last 20 years. Improvements in socio economic status of the people. Product and brand awareness improved and purchase decisions became more matured.

Household Pattern (Family Structure)

1991 Rural Urban Total
Households 112 (million) Family size 5.55 (number)

2001 Rural Urban Total 138 54 192

40

152

5.32

5.36

5.31

 Rural households have grown by 26 million during the last decade. Increase in population created pressure on land and socio economic factors. Average family size decreased. Joint families broke apart to create nuclear families. Range and number of branded products coming in increased.

Caste System
Marketers need to be sensitive to the caste systems and practices. While developing an advertisement or brand communication or promotion plan marketers need to ensure relevance of character and messages.

Cultural Differentials
Society across the country is highly differentiated. Presence of different regions and sub regions. Presence of different religious, caste and linguistic groups. No strict geographic boundaries for identifying differentials. Socio cultural behaviour mapped as distinct socio cultural regions and used for STP

Occupational Pattern
Demographic profile affects buying behavior. Difference in buying behavior between salary earner and wage earner. Three fourths of rural household heads are either cultivators or wage earners. Daily wage earner has to account for variations in income. Salary earner has an assured income. Cultivators disposable income is highly seasonal

Physical Environment

Physical Environment
Settlements patterns 1.Scattered ,2.Clustered ,3. Combination of both Characteristics of Rural Households  Houses are owner occupied (Farmers)  Pattern is according to 1.Kinship 2.Caste 3.Religious group

Classification of Village and Town based on population

Rural Market (per sq km) Town class < 200 1lakh and above 201-500 50,000-99,999 501-1000 20,00049,999 ...5000 .<5000

Economic environment
Shift in lower income group to higher income group. Per capita consumption expenditure increased 4 times over 20 years. Saving pattern 42 million in rural to 27 million in urban.

Socio cultural Environment

Socio - Cultural Region (SCR) A yard stick for segmentation and targeting. Urban and Rural socio-economic variables. Settlement pattern Occupation Realms of activity

Village Community
Pre Independence Post Independence It is self sufficient in terms of agriculture, economic infrastructure and political systems. Post independence it has undergone changes under the democratic system.
The elderly council (The Panchayat) is elected in the democratic system. Villages are well communicated. Migration to cities for jobs and batter life.

Caste System
Brahmins Kshatriyas Vaishyas Shudras

Zamindari

Political Environment
Panchayati Raj system under the 77th amendment. The Gram Sabha. (The general Assembly)
Decide developmental works. Suggest remedial measures. Scrutinize the decisions of panchyat. Review the annual financial statement of gram panchyats.

Technological Environment
Green revolution 1967-78
High yield verities. Increased farm production. Modernization of methodology and equipments used.

White Revolution In terms of improvement of livestock and the milk production.

Cooperatives like AMUL. Companies like Godrej Agrovet.

NGOs
Independent
Self Help Groups (SHG)
Interest Groups (IGs)

Government:
NABARD, KVIC, etc Help in providing vocational training, job opportunities, independent business opportunities, and basic Community Health services.

Constitution of Rural Market

Evolution of rural market
Shift in consumer needs(1980-1990) Steady reforms in economy(1990 onwards)

Consumer Market
Households and Individuals
Consumables-Food products, cosmetics, FMCG, garments Durables- watches, bicycles, TV, Radio, 2 wheelers etc.

 Institutional Market
Agriculture, Poultry, Health centers, Schools Fisheries, cottage industries
Consumables- pesticides, fertilizers, seeds, fuel Durables- Tractor, Pump set, Genset, Harvestors etc.

Service Market
Individuals, Households and Production firms
Services- Banking, Insurance, Credit, Healthcare, Tuition, ICT, Power etc.

Size of Market
Rs. 123000 Cr, including FMCG, Durables and Agri products

Nature of Rural Market

Developmental or Transactional.???? Agri product companies
Extended support, Education and Training

HPCLs Community kitchens

Popularizing the concept at affordable prices

HLLs Project Shakti

Empower rural women for income generating capabilities

A word of caution
Short term commercial goals to be avoided Create Mutual benefit opportunities

Win - Win Situation

NGOs and Corporate India SEWA Self Employed Womens Association, Gujarat based NGO ITC Agri commodity retailer

Thank You