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RURAL MARKETING

Issues, Opportunities & Challenges

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Rural Market Has Arrived
a x  million people
a Rural is bigger than urban
a FMCG's 53%
a Durables 59% Source: NCAER,

a Estimated annual size of the rural market


a FMCG Rs 65, Crore
a Durables Rs 5, Crore
a Agri-inputs (incl. tractors) Rs 5, Crore
a  / wheelers Rs 8, Crore
a m tal Rs 1,23,000 Cr re

Source: Francis Kanoi, 


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Rural Market Has Arrived

a Some impressive facts about the rural


sector.
a In -, LIC sold 55 % of its policies in
rural India.
a Of two million BSNL mobile connections, 5%
in small towns/villages.
a Of the six lakh villages, 5. lakh have a
Village Public Telephone (VPT)


Rural Market Has Arrived
a  million Kisan Credit Cards issued (against 
million credit-plus-debit cards in urban) with
cumulative credit of Rs 9xx billion resulting in
tremendous liquidity.

a Of  million Rediffmail signups, 6 % are from


small towns. 5% transactions from these towns
on Rediff online shopping site

a  million rural HHs availing banking services in


comparison to x million urban HHs.

a Investment in formal savings instruments: 6.6


million HHs in rural and and 6.x million in urban
Rural Inc e Dispersal
Pr ecti n
figures in %

C nsuer Annual
1995-96 2006-07
Class Inc e
Very Rich Above Rs 5, 0.3 0.9
Consuming
Rs 5,- 5, 13.5 25.0
Class

Climbers Rs ,- 5, 31.6 49.0

Aspirants Rs 6, - , 31.2 14.0

Destitutes Rs 6, & Below 23.4 11.1

m tal 100.0 100.0


      
Issues In Rural

a Distribution
a Understanding the rural consumer
a Communication
a Poor infrastructure


Distributi n  Villages
Population No of villages % of total
villages Hardly any shops
Less than  9,5  5.6 in these . lac
villages
-5 x,5 .

5-  ,8x  .

- 9,66 .9

-5 8,33 3.5


x% of villages
5- 8,x58 3. account for
5% of rural
Total no of villages 593,5  . population &
6% rural
wealth
Inhabited villages, total number of villages is 638, 69
x
u   

Distributi n  m ns in India
m  
       

i   
 

i     9 % of


durables
i      purchased by
rural people
i      are from
these 9
i      towns

i    


 

  




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Rural C nsuer Insights

a Rural India buys.


a Products more often (mostly weekly).
a Buys small packs, low unit price more
important than economy.
a Distribution and pricing are the mantras to
success in rural India.

V  #$ %  & % i!   %'%


! ($


& 
%)  ' 
 $%&% '%

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Rural C nsuer Insights

a In rural India, brands rarely fight with each


other, they just have to be present at the right
place.
a Many brands are building strong rural base
without much advertising support.
a Chik shampoo, second largest shampoo brand.
a Ghadi detergent, third largest brand.
a Fewer brand choices in rural : number of FMCG
brand in rural is half that of urban.
a Buy value for money, not cheap products
c
MYmH 1: Rural Market Is a
H  gene us Mass
a REALITY
a Heterogeneous population ig
Landl rds

mraders,Sall Farers

Marginal Farers

Lab rers, Artisans

a 6 languages
a State wise variations in rural demographics
a Literacy (Kerala 9%, Bihar %)
a Population below poverty line (Orissa 8%, Punjab
6%)
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u   ! 
   
MYmH 2: Disp sable Inc e Is L 
REALITY
a Number of middle class HHs (annual income Rs
5,- ,5,)
Rural x. million
Urban 9.5 million
a Per Capita Annual Income
Rural Rs 9, 8
Urban Rs 9, x
Total Rs ,8 Source: NCAER,
a Rural incomes CAGR was .95% compared to
.x % in urban between 9x-x and 993-9
Source:ETIG,-3cj
MYmH 3: Individuals Decide Ab ut
Purchases
REALITY

a Decision making process is collective

a Purchase process- influencer, decider, buyer, one


who pays can all be different. So marketers must
address brand message at several levels

a Rural youth brings brand knowledge to HH


c
Inrastructure Ipr ving
Rapidly
a In 5 years only % villages connected by road,
in next  years another 3%.

a More than 9 % villages electrified, though only


% rural homes have electric connections.

a Rural telephone density has gone up by 3% in


the last  years, every  pop is connected
by STD.
c
Inrastructure Ipr ving
Rapidly

a x% of R,R, R3 can be reached


through mass media. 




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c
Clibing S cial Indicat rs

Between 98 to 


a Number of pucca houses doubled from % to %
and kuccha houses halved ( % to 3%)

a Percentage of BPL families declined from 6% to


x%

a Rural Literacy level improved from 36% to 59%

c
pp rtunity

cx
Marketing pp rtunities
a Low penetration rates in rural

0 of rural HH

Durables Urban Rural motal


a CTV 3. .8 .
a Refrigerator 33.5 3.5 .

FMCGs Urban Rural m tal


a Shampoo 66.3 35. .
a Toothpaste 8. .9 55.6

c
u   

Marketing pp rtunities
a R - %
a R - %
a R3 - 3x%
a R - 8%
a Low rural consumption in FMCGs (rich HHs)
urban rural
a Annual consumption Rs 3, Rs 9, 

a Rural consumption volumes (RRR3)


a Toothpaste 88% u  
a Toothpowder x9%  

 
    
a Shampoo 88%  
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Challenges

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Challenges in the Future

a Reaching the product to remote rural


locations and entering more rural homes
(penetration)

a Increasing rural incomes (market growth)

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Challenges in the Future

a Making effective use of the large


available infrastructure
a Post offices ,38,
a Haats (periodic markets) ,
a Melas (exhibitions) 5,
a Mandis (agri markets) x,
a Public distribution shops 3,8,
a Bank branches 3,

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Challenges in the Future

a Using IT to transform markets


a ITCs e-choupal and other IT initiatives
(EID parry, Amul dairy information system
kiosk)

a STD revolution/ mobile connectivity

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Challenges in the Future

a Proliferation of large format rural retail


stores
a DSCL Haryali stores
a M & M Shubh Labh stores
a TATA/Rallis Kisan Kendras
a Escorts rural stores
a Warnabazaar, Maharashtra (annual sale Rs
 crore)
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Rural Qu tes

a The future lies with those companies who see the


poor as their customers.

a To get rich, sell to the poor.

 
 
 
  
          
 
      
  

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