Jayesh Aagja Assistant Professor Institute Of Management Nirma University


The Potential of the Unreached

´The future lies with those companies who see the poor as their customersµ ~C.K.Prahalad

What makes Rural markets attractive ‡ Substantial increase in purchasing power of rural communities. . ‡ Rural marketing initiatives are driving manufactured or processed inputs or services to rural producers or consumers. rural areas are consuming a large quantity of industrial and urban manufactured products. ‡ Due to the effect of Green revolution.

What makes Rural markets attractive Estimated annual size of the rural market Durables Rs 5000 crs Agri-inputs Rs 45000 crs Rural Markets FMCG Rs 65000 crs 742 million people 2/4 wheelers Rs 8000 crs .

What makes Rural markets attractive 2005-06 LIC sold 55% policies in rural India 41 million Kisan Credit Cards issued Rural Markets 6. 42 million households use banking service .6 million households have formal savings investments 6 lac villages with Public Tel.

60 % are from small towns.00.What makes Rural markets attractive ± Of 20 million Rediffmail signups. 50 per cent are from small towns .000 who have transacted on Rediff online shopping site. Similarly the 1.

.Rural marketing ‡ Two thirds of the countries live in rural areas and almost half of the National Income is generated here.

000 e.choupals . the tobacco major is moving fast to add 31.000 villages to its market ± and all by leveraging its web of 6.Rural marketing ‡ Rural market accounts for 56 % of the total FMCG demand.

Rural population is scattered across 5. Bihar 22. 25% 20-35 State to state variation. rural demand is scattered over a larger area A heterogeneous lot ‡Demographics. more than 48% less than 20 years. insigni has large income ‡More than 50% of very rich + well-off are in rural India. socio-cultural Mixed picture in income and socio-eco position ‡More than 50% low disposable income. white & Blue revolution. Green.CHARACTERISTICS OF RURAL CONSUMER GROUP Many rural Indias within rural Indias CTV ownership.000 villagesPopoulation size class. 41% of middle class in rural Age: 25% 5-14. 2/3rd just 3% SCATTERED MARKET Rural market is a scattered market. Bharat Nirman . BIMARU states.70. top 1/3rd . Maha. Kerala 88 points. which is highly concentrated. 12% own. Haryana Karna 40 to 50 60% of rural income comes from agriculture.doc Unlike urban demand. villages in india avg 33 develop index points.

5. Marketer¶s efforts to reach out the rural market. social. ‡ CULTURALLY A DIVERSE AND HETEROGENOUS MARKET Rural markets are diverse in terms of religious. . LIFESTYLE Conservative and tradition bound lifestyle. Growth in education 3. 1.650 dialects and diverse sub-cultures characterize the market. Heterogeneity is the no. 2. Lifestyle undergoes major change which may be contributed to several factors: 1. 33 languages.70.CHARACTERISTICS««CONTD.000 villages. Enhanced media reach. Growing interaction with urban communities. cultural and linguistic factors. Growth in income and change in income distribution.1 hallmark of the rural market5. 4. half dozen religions.

discriminating buyers .Situation in which consumption occurs  Availability of electricity  Place of purchase: towns/haats/melas/RO  Influence by youngsters/bahus (ORG-M)  Influence of community  Development marketing .

 bath soaps. Several products already well established in rural market. rural share is over 60%. Textiles.  washing soaps & batteries. packaged tea & hair oils more than 50%.  Telecom turnover will be 40% 2025 .doc Welcome change in the composition of rural demand.RURAL DEMAND ‡ STEADY GROWTHPopoulation size class. TVs. colour tv more than 65%. fans . Many new products have entered the consumption basket of the rural consumer and relative shares of different categories of products have recorded welcome change. table fans & pressure cookers .  among durables like sewing m/c. wristwatches. packaged tea etc. In many products rural consumption account for larger share than urban. bath soaps. medicines and hygiene products.

These include packaged tea. washing soap and detergent cake.‡ In several products rural market has overtaken the urban in growth rate A survey by National Council of Applied Economic Research (NCAER) shows that rural market is growing faster than urban market in several products. detergent powder. analgesics. .

Tapping The Rural Markets ‡ Unique strategy in every function of marketing ± Segmentation ± Channel ± Product ± Sales Force ± Physical Distribution ± Marketing communication .

greater literacy & exposure ‡ SEC Classification ‡ Income  Micromapping will reveal underserved pockets  Data Sources ‡ ‡ ‡ ‡ Census/ NCAER/NSSO/CSO Thompson rural market index MICA Rural market ratings on districts Ruralscan.Tapping The Rural Markets  Segmentation  Geographic ‡ Climate/irrigation level ‡ Nearness to town  Demographic ‡ Population concentration ‡ 40% lives in 7% of villages ‡ Age ‡ 16-30 years : 25 crores. quarterly newsletter .

Colgate . Life Insurance Corporation .Packs ± Colgate offers toothbrush with small toothpaste ± Family Packs-Britannia . Visual Patten on Packing : Red soap signifies Lifebuoy soap Combi. Eveready batteries . Cavin care .and Ghari . Priyagold  Product that are fairing well are Parle G .Amul . Hero Honda Sunfeast and Ashirwad which today contribute to 60% of ITC¶s FMCG¶s business find a place in all its rural shop shelves . Godrej with 6ml sachet . BSNL .Lux . LG Electronics .Nirma .Philips . P&G-Vicks Vaporub.Marketing mix for rural markets ‡ Product strategy .Cavin Care -Chik. HUl ± 75gm lifebuoy & 100gm Wheel Detergent Social & Cultural variations ± ITC sells its Gold Flake Cigarette pack in yellow cover in South India : Purity & same brand in Golden color in North India . Lifebuoy . Sachets(HLL). Britannia .Induce rural customers to buy and try the new     product trial by low unit packs . Coca Cola .

Pilli tikki for washing soaps .  BATA introduced PVC shoes  Sturdy Product.  smokeless chulhas  Samsung¶s CTV¶s for rural markets in the 14´ and 20´ categories l  LG Electronics launched Sampoorana .Marketing mix for rural markets  Specifically Designed Product ± Rajdoot . not cheap brands  Ruf & Tuf ± Aravind.HLL ± Lesancy (big soap)  Brand Names. hand wound radio.  Britannia launched economy Glucose biscuits ±Tiger  Utility oriented products.Jeevan sathi .Britannia . Lifebuoy ± HUL.  Brand names ± Britannia µs Glucose biscuits as Tiger with red background symbolizing energy  Logos inserted so that consumers recall the product. India¶s first TV with Devnagri script on screen display. equally accepted in urban LG¶s Golden eye and Onida¶s KY Thunder  Sell value brands. Eveready brass torch. Tiger Biscuits .Philips introduced µBahadur¶ in rural area ± a 2 band transistor which covered entertainment channels as well.

Indian Edible Oil Company Substitute costly parts with cheaper parts and materials ±( Milk proteins with Soya protein) Britannia-Probisk Seconds sale ± Akai in India. one rupee . sells Lux shampoo in a four militer sachet priced at 50 Paisa and six-milliliter sachet priced at one rupee . two rupee pack.e Clinic-plus in       50 paisa. 50 /HLL derives 50% of its revenue from rural areas.Low cost products i. Colgate at Rs.Marketing mix for rural markets ‡ Pricing Strategy. Quality products ± Marico .sales increase Special occasion pricing: festivals Payment terms coinciding with harvest cycle ± Rich in rural buy by cash down payment .

ITC & Eveready . inadequate warehouses.Physical Distribution  Problems in transportation & warehousing  Parts of rural India outside rail network  50% of villages not connected by proper roads  Kachcha roads. cold storage  Cost service dilemma  Guaranteed service in delivery increases the cost by 50% compared to urban area  Delivery Van  Cos/c&f agents/Stockists/distributors operates these vans  HLL.

HLL( Operation Harvest ) fleet of vans regularly visiting remote village and ITC  Project Shakti is HLL¶s rural initiative which is an attempt to use self help groups as an alternate distribution channel Samsung.Van displays all the products .Marketing mix for rural markets ‡ Place or DistributionCo-operative societies Utilization of petrol pumps Feeder markets / Mandi towns Delivery vans. the company has tied up with local distributors to showcase the Samsung range in local melas and fairs     .

network of computer kiosks in Raj/ Aponline-AP .ft  Non-conventional delivery mechanisms  ICICI Pru ± e-mitra.000  Each stockists will service 100 outlets in 100 villages. floor space of 1.300 towns with a population of > 20. can reach one lakh of six lakhs villages  Chain stores in rural  DCM kisan hariyali kisan bazar 54 rural supermarket  ITC choupal sagar ± rural hypermarket chain across 15 states  Aadhaar chain ± Godrej Agrovet.Place: Channel Management  Problems:  Multiple tiers  Non-availability of outlets  Inadequate banking & credit facilities  The village shop is the key  Satellite distribution  2.000 sq.

Marketing communications  Constraints:  Literacy rate is low  Linguistic diversity  Tradition bound nature. location-wise & in media habits ‡ Job: Find a media mix that will deliver the message in a costeffective manner to a pre-dominantlty illiterate target audience . break existing deep-rooted behaviour patterns ‡ Audience is fragmented. cultural barriers & taboos  Local idiom  Expensive. ‡ as elaborate and step by step.

mandis & mela)  POPs ‡ bright colours  Audio-visual vans ‡ Philips. Colgate-Palmolive. illumination & other such display (Haats.Marketing communications  Selecting the Media Mix  TV  Radio  Cinema ‡ 33% of cinema earnings from rural  Print (opinion leaders)  Outdoors ‡ Hoardings. Harikatha Music cassettes/cds Demos Word of mouth . wall paintings. Godrej ‡ Syndicated AV vans     Puppet Shows. folk theatre.

in Melas and puppet shows e.g.Marketing mix for rural markets ‡ Promotion ±  Television  Cinema. Banners. Unilever ± Video Vans .ITC.Godrej.36% of the population view cinema  radio  Print Media ± 9% read newspaper . Posters .P&G are major FMCG players who book their stalls  Gift Schemes etc.Nirma . 5% publications reach rural area  Hoardings . HLL.

Ability to handle several product lines Creativity  ICICI Pru hired 250 retired jawans of Air Force for selling insurance  HLL has largest rural salesforce  AP Rural academy  700 youth have graduated. retail majors like Future Group. Attitude factors. Reliance Retail.Sales Force Management  Rural Marketing Calls for Some Special Traits on the Part of Salesmen. ± ± ± ± ± ± Willingness to be located in rural areas. Cultural congruence. Spencer¶s Mc Donald¶s . Food World. Knowledge of local language.

Arvind Mills ‡ When Arvind Mills discovered even the cheapest brand could not make dent in the rural markets . ‡ The Jeans were distributed using local retail outlets in villages with population up to 5. ‡ Tailors were trained and given Machine accessories needed to stitch heavy denim ‡ In about year and a half Arvind sold 50 Lakh Rug & Tuf kits because it had beaten the lowest-priced organized sector jeans around Rs.000 . ‡ It introduced ready-to-stitch Ruf&Tuf Jeans with price as low as 195 a Piece . 300 at that time .

‡ Coca ±Cola available at Rs. it took the high road to marketing and got nowhere. 5 a bottle ‡ Result was within months Coke was able to reach out to rural audiences in large numbers all over India . ‡ More recently it re-invented itself and its TV commercial showed Bollywood star Amir Khan first as a Punjabi Farmer and also in other rustic roles in different parts of India .Coca Cola ‡ When Coca ±Cola re-entered the Indian Market in the mid-1990¶s . .

‡ Cavin Care therefore launched Chik in sachet prices very cheap . ‡ Today it is a huge success in rural markets .Cavin Care ‡ Cavin Care ( Chik shampoo fame ) found that many rural consumers are using bathing soap for washing hair since it was practice followed for years ‡ The rural consumer was aware that shampoo cleaned hair better . . 2 a sachet it was still beyond reach . but at Rs.

RURAL MARKETING IS DEVELOPMENTAL MARKETING ‡ FACINATING AND CHALLENGING Challenges ‡ Lack of understanding of rural customers and data ‡ Poor infrastructure .

and is by far the largest potential market in the world ‡ Rural annual household income averages Rs.India.630 with high savings rates ‡ Changing rural aspirations in consumption patterns and lifestyle unfolds opportunities for rural marketing ‡ Literacy levels are rising steadily .Rural Market Opportunities Opportunities ‡ The rural market in India constitutes 740+ million people.56.

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