By Chawla Deepak Jagdish(65) Kashyap Pandya(78) Gupta Rohit(21)

Under guidance of Mr.Baxis Patel.

Academic year- 2010-11.

NAVNIRMAN INSTITUTE OF MANAGEMENT

Meaning
y Rural marketing is promotion of a company's products

in the rural market buy using strategies which differs from that of urban market, the rural market is more price sensitive but it has preference for quality. y There are many MNcompanies, who had seek for success in Indian rural market. Some got the way but many of them pack their bags for urban area, due to extra-ordinary challenges in rural market.

NAVNIRMAN INSTITUTE OF MANAGEMENT

Significance Of rural Marketing:

1. Growing Population:
India Rural marketing is indeed a large one. It consists of more than 740 million Indians , forming 73% of Indians Population in rural areas , according to census 2001.

2. Market size:
The size of India rural market stated as 12.2% of the percentage of world population.

3. Increasing Income:
The growing opportunity in the rural market in no doubt the prime factor. The increased income or Purchasing power of the consumer and the improved income distribution have enhanced rural demand for several product.

NAVNIRMAN INSTITUTE OF MANAGEMENT

4. Current Consumption:
5.Accessibility Of Market:
The road network has considerably increased in last 30/40 years. Some states like Gujarat almost 95% of the villages and towns are connected by roads.

6. Change In Rural Consumer

Behavior : 7. Competition In Urban Areas:
NAVNIRMAN INSTITUTE OF MANAGEMENT 4

Key Decision Area In Rural Marketing:

1. Rural Marketing Segmentation:
y y y y y y y y

Geographical Location Population Density Gender and age Occupation .ETC. Other than the conventional methods of segmentation , we can also use few more variables as: Land Holding Pattern Irrigation facilities Cropping pattern Education level

2. Product Planning:
Companies have to consider whether the existing successful products available in the urban areas can be marketed in rural market without any modification.

3. Pricing Decision:
The rural consumer in general is price sensitive and value conscious. Apparently this has to do with the income level of most of the consumer.
NAVNIRMAN INSTITUTE OF MANAGEMENT 5

4. Distribution strategy:
It is well known that transportation infrastructure in most part of the rural India is in poor shape.

5. Promotion:
The masses in rural areas are highly traditional with high regards and compliance for deep rooted customs.

6. Communication and personnel selling:

Rural customers have poor literacy level, the scope for using print media, magazine, newspaper etc. is not viable.

NAVNIRMAN INSTITUTE OF MANAGEMENT

Typical problems encountered in rural marketing:

1. Large Market:
The rural market of India consists of India consists of 60,00,00,000 consumers.

2. Scattered market:
The rural markets are widely scattered covering about 5.6 lac of villages spread over the entire length and breadth of India.

3. Seasonal and irregular demand: 4.Economic and social backwardness:

NAVNIRMAN INSTITUTE OF MANAGEMENT 7

5. Problem in physical distribution 6. Problem of distribution channel 7. Problem of promotion and marketing communication 8. Problem of sell force management

NAVNIRMAN INSTITUTE OF MANAGEMENT

4 PS In Rural Marketing:
y 1. Product Strategy:

The rural marketing is conscious for getting value for money. Low price high quality and multiple uses is the basic principles rural product desigh.
y Case : LG sampoorna TV

LG electronics launched a customized TV sampoorna. A more important aspect of customization is to make TV set which ca appeal to local needs, it facilitated on screen display in vernacular language like hindi, tamil and Bengali selling 1,00,000 sets in very first year.
y Strategy: Thinking Locally, Succeeding Globally
NAVNIRMAN INSTITUTE OF MANAGEMENT 9

2. Price Strategy: y Rural marketing are low price high volume growth markets. The rural markets being intensily price sensitive in comparison to urban area , reaching at lower cost is a major challenge.
y Case: Mc Donalds

The Indians Customer seek high value for evry rupee spent, so Mc Donald s has been highlighting the Happy Price Menu Rs 20 to shackle entry barriers appeal to India Customer.
y Strategy: Highlighting The Value Being Delivered For A Small

Price

NAVNIRMAN INSTITUTE OF MANAGEMENT

10

3. Promotion Strategy: y The challenge is to create communication that would help the rural consumer in recognizing brands , logos, visuals and colors. To effectively tap the rural markets , a brand must associate with their culture and personality.
y Case: Idea Cellular: Idea s aggressive promotion campaigns What An Idea Sirjee ad creates a real rural feel came through strong advertisement . y Strategy: Spreading a social message Each One Has Aimed At The Changing Someone s Life For Better
NAVNIRMAN INSTITUTE OF MANAGEMENT 11

4.Distribution Strategy (Place): y Planning physical distribution , managing logistics and controlling marketing communication are major inpediments for entering rural market. The distribution structure involves stock points in feeder town to service these retail outlets at the village levels.
y Case: Coca Cola:

Coca Cola is a pioneer company in distribution network . CocaCola has envolved a hub and spoke distribution model for effectively reaching and serving rural markets. Coca Cola provides low-cost ice boxes to the small distributors in rural areas because of the lack of the electricity. In this marketing strategy a wake up call for coke s rural focus. y Strategy: Coke Is Available Where , Even Water Is Not Available

NAVNIRMAN INSTITUTE OF MANAGEMENT

12

Rural Marketing in India Economy:

y The rural market in India is not a separate entity in itself and it is

highly influenced by the sociological and behavioral factors operating in the country. The rural population in India accounts for around 627 million, which is exactly 74.3 percent of the total population. y The rural market in India brings in bigger revenues in the country, as the rural regions comprise of the maximum consumers in this country. The rural market in Indian economy generates almost more than half of the country's income. Rural marketing in Indian economy can be classified under two broad categories. These are: 1. The market for consumer goods that comprise of both durable and non-durable goods 2. The market for agricultural inputs that include fertilizers, pesticides, seeds, and so on.
NAVNIRMAN INSTITUTE OF MANAGEMENT

13

important features or characteristics of Rural Marketing in India

Some of the Economy are being listed below:

y With the initiation of various rural development

programmers there have been an upsurge of employment opportunities for the rural poor. One of the biggest cause behind the steady growth of rural market is that it is not exploited and also yet to be explored. y The rural market in India is vast and scattered and offers a plethora of opportunities in comparison to the urban sector. It covers the maximum population and regions and thereby, the maximum number of consumers.
NAVNIRMAN INSTITUTE OF MANAGEMENT 14

y The social status of the rural regions is precarious as

the income level and literacy is extremely low along with the range of traditional values and superstitious beliefs that have always been a major impediment in the progression of this sector. y The steps taken by the Government of India to initiate proper irrigation, infrastructural developments, prevention of flood, grants for fertilizers, and various schemes to cut down the poverty line have improved the condition of the rural masses.

NAVNIRMAN INSTITUTE OF MANAGEMENT

15

Coca Cola India's Thirst for the Rural Market: 'Thanda' Goes Rural
y In early 2002, Coca-Cola India (CCI) (Refer Exhibit I for information

about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan. The advertisement with the tag line 'Thanda MatlabCoca-Cola' was targeted at rural and semi-urban consumers. According to company sources, the idea was to position Coca-Cola as a generic brand for cold drinks. The campaign was launched to support CCI's rural marketing initiatives.
y With flat sales in the urban areas, it was clear that CCI would have to

shift its focus to the rural market. Nantoo Banerjee, spokeswoman CCI, said, "The real market in India is in the rural areas. If you can crack it, there is tremendous potential.

NAVNIRMAN INSTITUTE OF MANAGEMENT

16

CCI's Rural Marketing Strategy:

y CCI's rural marketing strategy was based

on three A's - Availability, Affordability and Acceptability. The first 'A' Availability emphasized on the availability of the product to the customer; the second 'A' - Affordability focused on product pricing, and the third 'A'- Acceptability focused on convincing the customer to buy the product.
NAVNIRMAN INSTITUTE OF MANAGEMENT 17

Availability
y

By March 2003, the company had added 25 production lines and doubled its glass and PET bottle capacity. Further it also distributed around 2,00,000 refrigerators to its rural retailers. It also purchased 5,000 new trucks and auto rickshaws for boosting its rural distribution. Through its rural distribution initiatives, CCI was able to increase its presence in rural areas from a coverage of 81,383 villages in 2001 to 1,58,342 villages in August 2003. Apart from strengthening its distribution network, CCI also focused on pricing in rural market.
NAVNIRMAN INSTITUTE OF MANAGEMENT 18

Affordability
y A survey conducted by CCI in 2001 revealed that 300 ml bottles

were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle. It was also found that the price of Rs10/- per bottle was considered too high by rural consumers. For these reasons, CCI decided to make some changes in the size of its bottles and pricing to win over consumers in the rural market.

In 2002, CCI launched 200 ml bottles (Chota Coke) priced at Rs 5. CCI announced that it would push the 200 ml bottles more in rural areas, as the rural market was very price-sensitive. It was widely felt that the 200 ml bottles priced at Rs. 5 would increase the rate of consumption in rural India. Reports put the annual per capita consumption of bottled beverages in rural areas at one bottle as compared to 6 bottles in urban areas.
NAVNIRMAN INSTITUTE OF MANAGEMENT 19

Acceptability
y In the first commercial the connection of Coke with

Thanda was made, in the second one there was a subtle difference, with the shopkeeper asking customers to ask for Thanda instead of Coke, and the third commercial showed that when one asked for Thanda, one would get Coke. Analysts said that all the three commercials succeeded in make rural consumers connect to Coke and increased awareness of the brand among them. Along with TVCs, CCI also launched print advertisements in several regional newspapers.
NAVNIRMAN INSTITUTE OF MANAGEMENT 20

THIS IS IT

THANK YOU

NAVNIRMAN INSTITUTE OF MANAGEMENT

21