Presented ByProf.

Snehal Chincholkar

CONTENTS
Rural Rural Rural

India Customer. Marketing

Challenges
Strategies Success

in Rural Marketing

for Rural Marketing

Stories

Conclusion

RURAL INDIA
Definition of a Rural Area ( by planning Commission , Insurance Regulatory Development Association (IRDA) That which is not urban

Population of Less than 5000. At least 75 % of the male workforce is engaged in agricultural activities. Absence of a municipality/corporation Density of population is less than 400 per sq km.

RURAL INDIA ( UNTAPPED MARKET)

Accounts for approximately 70% of the population. 60% of income is from agriculture. Population > 50% having their income < 25,000 About 40% have income > 50,000.

Rural population spread over 5,70,000 villages.

CHANGING SCENARIO(GROWTH IN RURAL MARKET)

With time there are lots of changes in Rural India including socio-economic changes ,reach of IT , increase in per capita income .

Green revolution in 1970. Growing interaction with urban area and in large media reach. No of pucca houses doubled from 22% to 41%. Percentage of BPL families declined from 46% to 27 %.

CHANGING SCENARIO

Government introduced various policies such as Bharat Nirman , Sampooran Gramin Rozgar etc. Introduction of various agricultural methodology. White revolution. Rural literacy rate increases from 36% to 59% in two decades. Growth in income. ''There are roughly some 1,500 Mercedes in Punjab, it is Ludhiana that tops the list and it is followed by Jalandhar, where the number is 150''.

CHANGING SCENARIO
Rural telephone density goes up to 300% in last 10 years. In 2001-02, LIC sold 55% of its policies in rural India. 41 million Kisan Credit Cards have been issued (against 22 million credit-plus-debit cards in urban).

FEATURES OF RURAL MARKET IN INDIA

Fast Changing pattern in demand

Diversity
Features Widespread

Vast Potential

Heterogeneous market

Demand seasonal and agriculture dependent

RURAL CUSTOMER

A B C D

Groceries Agri - Inputs Medicines (Health Care) Apparel

E E1 E2 F

Fuel Vehicles Interest repayment Saving /Investment

WHERE DO VILLAGERS SHOP ?

Urban / City Grocery/Apparel/Consumer-durables/AgriInput Village Grocery Mandi/Semi-urban Market Agri-Inputs/Apparel

Promotion and Distribution Medium in Rural India Medium Total Number Mandis 6,800 Haats 47,000 Melas 25000

RURAL AND URBAN CUSTOMER

Criteria Occupation Rural world Majority of the people engaged in agriculture and agriculture related activities Urban World All the people engaged in manufacturing , mechanical pursuits, trade , commerce, profession , governing and other non-agricultural occupation.

Environment
Density of Population Heterogeneity and homogeneity of the population Mobility System of Interaction

Direct relationship to the nature

The density is lower than in urban community More homogeneous in racial and psychological traits. More Fewer contacts with outside world. Simplicity in relations. Speaks through heat.

Greater isolation from nature and man-made environment.

Greater density than rural community More heterogeneous

Less Impersonal casual relations , superficial, standardized formality of relations.

PROBLEMS/CHALLENGES IN RURAL MARKETING

Poor infrastructure. Poor understanding of Rural Customers. Traditionally bound and less flexible. Price Sensitive.

Imitation products and seasonal demand.

Narrow Consumption basket.

PROBLEMS/CHALLENGES IN RURAL MARKETING

Diversity in Traditions & Cultures (13 major languages & over 1300 dialects) Lack of Distribution Channels. Low per capita income. Dispersed Market.

Poor reach of Mass Media.

Low level of literacy .

RURAL MARKETING

Urban

Rural

Ex- FMCG , Pesticides ,Consumer Durables etc.

Rural

Urban

Ex- Vegetable Grain , Pulses etc.

Rural

Rural

Ex- agriculture tools , Cattles, Carts etc

CONTINUE

Socio-economic Concept
The word rural connotes an environment characterized by low investment , low literacy , low density of population , low infrastructure facilities, low income and low savings and marketing is the process of delivering better standard of living and quality of life to the rural population.

RURAL MARKETING
Rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers. Rural Marketing is a process of developing pricing , promoting , distributing rural specific goods and services leading to exchange between urban and rural markets which satisfies consumer demand and also achieves original objectives. Rural Marketing in India Economy covers two broad sections, namely: Selling of agricultural items in the urban areas . Selling of manufactured products in the rural regions .

CHALLENGES
Acceptability Affordability Availability Awareness

RURAL CONSUMER BEHAVIOUR

Environmental of the consumer Geographic influences - The geographic location in which the rural consumer is located also speaks about the thought process of the consumer. For instance, villages in South India accept technology quicker than in other parts of India. Thus, HMT sells more winding watches in the north while they sell more quartz watches down south. Economic Factors Family Place of Purchase (60% prefer HAATS due to better quality, variety & price) Creative use of product ex Godrej hair dye being used as a paint to colour horns of oxen, Washing machine being used for churning lassi. The study of product end provides indicators to the company on the need for education and also for new product ideas. Cultural Factors Another good example would be Philips audio systems. Urban India looks at technology with the viewpoint of the smaller the better. However, in rural India, the viewpoint is totally opposite. That is the main reason for the large acceptance of big audio systems. Thus Philips makes audio systems, which are big in size and get accepted in rural India by their sheer size.

RURAL CONSUMER BEHAVIOUR

Social Practices Decision maker

STRATEGIES FOR RURAL MARKETING

Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing

Product Strategy Pricing Strategy Distribution Strategy Promotion strategy Relationship Management

RURAL MARKET SEGMENTATION

1. 2.

Geographic Segmentation Climate and Level of irrigation Nearness to a feeder town/ Industrial Project Demographic Segmentation Population concentration Age Literacy Level Income

1. 2. 3. 4.

PRODUCT
Classification of product for rural consumers FMCG Consumer Durables Services Agri-Inputs

PRODUCT STRATEGY

Value for Money product.( Utility product) Sturdy product. Products for the rural markets will have to be simpler , and easy to use , service and maintain. After sale support

PRODUCT STRATEGY

The product literature should be simple and well-illustrated for the rural customer. Placement of product at right place. Small Packet. (Purchase of product is weekly) Branding Lal Saboon (life boy ) ( Should have logo for easy identification)

PRODUCT STRATEGY
Three Strategic Option

Extension Refers to the strategy of extending the product from urban market to rural markets without any modification. Ex-Parle-G , Lux, Brook Bond.

Adaptation-Which implies customizing the product to suit the rural buyers demography, is required since income and seasonality continue to impact rural demand. Ex-Small packaging ( Shampoo , Razor)

PRODUCT STRATEGY

Innovation- It is required when product awareness is low or the product is low in customers priority. Ex- ITC E-choupal

PRICING STRATEGY

Low Price (E.g.. - 1/- Shampoo pouch, 5/- oil pouch) No Frills Products( E.g. - LG TV known as Sampoorna ) Refill/Reusable packaging- For example, the rural people can efficiently reuse the plastic
bottle of hair oil. Similarly the packages of edible oil, tea, coffee, ghee etc can be reused. Pet jars free with the Hasmukhrai and Co Tea, Ariel Super Compact.

Credit Facility Discount (Cash, Quantity, Off Season, Promotional) High margin for retailer ( 60% to 300%)

DISTRIBUTION IN RURAL MARKET

Some of the obstacles to reach the rural consumer are As no of intermediaries increases cost also increases.

Non-availability of dealers. Less no of retail outlets. Inadequate banking facilities. Only about 70 % of the markets are connected by road.

Interior village roads get flooded during mansoon.

Transport and communication facilities are generally poor in villages.

CHANNELS OF DISTRIBUTION
0 Level 1 Level 2 Level 3 Level 4 Level

Manufacturer

Manufacturer

Manufacturer Distributor

Manufacturer

Manufacturer

Retailer Consumer Consumer Consumer Retailer

C & F agent

C & F agent Distributor

Distributor

Stockist
Retailer Retailer Consumer

Consumer

HUB AND SPOKE MODEL

Bottling Plant
The company instead opted for a hub and spoke distribution system, Under the hub and spoke distribution system, stock was transported from the bottling plants to hubs and then from hubs, the stock was transported to spokes which were situated in small towns. CCI not only changed its distribution model, it also changed the type of vehicles used for transportation. The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes.

Hubs

Spokes

Retailer

Retailer

Retaile r

AVAILABILITY

For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles. Commenting on the transportation of stock in rural markets, a company spokesperson said, We use all possible means of transport that range from trucks, auto rickshaws, cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas, to cart our products from the nearest hub.

TO BE CONTINUE.

Star Sellers Company Distributor Wholesaler Retailer Project Shakti The Bicycle Distribution Model Organized Rural Retailing Joint distribution by Non-competing Companies Utilization of multipurpose distribution centers by petroleum/oil companies: In order to cater to the rural areas the petroleum/oil companies have evolved a concept of multipurpose distribution centers in rural areas. In addition to petrol/diesel, lubricants, these outlets also stock consumables agricultural inputs like fertilizers, pesticides and seeds. It is estimated that there are about 450 such outlets in operation in the country. The rural consumer who has tractors, oil- 47 engine pump sets and mopeds frequent these outlets for their requirement. These outlets can be profitably utilized for selling consumables and durable items also.

OPERATION SHAKTI
HLL has married its rural penetration programme with Project Shakti to achieve better results, as coverage through the stockist route will not be as effective as using the rural women folk as agents for marketing its products, in a manner which is similar to door-to-door selling.

DISTRIBUTION
Marketers can make effective use of the large available infrastructure
Infrastructure
Post Office
Haats (periodic markets) Melas (exhibitions) Mandis (agri markets) Public Distribution Shops (FPS)

Numbers
1,38,000 42,000 25,000 7,000 3,80,000 32,000

Bank Branches

RURAL RETAILINGMany Companies are attempting to establish system to procure agricultural products and offer remunerative price for the produce. Ex- Choupal sagar , Haryali Kisan Bazzar , Godrej Agrovet , Reliance Fresh Characteristics of Rural retailersHigh Shop loyalty Varied availability of product Credit facility Display of products Free gift offer Retail sale price Seasonal demand

RURAL RETAILING

DCM Shriram Consolidated Ltd. (DSCL) a leading diversified corporate house in India with over 35 years of experience in the agri-input markets and firsthand knowledge of Indian farmers has set up the "Hariyali Kisaan Bazaar.

RURAL RETAILING

Chaupal Sagar is a rural retail shop & warehouse with a size of 1500 2400 Sq m

PROLIFERATION OF LARGE FORMAT RURAL RETAIL STORES, WHICH HAVE BEEN SUCCESSFUL ALSO

M & M Shubh Labh Stores TATA / Rallis Kisan Kendras Escorts Rural Stores Warnabazaar, Maharashtra (Annual Sale Rs. 40 crore)

VAN

JK Dairy launched whitener Dairy Top in small 50 gm sachets priced at Rs. 6.50. It decided to make a concerted foray into rural India in 1996. It hired vans to penetrate the rural interior, each van traveling around 125 km a day, 25 days a month.

PROMOTIONS
Firms must be very careful in choosing the vehicle to be used for communication.

Due to the social and backward condition the personal selling efforts have a challenging role to play in this regard. The word of mouth is an important message carrier in rural areas. Opinion leaders are the most influencing part of promotion strategy of rural promotion efforts. The experience of agricultural input industry can act as a guideline for the marketing efforts of consumer durable and non-durable companies. Relevance of Mass Media is also a very important factor.

CONTINUE
Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms areTV Radio News paper Womens initiative Festival branding Service provider can brand the pandals Built kiosks Hoardings Narrative story

CONTINUE..

Cultural fairs, puppet show, dramas and discussion with respected community elders/ influential people. Religious Events. Wall paintings. Fairs and weddings Joint or cooperative promotion .( Group Meeting) Local language. Free samples. By Cinema ( Movie) Choosing of Brand Ambassador
Special campaigns. Brooks Bond carries out marches in rural areas with band, music and caparisoned elephants to promote their brand of tea.

CONTINUE.

Melas It is estimates that around half of items sold in these melas are FMCG products and consumer durables. Escorts also display its product like tractors and motorcycles in such Melas. Tree Hoarding Farm to Farm/ House to House Visit Folk Dance- These are well-appreciated form of entertainment available to the village people.
The folk dance Kuravan Kurathi is popular in Tamil Nadu. The troupe consists of dancers, drummers and musicians and they move in a well-decorated van from one village to another village singing and dancing. In a day the troupe covers about 8-10 villages. As soon as the 59 van reaches a village, film songs are played to attract the attention of the villages. This is followed by folk dances. Mike announcement is made about the companys products and leaflets are distributed. After the dance programme, queries, if any, about the products are answered by the sales person. Folk dance programme costs about Rs.5000 per day and therefore these programmes are conducted during the peak season in selected villages. Examples: Fertilizer and pesticide companies organize folk dance programmes during peak season in selected markets. Thumps Up has sponsored Lavnis, the folk dance programme of Maharashtra and over 30 programmes have been arranged in selected rural markets.

CONTINUE

Audio Visual Publicity Vans (AVP Vans) AV unit is one of the effective tools for rural communication. The van is a mobile promotion station having facilities for screening films slides and mike publicity. The sales person makes a brief talk about situation in the village, the products and the benefits. The ad film is screened along with some popular film shots and this continues for about 30 minutes. At the end of the film show, he distributes handbills and answers queries of the customers. The whole operation takes about 1-2 hours depending upon the products under promotion, number of participants in the meeting and time taken for question and answers. The vans move to the next village for the second show. The cost of running a fully equipped AVP unit is about Rs.4000 per day and AVP van operation has to be considered as an investment for business development in rural areas. Example: Companies such as HLL, Colgate, and Phillips have made effective use of AVP vans for popularizing their products in rural areas. Field Display/ Demonstration

CHOOSING MEDIA VEHICLE

High reach High frequency Jeep based advertising Wall painting Bus stand & bus panels Haats Hoardings Postal branding Low reach High Frequency Co-operative notice boar Shop front notice Tin-plating houses Dealer Boards Village boards

Low reach Low frequency Tin painting tree/shops Leaflets Posters & banners

High reach Low frequency Van based advertising Melas Direct to home Folklore group Exhibitions/created events

ADVERTISEMENT TARGETING RURAL MARKETS

ADVERTISEMENT TARGETING RURAL MARKETS

RELATIONSHIP MANAGEMENT
Most rural buyers look for immediate benefits. Hence , a CRM initiative must take this into consideration .Further , CRM initiatives are ,today, much more possible given the fast pace at which Net based initiatives are getting diffused in rural India.

COMPETITION IN RURAL MARKET

There are four types of product competition in rural market

National Brand Regional Brand Local Brand Spurious Brand

SUCCESS STORIES

E-CHOUPAL

E-Choupal is an initiative of ITC Limited (a large multi business conglomerate in India) to link directly with rural farmers for procurement of agricultural / aquaculture produce like soybeans, wheat, coffee, and prawns. E-Choupal was conceived to tackle the challenges posed by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries .There are 6,500 e-Choupals today. ITC Limited planned to scale up to 20,000 eChoupals by 2012 covering 100,000 villages in 15 states, servicing 15 million farmers

SUCCESS STORY
Coca Cola used the Tag line Thanda matalab Coca Cola, with a typical village appearance of Amir Khan. And with that they Introduced 5/- bottle, with intense penetration in the market.

ESCORT

One very fine example can be quoted of Escorts where they focused on deeper penetration. They did not rely on TV or press advertisements, but rather concentrated on focused approach depending on geographical and market parameters like fares, melas, etc. Looking at the 'kuchha' roads of village, they positioned their bike as tough vehicle. Their advertisements showed Dharmendra riding Escort with the punch line 'Jandar Sawari, Shandar Sawari'. Thus, they achieved whopping sales of 95000 vehicles annually.

COLGATE

MAHINDRA TRACTORS

CONCLUSION
Thus, looking at the challenges and the opportunities, which rural markets offer to the marketers, it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India. The rural population has shown a trend of wanting to move into a state of gradual urbanization in terms of exposure, habits, lifestyles and lastly, consumption patterns of goods and services.

REFERENCE
1. 2. 3. 4. 5. Rural Marketing, Ravindranath V. Badi and Naranyansa V. Badi, Himalaya Publishing, 2004 Rural Marketing , R. Krishnamoorthy The Hindu - Business Line www.deccanherald.com www.indiantelevision.com

THANKS