Rural Marketing - Rural Consumer Behavior & Distribution Strategies

rural marketing

1. Chapter 1Chapter 1

2. What is Marketing?What is Marketing?
It means the performance of business
activities that direct the flow of goods
and services from producers to
consumers

3. RURAL MARKETINGRURAL MARKETING
In the Indian context, the word In the Indian context, the word
‘RURAL’ is so much associated ‘RURAL’ is so much associated
with with agricultureagriculture and farmers that and farmers that
rural marketing tends to be seen rural marketing tends to be seen
as a marketing of inputs or as a marketing of inputs or
outputs related to agriculture.outputs related to agriculture.

4. DefinitionDefinition
•According to IRDA, All locations which
satisfy the following criteria will come
under rural:
1.Areas with the population of less than
5000.
2.At least 75% of the male workforce
engaged in agricultural activities.
3.With the density of population less than
400 per sq. km.

5. •Most companies in the FMCG and
agri-input sector would define rural
as a place with a population of upto
20,000.
•Durable goods companies would
consider any town with a population
of below 50,000 as a rural market.

6. Attractiveness of rural marketAttractiveness of rural market
Rural markets have become the new targets to
corporate enterprises for two reasons :
1. Urban market has become congested with
too many competitors.
2. The market have reached a near saturation
point.

7. The Rural ConsumerThe Rural Consumer
A Detailed ProfileA Detailed Profile
•Size of Rural Consumer Group
* Rural population is about 73% of the total
population of India
* According to 2001 census the total rural population
amounts to 74 Crore
* 12 Crore households – 70% of the total
•Location Pattern
A Scattered market the comparison below shows the same –
* Urban Population is spread over 3,200 cities
* Rural population is spread across 5,70,000 villages

8. Various factors which have made
Rural Markets viable:-
1.1. Large population Large population
2. Raising prosperity2. Raising prosperity
3. Growth in consumption3. Growth in consumption
4. Life-style changes4. Life-style changes
5. Life-cycle advantages5. Life-cycle advantages
6. Market growth rates higher than urban6. Market growth rates higher than urban
7. Rural marketing is not expensive7. Rural marketing is not expensive
8. Remoteness is no longer a problem8. Remoteness is no longer a problem

9. Socio-Economic PositionSocio-Economic Position
•Low purchasing power & Per Capita Income
•Bounded by tradition, culture, religion &
community
•60% of rural income is from Agriculture
•More than 50% rural households have monthly
income < Rs 25,000
•About 14% have income > Rs. 50,000
•In recent years, 70% rural households have
started saving/investing their income

10. Socio-Economic PositionSocio-Economic Position
•Culturally a Diverse & Heterogeneous Market in terms of
Religious, linguistic, social & cultural factors
•State to State variation in extent of development

11. Socio-Economic PositionSocio-Economic Position
•Literacy Level
–Rural India has a literacy rate of 28% compared to 55% of
the whole country
•Lifestyle
–Conservative & tradition bound
–There has been a change in the same over the years
though with
–Increase in Income
–Growth in Education
–Greater Media Penetration
–Marketers efforts to reach and capture the rural
market’s

12. Socio-Economic PositionSocio-Economic Position
•Buying Behavior
Factors that Influence
–Literacy level
–Occupation
–Social & Cultural Factors
–Exposure to Media
–Marketer’s Efforts
•The buying behavior has undergone a major
change. A huge population in rural areas has seen
an increase in their income as a result of which
they have the potential to buy expensive/luxury
products

13. The Rural DemandThe Rural Demand
•Some well established products
–Pressure Cooker - Artificial Jewellery
–Cooking Utensils - Medicines
–Batteries - Tobacco Products
–Scooters, Motorcycles - Soaps,Detergents
–Bicycles - Electrical Goods
(fan,light)
–Radio - T.V
–Pesticides, Fertilizers - Wrist Watches
–Tea - Mobile Phones
–Sewing Machines

14. Recent TrendsRecent Trends
•Steady Growth from the past 2 decades
•Welcome change in the composition of
Rural Demand
–Several products already well established in
the rural market
–In many products the rural market share is
greater than the urban market
–In many products rural market has overtaken
the urban in growth rate

15. Rural Market becomes attractive to Rural Market becomes attractive to
CorporateCorporate
•The Rural Market is being seen as a Growing
Opportunity mainly because of the following –
–Rural Demand is growing rapidly
–Purchasing power has increased
–Cut Throat competition in the Urban Markets
–Rural market is largely unexplored and untapped
–There would be opportunities for new entrants as
compared to urban population being loyal to specific
brands
–The volume and the strength of the rural population

16. •Now for some facts and figures. The Indian
rural market today accounts for only about Rs 8
billion (53 per cent - FMCG sector, 59 per cent
durables sale, 100 per cent agricultural
products) of the total ad pie of Rs 120 billion,
thus claiming 6.6 per cent of the total share. So
clearly there seems to be a long way ahead.
•Time and again marketing practitioners have
waxed eloquent about the potential of the rural
market. But when one zeroes in on the
companies that focus on the rural market, a
mere handful names come to mind. Hindustan
Lever Limited (HUL) is top of the mind.

17. •Now for some facts and figures. The Indian rural
market today accounts for only about Rs 8
billion (53 per cent - FMCG sector, 59 per cent
durables sale, 100 per cent agricultural products)
of the total ad pie of Rs 120 billion, thus
claiming 6.6 per cent of the total share. So
clearly there seems to be a long way ahead.
•Time and again marketing practitioners have
waxed eloquent about the potential of the rural
market. But when one zeroes in on the
companies that focus on the rural market, a mere
handful names come to mind. Hindustan Lever
Limited (HUL) is top of the mind.

18. •Clearly the main challenge that one faces
while dealing with rural marketing is the basic
understanding of the rural consumer who is
very different from his urban counterpart.
•Also distribution remains to be the single
largest problem marketers face today when it
comes to going rural.
•Reaching product to remote locations spread
over 600,000 villages and poor infrastructure -
roads, telecommunication etc and lower levels
of literacy are a few hinges that come in the
way of marketers to reach the rural market

19. •In 1998 HUL’s personal products unit initiated
Project Bharat, the first and largest rural home-to-
home operation to have ever been prepared by any
company. The project covered 13 million rural
households by the end of 1999.
•During the course of operation, HUL had vans
visiting villages across the country distributing
sample packs comprising a low-unit-price pack each
of shampoo, talcum powder, toothpaste and skin
cream priced at Rs. 15. This was to create awareness
of the company’s product categories and of the
affordability of the products.

20. Khaitan fans' ad on a horse cart

21. •The greatest challenge for advertisers and
marketers continues to be in finding the right
mix that will have an Indian rural appeal. Coca
Cola, with their Aamir Khan ad campaign
succeeded in providing just that.

22. "Yaara da Tashan...” ads with "Yaara da Tashan...” ads with
Aamir Khan created universal Aamir Khan created universal
appeal for Coca Colaappeal for Coca Cola

23. •"Yaara da Tashan..." ads with Aamir Khan
created universal appeal for Coca Cola
•Coca-Cola India tapped the rural market in a
big way when it introduced bottles priced at Rs
5 and backed it with the Aamir Khan ads.
•The company, on its behalf, has also been
investing steadily to build their infrastructure
to meet the growing needs of the rural market,
which reiterates the fact that this multinational
has realized the potential of the rural market is
going strength to strength to tap the same.

24. •For HLL, a one rupee or a five rupee sachet or the
Kutti Hamam (the small Hamam) helps in giving the
consumers a trial opportunity.
•While it does help in generating volume but not in
terms of values. Till the time that volume - value
equation is managed better.
•Ultimately, the ball lies in the court of rural
marketers. It's all about how one approaches the
market, takes up the challenge of selling products and
concepts through innovative media design and more
importantly interactivity.

25. •Amul is another case in point of aggressive
rural marketing. Some of the other corporate
that are slowly making headway in this area
are Coca Cola India, Colgate, Eveready
Batteries, LG Electronics, Philips, BSNL, Life
Insurance Corporation, Cavin Kare, Britannia
and Hero Honda to name a few.

26. •Interestingly, the rural market is growing at a far
greater speed than its urban counterpart.
•All the data provided by various agencies like
NCAER, Francis Kanoi etc shows that rural markets
are growing faster than urban markets in certain
product categories at least.
•The share of FMCG products in rural markets is 53
per cent, durables boasts of 59 per cent market share.
Therefore one can claim that rural markets are
growing faster than urban markets

27. Satellite dish antennas reach rural IndiaSatellite dish antennas reach rural India

28. In 2000, ITC took an initiative to develop In 2000, ITC took an initiative to develop
direct contact with farmers who lived in far-direct contact with farmers who lived in far-
flung villages in Madhya Pradesh. ITC's flung villages in Madhya Pradesh. ITC's
E-choupal was the result of this initiative.E-choupal was the result of this initiative.

29. •So the fact remains that the rural market in
India has great potential, which is just waiting
to be tapped.
•Progress has been made in this area by some,
but there seems to be a long way for marketers
to go in order to derive and reap maximum
benefits.
•Moreover, rural India is not so poor as it used
to be a decade or so back. Things are sure a
changing

30. Typical shop in rural India stocked with Typical shop in rural India stocked with
sachets, etcsachets, etc

31. Rural VS Urban MarketRural VS Urban Market
Base Urban Mkt Rural Mkt
Philosophy Integrated, innovative,
relationship orientation
Additionally development
oriented with inclusive growth
concept
Views about
customers
A buyer; an innovator
who looks for style,
novelty and quality
A buyer and an entrepreneur,
partner in the business growth
model. As a buyer looks for
quality products that offer value
for money
Marketing
Research
Sophisticated
marketing research
methods, internet, TV
channels, mobile sms
Needs simple interactive
approaches (interviews,
discussions) observation (dairy
of farmer, a day in a haat)

32. Rural VS Urban MarketRural VS Urban Market
Base Urban Mkt Rural Mkt
Segmentat
ion
Psychographic (lifestyle)
and usage-based
segmentation
Demographic & geographic
TargetingSegment with relevant
characteristics
Segment with relevant
characteristics with or without
buying power.
Marketing
goal
Sustainable market
share, profitability and
image
Sustainable development of
the poor, market share,
profitability and image
building.
Marketing
Mix
Innovative 4P’s to meet
the customer’s current
and future expectations
Innovative 4P’s to meet the
customer’s current and future
expectations.

33. Rural VS Urban MarketRural VS Urban Market
Base Urban Mkt Rural Mkt
Technology
&
Innovations
Sophisticated
technology to create
luxury goods. Focus
can be on health,
recreational and
entertainment services
For rural innovations, remove
bottle necks in village life like
shortage of transport, poor
drinking water, power failure
Marketing
evaluation
Economic standards
relating to cost,
revenue, profits, sales
and brand equity.
Customer satisfaction
and image
Development related
economic standards like rise in
the incomes, quality of life

34. Phases in Rural Marketing Phases in Rural Marketing
Sr.
No
Time Frame Key Events & Trends
1 Phase One( Pre 1960’s) •Marketing rural products in
rural and urban areas
•Agricultural inputs in rural
areas
•“Agricultural marketing”
•Farming methods were
primitive and mechanisation
was low
•Markets unorganised

35. Cont’d Cont’d
2 Phase Two ( 1960s to 1990s) •Green Revolution
•Companies like Mahindra
and Mahindra, Sri Ram
Fertilisers and IFFCO
emerge
•Rural products were also
marketed through agencies
like KVIC
3 Phase Three( after mod -1990s) •Demand for consumables
and durables rise
•Companies find growth in
urban markets stagnating
or falling
•Rural market for household
consumables and durables
has also grown steadilty.

36. Cont’d Cont’d
2 Phase Four ( around 2015) •Global rural marketing will
emerge.
•Globalization, information
revolution, growth in size of
Indian organizations.
•Increasing urbanization
promoted by the formation
of greater cities and
corporations leading to
disappearance of many
rural areas.

37. Scope of Rural Marketing Scope of Rural Marketing
•Keenly debated topic
•Definitions based on organisational/ institutional
vision, mission & goals
•Need for a comprehensive and modular
understanding
•Rural Marketing is a “ work in progress”
•Multi – disciplinary approach is necessary for
sharper understanding

38. Problems in Rural MarketingProblems in Rural Marketing
•Underdeveloped people and underdeveloped market.
•Lack of proper physical communication facilities.
•Media for rural communication.
•Many languages
•Vastness and uneven spread
•Low per capita incomes
•Logistics, storage, handling and transport
•Market organization and staff
•Product positioning
•Hierarchy of markets
•Low level of literacy
•Seasonal demand