Ch 01 the Call of Rural Marketing

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Chapter 1


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ChapterObjectives Definition of Rural Markets

Significance of rural marketing

Emerging trends in rural marketing Debunking of rural myths

Unique features of rural marketing

Future of rural marketing

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Rural India

A Promising Marketplace 742 million rural consumers waiting to be tapped

Thirteen consecutive good monsoons barring 2002and 2003

600% increase in the five year plans from the Eighth tothe Tenth plan

230% increase in flow of institutional credit for

agriculture between 1997-98 and 2004-05Area covered, crop production and yield up nearly 50%

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Rural India

A Promising MarketplaceAs per NCAER, consuming class households in rural

India equal those in urban India

More than 50% ofIndias largest FMCG company HULcomes from the rural market

In durables, the average ownership of electrical goodsis 2.48 per rural family (for electrified villages) against3.39 in the urban sector

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Some Impressive Facts on Rural India 42,000 rural supermarkets (haats) in rural India

against 35,000 retail chain stores in the US

The billing per cell phone in small towns in AndhraPradesh is higher than the billing in the state capitalHyderabad

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What Makes Rural Rarkets Attractive?

RuralMarkets

FMCGRs. 65000 crores

DurablesRs. 5000 crores

Agri-inputsRs. 45000 crores

2/4 wheelersRs. 8000 crores

Estimated annual size of the rural market Rs. 1,23,000 crores

Source: Francis Kanoi, 2002


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What makes Rural markets attractive?

RuralMarkets

6.6 millionhouseholds have

formal savingsinvestments

2005-06 LIC sold55% policies in rural

India

41 million KisanCredit Cards

issued

42 millionhouseholdsuse banking

service

5.22 lakh villageswith PublicTelephones

50% of BSNLconnections


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Definition The Census of India defines rural as:

Any habitation with a population density of less than400 per sq. Kms.

Where at least 75% of the male population is engaged inagriculture

Where there exists no municipality or board

Most FMCG companies define rural with a populationof up to 20,000 population

Most durable companies keep the limit at 50,000

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Rural Marketing

Flow of Products/Services

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3 4

2

Rural Urban

Urban

To

From

EXCLUDED

BARTER

AREAOF

INTEREST

SIMILARTO

NORMAL

The book will concentrate on Quadrant 3

Ru

ral


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Understanding Rural Consumers Fundamentally different from the urban mind set

High degrees of difference in different parts of the

country Due to lack of mobility and because of socio-cultural

reasons males take most of the purchase decisions inthe family

Community decision making is also very common inrural India

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New Influencers The sarpanch/pradhan continues to be a key opinion

leader

His influence is diminishing and is limited todecisions on agri-products only

The rural youth who are attending colleges in nearbytowns and are exposed to the brands and trends are

gaining as influencers as compared to the classicalschool teacher

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Products Usage of products is different in rural environment

Cooking on ground rather than on platform

Electrical gadgets to withstand heavy voltagefluctuations

Washing machines to run without running water

Smaller pack sizes for affordability and freshness

Innovation and education is the mantra for productsuccess in rural

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Rural Distribution Need to understand where the rural consumer buys

products

90% of durables are purchased from 20,000+ towns(Source IMRB study). There are 2,300 such towns allover India

Situation with FMCG more complex with distribution

to cover villages with population over 2,000 population Stockists are however limited to 20,000+ population

towns to feed these villages

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Rural Communication Need to understand that the consumer may be buying

particular brand or product category for first time

Limited sources of influencers and information makedecision difficult

Below the line is therefore more suitable for rural

Mass media only for creating awareness and some

interest

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The AICDA Model

Ineffective use of traditional channelslike Haats andMelas

Considered most relevant andcredible by rural segment

Important to understand aspirations,fears and hopes in relation to eachproduct category

Need for localised communication

aimed at relatively homogeneous ruralsegments

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Awareness

Interest

Conviction

Desire

Action


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Information Technology in Rural Cost of technology down

Choupal by ITC

PCO in all 1,000+population village with STD facility Change in stocking pattern of retailers in villages

Improvement in infrastructure

Introduction of large retail formats by corporates and

impact on the local bania

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Rural Markets

The Way Ahead The 4 Ps in marketing have to give way to 4 As:

Awareness through traditional media of rural

Acceptabilitythrough product modifications Availabilitythrough deep and innovative distribution

Affordabilitythrough new price points

Public private partnerships to increase the size of the

rural pie by creating economic activity in ruralAs rural moves from poverty to prosperity corporates

will have to shift focus to efficiencies and marketinnovations

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Documents

Ch 01 the Call of Rural Marketing