Rural Marketing July

8/9/2019 Rural Marketing July

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Rural MarketingRural Marketing

Shobha MathewShobha Mathew



Factors that have contributed toFactors that have contributed tothe growth and development ofthe growth and development of

rural marketsrural markets

Favourable government policiesFavourable government policiesEgEg providingproviding irrigationirrigation throughthrough canalscanalsPowerPower supplysupply toto farmsfarms at at concessionalconcessional ratesratesFinancialFinancial facilitiesfacilities forfor farmersfarmers throughthrough banksbanks forfor farmfarm

operationsoperations andand landland development development SubsidiesSubsidies forfor agricultureagriculture inputs/machineryinputs/machineryDevelopment Development of of facilitiesfacilities suchsuch asas hospitals,hospitals, schools,schools,

banks,banks, roads,roads, radio,radio, TVTV etcetcCommercialCommercial banksbanks inin ruralrural areasareas areare offeringoffering credit credit

facilitiesfacilities forfor cultivationcultivation of of cropscrops andand development development of of smallsmall scalescale industriesindustries



A gricultural education and research A gricultural education and research

Establishment of agriculture collegesEstablishment of agriculture collegesand research stations has ensuredand research stations has ensuredavailability of technical manpower andavailability of technical manpower andtechnological developments intechnological developments in

agricultureagriculture





White revolutionWhite revolution

Was initiated by the government Was initiated by the government

Producing milk through rural coProducing milk through rural co operatives and moving processed milkoperatives and moving processed milkto urbanto urban

Milk production increased from 17 mioMilk production increased from 17 miotonnes in 1950 to 84.6 mio tonnes intonnes in 1950 to 84.6 mio tonnes in20012001



Private InitiativesPrivate Initiatives

Colgate and HLL have highlighted theColgate and HLL have highlighted theimportance of health and hygieneimportance of health and hygieneamong villages through schoolamong villages through schoolteachers, village meetings and filmteachers, village meetings and filmshowshow

Seed, fertilizer companies have createdSeed, fertilizer companies have createdawarenessawareness



Rising aspirations of rural peopleRising aspirations of rural peopleand attraction for high standard of and attraction for high standard of livingliving

Media explosionMedia explosion

Growth of incomeGrowth of income



Need for exploring theNeed for exploring the

rural marketsrural markets Rural markets are growing faster than urban market ( fiveRural markets are growing faster than urban market ( five

times)times) In major urban markets, there is severe competition (In major urban markets, there is severe competition (

companies likecompanies like hllhll,, colgate,maricocolgate,marico,, nirmanirma,, lglg electronics haveelectronics havetaken a lead in establishing their products in rural marketstaken a lead in establishing their products in rural markets To change the attitude of the farmers so that they will treatTo change the attitude of the farmers so that they will treat

agriculture as a businessagriculture as a business Rural marketing creates employment opportunitiesRural marketing creates employment opportunities Rural tourismRural tourism

72% population lives in rural72% population lives in rural Brand loyaltyBrand loyalty Parle Biscuits continue to be popular overParle Biscuits continue to be popular over

local brandslocal brands Increase in disposable incomeIncrease in disposable income Foreign competitionForeign competition urban more so can concentrate on ruralurban more so can concentrate on rural

marketsmarkets Development of regional TV networkDevelopment of regional TV network



Profile of Rural DemandProfile of Rural Demand

ModernModern cultivationcultivation practicespractices hashas increasedincreasedthethe yieldsyields of of cropscrops

IncomeIncome taxtax exemptionexemption makesmakes aa familyfamily withwithmoderatemoderate incomeincome wealthywealthy inin relationrelation toto itsitsurbanurban counterpart counterpart

LowLow cost cost of of livingliving inin ruralrural areasareas createscreates aahigherhigher disposabledisposable incomeincome withwith ruralrural

consumersconsumers ExpansionExpansion of of TVTV networknetwork andand development development

inin packagingpackaging hashas exposedexposed thethe ruralruralpopulationpopulation toto aa varietyvariety of of consumerconsumer goodsgoods



Composition of RuralComposition of Rural

demanddemand ProductsProducts that that areare wellwell establishedestablished inin ruralrural

market market egeg Bicycles,Bicycles, motormotor cycles,cycles,

agriculturalagricultural inputsinputs andand machinerymachinery suchsuch asasfertilizers,fertilizers, pesticides,pesticides, seeds,seeds, tractorstractors andandfarmfarm implements,implements, radios,radios, nonnon alcoholicalcoholicbeveragesbeverages suchsuch asas coffee,coffee, tea,tea, tabacco,tabacco,

products,products, cookingcooking utensils,utensils, bathingbathing andandwashingwashing soapssoaps andand textilestextiles



Repositioning of LifebuoyRepositioning of Lifebuoy

107107 yearyear oldold lifebuoylifebuoy

MaleMale soapsoap toto aa familyfamily soapsoap

InIn midmid 20012001 HLLHLL launchedlaunched LifebuoyLifebuoy A ctive A ctive andand LifebuoyLifebuoy ExtraExtra StrongStrong

TheThe newnew rangerange includesincludes LifebuoyLifebuoy A ctive A ctive

Red,Red, LifebuoyLifebuoy A ctive A ctive Orange,Orange, LifebuoyLifebuoyInternationalInternational PlusPlus andand LifebuoyLifebuoyInternationalInternational GoldGold



ChotaChota CokeCoke at at RsRs..55 forfor ruralrural market market Meswak,Meswak, NeemNeem andand BaboolBabool toothpastestoothpastesTractorTractor havehave becomebecome symbolssymbols of of statusstatus inin ruralrural lifelife.. InIn partsparts of of IndiaIndialikelike Punjab,Punjab, thethe HorseHorse PowerPower (Engine(Engine Power)Power) determinedetermine thethe statusstatus..

A A farmerfarmer owningowning 5050 HPHP tractortractor fromfrom FordFord isis consideredconsidered toto bebe personpersonwithwith powerpower andand moneymoneyParleParle GG andand TigerTiger areare moremore commonlycommonly soldsoldColgateColgate andand Pepsodent Pepsodent areare most most commonlycommonly usedused brandsbrandsLux,Lux, Lifebuoy,Lifebuoy, HamamHamam andand NirmabathNirmabath areare moremore commoncommon familyfamilysoapssoaps A

sian A

sian paintspaints launchedlaunched UtsavUtsav distemper,distemper, toto target target thethe chunachuna powderpowderpopularpopular inin ruralrural marketsmarkets inin 19991999BritanniaBritannia introducedintroduced smallersmaller packpack sizessizes of of TigerTiger BiscuitsBiscuits inin 19981998 at at RsRs..44,, RsRs..22 andand ReRe..11



Videocons Videocons washer, washer, aa washingwashing machinemachinewithout without aa dryerdryer launchedlaunched specificallyspecifically forfor thethe

ruralrural market,market, hashas becomebecome aa phenomenalphenomenalsuccesssuccess.. PricedPriced at at RsRs..30003000,, it it hashas registeredregistered100100 percent percent growthgrowth inin thethe last last threethreeyearsyears..TheThe successsuccess of of thisthis modelmodel pointspoints toto

thethe willingnesswillingness of of villagersvillagers toto upgradeupgrade totobranded,branded, overover locallylocally mademade productsproductsprovidedprovided thethe priceprice isis affordableaffordable



CavinKareCavinKare ChikChik shampooshampoo pricedpriced at at ..5050perper packpack..

6565%% of of totaltotal salesale of of chikchik todaytoday comescomesfromfrom ruralrural market market



Products that have entered the ruralProducts that have entered the ruralmarket in recent yearsmarket in recent years

Ready made garments, baby careReady made garments, baby careproducts, packaged foodstuffs,products, packaged foodstuffs,modern consumer durables, cosmeticsmodern consumer durables, cosmetics

and toiletriesand toiletries



Nestles rural initiatives have largelyNestles rural initiatives have largelybeen based on price led initiatives.been based on price led initiatives.

Brands such as maggi noodles andBrands such as maggi noodles andkitkat chocolates have been priced at kitkat chocolates have been priced at Rs.5 and a few other candy andRs.5 and a few other candy and

chocolates are priced at Rs.2chocolates are priced at Rs.2



Products where the rural consumptionProducts where the rural consumptionis more than urbanis more than urban

Eg bicycles, tailoring machinesEg bicycles, tailoring machines

Products where rural consumptionProducts where rural consumptiongrowth rate is higher than urbangrowth rate is higher than urban

marketsmarkets

Packed tea, bathing and washing cakePacked tea, bathing and washing cake



Need for exploring theNeed for exploring the

rural marketsrural markets RuralRural marketsmarkets areare growinggrowing fasterfaster thanthan urbanurban

marketsmarkets (five(five timestimes growth)growth)

InIn urbanurban marketsmarkets therethere isis severeseverecompetitioncompetition egeg HLL,HLL, Colgate,Colgate, Marico,Marico, Nirma,Nirma,LGLG ElectronicsElectronics

ToTo changechange thethe attitudeattitude of of thethe farmersfarmers sosothat that theythey willwill treat treat agricultureagriculture asas aa businessbusiness

IncreaseIncrease inin ruralrural incomeincome andand savingssavings RuralRural marketingmarketing createscreates employment employment

opportunitiesopportunities



Rural tourismRural tourism

Over 70% of countrys population liveOver 70% of countrys population livein rural areasin rural areas

Brand loyaltyBrand loyalty

Increase in disposable incomeIncrease in disposable income

Development of regional TV networkDevelopment of regional TV network



IDENTIFYING THE RIGHTIDENTIFYING THE RIGHT

CUSTOMERCUSTOMER There are three categories of customers in ruralThere are three categories of customers in rural

marketingmarketing Users or consumersUsers or consumers The landlordsThe landlords zamindarszamindars, traders and local money, traders and local money

lenders (high disposable incomelenders (high disposable income lifelife style canstyle canbe compared to that of upper income groups of be compared to that of upper income groups of urban market)urban market)

A ffluent farmers A ffluent farmers -- modern method of cultivationmodern method of cultivation

high position in the society with respect to socialhigh position in the society with respect to socialand economical statusand economical status high disposable incomehigh disposable income Small ( 1 or 2 hectares of land ) and marginalSmall ( 1 or 2 hectares of land ) and marginal

farmers (farmers ( uptoupto one hectare)one hectare)



Tenant farmersTenant farmers A gricultural labourers A gricultural labourers Petty traders , small artisans and unemployedPetty traders , small artisans and unemployed

peoplepeople The first two segments ( i.e traditional landlordsThe first two segments ( i.e traditional landlords

and rich farmers) offer excellent opportunities forand rich farmers) offer excellent opportunities formarketing consumer durables. The third categorymarketing consumer durables. The third categoryincludes small farmers, agricultural labourers andincludes small farmers, agricultural labourers and

artisans and forms about 70% of rural population.artisans and forms about 70% of rural population.Their needs are very basic i.e. food, clothing andTheir needs are very basic i.e. food, clothing andsheltershelter



Opinion leadersOpinion leaders

Villagers attach more importance to Villagers attach more importance tothe experience of others who havethe experience of others who haveused the product for making aused the product for making apurchasepurchase



Opinion LeadersOpinion Leaders Products/ServicesProducts/Services

a)a) A griculture A griculture

officers/ A griculturalofficers/ A griculturalscientists/scientists/progressiveprogressivefarmersfarmers

b)b) MedicalMedicalpractitioners/practitioners/

Veterinary doctors Veterinary doctors

c)c) SuccessfulSuccessful

Pesticides, Fertilizers,Pesticides, Fertilizers,

seedsseeds

Pharma/ A nimalPharma/ A nimalHealth productsHealth products

Hi h value farmHi h value farm



Village President / Painters Village President / Painters PaintsPaints

ElectriciansElectricians Fans, Electric ironFans, Electric iron

Mistry (Mason)Mistry (Mason) Cement Cement

Village President / Progressive farmers Village President / Progressive farmers-- Banking serviceBanking service



CredibilityCredibility -- Opinion leaders are highlyOpinion leaders are highlycredible source of product relatedcredible source of product related

informationinformation

Positive and Negative Product Positive and Negative Product InformationInformation

Information and A dviceInformation and A dvice



Sellers ( two categories)Sellers ( two categories)

Distributors or WholesalersDistributors or Wholesalers

Retailers / DealersRetailers / Dealers



Constraints in RuralConstraints in Rural

MarketingMarketing1.1. Physical DistributionPhysical Distribution

TransportationTransportation 30% of villages not 30% of villages not

connected with roadconnected with roadWarehousingWarehousing no pucca godwonno pucca godwon

CommunicationCommunication not well developednot well developed

2.2. Channel Management Channel Management

No scope for manufacturer owned outletsNo scope for manufacturer owned outlets low volume do not justify ownlow volume do not justify ownshowroomsshowrooms



-- Limited availability of dealersLimited availability of dealers nonoshopsshops 500 population500 population 2 lakh2 lakh

villagesvillages

-- Fewer brandsFewer brands less brand due toless brand due tolimited saleslimited sales

-- Inadequate banking and credit facilityInadequate banking and credit facility



3.3. Sales Force Management Sales Force Management Fluency in local languagesFluency in local languages

Capacity to work for extended hoursCapacity to work for extended hours A bility to understand long journeys A bility to understand long journeysHas to put up with inadequate boardingHas to put up with inadequate boardingand lodging facilitiesand lodging facilities

Knowledge of values, believes andKnowledge of values, believes andperceptions that influence the behaviourperceptions that influence the behaviourof consumersof consumersSelling skillsSelling skills



4.4. Sales PromotionSales Promotion

5.5. Underdeveloped People and Market Underdeveloped People and Market



Hierarchy of needsHierarchy of needs

General level of awarenessGeneral level of awareness

Purchasing capacityPurchasing capacity

Utility of the product Utility of the product

Cost benefit analysis done by himCost benefit analysis done by himHis attitude towards the product His attitude towards the product

Feedback from opinion leadersFeedback from opinion leaders



Percentage of share ofPercentage of share of

consumer goodsconsumer goodsProductsProducts RuralRural UrbanUrban

BicyclesBicycles 7878 2222

Radio/ TransisterRadio/ Transister 7979 2121

Tailoring MachinesTailoring Machines 6464 3636

Washing CakesWashing Cakes 6868 3232

Washing MachinesWashing Machines 1515 8585RefrigeratorsRefrigerators 2424 7676

ToothpasteToothpaste 3939 6161

ShampooShampoo 2525 7575



Company wise saleCompany wise sale

CompanyCompany Rural Sales (in %)Rural Sales (in %) HLLHLL 5050 COLG A TECOLG A TE 5050 HERO HOND A HERO HOND A 4040 LGLG 4040 C A VIN K AREC A VIN K ARE 3535 GODREJGODREJ 3030

KINETICKINETIC 3030 C A DBURY C A DBURY 2525 RA NB AXY RA NB AXY 1717 CIPL A CIPL A 1818





Profile of ruralProfile of ruralmarkets/characteristics ofmarkets/characteristics of

rural marketsrural markets LargeLarge numbernumber of of consumersconsumers 7272%% of of thethe

populationpopulation staysstays inin ruralrural IndiaIndia OccupationOccupation patternpattern majoritymajority engagedengaged inin

agricultureagriculture andand relatedrelated activitiesactivities LandLand isis thethe majormajorsourcesource of of incomeincome forfor about about 7777%% of of thethe populationpopulation..BusinessBusiness 1010%%,, nonnon agricultureagriculture labourlabour 99%%,,salarysalary earnersearners 22%% andand not not gainfullygainfully employedemployed isis22%% -- growthgrowth of of ruralrural isis dependent dependent onon agricultureagriculture

ScatteredScattered marketsmarkets :: nono shopsshops inin villagesvillages havinghaving lesslessthanthan 500500 populationpopulation andand therethere areare aroundaround 22 lakhslakhsvillagesvillages inin thisthis categorycategory.. FurtherFurther therethere areare about about 22..77 lakhslakhs villagesvillages withwith aa populationpopulation of of 500500 20002000andand makingmaking productsproducts availableavailable inin thesethese villagesvillagesinvolvesinvolves highhigh distributiondistribution cost cost



Literacy level : 59% in rural , 80% in urbanLiteracy level : 59% in rural , 80% in urbanSeasonalSeasonal demanddemand :: LPGLPG inin ruralrural areasareas isishighlyhighly seasonalseasonal andand therethere isis highhigh demanddemandduringduring harvestingharvesting seasonseasonDemand for TV, transistors and twoDemand for TV, transistors and twowheelers is high after harvest of crops andwheelers is high after harvest of crops andduring festivalsduring festivals

LowLow standardstandard of of livingliving :: LowLow income,income, lowlowpurchasingpurchasing power,power, overalloverall socialsocial andandeconomiceconomic backwardnessbackwardness leadsleads toto lowlowstandardstandard of of livingliving..



MassMass MediaMedia TheThe mediamedia reachreach inin ruralruralhouseholdshouseholds isis lowlow egeg print print 1010%%,, tvtv 3131%%,,

cinemacinema 3636%% andand radioradio 3232%%.. ThereforeThereforemarketermarketer hashas toto considerconsider ruralrural specificspecificpromotionpromotion mediamedia andand methodsmethods toto reachreach thethevillagesvillages..

CommunicationCommunication facilitiesfacilities :: A bout A bout 2020%% of of thethesixsix lakhlakh villagesvillages areare without without telephonetelephonefacilityfacility eveneven todaytoday..



Transportation facilites : 60% of theTransportation facilites : 60% of theroads are not accessible during rainyroads are not accessible during rainy

season.season. Rural electrification :77% has ruralRural electrification :77% has rural

electrification and this has increasedelectrification and this has increasedthe demand for electric motors, pumpsthe demand for electric motors, pumpsand agriculture machineryand agriculture machinery

Medical facilities : long distanceMedical facilities : long distance



The Profile of RuralThe Profile of Rural

DemandDemand



Profile of rural consumerProfile of rural consumer

LiteracyLiteracy 59%59%Rural IncomeRural Income 60% from agriculture60% from agricultureLow awarenessLow awareness

(Teta salt, Lucky boy, Pure and Lovely, A

real, Luk, Pentane, Kir(Teta salt, Lucky boy, Pure and Lovely, A

real, Luk, Pentane, KirKet, Cliric A ll Clear)Ket, Cliric A ll Clear)Price sensitivity (Titan introduced Sonata watches price rangePrice sensitivity (Titan introduced Sonata watches price range

from 350from 350 800 to meet the needs of the rural and semi urban800 to meet the needs of the rural and semi urbanconsumers.consumers.

Culture factorsCulture factorsColgate active salt is mainly targeted at the rural consumersColgate active salt is mainly targeted at the rural consumersBrand loyaltyBrand loyaltyOpnion leadershipOpnion leadershipFestivals and FunctionsFestivals and Functions -- purchases done during festivalpurchases done during festival



DefinitionDefinition

Census 2001Census 2001

TheThe ruralrural market market hashas beenbeen defineddefined asasaa placeplace wherewhere thethe populationpopulation isis not not moremore thanthan 50005000,, thethe densitydensity of of populationpopulation isis not not moremore thanthan 400400 perper

squaresquare kilometerkilometer andand at at least least 7575%% of of thethe malemale workingworking populationpopulation isisengagedengaged inin agricultureagriculture





NAB ARDNAB ARD

A ll A ll locationslocations irrespectiveirrespective of of villagesvillages orortownstowns uptoupto aa populationpopulation of of 1010,,000000 willwill

bebe consideredconsidered asas ruralrural



Most Most companiescompanies inin thethe FMCGFMCG wouldwoulddefinedefine ruralrural asas anyany placeplace withwith aa

populationpopulation uptoupto 2000020000



A A simplesimple definitiondefinition fromfrom marketermarketer viewview

anyany market market that that existsexists inin anan areaareawhichwhich isis lessless thanthan 1010,,000000 populationpopulationlowlow densitydensity of of populationpopulation andand without without significant significant infrastructureinfrastructure



ThereThere areare about about sixsix lakhslakhs villagesvillages ininIndiaIndia andand 7272%% of of thethe populationpopulation livelive

inin thesethese villagesvillages..

6767%% of of IndianIndian populationpopulation isis engagedengaged

inin agricultureagriculture whichwhich account account forfor half half of of nationsnations employment employment..



TheThe basicbasic facilitiesfacilities suchsuch asas housing,housing,healthhealth ,, education,education, waterwater supply,supply,

roads,roads, communicationcommunication andand transport transport areare poorpoor inin most most ruralrural areasareas.. Poverty,Poverty,unemployment unemployment andand lacklack of of financialfinancial

resourcesresources forfor modernizingmodernizing agricultureagricultureandand startingstarting smallsmall industriesindustries areare otherotherproblemsproblems facedfaced byby ruralrural peoplepeople..



Some impressive factsSome impressive facts

about rural sectorabout rural sector 4242,,000000 supermarketssupermarkets (( rural)rural) that that

exceedexceed thethe totaltotal numbernumber of of retailretail chainschains ininUU..SS

InIn 20012001 20022002 LICLIC soldsold 5555%% of of itsitspoliciespolicies inin ruralrural IndiaIndia

Of Of 2020 lakhlakh BSNLBSNL mobilemobile connections,connections,5050%% areare inin smallsmall townstowns andand villagesvillages

TheThe 4141 millionmillion KisanKisan Credit Credit CardsCards (KCC)(KCC)issuedissued inin ruralrural IndiaIndia exceedexceed thethe 4040 millionmillioncredit credit plusplus debit debit cardscards issuedissued inin urbanurban IndiaIndia..



Documents

Rural Marketing July