Introduction to Rural Introduction to Rural Marketing Marketing

““The first five years of the new The first five years of the new millennium will belong neither to millennium will belong neither to the urban markets which have the urban markets which have reached saturation and where reached saturation and where margins are under pressure not to margins are under pressure not to the export markets, which suffer the export markets, which suffer from inadequate infrastructure from inadequate infrastructure back home, and uncompetitive back home, and uncompetitive prices overseas. It will belong to prices overseas. It will belong to rural marketing.”rural marketing.”

RURAL MARKETINGRURAL MARKETING

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

What is Rural Marketing?What is Rural Marketing? Rural marketing is a function which manages Rural marketing is a function which manages

all those activates involved in assessing, all those activates involved in assessing, stimulating and converting the purchasing stimulating and converting the purchasing power into an effective demand for specific power into an effective demand for specific products and services, and moving them to the products and services, and moving them to the people in rural area to create satisfaction and a people in rural area to create satisfaction and a standard of living to them and thereby standard of living to them and thereby achieves the goals of the organization.achieves the goals of the organization.

Rural v\s UrbanRural v\s Urban

OCCUPATION:OCCUPATION:

Rural:Cultivators n few non –Rural:Cultivators n few non –agricultural pursuits.agricultural pursuits.

Urban:manufacturing,trade,comUrban:manufacturing,trade,commerce,professionsmerce,professions

Size of communitySize of community

Rural:open farms & small Rural:open farms & small community are –vly co-community are –vly co-relatedrelated

Urban:urbanity & size of Urban:urbanity & size of community are +vly co-community are +vly co-relatedrelated

Density of populationDensity of population

Rural:density of population is lower Rural:density of population is lower than urbanthan urban

MobilityMobility

Rural:social mobility less.More Rural:social mobility less.More migration from villages to town.migration from villages to town.

Urban:social mobility inreases with Urban:social mobility inreases with urbanityurbanity..

System of interactionSystem of interaction

Rural:less numerous contacts per Rural:less numerous contacts per man.Predominance of personal & man.Predominance of personal & relatively durable relations.relatively durable relations.

Urban:Greater Urban:Greater complexity,superficiality & complexity,superficiality & standarized formality in relations.standarized formality in relations.

Although the melting of the urban - Although the melting of the urban - rural divide will take a while, this is rural divide will take a while, this is not for want of the availability of the not for want of the availability of the means but for want of the rural means but for want of the rural consumer's mindset to change; consumer's mindset to change; which has its own logic, which is which has its own logic, which is driven by tradition, custom and driven by tradition, custom and values that are difficult to shed, values that are difficult to shed,

Attractiveness of rural marketAttractiveness of rural market Rural markets have become the new targets to Rural markets have become the new targets to

corporate enterprises for two reasons :corporate enterprises for two reasons : 1. Urban market has become congested with 1. Urban market has become congested with

too many competitors.too many competitors. 2. The market have reached a near saturation 2. The market have reached a near saturation

point.point.

Various factors which have made rule Various factors which have made rule markets viable:-markets viable:-

1.1. Large population Large population 2. Raising prosperity2. Raising prosperity 3. Growth in consumption3. Growth in consumption4. Life-style changes4. Life-style changes5. Life-cycle advantages5. Life-cycle advantages6. Market growth rates higher than 6. Market growth rates higher than urbanurban7. Rural marketing is not expensive7. Rural marketing is not expensive8. Remoteness is no longer a problem8. Remoteness is no longer a problem

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

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

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

Khaitan fans' ad on a horse cartKhaitan fans' ad on a horse cart

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

"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

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

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

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

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

Satellite dish antennas reach rural Satellite dish antennas reach rural IndiaIndia

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 E-flung villages in Madhya Pradesh. ITC's E-choupal was the result of this initiative.choupal was the result of this initiative.

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

Typical shop in rural India stocked Typical shop in rural India stocked with sachets, etcwith sachets, etc