Features of Indian Rural Markets

7/28/2019 Features of Indian Rural Markets

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Features of Indian Rural Markets

Features of Indian Rural Markets

1. Large and Scattered market:

The rural market of India is large and scattered in the sense that it consists of over 63 crore consumers

from 5,70,000 villages spread throughout the country.2. Major income from agriculture:

Nearly 60 % of the rural income is from agriculture. Hence rural prosperity is tied with agricultural

prosperity.

3. Low standard of living:

The consumer in the village area do have a low standard of living because of low literacy, low per capita

income, social backwardness, low savings, etc.

4. Traditional Outlook:

The rural consumer values old customs and tradition. They do not prefer changes.

5. Diverse socio-economic backwardness:

Rural consumers have diverse socio-economic backwardness. This is different in different parts of thecountry.

6. Infrastructure Facilities:

The Infrastructure Facilities like roads, warehouses, communication system, financial facilities are

inadequate in rural areas. Hence physical distribution becomes costly due to inadequate Infrastructure

facilities.

*The rural bazaar is booming beyond everyones expectation. This has been primarily attributed

to a spurt in the purchasing capacity of farmers now enjoying an increasing marketable surplus of farm

produce. In addition, an estimated induction of Rs 140 billion in the rural sector through the

governments rural development schemes in the Seventh Plan and about Rs 300 billion in the Eighth Plan

is also believed to have significantly contributed to the rapid growth in demand. The high incomes

combined with low cost of living in the villages have meant more money to spend. And with the market

providing them options, tastes are also changing.

The major problems faced are:

1. Underdeveloped People and Underdeveloped Markets:

The number of people below poverty line has not decreased in any appreciable manner. Thus

underdeveloped people and consequently underdeveloped market by and large characterize the rural

markets. Vast majorities of the rural people are tradition bound, fatalistic and believe in old customs,

traditions, habits, taboos and practices.

2. Lack of Proper Physical Communication Facilities:

Nearly fifty percent of the villages in the country do not have all weather roads. Physical communication

of these villages is highly expensive. Even today most villages in the eastern parts of the country are

inaccessible during the monsoon.


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3. Media for Rural Communication:

Among the mass media at some point of time in the late 50s and 60s radio was considered to be a

potential medium for communication to the rural people. Another mass media is television and cinemas.

Statistics indicate that the rural areas account for hardly 2000 to 3500 mobile theatres, which is far less

when compared to the number of villages.

*Many Languages and Dialects:

The number of languages and dialects vary widely from state to state, region to region and probably

from district to district. The messages have to be delivered in the local languages and dialects. Even

though the number of recognized languages are only 16, the dialects are estimated to be around 850.

*Dispersed Market:

Rural areas are scattered and it is next to impossible to ensure the availability of a brand all over the

country. Seven Indian states account for 76% of the countrys rural retail outlets, the total number of

which is placed at around 3.7 million. Advertising in such a highly heterogeneous market, which is widelyspread, is very expensive.

*Low Per Capita Income:

Even though about 33-35% of gross domestic product is generated in the rural areas it is shared by 74%

of the population. Hence the per capita incomes are low compared to the urban areas.

*Low Levels of Literacy:

The literacy rate is low in rural areas as compared to urban areas. This again leads to problem of

communication for promotion purposes. Print medium becomes ineffective and to an extent irrelevant in

rural areas since its reach is poor and so is the level of literacy.

*Prevalence of spurious brands and seasonal demand:

For any branded product there are a multitude of local variants, which are cheaper, and, therefore, more

desirable to villagers.

*Different way of thinking:

There is a vast difference in the lifestyles of the people. The kind of choices of brands that an urban

customer enjoys is different from the choices available to the rural customer. The rural customer usually

has 2 or 3 brands to choose from whereas the urban one has multiple choices. The difference is also in

the way of thinking. The rural customer has a fairly simple thinking as compared to the urbancounterpart.

The 4A Approach

The rural market may be alluring but it is not without its problems: Low per capita disposable incomes

that is half the urban disposable income; large number of daily wage earners, acute dependence on the

vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions;


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poor roads; power problems; and inaccessibility to conventional advertising media.

However, the rural consumer is not unlike his urban counterpart in many ways.

The more daring MNCs are meeting the consequent challenges of availability, affordability, acceptability

and awareness (the so-called 4 As).

Availability

The first challenge is to ensure availability of the product or service. Indias 627,000 villages are spread

over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy. However,

given the poor state of roads, it is an even greater challenge to regularly reach products to the far-flung

villages. Any serious marketer must strive to reach at least 13,113 villages with a population of more than

5,000. Marketers must trade off the distribution cost with incremental market penetration. Over the

years, Indias largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution

system, which helps its brands reach the interiors of the rural market. To service remote village, stockists

use auto-rickshaws, bullock-carts and even boats in the backwaters of Kerela. Coca-Cola, which considers

rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the

villages. To ensure full loads, the company depot supplies, twice a week, large distributors which who act

as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas. LGElectronics defines all cities and towns other than the seven metros cities as rural and semi-urban

market. To tap these unexplored country markets, LG has set up 45 area offices and 59 rural/remote

area offices.

Study on buying behaviour of rural consumer indicates that the rural retailers influences 35% of purchase

occasions. Therefore sheer product availability can affect decision of brand choice, volumes and market

share. Some of the FMCG giants like HLL took out project streamline to significantly enhance the control

on the rural supply chain through a network of rural sub-stockists, who are based in the villages only.

Apart from this to acquire further edge in distribution HLL started Project Shakti in partnership with Self

Help groups of rural women.

AffordabilityThe second challenge is to ensure affordability of the product or service. With low disposable incomes,

products need to be affordable to the rural consumer, most of whom are on daily wages. Some

companies have addressed the affordability problem by introducing small unit packs. Godrej recently

introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant

specifically for Madhya Pradesh, Bihar and Uttar Pradesh the so-called `Bimaru States.

Hindustan Lever, among the first MNCs to realise the potential of Indias rural market, has launched a

variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The move is mainly targeted at the

rural market. Coca-Cola has addressed the affordability issue by introducing the returnable 200-ml glass

bottle priced at Rs 5. The initiative has paid off: Eighty per cent of new drinkers now come from the rural

markets. Coca-Cola has also introduced Sunfill, a powdered soft-drink concentrate. The instant andready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and multiserve sachet of

200 gm priced at Rs 15.

Acceptability

The third challenge is to gain acceptability for the product or service. Therefore, there is a need to offer

products that suit the rural market. One company, which has reaped rich dividends by doing so, is LG

Electronics. In 1998, it developed a customised TV for the rural market and christened it Sampoorna. It


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was a runway hit selling 100,000 sets in the very first year. Because of the lack of electricity and

refrigerators in the rural areas, Coca-Cola provides low-cost ice-boxes a tin box for new outlets and

thermocol box for seasonal outlets.

The insurance companies that have tailor-made products for the rural market have performed well. HDFC

Standard LIFE topped private insurers by selling policies worth Rs 3.5 crore in total premia. The company

tied up with non-governmental organisations and offered reasonably priced policies in the nature of

group insurance covers.

Awareness

Mass media is able to reach only to 57% of the rural population. Creating awareness then, means

utilizing targeted, unconventional media including ambient media .For generating awareness, events like

fairs and festivals, Haats, etc., are used as occasions for brand communication. Cinema vans, shop-

fronts, walls and wells are other media vehicles that have been utilized to increase brand and pack

visibility. Ideas like putting stickers on the hand pumps, walls of the wells putting on tin plates on al the

tree surrounding the pond are some of the innovative media used by personal wash like Lux and Lifebuoy

and fabric wash items like Rin and Wheel. Idea was to advertise not only at the point of purchase but

also at the time of consumption.With large parts of rural India inaccessible to conventional advertising media only 41 per cent rural

households have access to TV building awareness is another challenge. Fortunately, however, the rural

consumer has the same likes as the urban consumer movies and music and for both the urban and

rural consumer, the family is the key unit of identity. However, the rural consumer expressions differ

from his urban counterpart. Outing for the former is confined to local fairs and festivals and TV viewing is

confined to the state-owned Doordarshan. Consumption of branded products is treated as a special treat

or indulgence.

Hindustan Lever relies heavily on its own company-organised media. These are promotional events

organised by stockists. Godrej Consumer Products, which is trying to push its soap brands into the

interior areas, uses radio to reach the local people in their language.Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per cent of rural households. It

doubled its spend on advertising on Doordarshan, which alone reached 41 per cent of rural households.

It has also used banners, posters and tapped all the local forms of entertainment. Since price is a key

issue in the rural areas, Coca-Cola advertising stressed its `magical price point of Rs 5 per bottle in all

media.LG Electronics uses vans and road shows to reach rural customers. The company uses local

language advertising. Philips India uses wall writing and radio advertising to drive its growth in rural

areas.

The key dilemma for MNCs eager to tap the large and fast-growing rural market is whether they can do

so without hurting the companys profit margins. In case of nestle, companys product portfolio is

essentially designed for urban consumers which cautions companies from plunging headlong into therural market as capturing rural consumers can be expensive.

Brand Positioning in Rural Markets


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Branding correlates with Image Building in an organization vis--vis its products produced/servicesrendered. In the vicinity of today's Marketing scenario along with advancement in technology, BrandManagement is the order of the day. In the process of branding, the aspect of brand activation at ATL(above the level) and BTL (below the level) makes a vital contribution for the marketing journey.To attain a safe platform in Brand activation, the Marketing Managers pay attention and focus in adiligent manner on the value based credentials of the users in the Marketing arena. A full-fledgeddedicated team with multi focused thoughts only can do the needful for the successful brandmanagement.Good branding strikes a chord with viewers help them relate with the product and reflect theiraspirations.

The research approaches to get at brand objective.1. Word Associations:While using the logo, hoardings and exhibits, suitable jargons have to be deployed in the wordassociation. People can be asked what strikes in their mind when they hear the brand's name.

2. Personifying the Brand:Visual control mechanism plays a vital role in identifying the brands in terms of personification. Peoplecan be identified the brands when seeing the visual pictures described.3. Laddering up to find the brand essence:Brand essence relates to the deeper, more abstract goals consumer and trying to satisfy with thebrand. The attribute, a functional benefit and an emotional benefit brand essence constitute atechnique known as laddering up.Brands are increasingly getting more entwined with our lives. The debate today is not as much about'why branding' as above defining a meaningful role for a brand in the consumer's life.

FLOW CHART ON BRANDING PROCESS


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BRAND

Views of the Expertise:The theme addresses of the Confederation of Indian Industry (CII) Brands submit 2005.Pointed out, this increasing clutter in the market place and the changing consumer dynamics havethrown up a new set of challenges for marketers-of accruing, retaining and sustaining the relationshipwith the consumer.A leitmotif of this is that the consumer is at the center of all brands do, or at least need to do.Dr. Erich Joachimsthaler, CEO, Vivaldi Partners and co author with David Aaker of the seminalbookbrand leadership, saysthat this no longer means mere lip service on the part of the marketers.

As he points out, perhaps to many a brand marketer's chagrin, brands don't occupy much mind space.In consumers, but revolves around other interest in their lives. Now as he says it's up to companies todevelop products that fit in to consumers' lives rather than develop products, which they thinkconsumers will prefer.Prof. Ramaswamy says consumers are no longer passive beings that who will accept what is doled outto them as a product and service. Consumers today are seeking to "co-create" their experience of aproduct or service with a company. This puts traditional business models in a bind and also hasimplications for companies' brands.The next decade is expected to be quite cataclysmic for brands and an article by D.Shivakumar, ED ofPhilips India, captures the essence of the changes that are being wrought. But the refrain is the same.

To manage and succeed in tomorrow's Brand world, marketing teams would need to be far more rightbrained than left brained they need to be more consumer connected and responsive than ever before.Speed, smart thinking and sensitivity will be the skill set of the marketer. An office desk will be a badplace from which to manage the future brand, says a clairvoyant Shivakumar.Why Branding:* Separate your brand from your competitors in a unique way* Relevant and motivating to your customers


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* Prospects and channels-it gives you value and make you special.* Enhance your perceived value, there by supporting premium pricing, sheltering you from low pricecompetition.* Contributing to share holder value.

(Companies like Morgan Stanley look to evidence of brand strength in setting buy ratings.)* Provide resilience in times of negative press.

* Enable you to launch new products more quickly and cost effectivelySuccessful Branding:As branding can make or break a product, marketer should handle it with the same concern as theartisans show in their work. All the activities that are taken under the umbrella of a brand add to orsubtract from the value. The customer's evaluation of a brand is a result of all the consumerexperiences he has had with the brand. Consumer experience includes product, services, personalcontacts, advertising, promotions, word of mouth, etc.This mix of memories, which are built up over a long time, makes the brand potentially the mostpowerful liver of the intangible perceived values. After all the first thought that comes to the mind of

the customer prior to the purchase of the product is 'who has made it', if that brand has goodreputation, it raises the level of confidence on the part of the customer to buy the product.India's USPIndia is shining then! India is Unique in many ways. A population that is large, heterogeneous, largelyEnglish speaking and a cultural heritage that runs back to thousands of years. India is young. India isvibrant. The major segmentation of mass population is located in rural area. So, the market potentialis large in number. So we can expect the market strength in rural area. Now, the educationalInstitutions are also concentrating on rural marketing and doing market research in rural places. Ruralmarkets are rapidly growing in India but have often been ignored by marketers. Most of them areremote-fully ignorant due to the reason of diversification of products produced thereby slitting into

disposable income.

A glance at the following statistics will help you get a fair idea of the consumers in Rural India:* 46 percent of soft drinks* 49 percent of motorcycles* 59 percent of cigarettes* 18 million TV Sets* 50 percent of 2 million BSNL mobile connections* 53 percent of FMCG products* 59 percent of consumer durables are sold in rural India.Some facts about the rural sector:

* There are nearly 42,000 rural haats (Super Markets) in India* In 2002 2003, LIC sold 50 percent of its policies in rural India* Of the 20 million who have signed up for Rediffmail, 60 percent are from small towns* Of the 1,00,000 souls that have transacted on Rediff's shopping site, 50 percent are from smalltowns* The 30 million Kisan Credit Cards (KCC) issued so far exceed the 25 million credit-plus-debit cardsissued in urban. A whopping Rs. 65, 000 crore has been sanctioned under the KCC scheme.


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* Electricity Consumption increase from 17.6 percent in 1980 81 to 20.2 percent in 1999 2000.During the same period, the industry share has dropped from 58.4 percent to 34.8 percent.* Hindustan Lever, the largest FMCG Company in the country. More than half of its annual sales ofRs.11, 700/- crore come from the rural market.* The proposed agricultural reforms in the tenth plan, the easy availability of agriculture credit Rs60,000/- Crore Village road programme introduced recently to connect 1,90,000/- village and the

improved communication network (STD and Mobile).Branding strategy in rural place.a) Rural Product Development:The rural market is a fast growing one and has a huge population with a great level of disposableincome. To encash this, products have to be specifically developed to meet the needs of rural markets.Sometimes, existing products might have to be modified to suit these markets too accordingly.Rural product development has the strong edifice on a great deal of research like feasibility studies,rural aspiration, rural profiling and so on. This paves way for a great deal of infrastructure and

expertise in this area.b) Rural BrandingRural branding bears quite different stand from urban branding. The first step towards rural brandingis to research and gain insight into the working of rural markets. Based on this communicationcampaigns have to be developed with a lot of rural sensitivity.Rural branding is attained by way of opting to a greater percentage of local media and a smallerpercentage of the mass media. Rural gatherings like temple festivals, melas, cinema halls and so oncan be used as venues to promote brands. Direct Marketing and events like road shows; film shows,melas, street theatre can also be used to promote brands.A well-planned rural branding campaign cannot just create brand awareness but help your targetrelevant to your brand and promote sales. A long-term campaign will keep your brand at the top-of-the-mind and build brand loyalty. So the brands are in safe hands.c) Rural Market ResearchRural markets behave most differently from urban markets. While many marketers have tried tomarket their products in rural areas, just a handful of the same only has succeeded. A strong insightinto rural consumer behavior and sensitivity to their values and beliefs is essential; to upgrade therural market rural market research encompasses not just gathering data but analyzing them andlinking the findings to promoting your products.d) Rural Communication Campaigns:Communication for rural markets calls for a different kind of outlook. There must be a strong accent onhelping the target relate to the message.The entire communication and media strategy has to devise a system based on research findings.These have to be developed in the regional vernacular languages and set in the local culture for easieracceptance and reach. Unlike communication campaigns in urban areas that rely greatly on the mass


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media, the strategy will be of crying in the wielderness in rural areas. Besides mass and outdoormedia, rural extravaganza like temple festivals, melas and other events where the villagers cometogether can be used for promotions.e) Rural Events:In the rural context, one of the best ways to capture the attention of the audience is through Event-management. Since rural areas have limited venues for entertainment, conducting an event in ruralareas can bring a good response.A well-planned event can get the product the mileage that we want. Some of the interesting eventsthat can be conducted are Road Shows, Melas, Street-Theatre, Film Shows and so on. These make avisually strong impact and build long term brand recall. Rural public are the target audience and hencethe portfolio of event management has to be handled professionally with diligent care and broadperspective.f) Rural DM Campaigns:Direct Marketing (DM) is one of the most powerful way to meet the target on their turf and buildproduct awareness as well as promotion. The success of any DM campaign depends on the fieldworkers and their sensitivity and emotional connectivity to rural markets.In the area of Direct Marketing, rural team has to be trained, to be sensitive to rural culture andbeliefs. They can handle activities like Door-to-Door sampling, marketing and product promotion.These activities can also be carried out innovatively at places like local cinema halls, melas andfestivals, in the midst of cross-cultural gatherings and conglomerations.g) Database Creation & Management:Marketing, branding and promotional activities in the rural context can be highly effective and

thereafter have to create a database of prospects. The question is how will you source this criticaldata? The data will contain details of your target segments at the village level / town-level. This data isessential for us to reach our target accurately and helps our marketing plan and communicationstrategies. Management Information System along with Database management paves ways for acongenial rural marketing through the information and data available for effective interpretations anduse.

There are seven C's steps for brand positioning:1. Capacitate:Understand the company history, its products, top management's objectives their view of the market

and their commitment to branding. So, our brand should capacitate in the customer's mind. The mind-sets of the customers shall congenially work out the strategic goals and action plan thereupon toameliorate the situations prevailing in the rural market.2. Cabochon:Our brand is the achievable, differentiating, compelling, attractable, and for long run. The pragmaticapproach in the marketing field in such way to differentiate/ discriminate, identify the branding activity


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in an achievable manner for long run.3. Caesarism:Our brand is unique, creative, are catchy, asked question forever "do I brand or do I sellproduct,"Answer:'yes' to both. Caesarism literally means the creative and unique thought, ideas and

actions in a catchy manner to penetrate the customers' mind regarding the brand of the products inthe selling buying process.

4. Cameraderic:By learning from environment be strong enough to make changes as needed, yet have the faith andcourage to be patient and let your marketing programs build your brand. It is friendly in nature andbranding program is creating awareness, attitude shift etc. The trust worthiness and consensus ofminds prevailing between the market personnel and customers/consumers will largely contribute tothe attitudinal pleasure.5. Calibre:Obtain feedback by setting up a response analysis system for individual media, as well as trackingsystem to measure effectiveness of marketing investments where they are best tested in the market.Efficiency and effectiveness, the two extreme scales in a continuum of the rural market shall developthe calibre of the members present in the game of Direct marketing in rural marketing.

6. Clincher:Incorporate consistency in media scheduling, adequacy of spending levels and extend brand messageacross products and campaigns. Don't just plan a launch campaign for short period and then 'Go dark'for the balance of the period. Our customer should demand for a particular brand campaigning, mediascheduling, etc shall incorporate the brand activation at ATL and BTL.7. Catagorize:The company's should outline very exact specifications of what they hope to accomplish. The companyhas to invest often in emerging technologies and services simply because what all the customersearnestly believe will eventually set a standard. The company can predict the outcome, should doprofessional services and introspection, long term vision, and initiate steps to dedicate for thecustomers. Virtually speaking, "categorize", the seventh step will be the gate-way for customers aswell the marketer in the journey of brand positioning.

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Features of Indian Rural Markets