rural marketing final m.com1

8/7/2019 rural marketing final m.com1

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Contentsy What is Rural?y What is Marketing?y What is Rural Marketing?y

Evolution of Rural Marketingy Indian Rural Markety 4As of Rural Marketingy Rural Factsy

Size Of Rural Marketingy Case Studiesy Rural Marketing in India for Global Recessiony Conclusion


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What is Rural?y Any habitation with a population density of less than 400

sq. km., where at least 75% of the male population isengaged in agriculture and where there exists no

municipality or board (Census 2001).

y The rural and semi urban area is defined as all other citiesother than the 7 Metros (LG India).

y Locations having shops or commercial establishments withup to 10,000 people are treated as rural (Sahara, ITC, HUL)


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What is M

arketing

?

y The Chartered Institute of Marketing definemarketing as 'The management process

responsible for identifying , anticipating andsatisfying customer requirements profitably.

y Marketing is not about providing products orservices it is essentially about providingchanging benefits to the changing needs anddemands of the customer


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Introduction to Rur

alMa

rketingy Developing of the market in the area as defined as

Rural. Hence it could be aptly said that itencompasses the activities such as developing theprocess.

y To meet this Objective 1. Right product at the right price to the right

people at the right time.2. Exchange between Rural and Urban is a factorcould be Urban to Rural, Rural to Urban, Ruralto rural.


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Evolution Of Rural Marketingy Phase 1 (Before 1960s) Before the advent of the Green

revolution, the nature of rural market was altogetherdifferent. Rural marketing then referred to the marketingof rural products in rural & urban products.

y Phase 2 (1960s-1990s)During these times, due to theadvent & spread of the Green Revolution, rural marketingrepresented marketing of agriculture inputs in ruralmarkets & marketing of rural produce in urban areas.

y Phase 3 (1990s to present) The third phase of ruralmarketing started after the liberalization of the Indianeconomy. In this period, rural marketing represented theemerging, distinct activity of attracting & serving ruralmarkets to fulfill the need & wants of rural households,peoples & their occupations.


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y 47% of the total population.(Urban- 28%, Semiurban- 25%).

y

More than 570 Million people.y The annual rural household income of Rs 56,630

(as per NCAER, IMDR 2009)

y Changing consumption patterns and lifestyles

y Unfold tremendous opportunities for ruralmarketing.

Indi

an Rur

alMa

rket


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RURAL & URBAN

DISTRIBUTION POPULATION

0

20

40

60

80

100

RURAL URBAN TOTAL

POPULATION %

TRU RURAL UR B AN TOTAL

MALE 381,602,674 150,554,098 532,156,772

FEMALES 360,887,965 135,565,591 496453556

BOTH 742,490,639

(72%)

286,119,689

(28%)

1,028,610,328

(100%)

ACCORDING

TO CENSUS

2001


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4As of rural Marketingy large number of daily wage earners,

y acute dependence on the vagaries of the monsoon;

y seasonal consumption linked to harvests and festivals and

special occasionsy poor roads,power problems;

y inaccessibility to conventional advertising media.

However, the rural consumer is not like his urban

counterpart in many ways. The more daring MNCs aremeeting the consequent challenges of availability,

affordability, acceptability and awareness (the so-called 4 As)


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y first challenge is to ensure availability of the product or

service.

y Around 700 million indians live in 627,000 villages & are

spread over 3.2 million sq kmy Poor state of roads,

y Greater challenge is to regularly reach products to the far-flung

villages.

y Marketers must trade off the distribution cost with incremental

market saturation.y India's 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.

Availab

ility


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y Stockiest use autorickshaws, bullock-carts and even boats in

the backwaters of Kerala to serve remote villages.

y Coca-Cola considers rural India a future growth driver, has

evolved a hub and spoke distribution model to reach thevillages.

y 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,

y LG Electronics has set up 45 offices in urban and semi-rural

areas and 59 rural/remote area offices.

Contd......


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y The second challenge is to ensure affordability of the

product or service.

y Most of rural people earn daily wages

y

With low disposable incomes, products need to beaffordable to the rural consumer,

y Some companies have addressed the affordability problem

by introducing small unit packs.

y Shampoos, Fair and lovely, Colgate toothpaste and many

others launched its smaller packs to cater most of the ruralconsumers.

y Godrej recently introduced three brands of Cinthol, Fair

Glow and Godrej in 50-gm packs, priced at Rs 4-5.

A

ffordab

ility


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y Hindustan Lever, among the first MNCs targeted the rural

market has launched a variant of its largest selling soap brand,

Lifebuoy at Rs 2 for 50 gm.y Coca-Cola has addressed the affordability issue by introducing

the returnable 200-ml glass bottle priced at Rs 5.

y Eighty per cent of new drinkers come from the rural

markets.

y Coca-Cola has also introduced Sunfill, a powdered soft-drinkconcentrate. The instant and ready-to-mix Sunfill is available in

a single-serve sachet of 25 gm priced at Rs 2 and multi serve

sachet of 200 gm priced at Rs 15.

contd....


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Accept

abilityy The third challenge is to gain acceptability for the product or

service.

y Need to offer products that suit the rural market.

y In 1998 LG Electronics, developed a customized TV for the

rural market and christened it Sampoorna. It was a runway hit

y selling 100,000 sets in the very first year.

y lack of electricity and refrigerators in the rural areas

y Coca-Cola provides low-cost ice boxes-a tin box for new outlets

and thermocol box for seasonal outlets.


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contd....y The insurance companies that have tailor-made products for the

rural market have performed well.

y HDFC Standard LIFE topped private insurers by selling policies

worth Rs 3.5 crores in total premium.y 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.


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y The rural consumer has the same likes as the urbanconsumer movies and music and for both the urban

and rural consumer, the family is the key unit of identity.

y The rural consumer expressions differ from his urban

counterpart.y Outing is confined to local fairs and festivals and TV

viewing is confined to the state-owned Doordarshan.

y Consumption of branded products is treated as a special

treat or indulgence.

y Hindustan Lever relies heavily on its own company-organized media.

y 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.

Awareness


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continued......y Coca-Cola uses a combination of TV, cinema and radio to reach

53.6 per cent of rural households.

y Coca-Cola doubled its spend on advertising on Doordarshan,

which alone reached 41 per cent of rural households.

y Use of banners, posters and all the local forms of entertainment.

y Coca-Cola advertising stressed its `magical' price point of Rs 5

per bottle in all media.

y LG Electronics uses vans and road shows to reach rural

customers.

yThe company uses local language advertising.

y Philips India uses wall writing and radio advertising to drive its

growth in rural areas.

y The key dilemma for MNCs ready to tap the large and fast-

growing rural market is whether they can do so without hurting

the company's profit margins.


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Rural factsy The average Monthly per capita Consumer

Expenditure (MPCE) for rural areas is Rs 495 and that

for urban areas is Rs 914.y 93% people in Rural Area live in their own houses as

comparative to 61% of Urban.

y Food Expenditure in Rural Area is 56% as in Urban it is

44%.


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Contdy 9 in 10 Rural households use branded washing powder

or cakes

y

2 in 5 uses more than 1 brand of soapy More than 1/2 of households use branded skin creams.

y Rural contribution is 40% in sales to top 7 cities ofFrost Free refrigerator

y More than 70 Million Kisan Credit Cards are alreadyissued byBanks to rural households.

(Source: ORG- MARG Survey / NSSO Survey).


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Size of t

he Rur

alMa

rkety The total size of the rural market is estimated at Rs.

1,23,000 crore, which includes FMCGs, Durables, Agriproducts and 2/4 wheelers.

Estimated Annual Size : Rural Market

FMCG Rs.65000 crore

Durables Rs.5000 crore

Agri- Inputs Rs.45000 crore

2/4 Wheelers Rs.8000 crore

Total Rs.123000 crore

Source: Francis Kanoi 2009


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Rural customer. Understand

them

Illiterate but not fools


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Agro Advertising

y No brands, no advertising

y Posters

y Farmer meets

y

Leaflets


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Rural Marketing Common..

One follows other


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CASESTUDIES


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LGs advertising strategies for rural

Market

LG launched its first low pricedTV for rural consumers..

-Sampoorna- Rs.3000-Cineplus- RS 4900

Promotion

y Mobile Vans

y

Exhibitiony Road Shows


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Coca colay THANDA MATLABH COCA COLAy COCA COLA CAPTURE 17.34% RURAL MARKET TILL

2009.


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HUL

yHindustan Levers Project Shakti fetches 10% of itstotal sales from rural markets.


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Lux at Rs.5,

Lifebuoy at Rs.2,

Surf Excel sachet at Rs.1.50,

Pond's Talc at Rs.5,

Pepsodent toothpaste at Rs. 5,

air Lovely S in rea at Rs.5,


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ITC - eCHOUPALITC-eChoupal Sagar records an average footfalls of 1,200 a day andnets Rs 2 lakh; the company will be launching 50 such rural mallsby the end of the next fiscal; it stacks almost all the leadingdurables and non-durables brands.


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Key Success Factor

Self Sufficient Infrastructure

Power Connectivity

Training


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IDEA

y Has a customer base of over 17 million.

y Promotional Strategy (An Idea can change your life!)

y Idea as an instrument of democracy, bringing power to thepeople.

y Social messaging to reach the hearts and minds of ruralIndia.

y Abhishek Bachchan- presented as a humble public servant,an agent of change.


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We dont

considerother service

providers,

only IDEAworks here..


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IDEA- What an idea sir ji?

y Combi pack- sim + mobile

yAt only Rs. 1199.00


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NokiayVariety of product

y Number of low Priced phones

yAirtel sim free with nokia celly Teaching them how to use

y Low priced phones, easy to use


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NOKIA RURAL MARKET


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Hero Honday Free trials

y On the spot finance

y Broad servicing range


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y In 2001-02, LIC sold 55% of its policies in rural India.

y Of two million BSNL mobile connections, 50% are in smalltowns / villages.

y Of the 20 million Rediffmail sign-ups, 60% are from small

towns. 50% oftransactions from these towns are on

Rediff online shopping site.

y 42 million rural households are availing bankingservices in comparison to 27 million urban HouseHolds.

y Investment in formal savings instruments is 6.6million HouseHolds in rural and 6.7 million HHs inurban.


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Rural Consumer Insights

Rural India buys -

y Products more often (mostly weekly).

y Buys small packs, low unit price more important thaneconomy

y Rural market involves more intensive personal sellingefforts compared to urban marketing

y To effectively tap the rural market, a brand must associateit with the same things the rural folks do.

y This can be done by utilizing the various rural folk mediato reach them in their own language and in large numbersso that the brand can be associated with the myriad rituals,celebrations, festivals, "melas", and other activities wherethey assemble.


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Current Scenarioy Rural India, which accounts for more than 70 per cent of the

countrys one billion population is not just witnessing an increasein its income but also in consumption and production.

y The Union Budget for 2009-10 hiked the allocation for the

National Rural Employment Guarantee Act (NREGA) to US$ 8.03billion, giving a boost to the rural economy. This is in addition tothe ambitious Bharat Nirman Programme with an outlay of US$34.84 billion for improving rural infrastructure.

y

According to a study on the impact of the slowdown on ruralmarkets commissioned by RMAI and conducted by MART, therural and small town economy which accounts for 60 per cent ofIndias income has not been impacted by the global economicslowdown,


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y

The rural consumer market, which grew 25 per cent in 2008 whendemand in urban areas slowed due to the global recession, isexpected to reach US$ 425 billion in 2010-11 with 720-790 millioncustomers

y Several FMCG companies such as Godrej Consumer Products,Dabur, Marico and Hindustan Unilever (HUL) have increasedtheir hiring in rural India and small towns in order to establish alocal connect and increase visibility.

y GlaxoSmithkline Consumer Healthcare (GSK) and Nestle and arenow launching products specifically for rural markets

y At present 53 per cent of all FMCGs and 59 per cent of allconsumer durables are being sold in rural India. The biggestFMCG Company in India HLL derives more than half of its Rs.

12,000 crore revenues from the rural markets

Contd....


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RuralMarketing In INDIA- AStrategy

To Fight global RECESSIONy Rural India accounts for more than 70 per cent of the

country's one billion population (according to theCensus of India 2001).

yWitnessing an increase in its income but also inconsumption and production.

y The rural consumer market, grew 25 per cent in 2008

y Demand in urban areas slowed due to the globalrecession.

y The rural economy had not been impacted by the

global economic slowdown.


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Maruti Suzukiy The industry posted a growth rate of 11% from April to

October 2007 which fell to just 3% in 2008.

y The sale of small cars (the entry-level segment) alsodecreased in the face of the credit squeeze.

y Maruti planned to tap the rural market.y Maruti appointed 2,000 sales executives

y Target rural areas and started special schemes for villagepanchayats, rural teachers and rural officers.

y A mobile van was put on standby to provide car servicing atthe villagers doorstep.

y Discounts from Rs 3,000 to 8,000 on various models in ruralmarkets.Rural areas and middle class cities pushed the

companys sales during the period of recession thereafter.


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Mobile Industryy Stock markets crashedy Nasscom lowered its expectations for IT-BPO to 16-17%,y The mobile markets didnt got affected but on the other hand

reported a record growth, especially the rural mobile market in

India.y The industrys overall subscriber base grew 48 per cent in

2008 to 347 million customers.y 25 million new mobile subscribers added during April 2008 to

June 2008.y

8 million were from the villages, that is more than 30%.y The mobile subscriber base is growing in leaps and bounds.Bharti Airtel saw its profit in the three months to December 31climb to 22 billion rupees , up 25 per cent from a year earlier, asit drew in a record number of new subscribers.


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Tata

tea

y During the time of recession, Tata Tea also invested in rural India.

y Tata Teas shares incresed from 18 percent in January-March 2006to 21.4 percent in January-March 2008.

y Tata Tea realized that it was not selling in more than 1,00,000

villages in UP.y Tata Tea decided to tie up with NGOs.

y Tata Tea created a unique channel of distribution with NGOsacting as the first tier and followed by 2 tiers from villages thusproviding a means for funding to NGOs and as a source of steady

income to youths who became distributors at level 2 and 3.y In the same period of time.HUL lost its market share from 21.2

percent to 18.9 percent and Tata Tea consolidated its market sharefrom 18.1 percent to 26.6 percent.


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Post Recession Initiatives

y Major domestic retailers like AV Birla, ITC, Godrej,Reliance and many others have already setup farm linkages.

y Hariyali Kisan Bazaars (DCM), Aadhars (Pantaloon-GodrejJV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance

Fresh, Project Shakti (Hindustan Unilever) and Naya YugBazaar have established rural retail hubs.y DCM Shriram Consolidated (DSCL) has undertaken the

process of improving the business model of the rural retailchain.

y durable companies, such as LG India and Godrej, haveincreased their marketing efforts in rural areas.

y Rural melas' are being organised by Godrej in order toaccess potential rural consumers.


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ConclusionRural market has an untapped potential like rainbut it is Different from the urban market so it

requires the defferent marketing strategies andmarketer has to meet the challenges to besuccessful in rural market.


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Sat Shiri Akal

Thank You!

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rural marketing final m.com1