Contents

What is Rural? What is Marketing? What is Rural Marketing? Evolution of Rural Marketing Indian Rural Market 4As of Rural Marketing Rural Facts Size Of Rural Marketing Case Studies Rural Marketing in India for Global Recession Conclusion

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

sq. km., where at least 75% of the male population is engaged in agriculture and where there exists no municipality or board (Census 2001). other than the 7 Metros (LG India).

The rural and semi urban area is defined as all other cities
Locations having shops or commercial establishments with

up to 10,000 people are treated as rural (Sahara, ITC, HUL)

What is Marketing?
The Chartered Institute of Marketing define marketing as 'The management process responsible for identifying , anticipating and satisfying customer requirements profitably.
Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer

Introduction to Rural Marketing

Developing of the market in the area as defined as Rural. Hence it could be aptly said that it encompasses the activities such as developing the process.

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 factor could be Urban to Rural, Rural to Urban, Rural to rural.

Evolution Of Rural Marketing

Phase 1 (Before 1960s) Before the advent of the Green

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

Phase 2 (1960s-1990s)During these times, due to the

advent & spread of the Green Revolution, rural marketing represented marketing of agriculture inputs in rural markets & marketing of rural produce in urban areas. marketing started after the liberalization of the Indian economy. In this period, rural marketing represented the emerging, distinct activity of attracting & serving rural markets to fulfill the need & wants of rural households, peoples & their occupations.

Phase 3 (1990s to present) The third phase of rural

Indian Rural Market

47% of the total population.(Urban- 28%, Semi urban- 25%). More than 570 Million people. The annual rural household income of Rs 56,630 (as per NCAER, IMDR 2009) Changing consumption patterns and lifestyles Unfold tremendous opportunities for rural marketing.

RURAL & URBAN DISTRIBUTION POPULATION

TRU MALE FEMALES BOTH RURAL 381,602,674 360,887,965 742,490,639 (72%) URBAN 150,554,098 135,565,591 286,119,689 (28%) TOTAL 532,156,772 496453556 1,028,610,328 (100%)

100 80 60 40 20 0 RURAL URBAN TOTAL

POPULATION %

ACCORDING TO CENSUS 2001

4As of rural Marketing

large number of daily wage earners,

acute dependence on the vagaries of the monsoon;

seasonal consumption linked to harvests and festivals and

special occasions poor roads,power problems; inaccessibility to conventional advertising media. However, the rural consumer is not like 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

first challenge is to ensure availability of the product or service. Around 700 million indians live in 627,000 villages & are spread over 3.2 million sq km Poor state of roads, Greater challenge is to regularly reach products to the far-flung villages. Marketers must trade off the distribution cost with incremental market saturation. 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.

Contd......
Stockiest use autorickshaws, bullock-carts and even boats in the backwaters of Kerala to serve remote villages. Coca-Cola considers rural India 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, LG Electronics has set up 45 offices in urban and semi-rural areas and 59 rural/remote area offices.

Affordability
The second challenge is to ensure affordability of the product or service. Most of rural people earn daily wages With low disposable incomes, products need to be affordable to the rural consumer, Some companies have addressed the affordability problem by introducing small unit packs. Shampoos, Fair and lovely, Colgate toothpaste and many others launched its smaller packs to cater most of the rural consumers. Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5.

contd....
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. Coca-Cola has addressed the affordability issue by introducing the returnable 200-ml glass bottle priced at Rs 5. Eighty per cent of new drinkers come from the rural markets. Coca-Cola has also introduced Sunfill, a powdered soft-drink concentrate. 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.

Acceptability
The third challenge is to gain acceptability for the product or service. Need to offer products that suit the rural market. In 1998 LG Electronics, developed a customized TV for the rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets in the very first year. 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.

contd....
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 crores in total premium. 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.

Awareness
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. The rural consumer expressions differ from his urban counterpart. Outing 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 companyorganized media. 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.

continued......

Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per cent of rural households. Coca-Cola doubled its spend on advertising on Doordarshan, which alone reached 41 per cent of rural households. Use of banners, posters and all the local forms of entertainment. 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 ready to tap the large and fastgrowing rural market is whether they can do so without hurting the company's profit margins.

Rural facts
The average Monthly per capita Consumer

Expenditure (MPCE) for rural areas is Rs 495 and that for urban areas is Rs 914. 93% people in Rural Area live in their own houses as comparative to 61% of Urban. Food Expenditure in Rural Area is 56% as in Urban it is 44%.

Contd
9 in 10 Rural households use branded washing powder

or cakes 2 in 5 uses more than 1 brand of soap More than 1/2 of households use branded skin creams. Rural contribution is 40% in sales to top 7 cities of Frost Free refrigerator More than 70 Million Kisan Credit Cards are already issued by Banks to rural households. (Source: ORG- MARG Survey / NSSO Survey).

Size of the Rural Market

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

1,23,000 crore, which includes FMCGs, Durables, Agri products and 2/4 wheelers.
Estimated Annual Size : Rural Market FMCG Durables Agri- Inputs 2/4 Wheelers Total Source: Francis Kanoi 2009 Rs.65000 crore Rs.5000 crore Rs.45000 crore Rs.8000 crore Rs.123000 crore

Rural customer. Understand them

Illiterate but not fools

Agro Advertising
No brands, no advertising Posters Farmer meets Leaflets

Rural Marketing Common.. One follows other

CASE STUDIES

LGs advertising strategies for rural Market

LG launched its first low priced TV for rural consumers.. -Sampoorna- Rs.3000 -Cineplus- RS 4900 Promotion Mobile Vans Exhibition Road Shows

Coca cola
THANDA MATLABH COCA COLA COCA COLA CAPTURE 17.34% RURAL MARKET TILL

2009.

HUL
Hindustan Levers Project Shakti fetches 10% of its

total sales from rural markets.

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,
Fair & Lovely Skin Cream at Rs.5,

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

Key Success Factor Self Sufficient Infrastructure

Power

Connectivity

Training

IDEA
Has a customer base of over 17 million. Promotional Strategy (An Idea can change your life!) Idea as an instrument of democracy, bringing power to the

people.
India.

Social messaging to reach the hearts and minds of rural

Abhishek Bachchan- presented as a humble public servant,

an agent of change.

We dont consider other service providers, only IDEA works here..

IDEA- What an idea sir ji?

Combi pack- sim + mobile At only Rs. 1199.00

Nokia
Variety of product
Number of low Priced phones Airtel sim free with nokia cell Teaching them how to use Low priced phones, easy to use

NOKIA RURAL MARKET

Hero Honda
Free trials
On the spot finance Broad servicing range

 In 2001-02, LIC sold 55% of its policies in rural India. Of two million BSNL mobile connections, 50% are in small towns / villages. Of the 20 million Rediffmail sign-ups, 60% are from small towns. 50% of transactions from these towns are on

Rediff online shopping site. 42 million rural households are availing banking services in comparison to 27 million urban House Holds. Investment in formal savings instruments is 6.6 million HouseHolds in rural and 6.7 million HHs in urban.

Rural Consumer Insights

Rural India buys Products more often (mostly weekly). Buys small packs, low unit price more important than economy Rural market involves more intensive personal selling efforts compared to urban marketing To effectively tap the rural market, a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, "melas", and other activities where they assemble.

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

countrys one billion population is not just witnessing an increase in its income but also in consumption and production. The Union Budget for 2009-10 hiked the allocation for the National Rural Employment Guarantee Act (NREGA) to US$ 8.03 billion, giving a boost to the rural economy. This is in addition to the ambitious Bharat Nirman Programme with an outlay of US$ 34.84 billion for improving rural infrastructure. According to a study on the impact of the slowdown on rural markets commissioned by RMAI and conducted by MART, the rural and small town economy which accounts for 60 per cent of Indias income has not been impacted by the global economic slowdown,

Contd....
The rural consumer market, which grew 25 per cent in 2008 when

demand in urban areas slowed due to the global recession, is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers
Several FMCG companies such as Godrej Consumer Products,

Dabur, Marico and Hindustan Unilever (HUL) have increased their hiring in rural India and small towns in order to establish a local connect and increase visibility.
GlaxoSmithkline Consumer Healthcare (GSK) and Nestle and are

now launching products specifically for rural markets

At present 53 per cent of all FMCGs and 59 per cent of all

consumer durables are being sold in rural India. The biggest FMCG Company in India HLL derives more than half of its Rs. 12,000 crore revenues from the rural markets

RuralMarketing In INDIA- A Strategy To Fight global RECESSION

Rural India accounts for more than 70 per cent of the

country's one billion population (according to the Census of India 2001). Witnessing an increase in its income but also in consumption and production. The rural consumer market, grew 25 per cent in 2008 Demand in urban areas slowed due to the global recession. The rural economy had not been impacted by the global economic slowdown.

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

October 2007 which fell to just 3% in 2008. The sale of small cars (the entry-level segment) also decreased in the face of the credit squeeze. Maruti planned to tap the rural market. Maruti appointed 2,000 sales executives Target rural areas and started special schemes for village panchayats, rural teachers and rural officers. A mobile van was put on standby to provide car servicing at the villagers doorstep. Discounts from Rs 3,000 to 8,000 on various models in rural markets.Rural areas and middle class cities pushed the companys sales during the period of recession thereafter.

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

reported a record growth, especially the rural mobile market in India. The industrys overall subscriber base grew 48 per cent in 2008 to 347 million customers. 25 million new mobile subscribers added during April 2008 to June 2008. 8 million were from the villages, that is more than 30%. The mobile subscriber base is growing in leaps and bounds. Bharti Airtel saw its profit in the three months to December 31 climb to 22 billion rupees , up 25 per cent from a year earlier, as it drew in a record number of new subscribers.

Tata tea
During the time of recession, Tata Tea also invested in rural India. Tata Teas shares incresed from 18 percent in January-March 2006

to 21.4 percent in January-March 2008. Tata Tea realized that it was not selling in more than 1,00,000 villages in UP. Tata Tea decided to tie up with NGOs. Tata Tea created a unique channel of distribution with NGOs acting as the first tier and followed by 2 tiers from villages thus providing a means for funding to NGOs and as a source of steady income to youths who became distributors at level 2 and 3. 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 share from 18.1 percent to 26.6 percent.

Post Recession Initiatives

Major domestic retailers like AV Birla, ITC, Godrej,

Reliance and many others have already setup farm linkages. Hariyali Kisan Bazaars (DCM), Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar have established rural retail hubs. DCM Shriram Consolidated (DSCL) has undertaken the process of improving the business model of the rural retail chain. durable companies, such as LG India and Godrej, have increased their marketing efforts in rural areas. Rural melas' are being organised by Godrej in order to access potential rural consumers.

Conclusion
Rural market has an untapped potential like rain but it is Different from the urban market so it requires the defferent marketing strategies and marketer has to meet the challenges to be successful in rural market.

Thank You!

Sat Shiri Akal

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