Introduction to Rural

Marketing
Dr. Suman Kumar Dawn
 Why should we do this course?
 Agriculture’s share in GDP is going down, but, India still
lives in her villages

 Urban markets are crowded and saturated

 The understanding of “rural” is diffused and sometimes

confusing

 Is “rural marketing” different from “urban marketing” ?

 One of the best examples of rural marketing has been
the Hindusthan Unilever’s ‘Kan khajura Tesan’ (KKT)
which literally means “ear worm radio channel” is a
mobile based radio for the media dark regions of rural
India. The idea of the campaign was to reach out to the
population which has no access to media or any form of
entertainment. And as the use of mobile phones is
ubiquitous, it was the best medium to reach out to
entertainment-deprived sections.
 Here is one example of Dabur India, Hindustan Unilever’s tech
route to rural markets:

 “ With urban consumers cutting back on their spending spree, fast-

moving consumer goods companies have redoubled efforts to tap
into rural India in 2012-13. In their latest annual reports, Dabur
India and Hindustan Unilever (HUL) have both highlighted why the
rural markets are so critical and what they are doing to better their
rural sales.
 GOING TECHNICAL
 HUL’s decade-old Project Shakti received a technology boost in
2012. About 40,000 Shakti Ammas were equipped with a basic
smartphone. These smartphones had specifically designed software
enabled them to take and bill orders, manage inventory and receive
updates on promotional schemes run by the company. This
improved their efficiency The Shakti workforce rose to 48,000 in
2012. Project Shakti equips women with the basic entrepreneurial
skills and facilities needed to set up and market FMCG products.
 If HUL depended on its Shakti Ammas to connect with consumers,
Dabur India embraced the idea of getting rural folk to sample
products and experience the benefits for themselves. The idea was
to get word-of-mouth advertising of product benefits.
 The company made the most of fairs and melas around the harvest seasons when
purchasing power is high. It also conducted school health camps to boost its
toothpaste and chyawanprash portfolio and beauty pageants, to showcase its
ayurvedic beauty products.
 That’s not to say the company ignored the power of the mobile phone. Dabur’s rural
sales force used mobile phones to report sales. Phones were equipped with maps
showing the demographics and market potential of each locality, to improve rural
coverage. Over two years, Dabur’s rural strategies saw it doubling the villages under
its coverage to 30,091.
 DISTRIBUTION
 For any FMCG company, the efficiency and reach of its distribution systems is the
most important tool to improve profits and drive sales. In this regard, HUL has a
giant coverage reaching out to over 2 million outlets. To improve connect and with its
distributors , HUL set up a helpline for its distributors and retailers to address
problems or questions quickly.
 Dabur, meanwhile, armed more than half of its urban sales force with hand-held
devices to generate data, which is then used to decipher buying patterns and
customise selling strategies. IT has also been used to provide information to, and
generate feedback from doctors on Dabur’s formulations and ayurvedic products. ”
 ITC is setting up e-Choupals, which offers the farmers all the
information, products and services they need to enhance farm
productivity, improve farm-gate price realization and cut transaction
costs. Farmers can access latest local and global information on
weather, scientific farming practices as well as market prices at the
village itself through this web portal - all in Hindi. It also facilitates
supply of high quality farm inputs as well as purchase of
commodities at their doorstep.
 " Gaon Chalo" by Tata Tea
"Gaon Chalo" is a distinctive rural marketing initiative started in the year 2006
in Uttar Pradesh by Tata Tea. For penetrating the rural market, the company
partnered with NGOs with wide reach among Uttar Pradesh's rural masses.
The "Gaon Chalo project has created employment opportunities to the youth of
villages and small towns. It has brought steady income to those who are
distributors of Tata Tea. Tata Tea's consolidated market shares from rural
areas rose from 18% to 26.6%.

* Nokia's Low-Cost Handsets

According to marketers, rural India has a huge progressive customer base for
mobiles. As most rural consumers are price-sensitive, Nokia has launched
seven handsets in the price range of Rs. 1500 to Rs. 5500 targeting rural
customers. Further, Nokia is promoting a subscription-based service called
"Life Tools" which provides information about agriculture and education that is
helpful to rural people. It also provides entertainment services. The "life Tools"
service is priced between Rs.30 to Rs. 60 per month, based on the package an
individual opt for.
 * Dabur- Indian Oil Partnership
In order to tap India's rural market, Dabur India Ltd. Has tied up with Indian Oil
Corporation (IOC). According to the agreement between the two companies,
IOC's retail outlets all over the country will stock and sell Dabur's products
consisting of healthcare, oral care, personal wash, skin care and home care
products. The Kisan Seva Kendra is a one-stop rural retail outlet of IOC, which
offers fuel and non-fuel products like fertilizers, grocery, tools used for
cultivation, seeds, personal care products, auto spares, etc. There are 1600 such
IOC outlets across India.

* Airtels's Telecom Revolution in Rural India

Airtel's rural start up package offers its customers a Motorola handset for just
Rs. 1599. Its recharge cards come in a minimum denomination of Rs.10, so that
even daily wage earners can afford to use the service, Airtel is spreading
awareness in villages by its roadside advertisements highlighting its red and
white logo. It is also increasing its business network through commission-based
retailers, who can be anyone who is selling cigarette, paan, textiles, etc. The
company already has 55000 retailers in Bihar and Jharkhand, and is planning to
expand the network by approaching 5000 more cigarette and paan sellers.
 Khushiyon ki Doli: The multi-brand rural engagement module-
Khushiyon ki Doli- initiated by HUL, provides various personal care
and home care brands such as Wheel, Surf Excel, Fair & Lovely,
Sunsilk, Vim, Lifebuoy and Close Up. The main objective of the
campaign is to reach out to media dark villages with HUL brand
messages to inculcate good personal hygiene habits among the
people. Shakti distributors now account for 15 per cent of the
company's sales in rural India
 Session Coverage
 Rural India – Some definitional issues

 Phases/ stages in rural marketing

 Scope of rural marketing

 How is rural India changing?

 Schools of thought- Approaches to Rural Markets

 Strategic Issues & Directions in rural marketing

 Rural marketing is the study of all the
Activity , agency and policy involved in
The procurement of farm inputs by the
Farmers and the movement of rural
products from farmers to consumers. _
G.N. MURTHY
 Defining Rural India
Organisation Definition Limitations
NSSO (  rural not defined
Census)  Population density < 400 / Sq Km
 75 percent of the male working
population is engaged in agriculture
No Municipal corporation / board

Planning  Towns upto 15,000 population are Town

Commission considered rural characteristics not
defined
 Cont’d
LG Electronics All places other than the Only clarifies what are
7 metros the cities

NABARD All locations with a Village & town

population upto 10, 000 characteristics not
considered “ rural” defined

Sahara Commercial Population

establishments located characteristics unknown
in areas servicing less
than 1000 population

Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S (
2007)
 Defining Rural Marketing
National Commission on NGOs Corporate Rural
Agriculture Marketing Definition
Decisions to produce Marketing products Function that manages
saleable farm produced in rural areas all activities involved in
commodities involving to urban areas assessing, stimulating
all the aspects of the and converting the
market system or Marketing products purchasing power of
structure, both produced in rural areas rural consumers into
functional and in rural markets effective demand for
institutional, based on specific products and
technical & economic services to create
considerations and satisfaction & a better
includes the pre & post standard of living for
harvest operations. achieving organisational
goals.
 Phases in Rural Marketing
Sr. No Time Frame Key Events & Trends
1 Phase One( Pre 1960’s) Marketing rural
products in rural and
urban areas
Agricultural inputs in
rural areas
“Agricultural
marketing”
Farming methods were
primitive and
mechanisation was low
Markets unorganised
 Cont’d
2 Phase Two ( 1960s to 1990s) Green Revolution
Companies like
Mahindra and Mahindra,
Sri Ram Fertilisers and
IFFCO emerge
Rural products were
also marketed through
agencies like KVIC

3 Phase Three( 1990s to Present) Demand for

consumables and
durables rise
Companies find growth
in urban markets
stagnating or falling
 Scope of Rural Marketing
 Keenly debated topic

 Definitions based on organisational/ institutional vision,

mission & goals

 Need for a comprehensive and modular understanding

 Rural Marketing is a “ work in progress”

 Multi – disciplinary approach is necessary for sharper

understanding
 Importance of rural marketing
 Size of rural market
 Rural target population
 Employment
 Better living
 Contribution to national income
 Increase in farm income
Rural Marketing: 12 Problems Faced in
Rural Marketing
 Twelve problems faced in rural marketing are as follows:
1. Deprived people and deprived markets 2. Lack of
communication facilities 3. Transport 4. Many languages
and dialects 5. Dispersed markets 6. Low per capita
Income 7. Low levels of literacy 8. Prevalence of
spurious brands and seasonal demand 9. Different way
of thinking 10. Warehousing problem 11. Problems in
sales force management 12. Distribution problem.
 Domain of Rural Marketing
To

Rural Urban

Rural

From

Urban

Source: M. Jha, Rural Marketing- Some Conceptual Issues, EPW, 1988

 Scope of Rural Marketing
Domain of Dimensions of the transaction
Rural
Marketing

Participants Products/ Modalities Norms Outcomes

services

Rural to
Rural

Rural to
Urban

Urban to
Rural
 Changes in Rural India
 Diverse change levers in rural India

 The “ pull of the cities & towns” – migration and its side
effects

 Effect of government programmes

 Civil society interventions

 Natural & manmade disasters

 Slow but sure change

 Transitions In Rural India

•Non –food, cash crops

• Food Grain Crops
•Livestock & fisheries
• On land activities
•Manufacturing &
• Farm Activities services
 Rural Employment Patterns( Male)
Sector Year – 1987 ( % share in Year -2004 ( % share in
employment) employment)

Agriculture 75 67

Transport & 2 8
Communication
Trade & Hotels 5 7

Construction 4 7

Manufacturing 7 8

Source: NSSO data, Mckinsey Global Institute Study, 2004-05

 Rural India – Population Trends

1971 1981 1991 2001

Total 548.2 683.3 848.3 1026.9

Population (in
million)
Rural 524.0 628.8 741.6
Population (in
million)
As a proportion 76.7 74.3 72.2
of total
population

Decadal 19.8 16.7 15.2

Variation
Source: Census 2001
 Cont’d
 The joint family system is being replaced by the nuclear
family system

 The occupational pattern shows a predominance of

cultivators and wage earners

 Cultivators( 40.86 %) and Wage Earners( 35.28 %)

according to NCAER studies (2002)
Rural Settlement & Habitation Trends

 Key findings from 2001 census

 Population density 253/ sq kilometer and total number of

villages is 638, 588

 Villages having less than 500 population are falling

 Villages having 2000 + population most prosperous

 What are the implications of these trends?

 Cont’d
 Size of villages/ habitations are changing

 Role & influence of towns is changing

 Social interaction is a mix of rural and urban

 Let’s look at some key trends in detail

 Rural Income Trends
Annual Income ( Income Class 1989-90( % 1998-99 ( %
at 1998-99 Households) Households)
prices)
<= 35,000 Low 67.3 47.9

35,001- 70,000 Low Middle 23.9 34.8

70,001 – 1,05,000 Middle 7.1 10.4

1,05,001- Upper Middle 1.2 3.9

1,40,000

> 1,40,000 High 0.5 3.0

Source: National Council for Applied Economic Research, 2000

Rural Marketing- Schools of Thought

 Determinist School

 Activist School

 What is the right approach?

 Dependent on level of market development, stage in the

PLC and access to resources

 Amul & ITC prominent examples

 No water-tight compartmentalisation
Strategic Issues & Directions in Rural
Marketing
 Evolutionary Vs revolutionary changes in rural markets

 Role of state & market forces

 ICT based interventions

 Partnership innovations

 Developmental role of rural marketing

 Scalability & replication of rural marketing programmes

 ICT in Rural Markets
Category Government Private NGO/ PPP

Infrastructure NIC N- Logue Simputer

Provision

Rural Services Bhoomi( Sewa

Karnataka)

Agri Marketing Agmarknet E- Choupal Ozhwar

Sandhiyes

Agri extension Universities EID Parry

Close of Session

Thank You