Taxonomy
Consumer Markets Industrial Markets Service Markets
FMCGs, Durables Seeds,Fertilizers,Pesticides,Tractors,Farm implements
Repairs,banking,communication,entertainment
Changing Patterns
Rural Share 1989-90 1992-93 1998-99 2004-2005
Over 75%
Radio/ Transistors
Bicycle. Radio/Transistors
Bicycle. Radio/Transistors, Mechanical Wrist Watch, B&W TV, Pressure Cooker, Cassette Recorder Table Fan, Ceiling Fan, Sewing Machine, Motor Cycle, Quartz Wrist Watch, Moped
50-75%
Cassette Recorder, Pressure Cooker, Table Fan, Ceiling Fan, Sewing Machine, Motor Cycle, Quartz Wrist Watch Moped, CTV, Mixer/Grinder, Scooter, Electric Iron
30-50%
7
20-30% 10-20% 5-10% Below 5%
Moped, B&W TV, Cassette Recorder, Pressure Cooker, Electric Iron, Ceiling Fan, Quartz Wrist Watch Scooter, Mixer/Grinder CTV, Refrigerator Washing Machine VCR/VCP
Moped, Motor Cycle, B&W TV, Cassette Recorder, Pressure Cooker, Electric Iron, Ceiling Fan Scooter, Mixer/Grinder Refrigerator VCR/VCP, Washing Machine -
4
Refrigerator VCR/VCP, Washing Machine -
2 2 1 1
2 1 2 0
1 2 0 0
1 2 0 0
400
352
305
2001-02
130 153
2009-10
170 79 17
272
2001-02
Low Rural Low er middle Middle high Urban
Rural pull
Rising affordability Growing acceptability Increasing demand Improving accessibility Success stories
CONTRIBUTING FACTORS
Agriculture Consistent good monsoons Better procurement prices fixed for various crops Better yields due to many research programs (HYV seeds provided by the government) Tax structures Spread of education Improved infrastructure Better banking facilities Government schemes like IRDP, JRY, NREGA Increased expenditure in plan outlay (from Rs.14000 Cr in 7th plan to Rs.30000 Cr in 8 th plan)
Up gradation from local products to branded and from low priced bands to premium brands Increasing influence of the youth in the buying decisions.
MAJOR CHALLENGES
I. AVAILABLITY
India's 6,38,365 villages are spread over 3.2 mn. sq. kms. 720 mn people - reaching them is not easy Given the poor state of roads, even greater challenge.
Companies like HLL have made strong distribution networks. To service remote villages stockiest use rickshaws, carts and even boats in the back waters of Kerala.
II.
AFFORDABLITY
Products need to be affordable to rural consumers ,most
of them are on daily wages.
Some companies have addressed the affordability problem by introducing small unit packs :
GODREJ introduced Cinthol and Fairglow in 50 gram packs priced at Rs.4
coca-cola
introduced Sunfill ( a powdered soft drink concentrate ) 25 gram pack priced at Rs. 2
III. ACCEPTABLITY To gain acceptability for the product or service, there is a need to offer products that suit the rural markets and conditions.
coca-cola is providing low cost iceboxes because of the lack of electricity and refrigerators in the rural areas.
IV. AWARENESS
With large parts of rural India inaccessible to conventional advertising media, building awareness is another challenge.
Companies like HLL use posters, banners and wall paintings to create awareness.
Advertising
Performing arts including theatre, songs, dance puppetry, magic shows
CAVIN CARE
First to come out with the concept of sachets and it revolutionized the whole market, making the Chic shampoo the 2nd largest selling shampoo in India What followed was the flood of products in small packing ranging from toothpaste, face creams, soaps, hair oil
NIRMA
Introduced the innovative technique of using video vans for marketing Nirma products . Reach to interior areas Offer opportunity for personal interaction .
LG
The company needed new cheaper products to capture the rural markets . The company did this by introducing a cheaper range of TV's by the name of Sampoorna. More offices in small towns. The company opened 178 branch offices in a short period of time
COCA-COLA
1. Increase in number of outlets from 80,000 in 2001 to 190,000 in 2005 resulting in increased market penetration from 13 % to 28 %.
2. It also tapped local available opportunities provided by annual haats and fairs and made huge investment in infrastructure for distribution and marketing.
3. It brought down the average price of its products from Rs.10 to Rs.5,therby bridging the gap between soft drinks and other local options like tea, buttermilk or lemon water.
As a result the rural market accounts for 80 % of the new coke drinkers and 30% of its total volumes.
ITCs e - CHAUPAL
The companys e-chaupal initiative is a novel idea which bypasses the brokers between the Company and the farmers. It is helping Indian agriculture to enhance its competitiveness by empowering Indian farmers through the power of the internet
Formed in 1946,it is a brand name managed by an apex cooperative organization ,Gujarat Cooperative Milk Marketing Federation Limited which today is jointly owned by some 2.41 million milk producers in Gujarat. Has established itself as a uniquely appropriate model for rural development.
HLL has played a dominant role in exploring the potential of rural India with its various projects
1. PROJECT STREAMLINE 2. PROJECT BHARAT 3. PROJECT SHAKTI
Rural Focus
Sales, marketing & production of Power Brands in rural areas Key issues to be addressed availability, awareness, overcoming attitudes & habits, penetrative pricing Target of 16 million new rural households by 1999