Rural Marketing

Focusing on the poor represents an

opportunity rather than a problem.

C K Prahalad





There's incredible potential in rural markets. That's
where the growth will come from.
Sharat Dhall
Diretor HUL

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).

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

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

1.3 Statistical Approach to Rural Marketing:
Government agencies like IRDA (Insurance Regulatory and
Development Authority) and NCAER (National Council for
Applied Economic Research) define rural as
villages with a population of less than 5,000, with 75% of the
male population engaged in agriculture, etc.

Two-thirds of the countrys consumers live in rural areas,
which are around 800 million people, and almost 26% of the
National income is generated there.

10 consecutive monsoons have led to 26% of GDP as returns
from agriculture. This has increased their purchasing power.
India is divided into 597 districts, and has 6,38,667 villages,
of which 32% can be reached as they are connected by pucca
roads.
Rural India
India is a country where 2/3 of its population
is still residing in rural area.
In India more than 800 million people are
scattered in more than 6.4 lacks villages.
In all there are more than 3.8 million retail
outlets in rural India, averaging 5.8 shops per
village


Rural India
Liberalization and globalization is one major factor
which changed the income level, life style of this
population, and put them equally with their urban
counterparts.
The rural market has been growing at 3-4% per
annum, adding more than 1 million new consumers
every year.
It now accounts for close to 50% of the volume of
consumption of fast-moving consumer goods in
India.
RURAL MAHARASHTRA
According to Census 2011, population of the state is 11 crore
plus, which is roughly 9.29% of the total population.
many cities like Nashik, Aurangabad, Nagpur and many more
cities are developed rapidly in last two decades.
According to Census Maharashtras Rural Population is 6
crore, which 54 percent of total population.
States per capita income is Rs.95, 351/- where as on national
level it is Rs.60349/- .
Litreacy rate in state have increased from 77 to 83 percent
over a decade.

Evolution Of Rural Marketing
Phase 1 (Before 1960s)

Phase 2 (1960s-1990s)

Phase 3 (1990s to present)

The Glorious Past
In 1949, Asian Paints was the first company to enter
rural markets.
In 1960 HLL saw rural markets as an opportunity and
entered with lifebuoy soap.
Today HUL dominates rural markets and have its
presence in more than 1 lakh villages. Major players
like Colgate and Dabur followed in. in 80s companies
like Nirma, Cavinkare, and Marico entered rural
markets
. MNCs in rural markets like P&G (Proctor & Gamble)
also found potential in rural markets

The Pulse of the Present

Around 70% of the population lives in rural India,
which is almost 700 million in number. A 1% increase in
their purchasing power can lead to an increase
of Rs.10,000 crores in the government revenues.
Cos. are launching a range of products
to cater to the changing lifestyles in rural India. MNCs
like LG, Samsung, Revlon and insurance biggies like
Birla Sun life, Max New York Life and Prulife are
entering rural markets in a big way. But till today these
have altogether tapped only 1-lakh villages out of the
6-lakh odd villages



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 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

Rural customer. Understand them

Illiterate but not fools
The Reasons to Prefer Rural Areas

Presently, companies operating in India are left with only two options,
I .e. either to go Global or to go Rural. The cost of going global is very high
and also its tough to penetrate markets in other countries. Rural India is
emerging as a large market

for a number of goods and services. So, its better to target the rural
market. Marketers find a similarity between the criticality of rural as well
as urban markets. Some reasons for the same are listed below:

A)Saturation of urban markets: There is cutthroat competition in urban
markets. Due to the wide variety of choices of products, it becomes
difficult for existing companies to maintain their market share. Compared
to urban markets, the rural markets provide better opportunities.

One very fine example can be quoted of Escorts
where they focused on deeper penetration .In
September-98 they established rural marketing
sales. They did not rely on T.V or press
advertisements rather concentrated on focused
approach depending on geographical and market
parameters like fares, melas etc. Looking at the
'kuchha' roads of village they positioned their
mobike as tough vehicle. Their advertisements
showed Dharmendra riding Escort with the
punchline 'Jandar Sawari, Shandar Sawari'. Thus,
they achieved whopping sales of 95000 vehicles
annually
B) A huge untapped market: With a rural population of more than
800 million, it has a huge potential and market areas as only
around 1-lakh villages are tapped out of the 6-lakh odd villages.

C) Rising disposable incomes: Good monsoons during the past 10
years have raised farmers incomes. Non-farm sectors now account
for almost 50% of the total rural incomes. It is a market that
corporatists cannot afford to ignore. Another reason for the rising
disposable incomes of the villages is that Agricultural income is
non-taxable.

D) Remittances from abroad: Many households in rural India have
one of their family members abroad, mostly in Gulf countries.
People working there send their savings to their families in India,
which is an additional source of income
E) Impact of the media: The growing reach of the
electronic media has created a huge change in the
lifestyles of rural consumers because of TV programmes
. Rural people are spending more on lifestyle products
these days . Modi, Revlon, for instance sells more
lipsticks in the rural market than in urban areas. Last
year rural sales were Rs.25 crores; only Rs.12 crores
came from the urban market
MYTHS ABOUT RURAL MARKET
All villages are equally populated.
Rural consumers are are a homogenous lot.
Being illetrate, rural consumers are not bale to
discriminate between prducts and brands.
Only low priced products will sell in rural
India.

Characteristics of Rural
Marketing:

India is a big
country and its
rural markets
have varied
characteristics
that change from
people to people,
region to region.
Some of the main

features of Indias
rural markets are:
-
1) Diverse Nature: There are 6,38,667 Indian villages in all.
Out of these 50% share a very small population of less than 500
and a limited purchasing power. Many of these villages dont
even have a single shop.

In the second category there are 2,50,000 villages with a
population between 500-2000. There are at least 5 shops per
village
Lastly there are 60,000 villages with a population of more than
2000.
Companies should try and focus on the last two categories
more as they have high potential.
Regional disparities heavily influence economic development,
social interaction patterns, mobility patterns and awareness
levels.

.
2) Urban Market Saturation
There is a cut-throat competition in urban
markets, which have reached a stage of
saturation

As a result, marketers are shifting focus to
greener pastures in rural markets, as there is
equal number of households in rural areas as
in urban areas.


3) Rising Disposable Income of Rural
Customers
New tax structures, good monsoons, the green revolution and
the Administered Pricing Mechanism (APM) have raised
disposable incomes in rural areas

It is ironic that rural people spend so lavishly on weddings,
ceremonies and festivals amidst deficiency.

Today the rural consumer shop for value. It is this income
that the companies are going to tap in the near future.


4) Rising Literacy Levels
4) Rising Literacy Levels
Nearly 45% of rural Indians are literate out of which 59% are
men and 31% are women.

Every year produces 60 lakh literate people.

Farmers are remarkably well informed about the changing
world around them.

The increased enrolment in schools has also generated a wave
of rural demand for lifestyles and aspiration products.

5) Spread of Cable Television
The growth of satellite TV channels has had a major impact on
villagers.
It has led to a change in lifestyle and consumption patterns
Television has high capacity to raise interest levels as it has
greater accessibility compared to other media.
Rural consumers now aspire to buy brands rather than to just
purchase commodities.
Rural employment pattern(Male)
SECTOR % SHARE IN
EMPLOYMENT
(1987)
% SHARE IN
EMPLOYMENT
(2004)
Agriculture 75 67
Transport and
communication
4 10
Trade and hotels 6 8
Construction 8 7
Manufacturing 7 8
Classification of Rural Marketing:
URBAN ---------- RURAL

RURAL ------------ URBAN

RURAL------------- RURAL

Characteristics of
Rural Consumer
Perception
&
Brand belief
Age &
Stages of
Lifestyle
Economic
Circumstances
Personality
&
Self-concept
Occupation
&
Income
Lifestyle
Personality &
Psychological
Factors
UNDERSTAND RURAL CUSTOMER

BELOW 12 YRS
URBAN
RURAL
13-19 Yrs URBAN
RURAL
20-40 Yrs
URBAN
RURAL
40-60 Yrs
URBAN
RURAL
AGE
LIFE-CYCLE
STAGE
RURAL URBAN
Below 12 Child Toys, ice candy, daliya
Video games,
chocolates,
beverages/health
drinks
13-19 Teenage
Bicycle, television,
cinema
Cell phones,
motorcycle, internet
20-40 Young
Motorcycle, telephone,
LPG,
Tailored/unbranded
clothes, local liquor,
haat
Car, PC, branded
clothing, alcohol,
stores/malls
40-60 Middle Aged
Tractor, kisan-credit
card, postal savings,
mela
Luxury car, credit
cards, house, health
insurance, holiday trips
Above 60 Old
Chaupal, playing
cards, pilgrimage
Clubs, theatre, parks
CONSUMPTION BY AGE & STAGES OF LIFE CYCLE
Personality
Sum total of unique individual characteristics that determine
how a person responds to the environment.
Tendency to buy the products which suit our personality.
Self image is the way we perceive ourselves in a society.
In the rural market, purchase depends on situation and
person.eg. Pan Masala in rural, Popcorn in urban
The rural customer is content to satisfy basic
needs.
Persuasion necessary to convince a customer.
Peer pressure not very relevant
High esteem but content with everyday life.

Perception and Brands
Perception plays a major role in purchase
behavior for the rural consumer.
Quality and price influence the perception of the
consumer.
Barrier to level of trial and acceptance of products
Rural customer trusts government services


. A year back HUL started 'Operation Bharat' to
tap the rural markets. Under this operation it
passed out lowpriced sample packets of its
toothpaste, fairness cream, Clinic plus shampoo,
and Ponds cream to twenty million households.
Thus looking at the challenges and the
opportunities which rural markets offer to the
marketers it can be said that the future is very
promising for those who can understand the
dynamics of rural markets and exploit them to
their best advantage.
Project Shakti/Operation Bharat
(HUL) and its constituent companies have been in India since 1931.

Over these decades, while HUL has benefited from the developments in
the country, it has contributed equally to these developments.

HUL has consciously woven India's imperatives with the company's
strategies and operations.

The companys main contributions include developing and using relevant
technologies, stimulating industrialization, boosting exports, adding value
to agriculture and generating productive employment and income
opportunities.

HUL has been proactively engaged in rural development
since 1976 with the initiation of the Integrated Rural
Development Programme in the Etah district of Uttar
Pradesh, in tandem with the companys dairy operations.
This Programme now covers 500 villages in the country.
Subsequently, the factories that HUL continued
establishing in less-developed regions of the country have
been engaged in similar programmes in adjacent villages
.These factory- centered activities mainly focus on training
farmers, animal husbandry, generating alternative income,
health, hygiene and infrastructure development

. The company has acquired a wealth of experience and
learning from these activities

The principal issue in rural development is to create
income-generating opportunities for the rural population.

Such initiatives are successful and sustainable when linked
with the companys core business and is mutually
beneficial to both the population for whom the programme
is intended and for the company.


Based on these insights, HLL launched Project Shakti in
the Year 2001, in keeping with the purpose of integrating
business interests with National interests.

In 2002 2003, LIC sold 50 percent of its policies
in rural India by doing street plays

3 As of rural marketing- Coca Cola

Affordability
Acceptability
Availability.

the traditional village..
where life stands still
waiting..