Rural Marketing

Transforming Present Challenges into Global Prosperity Sourabh Jain

Contents

Introduction Need of Rural Marketing Challenges of Rural Marketing Going Rural Opportunities of Rural Marketing Strategies of Rural Marketing Conclusions

C.K Prahalad while addressing to Indian CEOs 2000 said The

future lies with those companies who see the poor as their customers

What is Rural Marketing

It involves delivering manufactured and processed inputs or services to rural consumers or producers

Need
The growing saturation of the urban market has compelled the corporate houses, both national and international, to look into the immense potential of the rural India for their survival and future growth

Challenges
Physical Distribution Promotion and Marketing Communication Understanding the rural consumers Transportation Storage and warehousing facility Diversity Spurious Brands Outlets Capital Crunch

Physical Distribution
Size of village (based on population) Less than 200 200 499 No. of villages in group 1,50,000 1,68,000

500 999
1000 1999

1,32,000
87,973

2000 - 4999
5000 and above

36,005
6300
*Rural development statistics

Promotion and Marketing Communication

About 43% of rural India is out of reach of media coverage. Poor media penetration contributes to keeping vast majority of rural consumers unaware of genuine brands. Only about 10% of villages have access to satellite television. The print media is having a narrow scope due to lower rate of literacy.

Transportation
Efforts are being made to improve the road connectivity but many of the villages dont have such connectivity. The reach of the railway network is limited. About 2% of the villages are being directly connected to railway station.

Spurious Brands
These markets are abounding with spurious brands. These are almost identical in appearance with the original products even the names may sound similar. For example Use of Parile-G instead of Parle-G. These features are difficult to be identified by consumers and in fact more difficult by villagers. FICCI takes on spurious drug makers 'Raids reveal loopholes in distribution network as shown in the picture

Going Rural - 1

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.

Going Rural - 2
One more example, which can be quoted in this regard, is of HLL. A year back HLL started Operation Bharat to tap the rural markets. Under this operation it passed out low priced sample packets of its toothpaste, fairness cream, Clinic plus shampoo and ponds cream to twenty million households

Population Distribution
Distribution Total Population 102,7015,247 Population% 100

Rural
Urban

741,660,293
285,354,954

72.22
27.78

Source - NCAER 2002

Rural Income
According to National Council for applied economic research, there are as many middle income and above households in rural areas as there are in the urban areas in 2006-07.

There are almost twice as many lower middle-income households in rural areas as theyre in urban areas. At the highest income level there are 2.3 million urban households as against 1.6 million households in rural areas. The purchasing power of rural India is on the rise and it has been expected to grow at 3-4% per annum.

Life cycle of rural vs. urban product

Product Popular soaps Soap cake bars Batteries Urban Maturity Decline Decline Rural Growth Maturity Growth

Talcum Powder

Maturity
*ORG database

Growth

Low Penetration
FMCG Urban Rural Total% of Rural

Shampoo Tooth Paste

66.3 82.2

35.2 44.9

44.2 55.6

Marketing Strategies Adopted

Product Strategies Packaging Strategies Customer value Strategies Promotion Strategies Distribution Strategies

Product Strategies
Rural consumers do not show the same behavior of purchase for all products. Those companies which are able to convert rural consumers from purchasers of commodities into buyers of specific brands will be successful.

Packaging Strategies
Packaging is defining new paradigms in rural marketing, making it perhaps the most important component in the marketing mix. Innovative packages are packages to add value to the premium products. Innovations which help to lower the price are desirable. Company which desire to establish themselves in rural market should introduce small packs and combo packs

Customer Value Strategies

Unlike urban consumers, rural consumers are price sensitive rather than brand conscious. They are more concerned about functional benefits of the products and the value for money they pay. Hence companies desirous of entering rural market should launch economy products

Promotion Strategies
Designing rural promotion strategy is a challenge. Whether to utilize universal approach to reach rural and urban or differently tailored approach for rural marketing is the first question to be answered. In the rural context, personal one-to- one communication is effective. So the companies can establish this through sales persons and mailers

Cont
Newspaper and magazine advertisement have limited scope in rural areas. Compared to these live demonstrations, programs like story telling or skits will be a powerful media. Apart from these wall paintings, posters, publicity vans, hoardings and audio-visual publicity can also be used. One very fine example can be quoted of Escorts where they focused on deeper penetration. They did not rely on TV or press advertisements, but rather concentrated on focused approach depending on geographical and market parameters like fares, melas, etc.

Cont
ITC is setting up e-Choupals, which offers the farmers all the information, products and service 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.

Distribution Strategy
Considering the vastness of the rural market distribution is an important challenge. One of the ways could be using company delivery van which can serve two purposes - it can take the products to the customers in every nook and corner of the market, and it also enables the firm to establish direct contact with them, and thereby facilitate sales promotion. However, only the bigwigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between noncompetitive marketers can be established to facilitate distribution.

Conclusion
The Indian rural market has grown in size, range and sophistication. The limited success already achieved is like an eye opening for both the Industrial and service sector. What is needed is for the Industrial and service sector to extend its horizon, not thinking of short term profits but aiming at long term profit.

Cont.
While there are still miles to be transverse, there has definitely been improvement, and a significant improvement at that, in some pockets. Rural market can still go a long way with the support and cooperation of government, public and the persons engaged in rural marketing. It is now a question of willingness and motivation, rather than technological challenges that are holding things aback at this point.