Classification of Rural Product & Rural Market

Presented By:

Iqbal Ahmad Ansari Pramod Kumar Singh

Rural Quotes
 The future lies with those companies who see the poor as their customers.
CK Prahalad to Indian CEO's, Jan 2000.

 To get rich, sell to the poor .

Pradeep Kashyap
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RURAL MARKETING

Rural Marketing

Course Plan Details

 Issues, Opportunities & Challenges  Rural Marketing Environment

    Defining Rural India Evolution of Rural Marketing Rural Market Structure Size of Rural market

 The Rural Economic Scenario

     Rural Economic Structure Incomes & Consumption Physical Infrastructure Marketing Infrastructure Commercial Infrastructure and Govt. policies

Rural Marketing Course Plan Details  Consumer Behaviour

      Cultural Factors Technological Factors Economic Factors Characteristics of the Rural Consumer Buying Behaviour Patterns Customer Relationship Management and the Trade role

 Rural Market Research

 Planning Rural Research  Field Procedures & Rural realities  Understanding the Rural Market Research Industry

 Segmenting, Targeting & Positioning

 Demographic/Psychographic & Behavioural Segmentation  Targeted/Differentiated Marketing  Identifying/Selecting/Developing & Communicating the positioning concept
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Rural Marketing Course Plan Details  Product Strategy

     Product Concepts & Classification Rural Product Categories New Product Development Consumer adoption process The Role of Fakes

 Pricing Strategy
 Pricing Influences  Pricing Strategies  Role of Retailer & Schemes/Margins

 Distribution Strategy
    Coverage challenges & dilemma Channels of Distribution Existing Distribution Models Emerging Distribution Models
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Rural Marketing Course Plan Details  Communication Strategy

     Challenges in Rural Communication The Communication Process Developing Effective Communication Rural Media Role of Innovative Media

 Innovation in Rural Markets

 Role of Innovation in Rural India  IT Interventions  Emergence of Organised Retailing

 Financial Services in Rural India

 Need for Credit  Sources of Credit  Other Financial Products
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RURAL MARKETING
Issues, Opportunities & Challenges

Rural Market Has Arrived

 742 million people  Rural consumption is bigger than urban
 FMCG's  Durables     53% 59% Rs Rs Rs Rs
Source: NCAER

 Estimated annual size of the rural market

FMCG Durables Agri-inputs (incl. tractors) 2 / 4 wheelers 65,000 Crore 5,000 Crore 45,000 Crore 8,000 Crore

 Total

Rs 1,23,000 Crore
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Rural Market Has Arrived

 Some impressive facts about the rural sector.
 In the first 6 months of 2005-06, rural India bought 30 lakh Life Insurance policies  Of two million BSNL mobile connections, 50% in small towns/villages.  Of the six lakh villages, 5.40 lakh have a Village Public Telephone (VPT). Additionally there are 2 lakh PCOs 90% of villages covered.  By end 2007, there are likely to be 11.05 crore rural phone subscribers  For every Re.1/- per quintal increase in the Procurement Price for grains, Rs. 170 crores added to rural economy
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Rural Market Has Arrived

 55.6 million Kisan Credit Cards issued (against 60 million credit-plus-debit cards in urban) resulting in tremendous liquidity.  Of HHs earning Rs. 20 lakh + per year, 34% in rural India. Also 15% of India s crorepatis  42 million rural HHs availing banking services in comparison to 27 million urban HHs.  Investment in formal savings instruments: 6.6 million HHs in rural and and 6.7 million in urban  Over 50% of HLL s Rs. 11700 crore sales turnover is from rural markets

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RURAL TARGET MARKETS - CLASSIFICATION

0.8 1.6 26.8 41.3

Very Rich Consuming Class Climbers

54.7

63.3

25.0

14.7

Aspirants Destitutes

20.9 2001 - 02

12.2 2006-7
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Issues In Rural
    Distribution Understanding the rural consumer Communication Poor infrastructure

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Rural Consumer Insights

 Rural India buys
 Products more often (mostly weekly).  Buys small packs, low unit price more important than economy.  Distribution and pricing are the mantras to success in rural India.

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Rural Consumer Insights

 In rural India, brands rarely fight with each other, they just have to be present at the right place.  Many brands are building strong rural base without much advertising support.
 Chik shampoo, second largest shampoo brand.  Ghadi detergent, second largest brand.

 Fewer brand choices in rural : number of FMCG brands in rural are half that of urban.  Buy value for money , not cheap products
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Infrastructure Improving Rapidly

 In 50 years only 40% villages connected by road, in next 10 years another 30%.  More than 90 % villages electrified, though only 44% rural homes have electric connections.  Rural telephone density has gone up by 300% in the last 10 years, every 1000+ pop is connected by STD.
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Media Reach Improving Rapidly

 70% of R1,R2, R3 can be reached 70 through mass media.
53 41

21 14

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Satellite TV

Radio

Press

Cinema

TV

All Media

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Climbing Social Indicators

Between 1981 to 2001  Number of pucca houses doubled from 22% to 41% and kuccha houses halved (41% to 23%)  Percentage of Below the Poverty Line families declined from 46% to 27%  Rural Literacy level improved from 36% to 59%

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Government Spending in Rural

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Opportunity & Challenges

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Marketing Opportunities
 Low penetration rates in rural
% of rural HH

Durables
 TV  Refrigerator  Mobile Phones

Urban
30.4 33.5 40.0

Rural
4.8 3.5 12.0

Total
12.1 12.0 18.0

FMCGs
 Shampoo  Toothpaste

Urban
66.3 82.2

Rural
35.2 44.9

Total
44.2 55.6

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Challenges in the Future

 Reaching the product to remote rural locations and entering more rural homes (penetration)  Increasing rural incomes (market growth)

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Challenges in the Future

 Making effective use of the large available infrastructure
      Post offices Haats (periodic markets) Melas (exhibitions) Mandis (agri markets) Public distribution shops Bank branches 1,38,000 42,000 25,000 7,000 3,80,000 32,000

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Challenges in the Future

 Proliferation of large format rural retail stores
     Haryali stores M & M Shubh Labh stores TATA/Rallis Kisan Kendras Escorts rural stores Warnabazaar, Maharashtra (annual sale Rs 120 crore)
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An interesting Option - RURBAN

 Describes the clusters of migrants from rural to urban geographies  Rural psychography living in an Urban demography  Strong purchasing power because despite lower incomes, low wasteful expenditures  Become carriers and promoters of brands into rural geographies on their annual trip back home
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