GOOD AFTERNOON

RURAL MARKETING: INTRODUCTION

Discussions for this Session:

SYLLABUS & EVALUATION PATTERN What is Rural Markets (RM)? Definition, Nature & Significance - Myths. Factors that contributed to RM changes. Problems in RM. ( 4 As) Rural Vs. Urban Marketing.

Defining What is Rural Markets?

The Census of India defines: Any habitation with a population density of less than 400 per sq.km where at least 75% of the male working population is engaged in agriculture and where there exists no municipality or board, as a rural habitation. Facts & Figures: As per 2001 Census, India has more than 20,000 villages. 5000-10000 population are rural areas/villages. The majority having rural institutions, agricultural markets and rural banks are termed as large villages. If population crosses the above figure / change in occupation, consumption and buying behavior term it as semi-urban setup or transition setup.

 Other definitions: L.G. Electronics defines any population centres other than the seven metros as semi-urban or rural. Hindustan Unilever, ITC, and most FMCG sector defines a rural setup up to 20,000 population. Durables and agricultural inputs companies set this limit as 50,000.

Evolution of Rural Marketing

The rural environment in India is undergoing a massive change:
There is significant growth in purchasing power, change in lifestyle, increase in brand consciousness, Change in consumption pattern, Improvement in infrastructural facilities. And spread in communication facilities. DARK ECONOMY TO VIBRANT ECONOMY

 PHASE I: (Prior to the 1960s)

Rural Marketing referred to as rural products in rural and urban areas, and agricultural inputs in rural markets. (agricultural marketing). Agricultural produce such as food grains and industrial inputs like cotton, oilseeds and sugarcane were the primary products marketed during this period. Traditional farming methods. Marketing of products of black smith, carpenters, and potters were of less importance. Unorganized Market.

 Green Revolution - scientific farming practices. Better irrigation facilities, and application of implements etc, resulted in an exponential growth in agricultural production, White Revolution initiated by government diary development policy and producers cooperatives and moving processed milk to urban demand centres, etc Changed the contents of rural markets. Next

PHASE II: (1960s 1990s)

 A new area marketing of agricultural inputs emerged. This phase saw the growth of companies such as: 1.Mahindra & Mahindra, 2.Escorts, Eicher, 3.Shriram Fertilizers (now called DCM Shriram Consolidated Ltd.), and 4.Indian Farmers Fertilizer Cooperative Limited (IFFCO).

 Marketing of rural products received considerable attention through agencies like the KVIC (Khadi and Village Industries Commission), Bunkar (weavers) societies, and handicrafts emporia. Governments support for exhibitions and Gram Shree Melas and Shilp Melas, resulted in the inflow of products like handicrafts, handloom textiles, leather products, etc into urban markets on a large scale. It was in this period that a few FMCG companies began establishing a distribution network in rural segment.
In 1970s NIRMA first company to initiate and produce for rural consumers. Others were Usha, Philips, etc for home appliances.

PHASE III: (1990s 2000)

The first two phases, the marketing of consumables and durables to rural markets was not considered seriously. The prime reasons were:
The growth of urban markets during this period kept markets busy. The potential of rural markets was not visible. The existing rural markets for these products were not sizeable enough to attract the attention of urban marketers. The poor infrastructure made rural less accessible.

 From 1990s Industrial sector gained strength and maturity. A new service sector emerged, signifying the transition of an agricultural society into an industrial one. Plan outlay of central and state governments for rural development accelerated socio-economic progress. Economic reforms further accelerated the process by introducing competition into the markets. Led to growth of rural markets for household consumables and durables.

 In Phase III, most companies (both Indian and Multinational) began realizing the enormous potential of rural markets, brought about by a saturation in urban markets. Importance of rural markets with pro-rural initiatives of government and arrival of global and Indian corporations with customized offerings for rural markets.BEGAN.

PHASE IV: (After 2000)

Some of the Initiatives like Project Shakti (HUL) and e-Choupal (ITC) brought rural marketing a centre-stage in this phase. Urban to rural focus. FMCG companies such as HUL, Godrej Consumer Products, Dabur, Marico and ITC have planned for increased visibility and have hired people in rural areas and small towns to establish local connections. Durables companies like LG and Samsung employed rural thrust.

 Automobiles companies like Maruti, Hero Honda and Bajaj planned for affordable price range. GE, Intel, Shell Foundation, Microsoft and HPCL plan to enter RM with low-cost technologies. Reliance with Mobile connections. Private Insurance companies initiate to enter with new products. HUGE INTIATIVES The market size of rural India is expected to increase from USD 0.5 trillion to USD 1 trillion by 2020.

 The pace of migration from Rural to Urban is shrinking since 1980s. NREGS led to earning possibilities. Reverse migration possible. Though urban population will rise, the decline of village population will be marginal (mild) consistent till 2020. Nearly two-third of the population will settle in village itself as per predictions. Rural India is an Agrarian Economy: Rural India is no longer agrarian economy. Higher incomes have decreased the dependence of agriculture and more towards non-farm sector. (40%-60% to 30%-70% respectively). Evolving Rural Consumer: The rural consumer is becoming more literate and value driven. The greatest change is taking place amongst the rural youth, who are rapidly getting exposed to urban products and services.

RURAL MYTHS Rapid Urbanization:

RURAL MARKETING MIX Challenges

4 Ps of marketing strategy was for Urban Markets. 4 As of marketing strategy is for Rural Markets. Affordability: Rural customer is driven by value proposition (not just by cost). It is important to realize that creating an affordable product or service is not just low-cost-low-quality version of urban. Availability: It is one of the challenge. Products or Services should reach small towns. Retailers themselves transport to village level. Innovative distribution channels like project shakti will overcome the problems. Awareness: Access to media (TV) is more in rural. Others to be done is wall paintings, vans, road shows and nautankis in local languages will help.

 Acceptability: Acceptability of a product or service vis-vis rural consumers is critical. Product designed for urban cannot be for rural. Rural Environment should be borned in mind. Greater versatility and adaptability to rural conditions will have an advantage over others. For example: Once Chinese models mobile phones low cost, durable, easy to use, built-in-torch, loudspeakers (in no electricity conditions). SIZE OF TARGET RURAL CONSUMER SEGMENT AND COST IMPLICATIONS NEED TO BE CONSIDERED FOR A SUCCESSFUL COMPANY.

STARTLING FACTS ABOUT RURAL INDIA.

200 million rural mobile users, more than the total number of subscribers in Brazil. 14 million connections in rural areas, out of a total 20 million. 87 million Kisan Credit Cards issued, which exceeds the total number of (credit + debit) cards in urban areas. 11% car sales coming from rural areas and small towns.

There are 42000 rural supermarkets (haats) in India, which exceed the total number of retail chain stores in the US (35000).

 Rural Vs Urban Marketing ? Consumers:

Location Literacy Income Expenditure Needs Innovations

Others: Demand Price Sensitive Distribution Channels 4 Ps.

 THANK YOU