Rural Marketing

Unit 1
The future lies with those companies who see the poor as their customers.
CK Prahalad to Indian CEO's, Jan 2000.
The Chapter Focus

Evolution of Rural Marketing

Rural Market Profile
Evolving Rural Consumer
Rural Marketing Research
Defining Rural Markets
Any habitation with a population density of
less than 400/sq.km
75% of the male working population is
engaged in agriculture
Where there exists no municipality or boards
Population is less than 5000 (RBI: <10000 is
rural irrespective of whether village or town;
Planning Commission:<15000)
LG Electronics: All population centres other
than 7 metros are either rural/semi urban;
FMCG: <20000 is rural; Durables and agri
input companies<50000 population is rural
Evolution of Rural Markets
Slow down in Urbanization- In 2010, The UN
population database revealed very slight
increase in urban population as compared
to the increase in rural population
Likely hood of reverse migration; availability
of jobs in rural areas during agri lean
months
By 2020, two-thirds of countrys population
will continue to live in villages
Growth in Non-Farm Income: Rural India is no
longer an agrarian economy.
Non farm sector accounts for higher incomes in
rural India (60% in 2010 and 70% by 2020)
Multiple sources of income for a household
is the norm
One member is involved in agriculture as a
owner /daily wage laborer. Other members may
run a shop/business
Constant stream of income/ buffer from
risks/rise in overall increase in household
income/Resilient to fluctuations in rainfall
Evolving Rural Consumer
The rural consumer is no longer illiterate/poverty
stricken/ fearful of change/ reluctant to spend
Rural consumer today is value driven
Will purchase stuff that can increase earning
capability (mobile phones) or enhance status (ready
made garments/computers/education)
Better road infrastructure
Rural youth- most educated and savvy of all rural
consumers; emulate their urban cousins;
demanding of same high quality products and services
Rural area- children and not mothers are the decision
makers of health drinks (Pester Power)
Changing cultural and social norms- Nuclear
families creating new roles for women;
There are 7 million SHGs and 70 million SHG
members (one SHG member/2 rural
households)
50% reservation for women in the Panchayati
raj
SHG members attend federation meetings in
nearby towns
Women are evolving as decision-makers for all
household purchases- food items, soaps,
cooking utensils
The Booming Middle Class
200 million rural mobile users (more than total
number of subscribers in Brazil)
14 million DTH connections out of total 20 million
87 million Kisan Credit Cards (exceeds total credit +
debit cards in urban areas)
Rural India is growing faster than urban India. Durables
(25% vs 10% urban growth) and FMCG(18% vs 12%
urban growth)
11% car sales coming from rural areas and small towns
42000 rural supermarkets (haats) in India which
exceed total number of retail chain stores in the
U.S(35000)
Evolution of Shampoo Industry
Rural Market accounts for 56% of Indias total income
Accounts for 64% of expenditure and 33 % of savings
Increased demand for and access to new goods and services-
Better connectivity by road (67% of villages connected by all
weather roads) by phone (30% tele density), and access to
mass media.
Increased electrification (60%) has opened up markets for
durables.
Future income- rural population earning b/w 1 to 5 dollars will
increase 3 fold.
Population with more than 5 dollars per day (INR 33000/month )
holds a lot of promise for marketers)-own house/food
grown/subsidized healthcare and education leading to high
disposable income.
Rural employment guarantee scheme/ better monsoons
and two-fold increase in the support price of food grains
Trend- Shift to cash crops/food basket of the
world/integration of rural and small towns with urban area
The Evolution of Rural
Marketing
The Rural Marketing Mix: Challenges
Affordabiltity-The per capita rural incomes are only half of
urban incomes. Value driven and not cost driven.
E.g: Max Vijay (Life insurance)
Availability- 6.38 lakh villages spread over 3.2 million sq.km;
Need to target small towns. Further distribution strategy not
required.
Which small towns to target- small town index (attractiveness
rating required)
Innovative distribution reqd- HUL Shakti model, colgates
(Heinz, Eveready )bicycle entrepreneurs. Medentech
/MART- Aqutabs
Awareness-Low levels of literacy; Alternate communications via
wall paintings, vans, road shows, and nautankis in the local
language
Acceptability- Urban products need not succeed in rural markets
Productive assets preferred to consumption asset
E.g. Chinese mobiles-Low cost, durable, music, radio, built-in torch