Rural Marketing

Prof.Vidhya Srinivas
Defining Rural India
Organisation Definition Limitations
NSSO rural not defined
( Census) Population density < 400 / Sq Km
75 percent of the male working
population is engaged in agriculture
No Municipal corporation / board

Planning Towns upto 15,000 population are Town characteristics

Commission considered rural not defined
 Contd
LG Electronics All places other than the Only clarifies what are
7 metros the cities

NABARD All locations with a Village & town

population upto 10, 000 characteristics not
considered rural defined

Sahara Commercial Population

establishments located in characteristics unknown
areas servicing less than
1000 population

Source: The Rural Marketing Book- Text & Practice, Kashyap. P and
Raut. S ( 2007)
Defining Rural Marketing
National Commission on NGOs Corporate Rural
Agriculture Marketing Definition

Decisions to produce Marketing products Function that manages

saleable farm produced in rural areas all activities involved in
commodities involving to urban areas assessing, stimulating
all the aspects of the and converting the
market system or Marketing products purchasing power of
structure, both functional produced in rural areas rural consumers into
and institutional, based in rural markets effective demand for
on technical & economic specific products and
considerations and services to create
includes the pre & post satisfaction & a better
harvest operations. standard of living for
achieving organizational
goals.
Phases in Rural Marketing
Sr. No Time Frame Key Events & Trends

1 Phase One( Pre 1960s) Marketing rural

products in rural and
urban areas
Agricultural inputs in
rural areas
Agricultural
marketing
Farming methods were
primitive and
mechanisation was low
Markets unorganised
Contd
2 Phase Two ( 1960s to 1990s)
Green Revolution
Companies like
Mahindra and Mahindra,
Sri Ram Fertilisers and
IFFCO emerge
Rural products were
also marketed through
agencies like KVIC

3 Phase Three( 1990s to Present) Demand for

consumables and
durables rise
Companies find growth
in urban markets
stagnating or falling
Indian Rural Markets :
Overview
Rural India accounts for almost 70 per
cent of the population as the recent
Census 2011 indicates that of the 1.21
billion population, 833 million live in rural
India.
The rural segment of the Indian economy
is growing at a pace of 8-10 per cent per
annum and is anticipated to add new
consumption of US$ 90 billon-100 billion
over 2012-2017 to the current base of
US$ 240 billion-250 billion.
Indian Rural Markets :
Overview
Moreover, the growth of rural
India is largely attributed by
increasing awareness about need
of education. According to the
ASER (2012) report, private
school enrolment in rural India
has enhanced by 5.5 per cent
points over past six years. The
literacy rate has also gone up by
68.91 per cent in rural India.
Retail in Rural India
DCM Shriram's rural retail arm
Hariyali Kisaan Bazaar (HKB) is
planning to open 10 outlets in
2012. It is India's biggest rural
retail chain by sales and operates
230 stores across eight states.
HKB is also planning to partner
with mobile telephone companies
to provide farm and commodity
advisory services to the farmers
 FMCG in Rural India
Higher disposable income in the hands of
rural households along with massive
advertisements by the market players,
would take rural FMCG market from
current Rs 87,900 crore (US$ 18 billion) to
a market size of over Rs 106, 300 crore
(US$ 21.64 billion) by 2012, according to
a study by an industrial body. This entails
a compounded annual growth rate
(CAGR) of 10 per cent in totality for rural
and semi-urban areas.
FMCG in Rural India
Indian FMCG veteran Dabur is planning to
double its rural reach by rolling out its new
rural distribution strategy in 2012. Similarly
Godrej Consumer (dealing in hair colour,
soaps, toiletries and liquid detergent
segments) has realised the potential of rural
markets as it can notice a vast difference
between its sales volume in urban and rural
areas.
Similarly, paint companies, which used to rely
on cities for growth in sales, are now launching
low-cost emulsions to suit needs and
preferences of rural consumers
 Automobiles
Automobile makers are targeting Indian consumer
market in a big way, in search of potential car buyers.
Rural India accounts for almost 35 per cent of the
automobile industry sales.
While Ford is dedicatedly working with its retail banking
partners to target the rural customers, General Motors has laid
renewed focus on its rural marketing initiatives
Toyota is also planning to strengthen its rural reach and set up
additional 25 outlets in semi urban and rural areas in 2012
Hyundai offers customized finance schemes to its rural
customers and encourages its dealers to open more sales
branches in smaller markets. The company already has 340
dealerships and over 1,000 rural sales outlets which it plans to
enhance further in 2012
Consumer Durables
India's consumer durables market is anticipated
to expand by 40 per cent in 2011-12, according
to a study by an industrial body. Diversifying
across water purification, vacuum cleaning,
home security and air purification, Eureka
Forbes has launched one-of-its-kind solar bulb in
India under the brand name 'EuroDiya'.
Eurodiya is taken as an alternative to kerosene
lamps which are used in villages.
In recent years, rural India has also witnessed
exclusive launch of solar-powered lanterns and
light emitting diode (LED) lights from companies
like Philips and Mirc Electronics (of Onida fame).
Internet and e-Commerce in Rural India

According to eBay Census 2011, rural

India accounted for 9 per cent of the
purchases made online between July 1,
2010, and June 30, 2011. Another report
by Google stated that in 2011, over 70 per
cent of search happened in non-metros.
Thus, such data reveal the fact that rural
consumers are increasingly becoming
aware of internet usage and are adopting
new, sophisticated communication
technologies with open arms.
 BPO in Rural India
Rural business process outsourcing (BPO) units
account for over US$ 10 million towards India's IT-BPO
revenues. Many big IT-BPO companies in India are
getting attracted towards hinterlands due to
availability of immense untapped talent and lower
costs. Attrition rates in rural areas are just about 3-5
per cent as against a high of 50 per cent in urban
BPOs. Employee costs in rural BPOs is almost half as
against that of urban BPOs which bring overall
operational costs down by almost 30-40 per cent for
IT companies. Nasscom has further stated that
employee base in these areas would expand by over
10 times by 2013-14 from 5,000 in 2009-10.
BPO in Rural India
Wipro BPO, the BPO arm of Wipro
Technologies had launched its first rural BPO
centre at Manjakkudi Village in Tamil Nadu in
August 2011. In October 2011, Infosys BPO
had inked an agreement with the
Government of Andhra Pradesh to open rural
BPO centres in 22 districts. Rural Shores is
another firm that had opened a BPO centre in
Bagepalli district of Karnataka and serves
over 20 clients including HDFC, Infosys,
Wipro Technologies and Genpact. It aims to
recruit more than 10,000 youth by 2014.
Rural Marketing Strategie
s
RURAL MARKETING
In the India context, the word RURAL
is so much associated with agriculture
and farmers that rural marketing tends
to be seen as a marketing of inputs or
outputs related to agriculture.
 What is Rural Marketing?
Rural marketing is a function which manages
all those activates involved in assessing,
stimulating and converting the purchasing
power into an effective demand for specific
products and services, and moving them to the
people in rural area to create satisfaction and a
standard of living to them and thereby
achieves the goals of the organization.
Attractiveness of rural market
Rural markets have become the new targets to
corporate enterprises for two reasons :
1. Urban market has become congested with
too many competitors.
2. The market have reached a near saturation
point.
Rural Market Structure
3/4th of a Billion are rural
3/4th of the rural homemakers in India are
illiterate and only 10% have attained the
secondary level of education.
Rural Housing pattern
Occupational Pattern
Changing Rural consumer expenditure
Pattern
Social and Cultural Environment
PEST
Rural Customer Profile
Changing life styles : Customs, Norms,
Traditions, regional influences, family,
roles and status, roles of women
Changing exposure levels : literacy,
homemaker literacy, TV cable ownership,
Cable and Satellite penetration
Changing Consumption Patterns : Colour
TV, Refrigerators, Motorcycles, Packaged
oil, biscuits, chocolates, Shampoos, Skin
and face creams, Utensil cleaners,
Toothpaste/powders
Why go Rural?
Proliferationof brands in urban
High saturation levels in urban
Greater awareness of brands in
rural
Ever-growing aspirations in rural
No effects of slow down on
rural markets !
Government Spending in
Rural
ALL RESULTING IN FARMERS
INCOME RISING
Tremendous opportunities for
existing and new brands to enter
rural markets
Size of Rural Markets
FMCG Rs.65000 crore
Agri-inputs Rs.45000 crore
Durables Rs.5000 crore
Automobiles (2 & 4 Wheelers) Rs.8000 crore
Clothes, footwear etc. Rs.35000 crore
Construction material Rs.15000 crore
Total Rs.173000 crore
Source: CII Report (2008)
Building Brands in Rural
India
Contrary to popular belief people
in Rural India are fiercely brand
loyal
Single Brand Villages
Once converted, difficult to
dislodge them
First mover advantages
Pitfalls of Building a Brand
in Rural India
Merely stripping down all the so-called frills
from the product currently being sold in urban
Just extending the brand name to low cost
packs, thus making it cheaper for rural.
Merely modifying the packaging marginally.
Eg: add the brand name in Vernacular
languages, use cheaper packing material
Adapt the urban advertising by dubbing the
film in the local language, translate the print
material
Offer meaningless sales promotion giveaways
eg. Combs, spoons, tumblers, etc. FREE
Route to Brand Building in
Rural
Build customisation
Chotukool from Godrej Boyce, a nano
refrigerator (43 litres cool box loaded
from top)
Co-created using suggestions from rural
women and sold by rural women
 Of the 25 million
customers added in the
Apr-June quarter, 8
million are from rural
areas!
70 million mobile users in
villages (out of a total 300
million) compared with 40
million in September 2007
(out of 209 million).
Nearly 75 per cent of
mobile users in villages
are now owned by private
operators.

Mobile Penetration
Route to Brand Building in
Rural
Build Empathy / Relevance
Nokia Life Tools for farming and rural
community
Agri information to farmers in association
with Reuters
Imparting of knowledge of English language
to students by teaching one new word every
day
Build Recognition

Rural folks understands symbols

and colours better.
Pahelwan Chap MRF
Haathi Beedi
Laal Sabun Lifebuoy
Peela Powder - Nirma
Fake Brands
This also leads to duplicates and
spurious products
Largely sold in the Haats (weekly
markets) in Rural India
Rs.12000 crore p.a. is the estimated
loss to FMCG sector
Parameters for Fake
Features Duplicates Spell alikes Look alikes
Brand name Original Misspelt Different
Pack Replica Identical Similar
Appearance
Manufacturers Original Incomplete Owners name
add
Price M.R.P 40% low 10-15% low
Margins 200-300% 100-150% 60-70%
Quality Very Poor Poor Reasonable
Intention of To cheat To mislead To free load
retailer
Consumers Unaware Unaware Want cheaper
products
Identify None Only literate Majority
Offer None Discounts Schemes
 Build Access

Distribution in rural India is not a

nightmare
For FMCG reach villages (feeder
markets) in towns with population
10000 to 15000
For consumer durables reach towns
with population of 50000+ and also
Look at opportunities in haats, melas,
post offices, public distribution system
etc.
Build word of mouth

Through effective communication

using specific communication
package aimed at specific rural
audience
Opinion Leaders
Demonstrations
Build word-of-mouth
Importance of opinion leaders
Educated village youth as opinion
leaders
Women and children as demand
generators
Customised events targeting specific
groups with focused communication
 Rural
Rich

Aspiring
Middle Class

Bottom of the
Pyramid
 Ideal Media Strategy for Reaching
Rural Audiences

Rural Cinema
Mass Media Radio
RURAL
Plus MASSE TV
Direct Marketing Opinion S Un-
Efforts Leaders conventional
Media Focused
Events
Other Points to Remember
Understanding the Characteristics of
the Rural Masses
Very intelligent and clever cannot
be easily hoodwinked.
Daily activity is routinised
Plenty of time / No Sundays
Very conscious of value for money
Understanding the Characteristics of
the Rural Masses
Does not like to pay extra for frills he
cannot use.
Eg. Colour TV
High involvement in any product
purchased
Eg. Durables
Characteristics
Perceptions, traditions, values
vary from state to state and in
some cases from region to region
within a state.(MRF Bullock Cart
Tyres)
Divisions based on caste,
community and other hierarchical
factors continue to exist.
So how do we communicate with the Rural Folks?
Amitabh Bachchan
 Rural Communication
Keep the communication simple
No scope for gimmicks
Taketime in communicating the
message
Quickies have no impact.
Think in the local language to
capture the local spirit in the
communication aimed at specific
region.
Rural Communication
Demonstration a key element
for success
Shampoo Demonstration
 Dalda
Vanaspathi
Demonstration
Demonstration
Analogies help in better comprehension.

Examples
Mahindra tractors
Lifebuoy Soaps
Rural Communication
Television does not distinguish
between urban and rural
You may be able to get away with
a common TVC for both urban and
rural audience particularly for
FMCG products provided your
communication is not
gimmicky, suggestive and is
easy to comprehend.
Rural Communication
But when it comes to Durables, where
rational decisions are involved, it is
advisable to target the opinion leaders
first.
While urban oriented TVC may register
with opinion leaders and help create
awareness, for real impact down the
line, a region specific and need specific
communication programme has to be
devised which provides for
demonstration and touch & feel of the
products.
Important
Rural Urban Divide in terms of
communication continues to exist
Hence need for different
communication packages focused
on rural audience
Examples of different treatment for
urban and rural

Philips Consumer Electronics

Division
Leprosy Eradication Programme
Lessons from the Success of
regional brands in recent times
They understand the regional
ethos better
They satisfy a perceived local need
Their communication touches a
chord which helps in brand
acceptance
They are flexible
Adapt to changing market situations
Eg. Anchor, Gadi, Ajanta,
Cavinkare (Chik), Power,
Goldwinner, Arasan
Small is BeautifulKISS
Ifyou are small with limited
budgets start by concentrating on
smaller areas
Outdoor / local Cable TV / Radio /
participate in local festivals etc.

Even Nirma started very small

Today it is a Rs.2000 plus crore
company!
Videos and case
presentation
Hariyali ppt
Hariyali video 1
Amul as an excellent
example
Video 1
Video 2
Shakti AmmaHUL
Thank You!!!