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Rural

Marketing

Presented by:
Bulbul Sharma
Tanvi Gupta
Contents
 Rural marketing
 What makes rural marketing
attractive
 Myths about Rural Market
 Challenges and Strategies for
Rural Marketing
 Case Studies
 LG

 ITC e-Choupal

 Conclusion
Rural Marketing
 On account of green revolution, the rural areas are consuming
a large quantity of industrial and urban manufactured products.
Thus a special marketing strategy emerged known as Rural
Marketing.

 Rural Marketing involves delivering manufactured or


processed inputs or services to rural producers or consumers.
What makes Rural marketing
attractive
 Untapped rural potential

- 6,27,000 villages across the


country

- account for 70% of


population

- 60% of National demand


for various product
categories
Expansion of middle income household

-According to NCAER study, there are as many 'middle


income and above' households in the rural areas as there are in
the urban areas.
-There are almost twice as many 'lower middle income'
households in rural areas as in the urban areas.
 Improvement in Social Indicators
-No. of “pucca” houses doubled from 22% to 41%

-No. of “Kuccha” houses halved from 41% to 23%

-Percentage of BPL families declined from 46% to 27%

-Rural literacy level improved from 36% to 59% in past two


decades
Improvement in Infrastructure

- In 50 years,40% villages have been connected by road,


in next 10 years another 30% would be connected

-More than 90% villages are electrified, though only 44%


rural homes have electric connections

-Rural telephone density has gone up by 300% in the last


10 years
Low penetration rate
-Low penetration rates in rural areas, so there are many
marketing opportunities –

Durables Urban Rural


CTV 30.4 4.8
Refrigerator 33.5 3.5
FMCGs Urban Rural
Shampoo 66.3 35.4
Toothpaste 82.2 55.6
Myths About Rural Market

 Rural Market Is a Homogeneous Mass

 Disposable Income Is Low

 Individuals Decide About Purchases


Myth 1: Rural Market Is a Homogeneous Mass

 REALITY
 Heterogeneous population

 16 languages

 State wise variations in rural demographics


 Literacy (Kerala 90%, Bihar 44%)
 Population below poverty line (Orissa 48%, Punjab 6%)
Myth 2: Disposable Income Is Low

 REALITY

 Number of middle class HHs (annual income Rs 45,000-


2,15,000)
 Rural 27.4 million
 Urban 29.5 million

 Per Capita Annual Income


 Rural Rs 9,481
 Urban Rs 19,407
 TotalRs 12,128
Source: NCAER,2002
Myth 3: Individuals Decide About Purchases

 REALITY

 Decision making process is collective

 Purchase process-influencer, decider, buyer, pays can


all be different. So marketers must brand message at
several levels

 Rural youth brings brand knowledge to HH


Challenges and Strategies

 Availability

 Affordability

 Acceptability

 Awareness
Availability

 Challenge:

 Regularly reach products to the far-flung villages.

 India's 627,000 villages are spread over 3.2 million sq


km; 700 million Indians may live in rural areas
 Strategies

 Strive to reach at least 13,113 villages with a population of


more than 5,000

 Trade off the distribution cost with incremental market


penetration.

 Can reach the rural market by the following ways:


`
Contd….

 Hindustan Lever, to serve remote village,use autorickshaws,


bullock-carts and even boats in the backwaters of Kerala.

 Coca-Cola, has evolved a hub and spoke distribution model to


reach the villages. To ensure full loads, the company depot
supplies, twice a week, large distributors which who act as
hubs. These distributors appoint and supply, once a week,
smaller distributors in adjoining areas.
Affordability

 Challenge: to provide at cheaper price

 Strategies:

 Introduce small unit packs.

 Godrej introduced three brands of Cinthol, Fair Glow and


Godrej in 50-gm packs, priced at Rs 4-5 meant specifically
for Madhya Pradesh, Bihar and Uttar Pradesh — the so-
called `Bimaru' States.
Contd….

 Coca-Cola has addressed the affordability issue by


introducing the returnable 200-ml glass bottle priced at Rs 5.

 Hindustan Lever, has launched a variant of its largest selling


soap brand, Lifebuoy at Rs 2 for 50 gm.
Acceptability

 Challenge: to gain acceptability for the product or


service

 Strategies:

 Offer products or services that suit the rural market

 Easy to understand
Contd..

 Because of the lack of electricity and refrigerators in the rural


areas, Coca-Cola provides low-cost ice boxes — a tin box for
new outlets and thermocol box for seasonal outlets.

 HDFC tied up with non-governmental organisations and


offered reasonably-priced policies in the nature of group
insurance covers.
Awareness

 Challenge: less exposure to the world, low literacy rate

 Strategies:

 Opinion leaders play a key role in popularizing products


and influence in rural market so choose the appropriate
opinion leader

 Can use the following promotional methods:


Personal Interface

 One on One contact


programs are extremely
efficient manner to reach the
Rural Consumer

 Provides an opportunity to
 Demonstrate
 Induce Trial
 Educate
Events -Using Culture to touch a chord
Events -Folk entertainment
Events : Melas

 An opportunity to present
Brand Stories using better
Display tools
 Large Screens

 Animations

 Melas can be used for


 Retail Sales Points

 Sampling Exercise

 Demonstration
Haats -Presence in the Market

 42000 rural haats


(supermarkets)

 4500+ Visitors per haat.


Average

 Sales per day US$ 5000

 300+ Sales outlets/haat.


Case Studies

LG
 Established in 1997, LG Electronics India Pvt. Ltd., is a
wholly owned subsidiary of LG Electronics, South Korea.

 LG found the untapped potential in the rural market in India


and to encash the opportunity it comes with rural marketing
strategy.
4 A’s of Rural Marketing
 Availability- Place
 65 Remote Area Offices under
the branch offices that
empowered to directly link for
orders.

 230 service centers.

 2,600 mobile authorized


service personnel for villages
having residents below
10,000.
 Affordability- Price

1998, LG launched its first low priced TV for rural consumers

-Sampoorna- Rs.3000
-Cineplus- RS 4900

 Acceptability- Product
-LG came out with Hindi and regional language menus on
its TVs.

-Introduced the low-priced “Cineplus” and “sampoorna”


for the rural market.

-LG was the first brand to introduce gaming in TVs.


Awareness-Promotion

-Mobile Vans

-Exhibition

-Road Shows
ITC e-Choupal
 ITC is one of India's foremost private sector companies
diversified presence in Cigarettes, Hotels, Paperboards &
Specialty Papers, Packaging, Agri-Business, Packaged Foods
& Confectionery, Branded Apparel,Greeting Cards and other
FMCG products.

 Its International Business Division (ITC IBD) was created in


1990 as an agricultural trading company

 In 1998, after competition forced , ITC-IBD taken the


challenges to use information technology to change the rules
of the game and create a competitive business.
Strategy

 Use the Information


Technology

 Places computers with


Internet access in rural
farming villages

 Each e-Choupal costs between


US $3,000 and US $6,000 to
set up and about US $100 per
year to maintain.
Contd…

 The farmers use the computer to access daily closing


prices on local mandis

 The farmers can also know about weather forecast


(local) and best practices in the world from e-Choupal
website.
Contd…

 Use the e-Choupal to order


seed, fertilizer, and other
productsAt harvest time,

 ITC offers to buy the crop


directly from any farmer at
the previous days closing
price
Conclusion

“Rural market has an untapped potential like rain but it is


different from the urban market so it requires the different
marketing strategies and marketer has to meet the challenges
to be successful in rural market.”