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RURAL

MARKETING
AN INSIGHT BY NITESH CHAHARIA
WHAT IS RURAL?
According to census of India , villages with clear surveyed boundaries not having a municipality,
corporation or board , with density of population not more than 400 sq.km and at least 75
percent of the male working population engaged in agriculture and allied activities would qualify
as rural.

As per RBI a centre , where a bank branch is located is classified into


1. Rural Population < 10,000
2. Semi Urban Population > 10,000 and < 1,00,000
3. Urban Population > 1,00,000 and < 10,00,000
4. Metropolitan 10 lakh and above
RURAL MARKET - CHARACTERISTICS
• Large Population – Around 68% of Indian Population in more than 6 lakhs villages
• Purchasing Power – There is a gradual increase in non agri income growth leading to increase in
purchasing power
• Market Breadth – Demand for white goods , branded goods , discretionary purchases is increasing
• Size of Market
• More than 60 % of the Rural Income is from Agriculture

RURAL ECONOMY
Agriculture & Allied Non Agriculture

• Crop Cultivation • Small Mfg. & Handicrafts


• Diary • Repairs & Construction
• Fisheries • Mining & Quarrying
• Poultry • Transport, Trade & Comm
• Other Allied Sectors • Community & Personal Services
FACTORS DEFINING
CHARACTERISTICS
• Dispersed Population
• Varying Landscape
• Remoteness
• Traditional Outlook
• Low Reach of Electronic Media
• Social/Cultural/Lingustic/Religious Diversity

Market Size – Almost 50% of India GDP


Growth Rate of 6.2% CAGR as compared to 4.7% for Urban
Branded & Expensive Product are replacing entry-level version in “Consideration Set”
Disposable Household Income Levels set to rise significantly in Rural Markets
RURAL VS URBAN MARKET
Rural Urban
Access may be a challenge Easily accessible
Lack of multi distribution/ sourcing points Multiple points for sourcing and distribution
Weak Storage Infrastructure Robust infrastructure for all weather storage
Usually single/few brands Multiple brand can co-exist
Driven by relationship, comfort and ease Driven by campaigns
Slow to accept new products Willing to experiment
Need based spending Discretionary spending
Basic Needs is Changing. Rural is developing at a high pace
Products which have reached maturity stage in urban markets, are still in growth or
entry stage in Rural . It’s a big opportunity to Rural marketing professional.
RURAL HOUSEHOLD SIZE IS BECOMING SAME AS URBAN , WITH
SMALLER COMPACT HOUSES. MOVING FROM JOINT FAMILIES TO
NUCLEATED FAMILIES. THIS GIVES BOOST TO PER HOUSEHOLD
DEMAND.
Similarity as a Shopper
Rural Urban
Basic Needs Exisit (Food,Clothing Entertainment..) Basic Needs Exisit
Aspirations across SECs Aspirations across SECs
Exposure to Options (though limited) Exposure to Options
Resource (within limits of needs) Resource
GAP between affordability and desire GAP between affordability and desire

DIFFERENCES AS A SHOPPER
Rural Urban
Need – Priority Linked Need – Universal and Adhoc
Mostly planned buying Both planned and unplanned buying
Calculated Trials Random Trials
Limited Awarness – local,tested Broad based awareness – information based
Trustworthy buying source Catalogue based buying
POSSIBLE REASON OR CHALLENGES
IN DISTRIBUTION STRATEGY
• Reach
• Lack of Info
• Cannot Sell at Suggested Price
• Channels do not follow leads
• Doubt on Utilization of Resouces

Sometime when the convention methodology of distribution does


not seems to work one should try for the Alternate Distribution
Model. One Solution is exploring Alternate Distribution Channel
ALTERNATE DISTRIBUTION MODEL
CASE STUDY – TETLEY TEA
• Tetley Tea was able to grow its Rural Market share by 40% beating its competitor HUL by
deploying alternate distribution model by attaching itself with various NGO’s and creating a
strong Rural work force and maintaining same price model at both distributor and Rural
stockist level. However other parameter such as small sachets, frequent visit by workforce and
creating Brand Ambassadors at village level helped achieve the objective. Before launching the
model the company was facing two major challenges
• 1. Cost of Reach – The same was extensively worked out in a cost effective model by
deploying rural youths and local agents.
• 2. Threats from its own distributors – Loss of sales from distributors were worked out with
potential sales from Rural model which was supposed to be more consisted and will sustain
over a long period of time
ALTERNATE DISTRIBUTION MODEL
CASE STUDY – SOLAR LANTERN
• D.Light was not hitting its revenue goals because their distribution strategy was in trouble
• Reasearch found out that there was NO NEED, NO PULL, NO DISCUSSION, NO TRUST
• The Trust factor was predominating and d.Light realized that TRUST is not something which can be generated
overnight. They also felt that it will take years and tons of spends to earn that trust.
• Hence they decided to borrow it. D.Light defined a set of Alternative Distribution Channels that had the following
characteristics
– Brick and Mortar last Mile outlet facility
– Outlet space where people can spens at least 30 mins
– Presence in the local area at least for 3 years
– Easy public acess to the outlet owner
– Strong image of the mother brand
– IT infrastructure for data flow
– Scope for Reward & Recognition program
• D Light ecelled in distribution strategy and gained No. 1 spot by establishing partnership with brands such as
BHARAT GAS,INDIAN POST, HP GAS, ITC ABD,
FORMULA FOR RURAL MARKETING

4P 4A
PRODUCT AWARNESS

PLACE ACCEPTABILITY

PRICE AVAILABILITY

PROMOTION AFFORDABILITY
PRICING STRATEGIES
• Penetration Pricing Free/Gifts discounts do not work always –
Rural consumer develops negative opinion
• Value Pricing
• Product Price bundling Schemes to channel partner – may lead to
• Optional Product pricing financial blocking in the channel
• Coinage Pricing
Smaller version , low-end technology – does
• Economy Pricing not mean always it is for rural
• Discriminatory Pricing
• Discounts Rural does not mean cheap – Rural market
needs the product that match the need
ULL AS K AMATH, JOINT MD , JYOTI L ABORATORIES LTD.
OVER 25 YEAR OF EXPERIENCE IN TRANSFORMING THE COMPANY FROM A
PROPRIETARY CONCERN TO A MULTI -BRAND FMCG CORPORATE WITH KEY
BRANDS LIKE UJAL A , MA XO,EXO,PRIL ,HENKO,MARGO,MR. WHITE, CHEK ,
NEEM & MAYA .

• To sell in Urban India one requires Mind and to sell in Rural India one require Heart.
• The problem in Rural India is that they need the product as they want and in the place they want.
• Do not outsource your business in Rural India. Empower your field force to cater the Rural market
by making them your Brand Ambassador
• People incharge of Rural Marketing should travel extensively by road first to understand the
demography and the need of the Rural market.
• We don’t recruit a single person from the urban area to manage the Rural market. It is important
to have a local connect for people in Rural area still prefers to buy a product from a local guy
rather than an outsider.The trust factor is much stronger with the localities
SANJAY PANIGRAHI, PRESIDENT
PIDILITE INDUSTRIES LTD.
• Targeting the Right Rural Market – Basis of selection to be decided whether on population ,
per capita income, consumption pattern etc. Data Science or 3rd part Agency could prove
useful in selecting the right market.
• ATL activities build a corporate image but to create a demand in Rural market one need to do
Demand Generation Activities. The budget is more than that of TV spend for Pidilite
• Entire Sales is done via marketing activities through influencer.
MADAN MOHAN PANDEY, PRESIDENT
SALES CONSUMER CARE DIVISION,
EMAMI LIMITED
• Key Challenges : Assessing Market Potential, Controlling Large workforce, Estimating Time Spent in
market, Absenteeism & Attrition
• Implemented Swadesh App fro Field Force : Collecting Orders,Market Information and Manning
Workforce
• Setup a Team of callers that will call the Dealers for any order if any executive is absent on a
particular day as per his beat plan.
• Data captured from the app was processed as information and feedback was given to the Sales
Staff. This processed doubled the time field staff used to spent in market.
THANK YOU
The Presentation has been made on the basis of Inputs by various companies at the 2nd Annual
Rural Market Summit held at Mumbai.

For any query please mail to nitesh.chaharia@greenvalliey.com