RURAL MARKETING

Learning Objectives
Sources & patterns of incomes of rural consumers

Identifying & Targeting relevant consumer segments

in rural India
Consumer behavior of rural consumers

Definition
Application of techniques & concepts of marketing to

the vast rural segment of Indian population in the background of the sociological & behavioral factors that affect the economy of rural markets Identifying & serving needs of consumers living in villages Marketers need to understand the living conditions of rural consumers before attempting to sell their products & services to them

Facts
742 million people in over 6 lakh villages

Growing at 5 times the pace of urban markets

8.6 million households with incomes above

Rs.25,000 Of the 2 million BSNL connections more than 50% are in villages

Source: NCAER, IMDR 2002

Estimated Annual Size

FMCG Rs. 50,000 crores

Agri- inputs & farm machinery Rs.45,000 crores

2/4 wheelers Rs. 8,000 crores Durables Rs. 5,000 crores

Source: NCAER, IMDR 2002

Major Items of Consumption

Products

Ranking

Consumption in grams per household per month

Toilet Soap
Washing Powder Packaged Tea Biscuits Detergent Cakes

1
2 3 4 5

268
950 268 302 893

Challenges
Distance from & accessibility to products & services

Scattered & sparsely populated areas insufficient to

attract companies population

Extra costs are created due to distance & sparse

Changes in rural economy diversification, dependence

on monsoons, increasing external controls

Illiteracy & poor educational facilities Lack of alternatives in careers/jobs, housing, transport,

recreation

Primary source of rural income is agriculture

Marketing Strategy
Diverse rural segments

Cultural dimensions
Lifestyles Literacy rates

Consumption patterns
Heightened role of peers & elders

4 As of Rural Marketing
Affordability

Awareness
Acceptability Availability

Sources & Patterns of Income

Primary source is agriculture

No regular income - Cash at harvest time only

Time of cash surpluses vary geographically as crop

patterns & harvest time vary in India

Cash crops & services now lead to stable cash flows

through the year

Marketers should keep track of time of year when

incomes are due

Target Segments
Distinct segments in rural markets

Very Rich buy most expensive consumer products Consuming class buy bulk of goods Climbers own some durables like TVs & appliances Aspirants possess most basics radios, bicycles & aspire for more

Destitute

Rich farmers who own lot of land; Farmers who own some land; Daily

wage workers Visible changes in last group due to government policies and urbanization Uncertainty whether village consumers will grow richer or poorer Rural economy & community in flux

Consumer Behavior
Villages are a close-knit community

Average rural consumer very reluctant purchaser

Value for money products are most popular and easily sold

Rural consumers already have a settled way of life and marketers

products & services not really needed

Rich rural population - ostentatious customers Marketers products & services either have to change lives of rural

consumers in significant ways, or be very inexpensive to become acceptable

Product

Product for rural market must be built or modified to suit the lifestyle and needs of the rural consumers . Product Strategies New/Modified Product. Utility Oriented Product Avoiding Sophisticated Packaging Application of Value Engineering. Small unit packaging

1. 2. 3. 4.

5.

Product
Godrej recently 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

Hindustan Lever, among the first MNCs to realize the

potential of India's rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm
concentrate. The instant and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and multi-serve sachet of 200 gm priced at Rs.15

Coca-Cola has introduced Sunfill, a powdered soft-drink

Products
Consumer Durable Products Lack of regular supply of electricity Consider such products to be luxury -reluctant to buy

durable items Fast moving Consumer Goods Substitutes available & in use Products adoption slow - educative inputs needed Self sufficiency barrier to product purchase

Products
Services Large vacuum in rural service infrastructure
Changes in social structure hastening requirement of

services

Professional services emerging opportunity Large market for services like telecommunication, health,

education, transport, drinking water, housing & electricity potential opportunities

Inefficiency and ineffectiveness of the government -

Products
Farm Equipments & Products Obvious requirement of farming equipments opportunity for companies in farm mechanization
Changing rural scenario presents very different

opportunities from the past

Small farmers a captive market Enter profitable partnerships with farmers

Pricing
Both edifices of self-sufficient economy & closed

community of villages crumbling

Do more than just offer products at low prices Money normally controlled by the eldest male

member
Understand the revenue cycle & management of cash

of rural consumers

Place - Distribution
Villages geographically scattered.

Predominant reliance on local markets

Buy their products as they get exhausted, not for a

whole month, unlike urban India

If product not available substitutes used. Purchase

postponement common

Place - Distribution
To service remote village, stockists use auto-rickshaws,

bullock-carts and even boats in the backwaters of Kerala. Coca-Cola, which considers rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages

LG Electronics defines all cities and towns other than

the seven metros cities as rural and semi-urban market. To tap these unexplored country markets, LG has set up 45 area offices and 59 rural/remote area offices.

Promotions
Rural consumers deferential to elders, people in

authority & highly educated people

Companies should engender word-of-mouth

promotion - crucial in rural markets

Ensure that product reaches influential people in the

village
Celebrity endorsements can be very useful

Some Examples
Nokia developed affordable Mobile phones for rural markets with

unique features such as local language capabilities, present time/ call limits etc. 90-270 volts.

Philips developed a TV Vardaan for rural markets that works on Philips developed Free Power Radio priced at Rs.995. This radio

does not require power or battery. It runs on simple winding of level provided in the set.
Rs.5000

LG developed CTV called Cine Plus for its rural market at a price of

Hyundai launched a scheme Ghar ghar ki pehchaan in 2008 to

touch base with at least 58 per cent of Indian villages with a population of 500 or more.