Chapter 11

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Marketing in Small Towns

Rural Marketing, 2e

Define small towns, their potential and relevance

Understand the behaviour of small-town customers

Understand the strategic importance of small towns for rural

marketers

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Learning Objectives

 Towns with population of less than one million

Availability of adequate land, lower construction costs a great
advantage
Number
of Cities

Share
of HHs

Income
per HH

Share of Total
Disposable
Income

Tier I

29%

186,000

39%

Tier II

26

15%

129,000

14%

Tier III

33

9%

136,000

9%

Tier IV

5.094

47%

114,000

39%

TOTAL

5,160

100%

Rural Marketing, 2e

100%

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Small Towns and Their Potential

 Small

towns constitute 59% of the urban

population

Town Population (in per cent)

Source: McKinsey Global Institute.
Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

The Potential of Small Towns

 Income

levels and buying power

Distribution of Indias Urban Population by City Tier

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

The Potential of Small Towns

 Income

levels and buying power

Distribution of Households by Income and Size of Town (in per cent)

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

The Potential of Small Towns

The Potential of Small Towns

between urban and rural

Small Towns as Bridges Between Urban and Rural India

Small

towns cater to 200 nearby villages

Infrastructure opportunities
Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Bridge

 Penetration

of
durables and
FMCG

Household Penetration of Durables and FMCG Products (in per cent)

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

The Potential of Small Towns

The Potential of Small Towns

of durables and FMCG

Household Penetration of High-end Durables in Towns with Less

than 100,000 Population

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Penetration

Small Town Consumer

Behaviour
pattern in small towns matches that
of bigger towns.
Distribution of Routine Expenditure by Size of Town (in per cent)

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Expenditure

Growing affluence, leading to a better standard of living.

Increase in awareness and education due to penetration of

DTH, C&S and Internet

Changes in aspirations and lifestyle especially amongst youth

Increasing brand awareness and preference for premium

products and services

Consumer buying behaviour in small towns reflects both

urban and rural and is therefore a mix

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Small Town Consumer

Behaviour

Strategic Importance of Small

Towns for Rural Marketers
selling and redistribution centres

Products Purchased from Different Locations by Rural Consumers (in per cent)

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

As

As servicing centres

As a hub for availing services in the area of health,

education and financial services

As the agricultural linkage

As a place for leisure and entertainment

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Strategic Importance of Small

Towns for Rural Marketers

Larger
Village
Close by

Nearest
Town

Larger
Town
Close
by

City

Products

Village

Nearby
Shandy/
Mela

Groceries

79

18

Food articles

82

12

18

Cosmetics
and Toiletries

73

12

13

29

11

11

Stationery

48

11

27

13

11

Agri-inputs

16

12

34

20

20

Clothes /
Footwear

11

35

22

28

Durables

37

25

35

All figures in percentages. For further details refer Table 11.6

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Products Purchased from Different

Locations by Rural Consumers

Refer to video case and answer the following questions:

1.

2.

Give examples of two leading brands that have faced a

similar problem of
commodification in small-town
markets. Explain how they responded to this challenge.
Why do you think this campaign achieved phenomenal
success?

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Rural Marketing Case

Philips Lighting

Observe the Linkages with Cities

and Rural Areas

Rural Marketing, 2e

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Successful Mantra in Small

Towns