RMB 01

Chapter

Chapter Objectives
Definition of Rural Markets

Significance of rural marketing

Emerging trends in rural marketing Debunking of rural myths Unique features of rural marketing Future of rural marketing

RMB 01

Rural India A Promising Marketplace

742 million rural consumers waiting to be tapped Thirteen consecutive good monsoons barring 2002

and 2003 600% increase in the five year plans from the Eighth to the Tenth plan 230% increase in flow of institutional credit for agriculture between 1997-98 and 2004-05 Area covered, crop production and yield up nearly 50%

RMB 01

Rural India A Promising Marketplace

As per NCAER, consuming class households in rural

India equal those in urban India More than 50% of Indias largest FMCG company HUL comes from the rural market In durables, the average ownership of electrical goods is 2.48 per rural family (for electrified villages) against 3.39 in the urban sector

RMB 01

Some Impressive Facts on Rural India

42,000 rural supermarkets (haats) in rural India

against 35,000 retail chain stores in the US The billing per cell phone in small towns in Andhra Pradesh is higher than the billing in the state capital Hyderabad

RMB 01

What Makes Rural Rarkets Attractive?

Estimated annual size of the rural market Rs. 1,23,000 crores

Rs. 5000 crores

Durables

Rs. 45000 crores

Agri-inputs

Rural Markets

Rs. 65000 crores

FMCG

Source: Francis Kanoi, 2002

Rs. 8000 crores

2/4 wheelers

What makes Rural markets attractive?

2005-06 LIC sold 55% policies in rural India 50% of BSNL connections 41 million Kisan Credit Cards issued

Rural Markets

6.6 million households have formal savings investments

5.22 lakh villages with Public Telephones

42 million households use banking service

Definition
The Census of India defines rural as: Any habitation with a population density of less than 400 per sq. Kms. Where at least 75% of the male population is engaged in agriculture Where there exists no municipality or board Most FMCG companies define rural with a population

of up to 20,000 population Most durable companies keep the limit at 50,000

RMB 01 9

Rural Marketing
Flow of Products/Services
BARTER SIMILAR TO NORMAL

From

AREA OF INTEREST

Urban

Rural

1 3
To Rural

2 4
Urban

EXCLUDED

The book will concentrate on Quadrant 3

RMB 01 10

Understanding Rural Consumers

Fundamentally different from the urban mind set
High degrees of difference in different parts of the

country Due to lack of mobility and because of socio-cultural reasons males take most of the purchase decisions in the family Community decision making is also very common in rural India

RMB 01

11

New Influencers
The sarpanch/pradhan continues to be a key opinion

leader His influence is diminishing and is limited to decisions on agri-products only The rural youth who are attending colleges in nearby towns and are exposed to the brands and trends are gaining as influencers as compared to the classical school teacher

RMB 01

12

Products
Usage of products is different in rural environment
Cooking on ground rather than on platform Electrical

gadgets to withstand heavy voltage fluctuations Washing machines to run without running water Smaller pack sizes for affordability and freshness Innovation and education is the mantra for product success in rural

RMB 01

13

Rural Distribution
Need to understand where the rural consumer buys

products 90% of durables are purchased from 20,000+ towns (Source IMRB study). There are 2,300 such towns all over India Situation with FMCG more complex with distribution to cover villages with population over 2,000 population Stockists are however limited to 20,000+ population towns to feed these villages
RMB 01 14

Rural Communication
Need to understand that the consumer may be buying

particular brand or product category for first time Limited sources of influencers and information make decision difficult Below the line is therefore more suitable for rural Mass media only for creating awareness and some interest

RMB 01

15

The AICDA Model

Awareness

Ineffective use of traditional channels

Interest

Conviction

Desire

like Haats and Melas Considered most relevant and credible by rural segment Important to understand aspirations, fears and hopes in relation to each product category Need for localised communication aimed at relatively homogeneous rural segments

Action
RMB 01 16

Information Technology in Rural

Cost of technology down
Choupal by ITC PCO in all 1,000+population village with STD facility Change in stocking pattern of retailers in villages Improvement in infrastructure Introduction of large retail formats by corporates and

impact on the local bania

RMB 01

17

Rural Markets The Way Ahead

The 4 Ps in marketing have to give way to 4 As: Awareness through traditional media of rural Acceptability through product modifications Availability through deep and innovative distribution Affordability through new price points Public private partnerships to increase the size of the

rural pie by creating economic activity in rural As rural moves from poverty to prosperity corporates will have to shift focus to efficiencies and market innovations
RMB 01 18