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Rural Marketing
Defining Rural India
Organisation
Definition
NSSO ( Census)
Limitations
 rural not defined
 Population density < 400 / Sq Km
 75 percent
of the male working population is
engaged in agriculture
No Municipal corporation / board
Planning
Commission
 Towns upto 15,000
rural
population are considered
Town characteristics not
defined
LG Electronics
All places other
than the 7 metros
Only clarifies what
are the cities
NABARD
All locations with a
population upto 10,
000 considered “
rural”
Village & town
characteristics not
defined
Sahara
Commercial
establishments
located in areas
servicing less than
1000 population
Population
characteristics
unknown
Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S ( 2007)
Scope of Rural Marketing
• Keenly debated topic
• Definitions based on organisational/ institutional vision,
mission & goals
• Need for a comprehensive and modular understanding
• Rural Marketing is a “ work in progress”
• Multi – disciplinary approach is necessary for sharper
understanding
Transitions In Rural India
•Non –food, cash crops
•
Food Grain Crops
•
On land activities
•
Farm Activities
•Livestock & fisheries
•Manufacturing &
services
Rural Employment Patterns( Male)
Sector
Year – 1987 ( % share in employment)
Year -2004 ( % share in
employment)
Agriculture
75
67
Transport &
Communication
2
8
Trade & Hotels
5
7
Construction
4
7
Manufacturing
7
8
Source: NSSO data, Mckinsey Global Institute Study, 2004-05
Rural India – Population Trends
1981
1991
2001
Total Population
(in million)
683.3
848.3
1026.9
Rural Population
(in million)
524.0
628.8
741.6
As a proportion
of total
population
76.7
74.3
72.2
Decadal Variation
19.8
16.7
15.2
Source: Census 2001
• The joint family system is being replaced by the nuclear family
system
• The occupational pattern shows a predominance of cultivators
and wage earners
• Cultivators( 40.86 %) and Wage Earners( 35.28 %) according to
NCAER studies (2002)
Rural Income Trends
Annual Income ( at
1998-99 prices)
Income Class
1989-90( %
Households)
1998-99 ( %
Households)
<= 35,000
Low
67.3
47.9
35,001- 70,000
Low Middle
23.9
34.8
70,001 – 1,05,000
Middle
7.1
10.4
1,05,001- 1,40,000
Upper Middle
1.2
3.9
> 1,40,000
High
0.5
3.0
Source: National Council for Applied Economic Research, 2000
Introduction to Rural
Marketing
“The first five years of the new millennium will
belong neither to the urban markets which have
reached saturation and where margins are
under pressure not to the export markets,
which suffer from inadequate infrastructure
back home, and uncompetitive prices overseas.
It will belong to rural marketing.”
RURAL MARKETING
In the India context, the word ‘RURAL’ is so
much associated with agriculture and
farmers that rural marketing tends to be
seen as a marketing of inputs or outputs
related to agriculture.
What is Rural Marketing?
Rural marketing is a function which manages
all those activates involved in assessing,
stimulating and converting the purchasing
power into an effective demand for specific
products and services, and moving them to
the people in rural area to create satisfaction
and a standard of living to them and thereby
achieves the goals of the organization.
Rural v\s Urban
OCCUPATION:
Rural: Cultivators n few non –
agricultural pursuits.
Urban:
manufacturing,trade,commerce,profess
ions
Size of community
• Rural:open farms & small community
are negatively co-related
• Urban: urbanity & size of community
are positively co-related
Density of population
• Rural:density of population is lower than
urban
Mobility
Rural: social mobility less. More migration from
villages to town.
Urban: social mobility increases with urbanity.
System of interaction
• Rural: less numerous contacts per man.
Predominance of personal & relatively durable
relations.
• Urban: Greater complexity, superficiality &
standardized formality in relations.
• Although the melting of the urban - rural
divide will take a while, this is not for want of
the availability of the means but for want of
the rural consumer's mindset to change;
which has its own logic, which is driven by
tradition, custom and values that are difficult
to shed,
Attractiveness of rural market
Rural markets have become the new targets to
corporate enterprises for two reasons :
1. Urban market has become congested with
too many competitors.
2. The market have reached a near saturation
point.
Various factors which have made rule
markets viable:1. Large population
2. Raising prosperity
3. Growth in consumption
4. Life-style changes
5. Life-cycle advantages
6. Market growth rates higher than
urban
7. Rural marketing is not expensive
8. Remoteness is no longer a problem
• Now for some facts and figures. The Indian
rural market today accounts for only about Rs
8 billion (53 per cent - FMCG sector, 59 per
cent durables sale, 100 per cent agricultural
products) of the total ad pie of Rs 120 billion,
thus claiming 6.6 per cent of the total share.
So clearly there seems to be a long way ahead.
• Time and again marketing practitioners have
waxed eloquent about the potential of the
rural market. But when one zeroes in on the
companies that focus on the rural market, a
mere handful names come to mind. Hindustan
Lever Limited (HUL) is top of the mind with
their successful rural marketing projects like
'Project Shakti' and 'Operation Bharat'.
• Clearly the main challenge that one faces
while dealing with rural marketing is the basic
understanding of the rural consumer who is
very different from his urban counterpart.
• Also distribution remains to be the single
largest problem marketers face today when it
comes to going rural.
• "Reaching your product to remote locations
spread over 600,000 villages and poor
infrastructure - roads, telecommunication etc
and lower levels of literacy are a few hinges
that come in the way of marketers to reach
the rural market
• In 1998 HUL’S personal products unit initiated
Project Bharat, the first and largest rural hometo-home operation to have ever been prepared
by any company. The project covered 13 million
rural households by the end of 1999.
• During the course of operation, HUL had vans
visiting villages across the country distributing
sample packs comprising a low-unit-price pack
each of shampoo, talcum powder, toothpaste and
skin cream priced at Rs. 15.
• This was to create awareness of the company’s
product categories and of the affordability of the
products.
Khaitan fans' ad on a horse cart
• The greatest challenge for advertisers and
marketers continues to be in finding the right
mix that will have a pan-Indian rural appeal.
Coca Cola, with their Aamir Khan ad campaign
succeeded in providing just that.
"Yaara da Tashan...” ads with Aamir Khan
created universal appeal for Coca Cola
• "Yaara da Tashan..." ads with Aamir Khan
created universal appeal for Coca Cola
• Coca-Cola India tapped the rural market in a
big way when it introduced bottles priced at
Rs 5 and backed it with the Aamir Khan ads.
• The company, on its behalf, has also been
investing steadily to build their infrastructure
to meet the growing needs of the rural
market, which reiterates the fact that this
multinational has realised the potential of the
rural market is going strength to strength to
tap the same.
• For HLL, a one rupee or
a five rupee sachet or
the Kutti Hamam (the
small Hamam) helps in
giving the consumers a
trial opportunity. While
it does help in generate
volume but not in terms
of values. "Till the time
that volume - value
equation is managed
better.
• Amul is another case in point of aggressive
rural marketing.
OTHER EXAMPLES ARE,
• Interestingly, the rural market is growing at a
far greater speed than its urban counterpart.
"All the data provided by various agencies like
NCAER, Francis Kanoi etc shows that rural
markets are growing faster than urban
markets in certain product categories at least.
• The share of FMCG products in rural markets
is 53 per cent, durables boasts of 59 per cent
market share. Therefore one can claim that
rural markets are growing faster than urban
markets
Satellite dish antennas reach rural India
In 2000, ITC took an initiative to develop direct
contact with farmers who lived in far-flung
villages in Madhya Pradesh. ITC's E-choupal was
the result of this initiative.
Typical shop in rural India
WAYS OF RURAL ADVERTISING
Tapping the rural markets
-Segmentation
-Product Strategy
-Pricing strategy
-Physical distribution
-Channel Management
-Sales Force Management
-Marketing Communication
1.Segmentation
- Geographic segmentation: North, South, West, East
- Climate/irrigation level: Favorable climate are usually
more prosperous than climatically handicapped region.
Irrigated areas and dry areas pose different
economic/marketing environment.
- Nearness to town: the village which is nearer to feeder
town, the people from that village go to the village once in
a month to buy their requirements and sell their products.
They exposed to town lifestyle.
Demographic Segmentation
-Population concentration:
40% of rural population lives in 7% of the villages of the
country, and remaining 60% in the other 93% of the villages
-Age:
Youth in the rural areas can be picked up as a separate
market. In rural population 25 crore people are between age of 16-30
-Income:
Regular income and seasonal income. Some people have
seasonal income only while some have regular income as well as
seasonal income also.
2. Product Strategy:
Whether to offer same product that is offering to the urban area or
there is need to change the product.
For ex. Small size, lower price.
-Specifically Designed Products
Ex. Philips hand wound radio, phiips smokeless chulhas,
-Color Preference:
They mostly like the bright colors. Asian pain introduce new bright color for riral
market. HUL has put this knowledge to good use in the color choice for lifebuoy.
-Package to be appropriate:
Packaging should be appropriate, bcause most of the people in rural
area recognize the brand by its packaging.
Ex. Pears, fair and lovely.
Small packs are more effective in rural areas. Shampoo company are
doing so for the rural market. Small packaging of vicks vaporub,
lifebuoy etc.
-Logo, symbol :
Most of the people recognize the brand by the logo of the company
for
Ex. Nirma girl, parle girl, dettol sword.
-Product differentiation:
Product differentiation is important in rural marketing. They may
not have any differentiation to offer in their product. They create
differentiation through the service route, providing superior
extension service, advice, discount offers, better farming practices.
-Positioning decision:
It is necessary to use different positioning strategy for rural market.
Ex. Titan. When target is urban area its use as ornament and
fashion while targeting rural area its just a watch-an inexpensive
yet durable.
3.Pricing strategy:
-Affordability:
Economy is more important to them
-Common price for both urban and rural market:
Samsung an LG have follow this pricing strategy.
The argument is that “ there are as many rural rich as there are
urban poor.
EX. LG’s rural color TV Sampoorna originally launch for rural area but
also successful in urban area. Titan sonata also have same situation
-Special occasion pricing: Marriage
-Strategy on payment terms: Mostly have seasonal income
4.Physical distribution:
There is major problem in physical distribution in rural
market bcause most of the villages don’t have proper
road connectivity and also railway is not there so most of
the company use delivery van to distribute their product
in the rural area.
Ex. ITC
5.Channel Management:
Problems :
- Multiple tiers add to the cost
- Non Availability of dealers
- Poor viability of outlets
- Inadequate banking and credit facilities
 The village shop is the key to rural distribution
6. Sales force Management:
 Rural salesman must posses certain special traits:
- Willingness to be located in rural areas
- Cultural congruence
- Attitude factor
- Knowledge of local language
- Ability and willingness for handling several
product lines
7. Marketing communication:
Selecting the media mix:
-Tv
-Radio
-Cinema
-Print media
-Outdoor
-POPs
-Audio visual units/publicity van
-Syndicated AV vans
-Puppet shows, folk theater
-Demos
-Word of mouth
Developmental Marketing-HPCL’s
Rasoi Ghars
Developmental Marketing-HPCL’s Rasoi Ghars
Hindustan Petroleum (HPCL) has established ‘rasoi
ghars’ or community kitchens in many villages. The rasoi
ghar introduces the villagers to cooking gas (LPG). Each
rasoi ghar comprises of eight gas stove stations, a gas
meter, and a ‘pay as you use’ system.
Everybody knows that appropriately priced,
smokeless, efficient and modern cooking fuel / cooking
devices will find a big market in rural India.
Objectives:
1. Provide them access to a hands-on experience in the
operation of LPG stoves.
2. Eliminating the fear of using the gas.
3. Showing them that they can save the large amount of
time they spent in gathering firewood.
4. They can do some wage earning work and that those
wages can be used to pay for the gas.
5. If their girl children were being used for gathering
firewood, now they can use the time to go o school.
HPCL had set up 600 Rasoi Ghars spread over 30 villages across India.
At the next stage, HPCL may go for franchising this business to woman
entrepreneurs all over rural India.
The cost of transportation of cylinders makes mini-cylinders unviable
from the manufacturer’s point of view and the unit cost makes large cylinders
unaffordable from the rural consumer’s point of view.
Firms engaged in such endeavours are obviously in for the long haul,
HPCL accepts the fact that it will continue to make losses on the Rasoi ghars for
quite a few years. But it is building a big clout and a potential market. HPCL’s
objectives are certainly commercial-to develop a big market for its LPG gas , but
it is building a big clout and a potential market. HPCL’s objectives are certainly
commercial-to develop a big market for its LPG gas, but it is improving rural lives
in the bargain.