Potentiality of Rural - Market A Case of FMCG Product

Potentiality of Rural Market
A Case of FMCG Product
Department of Professional Development
Submitted By
Tanuj Bansal
06307G, CSE
---------------------------------------------------------------------------------------------------------------------------------------
Jaypee Institute of Engineering & Technology

A-B Road, Raghogarh, Guna (M.P.)
Potentiality of Rural Market – A Case of FMCG Product 2009
Index
1. Acknowledgement ………………………………………………………………….. 3
2. Certificate …………………………………………………………………………..... 4
3. Introduction to Indian Rural Market ……………………...………………………… 5
4. Market Segmentation of Indian Rural Market ……………………………………..... 6
a. Rural and Urban Potential …………………………………………………… 7
5. Fast Moving Consumer Goods ……………………………………………………..... 8
6. Top 10 FMCG companies in India …………………………………...…………...... 9
7. Rural Market and FMCG Products ………………………………………………… 10
a. Penetration ………………………………………………………………..… 12
8. What makes Rural Market attractive? ……………………………………………… 13
9. Rural Consumer Insight …………………………………………………………….. 13
10. MARK Approach to Rural Marketing ………………………………………...……. 14
11. Analysis of FMCG Sector ………………………………………………………….. 15
12. Why Different Strategies ………………………………………………...…………. 16
13. Opportunities .…...……………………………………………………….…………. 17
14. Case Study – 1 Tata Tea ………….…………………………………………..…….. 18
a. Company Profile ……………………………………………………………. 18
b. Products and Brands …………………………………………………..……. 18
15. 4 P’s of Marketing of TATA TEA ………………………………………….……… 19
16. Case Study – 2 Society Tea ………………………………………………………… 21
a. Company Profile ……………………………...…………………………….. 22
b. Mission Statement ……………………………………...…………………... 22
17. Health Benefits of Society Tea ……………………………………..………………. 22
18. 4 P’s of Marketing of Society Tea ……………………………………..…………… 23
19. Live Examples of Market Capturing ……………………………………..………… 25
20. Present Position ……………………………………………………………..……… 26
21. Bibliography ………………………………………………………………….…….. 27
Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 2

ACKNOWLEDGEMENT
There is always a sense of gratitude which one expresses and offer for the helpful and needy
services someone renders during all the phases of life. We really wish to express our
gratitude towards all members of JIET (Guna) who has been helpful to me in the completion
of this project.
I express my heartfelt and profound gratitude to our guide Mr. Sandeep Srivastava, Sr.
Lecturer Department of Professional Development, JIET, Guna (M.P.) whose valuable
suggestions and cooperation have encouraged me and provided the impetus to get this
project off the ground.
I also duly acknowledge all the faculty members of Professional Development department
for guiding me in the making of this project and for solving my problem at every stage.
Date: 19/11/2009 Tanuj Bansal

06307G
CSE, JIET

JAY PEE INS TITUTE OF ENG INEERING & TECHNOLO GY

Department of Professional Development
CERTIFICATE
This is to certify that project entitled ”Potentiality of Rural Market – A Case of

FMCG Product” submitted by Tanuj Bansal(06307G) student of B-Tech
Computer Science Engineering at JIET Guna , in partial fulfillment for award of
degree of bachelor of technology, is a bonafide record of work under the
supervision of Mr. Sandeep Srivastava, Department Professional Development,
Jiet Guna. The matter embodied in this report has not been submitted partially
or wholly to any other University or Institute for the award of this or any other
degree or diploma.
Mr. Sandeep Srivastava

PROJECT GUIDE
Jiet, guna

Introduction to Indian Rural Market

The rural India has 75 percent of the population living in 5,72,000 villages speaking 33
languages, 1652 dialects and have diverse sub cultures and diverse requirements. More
than 80 percent of the rural consumers depend upon agriculture and allied activities for
their livelihood. The rural market has been growing steadily since the 1980s and, is now
bigger than the urban market for both fast moving consumer goods (53 percent share of the
total market) and consumer durables (59 percent). An analysis of the National Samples
Survey (NSS) data reveals that 75 percent of the expenditure on manufactured goods is
accounted by rural India. Technological developments are taking place in rural areas at a
rapid fast rate as is in the urban areas. The disposable income in rural India has increased
manifold in the last five years than the urban area. All these paved way for rural marketing.

Market Segmentation of Indian Rural Market

The Indian rural market can be segmented on the following basis:
Rural Rich Consumers: The rural rich consumers can be estimated on the basis of land
owned by them. They occupy major portion of the land (in acres) in their locality. They
engage in agriculture and allied activities. They hold important positions in their
places. They may be a member of political party or may be having the support of political
party. They give employment opportunities in their field for other peoples in their
locality. They enjoy huge surplus of disposable income. They mostly use the disposable
income for purchasing jewels for their family members. They also deposit consistent
portion of their amount in the nationalized banks. Some of the rural rich consumers also
invest their money in small-scale businesses, land and buildings and act as moneylenders of
their locality. They have television, refrigerator, VCD/VCR/VCD, two-wheeler (prefer to have
bike), tractor, and car. Their children are sent to the nearby reputed educational
institutions for their studies. They prefer to use all leading brands available in the market.
Rural Consumers above Poverty Line: They are identified as the middle class peoples
residing in rural areas. There are 50 million households that live above the poverty line in
rural areas of India. When comparing to the rural rich consumers they own few acres of
land. They mostly engage in agriculture and few other allied activities. They have only less
disposable income and deposit in local banks. They also invest their disposable surpluses if
any in jewels for their daughters' marriage. Most of them have two-wheelers like Bajaj M80
or TVS 50 and only few of them prefer to have bikes (bullets) and use these vehicle for
multipurpose. Only few of them have tractors and they send their children to the nearby
government educational institutions that charge fewer fees. They prefer to have brands,
which gives them value for money spent.

Rural Consumers below Poverty Line: There are 260 million Indians who live below
poverty line and most of them are located in rural areas. They occupy minimum portion of
land in their locality. Some of them not even have any land in their locality. They survive
their family by working in the farm of rich persons in their locality. They work for daily
wages and sometimes they are compensated for their work with food grains. They live in
hut or in the farm of rich persons. When they don’t have work in their village they migrate
to the nearby village for work. They also involve in temporary seasonal business for their
survival. They mostly purchase local brands or fake brands for their usage because of its less
pricing .
Rural and Urban Potential
Urban Rural
Population 2001-02 (m household) 53 135
Population 2009-10 (m household) 69 153
% Distribution (2001-02) 28 72
Market (Towns/Villages) 3,768 627,000
Source: Statistical Outline of India (2001-02), NCAER
An average Indian spends around 40% of his income on groceries and 8% on personal care
products. A larger part of the total spending pie along with a large base (in terms of
population) makes India one of the largest FMCG markets.

Fast Moving Consumer Goods (FMCG)

We regularly talk about things like butter, potato chips, toothpastes, razors, household
care products, packaged food and beverages, etc. But do we know under which category
these things come? They are called FMCGs. FMCG is an acronym for Fast Moving Consumer
Goods, which refer to things that we buy from local supermarkets on daily basis, the things
that have high turnover and are relatively cheaper.
FMCG’s constitute a large part of consumers’ budget in all countries. The retail sector f or
FMCG’s in India is in the process of a drastic transformation. The transformation of the retail
market is likely to have a long-lasting impact on wholesale trade and the distribution of
FMCG’s as well. Traditional wholesalers are the most likely losers, because large retailers
tend to buy directly from suppliers.
The Indian FMCG sector is the fourth largest sector in the economy, with a total market size
in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well
established distribution network, intense competition between the organized and
unorganized segments and low operational cost. Availability of key raw materials, cheaper
labor costs and presence across the entire value chain gives India a competitive advantage.
Products and Categories

-Personal Care, Oral Care, Hair Care, Skin Care, Personal Wash (soaps);
- Cosmetics and toiletries, deodorants, perfumes, feminine hygiene, paper product;
- Household care fabric wash including laundry soaps and synthetic detergents, household
cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners, air
fresheners, insecticides and mosquito repellents, metal polish and furniture polish
- Food and health beverages, branded flour, branded sugarcane, bakery products such as
bread, biscuits, etc., milk and dairy products, beverages such as tea, coffee, juices, bottled
water etc, snack food, chocolates, etc.

Top 10 FMCG Companies in India

1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestlé India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and Health Care
10. Marico Industries

Rural Market and FMCG Products

‘The future lies with those companies who see the poor as their customers’
Rural market is getting an importance because of the saturation of the urban market. As
due to the competition in the urban market, the market is more than or as saturated as
most of the capacities of the purchasers have been targeted by the marketers. So the
marketers are looking for extending their product categories to an unexplored market i.e.
the rural market. This has also led to the CSR activities being done by the corporate to help
the poor people attain some wealth to spend on their product categories. Here we can think
of HLL (now, HUL) initiatives in the rural India. One of such project is the Project Shakti,
which is not only helping their company attain some revenue but also helping the poor
women of the village to attain some money which is surely going
to increase their purchasing power. Also this will increase their
brand loyalty as well as recognition in that area. Similarly we can
think of the ITC E-Chaupal, which is helping the poor farmers get
all the information about the weather as well as the market price
of the food grains they are producing. In other view these
activities are also helping the companies increase their brand
value. So as it is given above the significance of the rural market
has increased due to the saturation of the urban market as well as in such conditions the
company which will lead the way will be benefited as shown by the success of HUL and ITC
initiatives.
There was a time when the FMCG companies ignored rural market, they took no any
interest to produced or sell products in rural market in India. It was the initial stage of FMCG
companies in India. As per as the time has passed, the strategy and marketing style of FMCG
companies has changed.
In 1970, Nirma was the first FMCG Company to initiate and produce goods according to
rural consumers. In the early 1970s, when Nirma washing powder was introduced in the
low-income market, Hindustan Lever Limited (HLL) reacted in a way typical of many
multinational companies. However, Nirma’s entry changed the whole Indian FMCG scene. It
became a great success story and laid the roadmap for others to follow. MNC’s like HLL,
which were sitting pretty till then, woke up to new market realities and noticed the latent
rural potential of India. In 1983, C K Ranganathan started selling shampoos in a sachet with
an investment of Rs 15,000 and dared to take on the multinationals, Lever and P&G, the
unquestioned leaders in that segment. He targeted rural and small-town consumers who
used soaps to wash their hair. He introduced the sachet at 90 paise and then reduced it to
50-paise. And that’s when the multinationals noticed him. Sales zoomed from 35,000
sachets to 12 lakhs. Initially they took any sachet, but after three months they restricted to
Chik sachets.

Now at the present time, rural market is one of the best opportunity and focusing sector for
the major FMCG companies in India. Each and every company is set to invest a huge capital
for competition in rural market. According to the Federation of Indian Chambers of
Commerce and Industry, the number of rural households using FMCG products has grown
from 136 million in 2004 to 143 million in 2007, a clear indication that rural consumers are
shifting from commodities to branded products. Urban consumers, on other hand, could go
slow on FMCG expenses, thanks for inflation spiral, rise in fuel cost and costlier credit.
Evidence suggests that for the first time, the rural market has grown faster than the urban
market in key product categories in April-May 2008.
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 (HLL) is top of the mind with
their successful rural marketing projects like 'Project Shakti' and 'Operation Bharat'. The
lynchpin of HLL's strategy has been to focus on penetrating the market down the line and
focusing on price point. Furthermore, activating the brand in the rural market through
activities, which are in line with the brand itself, is what sums up HLL's agenda as far as the
rural market is concerned informs MindShare Fulcrum general manager R Gowthaman.
Amul is another case in point of aggressive rural marketing. Some of the other co rporate
that are slowly making headway in this area are Coca Cola India, Colgate, Eveready
Batteries, LG Electronics, Philips, BSNL, Life Insurance Corporation, Cavin Kare, Britannia
and Hero Honda to name a few.
We can safely say that until some years ago, the rural market was being given a step-
motherly treatment by many companies and advertising to rural consumers was usually a
hit and miss affair. More often than not, the agenda being to take a short-cut route by
pushing urban communication to the rural market by merely
transliterating the ad copy. Hence advertising that is rooted in
urban sensitivities didn't touch the hearts and minds of the rural
consumer. While, this is definitely changing, the process is slow.
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.
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 realized the potential of the
rural market is going strength to strength to tap the same.
So the fact remains that the rural market in India has great potential, which is just waiting to
be tapped. Progress has been made in this area by some, but there seems to be a long way
for marketers to go in order to derive and reap maximum benefits. Moreover, rural India is
not so poor as it used to be a decade or so back. Things are sure a changing!

Low penetration and low per capita consumption: Due to the large size of the
market, penetration level in most product categories like jams, toothpaste, skin care, hair
wash etc. in India is low. This is more visible when comparison is done between the rural
and the urban areas. The average consumption by rural households is much lower than their
urban counterparts. Existence of unsaturated markets provides an excellent opportunity for
the industry players in the form of a vastly untapped market as the income rises.
Penetration %
Category All India % Urban % Rural %
Deodorants 2.1 5.5 0.6
Toothpaste 48.6 74.9 37.6
Skin Cream 22 31.5 17.8
Shampoo 38 52.1 31.9
Utensil Cleaner 28 59.9 14.6
Instant Coffee 6.6 15.5 2.8
Washing Powder 86.1 90.7 84.1
Detergent Bar 88.6 91.4 87.4
Toilet Soap 91.5 97.4 88.9
Source: HLL investor meet 2006
As per given in the above chart, rural market shows a good improvement. In the presence of
some product categories like, toilet soap, detergent bar, washing powder etc., it is same as
in the urban level. Rural market is also improving in the other products category.

What makes Rural Market attractive?

Rural market has following arrived and the following facts substantiate this:
 742 million people
 Estimated annual size of the rural market
 FMCG Rs 65,000 Crore
 Durables Rs 5,000 Crore
 Agri-inputs (incl. tractors) Rs 45,000 Crore
 2 / 4 wheelers Rs 8,000 Crore
 In 2001-02, LIC sold 55 % of its policies in rural India.
 Of two million BSNL mobile connections, 50% in small towns/villages
 Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT)
 41 million Kisan Credit Cards issued (against 22 million credit-plus-debit cards in urban)
with cumulative credit of Rs 977 billion resulting in tremendous liquidity.
 Of 20 million Rediffmail signups, 60 % are from small towns. 50% transactions from
these towns on Rediff online shopping site
 42 million rural HHs availing banking services in comparison to 27 million urban HHs.
 Investment in formal savings instruments: 6.6 million HHs in rural and 6.7 million in
urban
Rural Consumer Insight

 Rural India buys:
 Products more often (mostly weekly)
 Buys small packs, low unit price more important than economy
 In rural India, brands rarely fight with each other; they just have to be present at the
right place
 Many brands are building strong rural base without much advertising support
 Chik shampoo, second largest shampoo brand
 Ghadi detergent, third largest brand
 Fewer brand choices in rural: number of FMCG brand in rural is half that of urban
 Buy value for money, not cheap products

MARK Approach to Rural Marketing

Rural India has problems quite unique in nature. The major error people make while
marketing to the rural market is that they apply the same theories as learned from the
urban context. The underlying myth among the marketers that the rural consumer is similar
to an urban consumer except for the constraint of money has been proved wrong. It is in
this regard that we have identified ‘MARK’ (Money, Acceptability, Reach and Knowledge)
as the major challenges faced by a rural marketer. Each of these factors has been discussed
in detail.
Money: Products need to be within the affordable range. Sachetisation (selling in sachets)
was used to overcome this barrier and thereby sell to the rural consumer. This strategy
backfired and was found that sachet’s have in fact cannibalized the sales of the larger
volume packaged products manufactured by the same company.
Acceptability: There is a need to offer products that suit the rural market. Customizing
products to suit the needs of the rural folk will help it gain wider acceptability and thereby
lead to increased penetration within these rural markets. E.g. A rural consumer will never be
willing to accept Kellogg’s cornflakes as a substitute to his breakfast of Paratha and curd but
if the Kellogg’s is able to communicate the message that Kellogg’s since it is full of nutrients
vital to a growing child the can be used to supplement his child’s daily meal then he would
be ready to buy Kellogg’s for his child.
Reach: The first step towards gaining sales within the rural space is to see to it that the
reach of the product be wide enough. Unless the product is available there is no point
whether we overcome the other challenges or not as we will not finally derive any sales at
all. Marketers must trade off the distribution cost with incremental market penetration.
Over the years, MNC’s have tried out various tactics to reach out to the rural markets from
using auto rickshaws, bullock-carts and even boats in the backwaters of Kerala. Over the
years the hub and spoke distribution model has evolved as the one most suited to reach out
to the rural villages.
Knowledge : Knowledge or awareness about the product depends on how effective market
communication is. It is extremely important to choose the right channel for market
communication. It is a commonly held misconception by marketers and ad-agencies that TV
is the best medium to communicate to these rural masses. TV reaches 36% only and there is
a substantial media dark area of 2405 million in Bihar, Orissa, East UP, MP and Rajasthan.
Another important factor from the rural point of view is that during sowing and harvest time
there is electricity for agriculture but no time to watch TV, after the harvest when farmers
are free, electricity otherwise given to them is now diverted to the industry.

Analysis of FMCG Sector

Strengths:
1. Low operational costs
2. Presence of established distribution networks in both urban and rural areas
3. Presence of well-known brands in FMCG sector
Weaknesses:
1. Lower scope of investing in technology and achieving economies of scale, especially in
small sectors
2. Low exports levels
3. "Me-too" products, which illegally mimic the labels of the established brands, narrow the
scope of FMCG products in rural and semi-urban market.
Opportunities:
1. Untapped rural market
2. Rising income levels i.e. increase in purchasing power of consumers
3. Large domestic market - a population of over one billion
4. Export potential
5. High consumer goods spending
Threats:
1. Removal of import restrictions resulting in replacing of domestic brands
2. Slowdown in rural demand
3. Tax and regulatory structure

Why Different Strategies?

Rural markets, as part of any economy, have untapped potential. There are several
difficulties confronting the effort to fully explore rural markets. The concept of rural markets
in India is still in evolving shape, and the sector poses a variety of challenges. Distribution
costs and non availability of retail outlets are major problems faced by the marketers. The
success of a brand in the Indian rural market is as unpredictable as rain. Many brands, which
should have been successful, have failed miserably. This is because, most firms try to extend
marketing plans that they use in urban areas to the rural markets. The unique consumption
patterns, tastes, and needs of the rural consumers should be analyzed at the product
planning stage so that they match the needs of the rural people. Therefore, marketers need
to understand the social dynamics and attitude variations within each village though
nationally it follows a consistent pattern. The main problems in rural marketing are:
 Understanding the rural consumer
 Poor infrastructure
 Physical Distribution
 Channel Management
 Promotion and Marketing Communication
Dynamics of rural markets differ from other market types, and similarly rural marketing
strategies are also significantly different from the marketing strategies aimed at an urban or
industrial consumer.

Opportunities
 Infrastructure is improving rapidly.
 In 50 years only 40% villages connected by road, in next 10 years another 30%
 More than 90% villages electrified, though only 44% rural homes have electric
connections
 Rural telephone density has gone up by 300% in the last 10 years; every 1000+ pop is
connected by STD
 Social Indicators have improved a lot between 1981 and 2001
 Number of “pucca” houses doubled from 22% to 41% and “kuccha” houses halved
(41% to 23%)
 Percentage of BPL(Below Poverty Line) families declined from 46% to 27%
 Rural Literacy level improved from 36% to 59%
 Low penetration rates in rural so there are many marketing opportunities
Durables Urban Rural Total (% of rural HH)

CTV 30.4 4.8 12.1
Refrigerator 33.5 3.5 12.0
FMCGs
Shampoo 66.3 35.2 44.2
Toothpaste 82.2 44.9 55.6
 Marketers can make effective use of the large available infrastructure
 Post offices 1,38,000
 Haats (periodic markets) 42,000
 Melas (exhibitions) 25,000
 Mandis (agri markets) 7,000
 Public distribution shops 3,80,000
 Bank branches 32,000
 Proliferation of large format rural retail stores which have also been successful
 DSCL Haryali stores
 M & M Shubh Labh stores
 TATA/Rallis Kisan Kendras
 Escorts rural stores
 Warnabazaar, Maharashtra (annual sale Rs 40 crore)

CASE STUDY - 1
Company Profile
Set up in 1964 as a joint venture with UK-based James Finlay and Company to develop
value-added tea, the Tata Tea Group of Companies, which includes Tata Tea and the UK-
based Tetley Group, today represent the world's second largest global branded tea
operation with product and brand presence in 40 countries. Among India's first
multinational companies, the operations of Tata Tea and its subsidiaries focus on branded
product offerings in tea but with a significant presence in plantation activity in India and Sri
Lanka.
The consolidated worldwide branded tea business of the Tata Tea Group contributes to
around 86 per cent of its consolidated turnover with the remaining 14 per cent coming from
Bulk Tea, Coffee, and Investment Income. The Company is headquartered in Kolkata and
owns 27 tea estates in the states of Assam and West Bengal in eastern India, and Kerala in
the south.
Products & Brands

The company has five major brands in the Indian market - Tata Tea, Tetley, Kanan Devan,
Chakra Gold and Gemini -- catering to all major consumer segments for tea. The Tata Tea
brand leads market share in terms of value and volume in India and the Tata Tea brand is
accorded "Super Brand" recognition in the country. Tata Tea's distribution network in the
country with 38 C&F agents and 2500 stockiest caters to over 1.7 million retail outlets (ORG
Marg retail Audit) in India.
The company has a 100% export-oriented unit (KOSHER & HACCP certified) manufacturing
Instant Tea in Munnar, Kerala, which is the largest such facility outside the United States.
The unit's product is made from a unique process, developed in-house, of extraction from
tea leaves, giving it a distinctive liquoring and taste profile. Instant Tea is used for light
density 100% Teas, Iced Tea Mixes and in the preparation of Ready-to- drink (RTD)
beverages.
With an area of approx 15,900 hectares under tea cultivation, Tata Tea produces around 30
million kg of Black Tea annually.

4 P’s of Marketing of TATA TEA

Product:
Bulk Tea
All grades of CTC Teas
o All grades of Orthodox Teas
o Organic Tea - Orthodox grades Teas
are supplied in packaging as per ISO norms as well as
customer requirements viz. 4-ply Kraft Paper Sacks,
Multiwall Paper Sacks, Rigid T--Sacks, Polywoven Sacks,
Corrugated Fiber Carlons, and Polylined Jute Bags etc.
Instant Tea
Instant Tea Division caters to customer specific product and is used for light density 100%
Teas, Iced Tea Mixes and in the preparation of Ready to Drink (RTD) beverages. Instant Tea
powder is packed in bulk packages of 20/25/35 kg each.
Intant tea powder - heavy density

Instant tea powder - institutional density
Instant tea powder - grocery density
Micro milled instant tea powder

Price:
Marketers need to understand the psyche of the rural consumers and then act accordingly.
Rural marketing involves more intensive personal selling efforts compared to urban
marketing. Firms should refrain from designing goods for the urban markets and
subsequently pushing them in the rural areas. To effectively tap the rural market a brand
must associate it with the same things the rural folks do. This can be done by utilizing the
various rural folk media to reach them in their own language and in large numbers so that
the brand can be associated with the myriad rituals, celebrations, festivals, “melas” and
other activities where they assemble.
All the prices of the products depend upon the package i.e., 50gms or 100gms. Normally a
Penetrating Strategy is used frequently.
Place: (Dis tribution)

One of the ways could be using company delivery vans which can serve two purposes - it can
take the products to the customers in every nook and corner of the market and it also
enables the firm to establish direct contact with them and thereby facilitate sa les
promotion.
However, only the bigwigs can adopt this channel. The companies with relatively fewer
resources can go in for syndicated distribution where a tie-up between non-competitive
marketers can be established to facilitate distribution. Annual “melas” organized are quite
popular and provide a very good platform for distribution because people visit them to
make several purchases. According to the India n Market Research Bureau, around 8000
such melas are held in rural India every year.
Rural markets have the practice of fixing specific days in a week as Market Days (often called
“Haats’) when exchange of goods and services are carried out. This is another potential low
cost distribution channel available to the marketers. Also, every region consisting of several
villages is generally served by one satellite town (termed as “Mandis” or Agri -markets)
where people prefer to go to buy their durable commodities. If marketing managers use
these feeder towns they will easily be able to cover a large section of the rural population.
Promotion:
Firms must be very careful in choosing the vehicle to be used for communication. Only 16%
of the rural population has access to a vernacular newspaper. So, the audio visuals must be
planned to convey a right message to the rural folk. The rich, traditional media forms like
folk dances, puppet shows, etc with which the rural consumers are familiar and
comfortable, can be used for high impact product campaigns.

CASE STUDY – 2
SOCIETY TEA
"Time for you and time for me,
And time yet for a hundred in decisions,
And for a hundred visions and revisions,
Before the taking of a cup of tea"
An Aromatic Story
It's happening slowly, surely and smoothly.
People of the world are now waking up
To the pleasures of SOCIETY TEA
It comes from the people who have been giving the
World some of the finest blends of tea, since
1933 - Hasmukhrai & Co. The Company
launched Society Tea to meet
the ever- increasing demands from
distant shores such as yours.
Wherever tea is a tradition, Society Tea
Is always welcome, because here is a blend
Of such fine flavor, freshness and consistency,
That meets your expectations.
It's everything your cup of tea should be.

Company Profile
Tea is a tradition in our country. As, no doubt, it is in yours as well. But slowly, surely, people
all over are being a little more conscious about the tea that they drink. Slowly but surely, tea
is being referred to as SOCIETY TEA. Surely, one more delightful indication of the world
growing smaller. And in a way, of people coming closer. Now let's raise our cups, to this
cheerful tradition and to our little world of big-tasting teas.
Mission Statement
The objective is to create new blends for the world.
Teas of a superlative quality that taste buds had never known
To extend its reach, cross geographical and cultural boundaries and reaching the
hearts of the people.
Benefits of Society Tea – Health Benefits

Want the least expensive answer to memory problem?
Drink tea, every few hours a day, says recent findings by Unilever Research Laboratories.
After much experiment with combinations of various kinds of drugs that supposedly
enhanced memory power, the findings seek to subtly suggest that the most affordable
remedy, without medical expenses involved, was already available and yet ignored.
Findings by Unilever point to a strong link between tea and an increase in mental alertness
and other mental and physical attributes. Drinking tea every few hours can help prevent a
decline in mental alertness and performance throughout the day.
Tea is a rich source of flavonoids. The flavonoids in tea are found to be effective in
improving blood circulation and skin health. Research in Japan and Netherlands also indicate
that tea prevents strokes and heart attacks, certain cancers, check cholesterol levels and
inhibit formation of dental plaque.
Studies have shown that black tea consumption reduces the risk of heart disease and stroke.
It maintains a healthy circulatory system of arteries and veins.
Today researchers are finding that a steaming cup of tea can relieve more than just the
stress of a harried day. Drinking the brew has been linked with a lowered risk of everything
from tooth decay to heart disease to stroke.
In a study of more than 1000 Japanese men, the more green tea they drank, the lower their
concentrations of blood cholesterol dropped. And recently, University of Minnesota
researchers found a link between tea consumption and a decreased risk for cancers of
digestive and urinary tract organs in women. Study on humans on tea and heart health,
revealed that drinking more than five cups of black tea had the lowest risk of severe
atherosclerosis.

4 P’s of Marketing of Society Tea

Product:
Available in 50, 100,

250 & 500 grams
SOCIETY TEA respectively
Available in 250, 500 grams

and 1 Kg. only
SOCIETY TEA - PET
JAR
In Packs of 25, 50 & 100

SOCIETY TEA
respectively
BAGS
Available in 250 grams Jars on

SOCIETY request only
PREMIUM
Available in 250 & 500 grams

Jar only
T - TOWN TEA
Available on request only

SOCIETY PURE
DARJEELING TEA

Price:
The Pricing strategy used by Society Tea is somewhere in between penetrating and
skimming, but the major part is occupied by Penetrating.
Prices of Tea are as per the product packages.
E.g., - 100 gms are @ Rs.20/-
Place: (Dis tribution)

Rural markets have the practice of fixing specific days in a week as Market Days (often called
“Haats’) when exchange of goods and services are carried out. This is another potential low
cost distribution channel available to the marketers. Also, every region consisting of several
villages is generally served by one satellite town (termed as “Mandis” or Agri -markets)
where people prefer to go to buy their durable commodities. If marketing managers use
these feeder towns they will easily be able to cover a large section of the rural population.
Distribution of Society is all around the Urban and Rural Market.
The Manufacturer gives it to the wholesaler, wholesaler in turn gives it to the retailer and
then finally to the customers.
Promotion:
They arrested the eyes. There was something different about them. Something fresh.
Something elegant. Little wonder then, that tea-lovers felt persuaded to pick them up and
take them home. Yes, we're talking about the package.
As a matter of fact, everything was designed to appeal to the senses. From the packaging to
the point-of-sales of attractions, from the press advertisements to the posters, from radio
jingles to TV commercials. The jingle "Tea. Tea. Tea…………." caught on so much that people
we heard humming it, while walking into stores, waiting for trains, watching a cricket-match
or generally to ease out their boredom.
Even children were heard singing it. One felt freshness, newness, a sense of contentment
similar to the feeling one gets after each sip of Hasmukhrai & Co.'s teas. You couldn't expect
any less from them. After all, they take so much trouble to create such exquisite blends of
tea. Each of these pieces of communication was an invitation in every sense of the word. In
fact, the first ad for SOCIETY Tea said "Welcome to the Society…” It was an invitation well
accepted, for the society of tea lovers is growing larger, day by day. We're tempted to say
“Tea cheers for the design."

Live Examples of Market Capturing

 One very fine example can be quoted of Escorts where they focused on deeper
penetration. They did not rely on T.V or press advertisements rather concentrated on
focused approach depending on geographical and market parameters like fares, melas
etc. Looking at the ‘kuchha’ roads of village they positioned their bike as tough vehicle.
Their advertisements showed Dharmendra riding Escort with the punch line ‘Jandar
Sawari, Shandar Sawari’. Thus, they achieved whopping sales of 95000 vehicles annually.
 HLL started ‘Operation Bharat’ to tap the rural markets. Under this operation it passed
out low–priced sample packets of its toothpaste, fairness cream, Clinic plus shampoo,
and Ponds cream to twenty million households.
 ITC is setting up e-Choupals which offers the farmers all the information, products and
services they need to enhance farm productivity, improve farm-gate price realization
and cut transaction costs. Farmers can access latest local and global information on
weather, scientific farming practices as well as market prices at the village itself through
this web portal - all in Hindi. It also facilitates supply of high quality farm inputs as well
as purchase of commodities at their doorstep.
 BPCL Introduced Rural Marketing Vehicle (RMV) as their strategy for rural marketing. It
moves from village to village and fills cylinders on the spot for the rural customers. BPCL
considered low-income of rural population and therefore introduced a smaller size
cylinder to reduce both the initial deposit cost as well as the recurring refill cost.

Present Position
Rural markets, as part of any economy, have untapped potential. There are several
difficulties confronting the effort to fully explore rural markets. The concept of rural markets
in India, as also in several other countries, like China, is still in evolving shape, and the sector
poses a variety of challenges, including understanding the dynamics of the rural markets
and strategies to supply and satisfy the rural consumers.
Thus looking at the challenges and the opportunities which rural markets offer to the
marketers it can be said that the future is very promising for those who can understand the
dynamics of rural markets and exploit them to their best advantage. A radical change in
attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so
they can successfully impress on the 230 million rural consumers spread over approximately
six hundred thousand villages in rural India.

Bibliography
Following are the sources which were referred while completing this project :
1. http://en.wikipedia.org/wiki/Rural_markets
2. http://www.naukrihub.com/india/fmcg/overview/
3. http://insightory.com/view/175/rural_marketing_in_india
4. http://www.oppapers.com/essays/Fmcg-Sector-India/176985
5. http://www.oppapers.com/essays/Research-Paper-On-Marketing-To-Rural/229881
6. http://www.oppapers.com/essays/Lifebuoy/192117
7. http://publicrelationmanagement.blogspot.com/2009/01/wasss-up.html
8. http://www.indianmba.com/Faculty_Column/FC448/fc448.html
9. http://www.oppapers.com/essays/Conterfrid-Brands/188985

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Potentiality of Rural Market

A Case of FMCG Product

Department of Professional Development

Jaypee Institute of Engineering & Technology

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 2

Date: 19/11/2009 Tanuj Bansal

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 3

JAY PEE INS TITUTE OF ENG INEERING & TECHNOLO GY

This is to certify that project entitled ”Potentiality of Rural Market – A Case of

Mr. Sandeep Srivastava

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 4

Introduction to Indian Rural Market

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 5

Market Segmentation of Indian Rural Market

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 6

Rural and Urban Potential

Population 2001-02 (m household) 53 135

Population 2009-10 (m household) 69 153

Market (Towns/Villages) 3,768 627,000

Source: Statistical Outline of India (2001-02), NCAER

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 7

Fast Moving Consumer Goods (FMCG)

Products and Categories

- Cosmetics and toiletries, deodorants, perfumes, feminine hygiene, paper product;

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 8

Top 10 FMCG Companies in India

2. ITC (Indian Tobacco Company)

6. Asian Paints (India)

9. Procter & Gamble Hygiene and Health Care

10. Marico Industries

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 9

Rural Market and FMCG Products

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 10

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 11

Deodorants 2.1 5.5 0.6

Toothpaste 48.6 74.9 37.6

Skin Cream 22 31.5 17.8

Shampoo 38 52.1 31.9

Utensil Cleaner 28 59.9 14.6

Instant Coffee 6.6 15.5 2.8

Washing Powder 86.1 90.7 84.1

Detergent Bar 88.6 91.4 87.4

Toilet Soap 91.5 97.4 88.9

Source: HLL investor meet 2006

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 12

What makes Rural Market attractive?

Rural Consumer Insight

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 13

MARK Approach to Rural Marketing

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 14

Analysis of FMCG Sector

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 15

Why Different Strategies?

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 16

 Low penetration rates in rural so there are many marketing opportunities

Durables Urban Rural Total (% of rural HH)

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 17

Products & Brands

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 18

4 P’s of Marketing of TATA TEA

Intant tea powder - heavy density

Tanuj Bansal, 06307G, B-Tech, CSE, JIET, GUNA 19

Place: (Dis tribution)