CHAPTER 1 INTRODUCTION Increasingly, more companies are turning to rural markets to expand the scope of their operations and

also to pre-empt competition. Rural markets are tomorrows markets and the marketer should know how to penetrate these markets. This is not just because ! percent of Indias population still li"es in rural areas, but because of the sweeping changes that are occurring here. Rural markets are today important for all consumer product companies. This is because most urban markets are getting saturated. The intensity in competition in these markets impacts the profitability of firms. The rural markets ha"e also gained prominence because of the socio-economic changes, which are sweeping rural India. The cables and satellite tele"ision as also by the Internet and telecommunication are fueling these changes. This has enhanced rural consumers awareness and aspirations. #lso concerted attempts are being made by self-help groups to generate incomes in the poor areas, which, in turn is helping create demand for product and ser"ices. Ten years ago, foreign consumer products were scarce in India and only a"ailable to the affluent. Import restrictions pre"ented or se"erely hindered foreign consumer goods from entrance to India. $ith the economic liberali%ation that ensued, foreign brands are now pre"alent across India &'uce, (!!(). *or the rural consumer, access to product or ser"ice is more critical then just its ownership. Rural marketing therefore re+uires an inno"ati"e approach. It in"ol"es changing the "alue paradigm by altering products priceperformance relationship. It also in"ol"es designing products that can deli"er in sub optimal condition and despite infrastructural constraints Today, multinational corporations "iew emerging markets such as India as prime opportunities for growth. #ccording to ,hanthi -anaan, writer for The .indu, rural markets are growing twice as fast as the urban markets &(!!/). $ith a rural population e+ual to just under (.0 times the population of the entire 1nited ,tates as of the (!!!

census, the potential consumer base is astounding. 2ut generally speaking, success in Indias rural markets for multinational corporations has been mediocre at best. It is from these struggles and failures, howe"er, that multinational corporations seeking to enter the rural Indian market can learn how to do so more wisely.The marketer has three strategic options, namely extension of urban strategy to rural markets and finally inno"ate for rural market success. The challenge today lies in de"eloping relationship-marketing programme for rural buyers especially since "arious banks ha"e already issued 3/ million kisan cards.

JUSTIFICATION OF RESEARCH

There are two schools of thoughts persists. The first school believed that the products/services, marketing tools & strategies that are successful in urban areas, could be transplanted with little or no more modifications in rural areas. However, the second school saw a clear distinction between urban & rural India, & suggested a different approach, skills, tools & strategies to be successful in rural markets. To have a close look over rural market scenario and marketing strategies followed by different corporate firms and types of product and service offered to consumers of rural market are the major factors, which motivate us to do this research. Here we e plore the basic !" approach which is necessary to penetrate in to the rural market and distribution system of product delivery. Thus, in a large rural economy like India#s, rural marketing has emerged as an important & distinct internal sub$division within the marketing discipline. This sub$division clearly highlights the differences between rural marketing & mainstream marketing. %urther market could be e plored on the basis of income, infrastructural & socio$cultural factors.

CHAPTER OBJECTIVE 4

Rural consumers are fundamentally different from their urban counterparts. The lower le"els of literacy and limited exposure to product and ser"ices are well-known, but there are also differences in occupation options, with a direct impact on income le"els and income flows, and a high le"el of inter-dependency affecting the dynamics of rural community beha"ior. #ll contribute to make rural consumer beha"ior starkly distinct from the urban. The main objecti"es of analysis of rural market are to assess /. The present and future scenario of rural market. (. To search for 5ew opportunities in rural market. 4. Rural consumer insight. 3. To e"aluate marketing strategy of different companies. 0. Issues and challenges related to rural market

CHAPTER 4 RURAL MARKETING

4.1 CONCEPT CLARIFIER Rural marketing in"ol"es the process of de"eloping, pricing, promoting, distributing rural specific product and a ser"ice leading to exchange between rural and urban market which satisfies consumer demand and also achie"es organi%ational objecti"es.

URBAN RURAL

RURAL URBAN

RURAL

RURAL

It is a two-way marketing process wherein the transactions can be6 /. Urban to R ra!6 # major part of rural marketing falls into this category. It in"ol"es the selling of products and ser"ices by urban marketers in rural areas. These include6 7esticides, *89: 7roducts, 9onsumer durables, etc. (. R ra! to Urban6 Transactions in this category basically fall under agricultural marketing where a rural producer seeks to sell his produce in an urban market. #n agent or a middleman plays a crucial role in the marketing process. The following are some of the important items sold from the rural to urban areas6 seeds, fruits and "egetables, milk and related products, forest produce, spices, etc. 4. R ra! to R ra!6 This includes the acti"ities that take place between two "illages in close proximity to each other. The transactions relate to the areas of expertise the particular "illage has. These include selling of agricultural tools, cattle, carts and others to another "illage in its proximity. Rural marketing re+uires the understanding of the complexities. Indian agricultural industry has been growing at a tremendous pace in the last few decades. The rural areas are consuming a large number of industrial and urban manufactured products. The rural agricultural production and consumption process plays a predominant role in de"eloping

the Indian economy. This has designed a new way for understanding a new process called Rural 8arketing. The concept of rural marketing has to be distinguished from #gricultural marketing. 8arketing is the process of identifying and satisfying customers needs and pro"iding them with ade+uate after sales ser"ice. Rural marketing is different from agricultural marketing, which signifies marketing of rural products to the urban consumer or institutional markets. Rural marketing basically deals with deli"ering manufactured or processed inputs or ser"ices to rural producers, the demand for which is basically a deri"ed outcome. Rural marketing scientists also term it as de"elopmental marketing, as the process of rural marketing in"ol"es an urban to rural acti"ity, which in turn is characterised by "arious peculiarities in terms of nature of market, products and processes. Rural marketing differs from agricultural or consumer products marketing in terms of the nature of transactions, which includes participants, products, modalities, norms and outcomes. The participants in case of Rural 8arketing would also be different they include input manufacturers, dealers, farmers, opinion makers, go"ernment agencies and traders. Rural marketing needs to combine concerns for profit with a concern for the society, besides being titled towards profit. Rural market for agricultural inputs is a case of market pull and not market push. 8ost of the jobs of marketing and selling are left to the local dealers and retailers. The market for input gets interlocked with other markets like output, consumer goods, money and labour. Rural marketing in India is not much de"eloped there are many hindrances in the area of market, product design and positioning, pricing, distribution and promotion. 9ompanies need to understand rural marketing in a broader manner not only to sur"i"e and grow in their business, but also a means to the de"elopment of the rural economy. ;ne has to ha"e a strategic "iew of the rural markets so as to know and understand the markets well. In the context of rural marketing one has to understand the manipulation of marketing mix has to be properly understood in terms of product usage.

<

7roduct usage is central to price, distribution, promotion, branding, company image and more important farmer economics, thus any strategy in rural marketing should be gi"en due attention and importance by understanding the product usage, all elements of marketing mix can be better organised and managed. 4." EVOLUTION OF RURAL MARKETING MAJOR PRODUCTS #gricultural 7roduce SOURCE MARKET Rural DESTINATION MARKET 1rban

PHASE I

ORIGIN 2efore /=<! to 8id-

FUNCTION

&from #gricultural 8arketing green

independence re"olution) 8id,ixties &:reen re"olution 7reliberali%ation III period) 8id- 5ineties &7ostliberali%ation period on (!th century) I@ (/st century

II

8arketing ;f to #gricultural Inputs

#gricultural Inputs

1rban

Rural

9onsumables Rural 8arketing #nd >urables *or 9onsumption ? 7roduction >e"elopmental #ll products ? 1rban ? 1rban marketing ser"ices Rural Rural ? 1rban ? Rural Rural

P#a$% I &'ro( In)%*%n)%n+% to Gr%%n R%,o! t-on./ 2efore the ad"ent of the :reen re"olution, the nature of rural market was altogether different. Rural marketing then referred to the marketing of rural products in rural ?

urban products. P#a$% II &Gr%%n R%,o! t-on to Pr%0!-b%ra!-1at-on *%r-o)./ >uring these times, due to the ad"ent ? spread of the :reen Re"olution, rural marketing represented marketing of agriculture inputs in rural markets ? marketing of rural produce in urban areas. P#a$% III &Po$t0!-b%ra!-1at-on *%r-o) on "2t# +%nt r3./ The third phase of rural marketing started after the liberali%ation of the Indian economy. In this period, rural marketing represented the emerging, distinct acti"ity of attracting ? ser"ing rural markets to fulfill the need ? wants of rural households, peoples ? their occupations. P#a$% IV &"1$t +%nt r3./ 'earning from its rural marketing experiences after the independence, the corporate world has finally reali%ed the +uick-fix solutions ? piecemeal approaches will deli"er only limited results in the rural markets. #nd, if an organi%ation wants to tap the real potential of the rural market, it needs to make a long-term commitment with this market. Its approach ? strategies must not focus in just selling products ? ser"ices, but they should also aim at creating an en"ironment for this to happen. The objecti"e of rural marketing in the current phase is the impro"ement of the +uality of life by satisfying the needs ? wants of the customers, not through atand-alone products or ser"ices, but by presenting comprehensi"e ? integrated solutions which might in"ol"e a set of inter-related products ? ser"ices. Till recently, the focus of marketers in India was the urban consumer and by large number specific efforts were made to reach the rural markets. 2ut now it is felt that with the tempo of de"elopment accelerating in rural India, coupled with increase in purchasing power, because of scientific agriculture, the changing life style and consumption pattern of "illagers with increase in education, social mobility, impro"ed means of transportations and communication and other penetrations of mass media such as tele"ision and its "arious satellite channels ha"e exposed rural India to the outside world and hence their outlook to life has also changed. 2ecause of all these factors, rural India in now attracting

more and more marketers. Increase in competition, saturated urban markets, more and mo"e new products demanding urban customers, made the companies to think about new potential markets. Thus, Indian rural markets ha"e caught the attention of many companies, ad"ertisers and multinational companies. #ccording to a recent sur"ey conducted by the 5ational 9ouncil for #pplied Bconomic Research &59#BR), the purchasing power of the rural people has increased due to increase in producti"ity and better price commanded by the agricultural products. 2y and large this rise in purchasing power remains unexploited and with the growing reach of the tele"ision, it is now +uite easy for the marketers to capture these markets. Rural marketing has become the latest mantra of most corporate. 9ompanies like .industan 'e"er, 9olgate 7almoli"e, 2ritannia and e"en 8ultinational 9ompanies &859s) like 7epsi, 9oca 9ola, '.:., 7hilips, 9a"in -are are all eyeing rural markets to capture the large Indian market. 9oming to the frame work of Rural 8arketing, Rural 8arketing broadly in"ol"es reaching the rural customer, understanding their needs and wants, supply of goods and ser"ices to meet their re+uirements, carrying out after sales ser"ice that leads to customer satisfaction and repeat purchaseCsales.

4.4 NATURE OF RURAL MARKET Lar5%6 D-,%r$% an) S+att%r%) Mar7%t/ Rural market in India is large, and scattered into a number of regions. There may be less number of shops a"ailable to market products.

 DMa8or In+o(% o' R ra! +on$ (%r$ -$ 'ro( A5r-+ !t r%/ Rural 7rosperity is tied with agriculture prosperity. In the e"ent of a crop failure, the income of the rural masses is directly affected. Stan)ar) o' L-,-n5 an) r-$-n5 )-$*o$ab!% -n+o(% o' t#% r ra! + $to(%r$/ It is known that majority of the rural population li"es below po"erty line and has low literacy rate, low per capital income, societal backwardness, low sa"ings, etc. 2ut the new tax structure, good monsoon, go"ernment regulation on pricing has created disposable incomes. Today the rural customer spends money to get "alue and is aware of the happening around him. Tra)-t-ona! O t!oo7/ @illages de"elop slowly and ha"e a traditional outlook. 9hange is a continuous process but most rural people accept change gradually. This is gradually changing due to literacy especially in the youth who ha"e begun to change the outlook in the "illages. R-$-n5 !-t%ra+3 !%,%!$/ It is documented that approximately 30E of rural Indians are literate. .ence awareness has increases and the farmers are well-informed about the world around them. They are also educating themsel"es on the new technology around them and aspiring for a better lifestyle. DD-,%r$% $o+-o%+ono(-+ ba+75ro n)/ >ue to dispersion of geographical areas and une"en land fertility, rural people ha"e disparate socioeconomic background, which ultimately affects the rural market. In'ra$tr +t r% Fa+-!-t-%$/ The infrastructure facilities like cemented roads, warehouses, communication system, and financial facilities are inade+uate in rural areas. .ence physical distribution is a challenge to marketers who ha"e found inno"ati"e ways to market their products.

4.4 CLASSIFICATION OF RURAL CONSUMERS The rural consumers are classified into the following groups based on their economic status6

/!

 T#% A''! %nt Gro */ They are cash rich farmers and a "ery few in number. They ha"e affordability but not form a demand base large enough for marketing firms to depend on. $heat farmers in 7unjab and rice merchants of #ndhra 7radesh fall in this group. T#% M-))!% C!a$$/ This is one of the largest segments for manufacturedDgoods and is fast expanding. *armers culti"ating sugar cane in 17 andD-arnataka fall in this category. T#% Poor/ This constitutes a huge segment. 7urchasing power is less,DDbut strength is more. They recei"e the grants from go"ernment and reapDthe benefits of many such schemes and may mo"e towards the middleclass. The farmers of 2ihar and ;rissa fall under this category.

CHAPTER 9 EFFECT OF CONSUMER BEHAVIOUR PRODUCT AND MARKETING MI:

//

9.1 RURAL CONSUMER BEHAVIOUR 9onsumer 2uyer 2eha"iour refers to the buying beha"iour of final consumers indi"iduals and households who buy goods and ser"ices for personal consumption. #ll of these final consumers combined make up the consumer market. The consumer market in this case is Rural India. #bout !E of Indias population li"es in rural areas. There are more than <!!,!!! "illages in the country as against about 4!! cities and 3<!! towns. 9onsumers in this huge segment ha"e displayed "ast differences in their purchase decisions and the product use. @illagers react differently to different products, colours, si%es, etc. in different parts of India. Thus utmost care in terms of understanding consumer psyche needs to be taken while marketing products to rural India. Thus, it is important to study the thought process that goes into making a purchase decision, so that marketers can reach this huge untapped segment. Fa+tor$ -n'! %n+-n5 b 3-n5 b%#a,-or The "arious factors that affect buying beha"ior of in rural India are6 /. Environmental of the consumer - The en"ironment or the surroundings, within which the consumer li"es, has a "ery strong influence on the buyer beha"ior, egs. Blectrification, water supply affects demand for durables. (. Geographic influences - The geographic location in which the rural consumer is located also speaks about the thought process of the consumer. *or instance, "illages in ,outh India accept technology +uicker than in other parts of India. Thus, .8T sells more winding watches in the north while they sell more +uart% watches down south. 4. Family F it is an important buying decision making organi%ation in consumer markets. *amily si%e ? the roles played by family members exercise considerable influence on the purchase decisions. Industry obser"ers are increasingly reali%ing that at times, purchase of durable has less to do with income, but has more to do with the si%e of the family ? thats where rural India with joint family structures, becomes an attracti"e proposition. 3. Economic factors F The +uantum of income ? the earning stream are one of the major deciding factors, which determine to a great extent, what the customer will

/(

be able to buy. 8any people in the rural market are below po"erty line ? for large number of people, agriculture is the primary occupation. 8ore than !E of the people are in small-scale agricultural operation. These factors affect the purchase decision. 0. Place of purchase &<!E prefer .##T, due to better +uality, "ariety ? price) 9ompanies need to assess the influence of retailers on both consumers at "illage shops and at haats. <. Creative use of product ex :odrej hair dye being used as a paint to colour horns of oxen, $ashing machine being used for churning lassi. The study of product end pro"ides indicators to the company on the need for education and also for new product ideas. . Brand preference and loyalty &A!E of sale is branded items in /< product categories) ;. C !t ra! 'a+tor$ -n'! %n+-n5 +on$ (%r b%#a,-o r =. 9ultural factors exert the broadest and deepest influence on consumer beha"iour. The marketer needs to understand the role played by the buyers culture. 9ulture is the most basic element that shapes a persons wants and beha"iour. /!. In India, there are so many different cultures, which only goes on to make the marketers job tougher. ,ome of the few cultural factors that influence buyer beha"iour are6 Product &colour, si%e, design, and shape)6 There are many examples that support this point. a) *or example, the Tata ,umo, which was launched in rural India in a white colour, was not well accepted. 2ut howe"er, when the same ,umo was relaunched as ,pacio &a different name) and in a bright yellow colour, with a larger seating capacity and ability to transport good, the acceptance was higher. b) #nother good example would be 7hilips audio systems. 1rban India looks at technology with the "iewpoint of Gthe smaller the better. .owe"er, in rural India, the "iewpoint is totally opposite. That is the main reason for the large acceptance of big audio systems. Thus 7hilips makes audio systems,

/4

which are big in si%e and get accepted in rural India by their sheer si%e. Social practices6 There are so many different cultures, and each culture exhibits different social practices. *or example, in a few "illages they ha"e common bath areas. @illagers used to buy one 'ifebuoy cake and cut it into smaller bars. This helped lifebuoy to introduce smaller 0-gram soap bars, which could be used indi"idually. Decision-making by male head6 The male in Indian culture has always been gi"en the designation of key decision maker. *or example, the 8ukhiyas opinion &.ead of the "illage), in most cases, is shared with the rest of the "illage. B"en in a house the male head is the final decision maker. In rural areas, this trend is "ery prominent. Changes in saving and investment patterns *rom gold, land, to tractors, @9Rs, '9@s 9." SELLING IN RURAL INDIA The Indian rural market with its "ast si%e and demand base offers a huge opportunity that 859s cannot afford to ignore T; expand the market by tapping the countryside, more and more 859s are foraying into IndiaHs rural markets. #mong those that ha"e made some headway are .industan 'e"er, 9oca-9ola, ': Blectronics, 2ritannia, ,tandard 'ife, 7hilips, 9olgate 7almoli"e and the foreign-in"ested telecom companies. OPPORTUNIT< The Indian rural market with its "ast si%e and demand base offers a huge opportunity that 859s cannot afford to ignore. $ith /(A million households, the rural population is nearly three times the urban. #s a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to (!! million tones from / < million tones in /==/, rural India has a large consuming class with 3/ per cent of IndiaHs middle-class and 0A per cent of the total disposable income. The importance of the rural market for some *89: and durable marketers is underlined by the fact that the rural market accounts for close to ! per cent of toilet-soap users and

/3

4A per cent of all two-wheeler purchased. The rural market accounts for half the total market for T@ sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder, $hat is more, the rural market for *89: products is growing much faster than the urban counterpart.

9.4 THE 4A APPROACH/ The rural market may be alluring but it is not without its problems6 'ow per capita disposable incomes that is half the urban disposable incomeI large number of daily wage earners, acute dependence on the "agaries of the monsoonI seasonal consumption linked to har"ests and festi"als and special occasionsI poor roadsI power problemsI and inaccessibility to con"entional ad"ertising media. .owe"er, the rural consumer is not unlike his urban counterpart in many ways. The more daring 859s are meeting the conse+uent challenges of a"ailability, affordability, acceptability and awareness &the so-called 3 #s) A,a-!ab-!-t3 The first challenge is to ensure a"ailability of the product or ser"ice. IndiaHs <( ,!!! "illages are spread o"er 4.( million s+ kmI !! million Indians may li"e in rural areas, finding them is not easy. .owe"er, gi"en the poor state of roads, it is an e"en greater challenge to regularly reach products to the far-flung "illages. #ny serious marketer must stri"e to reach at least /4,//4 "illages with a population of more than 0,!!!. 8arketers must trade off the distribution cost with incremental market penetration. ;"er the years, IndiaHs largest 859, .industan 'e"er, a subsidiary of 1nile"er, has built a strong distribution system, which helps its brands reach the interiors of the rural market. To ser"ice remote "illage, stockiest use auto rickshaws, bullock-carts and e"en boats in the backwaters of -erala. 9oca-9ola, which considers rural India as a future growth dri"er, has e"ol"ed a hub and spoke distribution model to reach the "illages. To ensure full loads, the company depot supplies, twice a week, large distributors which who act as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas. ': Blectronics defines all cities and towns other than the se"en metros cities as

/0

rural and semi-urban market. To tap these unexplored country markets, ': has set up 30 area offices and 0= ruralCremote area offices.

A''or)ab-!-t3 The second challenge is to ensure affordability of the product or ser"ice. $ith low disposable incomes, products need to be affordable to the rural consumer, most of whom are on daily wages. ,ome companies ha"e addressed the affordability problem by introducing small unit packs. :odrej recently introduced three brands of 9inthol, *air :low and :odrej in 0!-gm packs, priced at Rs 3-0 meant specifically for 8adhya 7radesh, 2ihar and 1ttar 7radesh J the so-called K2imaruH ,tates. .industan 'e"er, among the first 859s to reali%e the potential of IndiaHs rural market, has launched a "ariant of its largest selling soap brand, 'ifebuoy at Rs ( for 0! gm. The mo"e is mainly targeted at the rural market. 9oca-9ola has addressed the affordability issue by introducing the returnable (!!-ml glass bottle priced at Rs 0. The initiati"e has paid off6 Bighty per cent of new drinkers now come from the rural markets. 9oca-9ola has also introduced ,unfill, a powdered soft-drink concentrate. The instant and ready-to-mix ,unfill is a"ailable in a single-ser"e sachet of (0 gm priced at Rs ( and mutiser"e sachet of (!! gm priced at Rs /0. A++%*tab-!-t3 The third challenge is to gain acceptability for the product or ser"ice. Therefore, there is a need to offer products that suit the rural market. ;ne company, which has reaped rich di"idends by doing so, is ': Blectronics. In /==A, it de"eloped a customised T@ for the rural market and christened it ,ampoorna. It was a runway hit selling /!!,!!! sets in the "ery first year. 2ecause of the lack of electricity and refrigerators in the rural areas, 9oca9ola pro"ides low-cost ice boxes J a tin box for new outlets and thermocol box for seasonal outlets. The insurance companies that ha"e tailor-made products for the rural market ha"e

/<

performed well. .>*9 ,tandard 'I*B topped pri"ate insurers by selling policies worth Rs 4.0 crore in total premium. The company tied up with non-go"ernmental organi%ations and offered reasonably priced policies in the nature of group insurance co"ers. $ith large parts of rural India inaccessible to con"entional ad"ertising media J only 3/ per cent rural households ha"e access to T@ J building awareness is another challenge. *ortunately, howe"er, the rural consumer has the same likes as the urban consumer J mo"ies and music J and for both the urban and rural consumer, the family is the key unit of identity. .owe"er, the rural consumer expressions differ from his urban counterpart. ;uting for the former is confined to local fairs and festi"als and T@ "iewing is confined to the state-owned >oordarshan. 9onsumption of branded products is treated as a special treat or indulgence. .industan 'e"er relies hea"ily on its own company-organised media. These are promotional e"ents organi%ed by stockiest. :odrej 9onsumer 7roducts, which is trying to push its soap brands into the interior areas, uses radio to reach the local people in their language. 9oca-9ola uses a combination of T@, cinema and radio to reach 04.< per cent of rural households. It doubled its spend on ad"ertising on >oordarshan, which alone reached 3/ per cent of rural households. It has also used banners, posters and tapped all the local forms of entertainment. ,ince price is a key issue in the rural areas, 9oca-9ola ad"ertising stressed its KmagicalH price point of Rs 0 per bottle in all media. ': Blectronics uses "ans and road shows to reach rural customers. The company uses local language ad"ertising. 7hilips India uses wall writing and radio ad"ertising to dri"e its growth in rural areas. The key dilemma for 859s eager to tap the large and fast-growing rural market is whether they can do so without hurting the companyHs profit margins. 8r. 9arlo >onati, 9hairman and 8anaging->irector, 5estle, while admitting that his companyHs product portfolio is essentially designed for urban consumers, cautions companies from plunging headlong into the rural market as capturing rural consumers can be expensi"e. L#ny generalisationL says 8r. >onate, Labout rural India could be wrong and one should focus on high :>7 growth areas, be it urban, semi-urban or rural.L

9.4 NE= MARKETING MI: FOR SELLING TO RURAL INDIANS /(.(E of the world li"es in Rural India. 7ut in a different context, this works out to / in A people on Barth. 2eing able to successfully tap this growing market is e"ery marketers dream. .owe"er, myths abound. Indias rural markets are often misunderstood. # clear distinction needs to be made with regard to the reality "ersus the image of rural India. If such a distinction is not made, we will be unable to distinguish between the serpent and the rope and the rope and the serpent. The rural market is not homogeneous. Though the aggregate si%e is "ery large, indi"idual subsets of this market tend to be rather small and disparate. :eographical, demographical, statistical, logistical differences are "ery apparent. 7ositioning and realities regarding the potential of each of these market segments differ and lie at the "ery core of forming the strategy for the rural markets. The face of Indian agriculture is changing from dry land and irrigated agriculture into high-tech and low-tech agriculture. *armers in states like 8aharashtra and #ndhra 7radesh ha"e reaped the benefits of adopting new age farming practices, including green house culti"ation, fert-irrigation and hydroponics. This has radically changed the economics of farming, with the in"estment in these systems lowering the cost of culti"ation, increasing yields due to integrated crop management practices and reducing the dependence on rainfall. #s a result, disposable income has grown sharply. The aspirants are becoming climbers showing a sustained economic upturn as purchasing power is increasing in the rural markets. The proportion of "ery rich has increased fi"efold. The growing incomes ha"e modified demand patterns and buyer beha"iour. 8oreo"er, the need for a product or ser"ice is now ade+uately backed up with the capacity, ability and willingness to pay. .owe"er, the market still remains largely unexploited. #t most times, potential markets need tobe found and at times, e"en created. ,uch creation of demand needs efficient management of thesupply chain. To increase market share, beha"ioural change needs to be at the forefront of anystrategy. *urther, due to the di"ersity of this market, marketers

/A

need to think, plan and act locally.It is therefore essential to de"elop an accurate 8arketing 8ix for selling to rural Indians.

Pro) +t The Rural market is not a homogenous set of customers with preferences fro%en in time. $hen de"eloping products in any category, marketers must identify the typical rural specific needs. 1rban products cannot be dumped onto rural markets without modifications. Tailor-made products are better recei"ed by the rural audience as the consumers feel empowered and tend to dentify with the offering. *or instance, shampoos or soaps with distincti"e, strong rose or jasmine perfumes are "ery popular with the rural women in ,outh India. The urban women do not identify as strongly with these perfumes. ,acheti%ation is also a distinctly rural-dri"en phenomenon. #s demand in se"eral categories is being created, intensity of use is +uite low. ;n a"erage, rural folk would use a shampoo only once a week. .abits take time to change and making unit sachet packs affordable is the key to inducing trial and purchase.,ystematic, in-depth research that can help understand the depths of the mind of the "illagers, their buying criteria, purchase patterns and purchasing power are an essential input while de"eloping rural specific products or ser"ices. # common error has been to launch a completely stripped down "ersion of the urban product in the rural market, with the objecti"e of offering the lowest possible price. This is not what a rural consumer wants. $hat is re+uired is to introduce a product with Gessential features, whose needs are recogni%ed and for which the consumer is willing to pay &"alue-adding features). 7roduct de"elopers should aim at eliminating all the costadding features, i.e., features which a consumer is unwilling to pay for as he sees no ob"ious utility. This would Mredefine "alueN in the minds of the consumer and tremendously increase product acceptability.

/=

7roduct de"elopment is se"erely constrained by legislation in the case of agricultural inputs like fertili%ers, insecticides and pesticides. In the case of fertili%ers for instance, though le"els of deficiency of nutrients ha"e increased significantly o"er the past decade, no significant changes in formulations notified under the *ertili%er 9ontrol ;rder ha"e taken place. This has se"erely restricted the a"ailability of cost effecti"e specialty fertili%ers of global standards to Indian farmers. Technological know-how for manufacture of such fertili%ers exists within the country. .owe"er, farmers using modern farming practices are unable to get an assured supply of such farm inputs due to draconian legislation. # mo"e to liberali%e the sector could perhaps consider the accepted worldwide norm of allowing manufacturers with a strong R?> base to decide their own formulations with the go"ernment machinery conducting checks on market samples of finished products to ensure that they li"e up to the labelled specifications. This would be a major policy initiati"e that would gi"e a huge impetus to inno"ati"e product de"elopment in the farm sector. 7roduct life cycles as are becoming shorter and these are ha"ing their impact on company life cycles. Thus for any company wishing to de"elop its product portfolio, allegiance to the classic #merican 7-#-' 7rinciple of Partnership - Alliances - Linkages is a basis for sur"i"al. Pr-+-n5 B"ery marketer must reali%e that the rural consumer is not a miser. .e is not simply looking for the cheapest product in e"ery category. .e understands and demands "alue for money in e"ery purchase that he makes. 7ricing therefore is a direct function of factors including cost-benefit ad"antage and opportunity cost. 7ricing offered to consumers should be for "alue offerings that are affordable. 7rice sensiti"ity is extremely high and comparison with competiti"e prices is common. 9onsumers seem to create narrow psychological price bands in their minds for product groups and price elasticity beyond the extreme price points is "ery high. The percei"ed utility or "alue of the product or ser"ice is the ultimate decision making factor.

(!

It is certain howe"er, that buying cheap is not the primary objecti"e. Rather, it is Mbuying smartN. # study re"ealed that the a"erage rural consumer takes approximately ( years to decide on buying a watchO .e will not do so unless he is totally con"inced that he is getting "alue for 8oney. Impulse buys and purchases for conspicuous consumption are also extremely few and far 2etween considering the M"alue for moneyN factor that reigns supreme in most rural purchase decisions. It must be remembered that the rural consumer does not ha"e a budget problem. .e has a cash flow problem. This is because the "illage folk recei"e funds only twice a year. #t these times, he is capable of making high "olume purchases. #t all times, howe"er, the unit price is critical and so is the pack si%e. 2ecause of this, in the lean season when there is a cash flow crunch, marketers need to pro"ide financial products, schemes or solutions that suit the needs of the rural population. Pro(ot-on$ > A),%rt-$-n5 There are a lot of barriers that militate against homogenous media and message deli"ery. These barriers stem from the fact that rural markets "ary immensely in terms of tastes, habits and preferences leading to different expectations of e"ery segment of the population. .owe"er, one fact is certain across all areas. The rural consumer likes to touch and feel a product before making a choice. >emonstrations are undoubtedly the most effecti"e promotional tool that shapes purchase decisions of the rural population. >emonstrations establish the credentials of any new technology used in de"eloping the product. In todays information era, it is "ery important for companies to wise-up on emerging technologies. It has in fact become a medium to attract larger audiences for a product demonstration. Technology must be used to prepare a database of customers and their re+uirements. The use of "ideo using mobile "ans and e"en large screen "ideo walls at e"ents should be arranged.

(/

The classic conundrums of reach and co"erage of the media are shattered. ,e"eral creati"e communication media ha"e been used by "arious companies to tackle the problem of ha"ing to use "isual communication and non-"erbal communication to reach the rural audience. This is re+uired because a large proportion of the rural population cannot read or write. #lliances with cottage industries, dharmsalas, panchayats, post offices and police stations for ad"ertising ha"e also helped immensely. 8ore importantly, in rural India, experience has pro"ed time and time again that word of mouth is the key influencer. Intermediaries are the foundation to rural distribution. If the intermediary understands and is constantly reminded about your product, then the end user will not be allowed to forget. The companies must reinforce this highly effecti"e medium and use all their inno"ation and money tom de"elop more dramatic point of sale and point of contact material. This becomes all the more important when in rural India, more often than not, the o"erlap between the product categories sold in a single outlet in tremendous. *or instance, a store may call itself as a grocery store but will stock e"erything from groceries to "egetables to fertili%ers and may at times e"en stock medicines. In such cases, the point at which the customer actually comes in contact with a product may not be the point at which the sale is affected. The re-use capacity and colour of the container in which the product is packed is also a crucial factor. In fact, reusable packaging is considered a major aid in promoting sales for products in the rural market.9onsumer and Trade schemes that Incenti"ise ,pending using discount coupons, off season discounts, free samples, etc. encourage spending. 'ucky draws and gift schemes are a major hit in most states. The use of local idioms and collo+uial expressions are an excellent way to strike a rapport with the rural consumer and must be borne in mind when de"eloping media plans and public relations programmes. 5o high "oltage publicity is re+uired. The rural consumer is "ery down to earth but e+ually discerning and marketers need to step into the shoes of the rural folk while creating product promotion campaigns.

((

#nother uni+ue feature of rural markets is that the >ecision making process is collecti"e. The persons in"ol"ed in the purchase process - influencer, decider, buyer, one who pays can all be different. ,o marketers must address brand messages in their campaigns at se"eral le"els. #part from regular household goods, se"eral agribusiness companies ha"e also started pro"iding gift schemes with offers for free jewellery that influences the ladies to pressure the farmers to purchase agricultural inputs from select companies. This promotion strategy thus makes women influence purchase decisions that they would ordinarily not be in"ol"ed in. Pouth power is becoming increasingly e"ident in "illages. Rural youth bring brand knowledge to the households. This has forced se"eral companies to change the focus and positioning of their products and ser"ices towards this segment that is growing in absolute number and relati"e influence. There are other attributes in the promotion strategy which are explained as under6 /. Ma$$ (%)-a/ In the present world mass media is a powerful medium of communication. The following are the mass media generally used6 Tele"ision. 9inema Radio 7rint media6 .andbills and 2ooklets, posters, stickers, banners, etc. (. P%r$ona! $%!!-n5 an) o*-n-on !%a)%r$/ In personal selling it is re+uired that the potential users are identified and awareness is created among them about the product, its features, uses and benefits. This can be achie"ed only by personal selling by highly moti"ated sales person. In fact the word of mouth information holds lot "alidity in rural areas e"en today. This is the reason why opinion leaders and word of mouth are thri"ing among rural consumers. #n opinion leader in rural areas can be defined as a person who is considered to be knowledgeable and is consulted by others and his ad"ice is normally followed. The opinion leaders may be big landlords or politicians or progressi"e farmers.

(4

4. S*%+-a! +a(*a-5n$/ >uring crop har"est and marketing seasons it is beneficial to take up special promotion campaigns in rural areas. Tractor owners &tone) conducted by 8R* 'imited is one such example. 2rooks 2ond carries out marches in rural areas with band, music and caparisoned elephants to promote their brand of tea. 4. Man)- an) M%!a (a5-+ #t last count, India witnessed o"er 0!,!!! melas. ;f these (0,!!! meals are held to signify religious, cultural festi"als as well as local fairs and e"ents. ;n an a"erage, "isitors at these melas spend between Rs. 0,!!! to Rs. 0!,!!! a day. *or example, 4 lakh people "isited the annual mela at 5a"chadi which lasts for days in 8eerut. The largest such mela is the 8aha -umbh 8ela which is "isited by an a"erage of /( crore people. There is howe"er, a ca"eat when an organi%ation is considering using mela for marketing their products. Is the audience at this mela fit for promotion of the product at handQ $hat are the psychographics of this audienceQ $hat is the moti"ational and beha"ioural impetus that brings "isitors to each of these melas. ;n considering these +uestions, it has been obser"ed that melas are fit to generate product exposure, package familiarity, brand reminder and word of mouth. .owe"er, for products that need concept marketing and those that ha"e high prices, such melas are not suitable promotion media. This is because the time and the mood of the people that "isit these melas are not right to digest technical information or for making large purchases. 7eople come to melas to ha"e a good time and are not reminded of such high technology or high priced products when they return home. In the words of 8r. 5e"ille :omes, 8anaging >irector of 8ultimedia #+uarius, promotion at melas is like a Mone night standN. There will be no reminder later. Thus, a large amount of +ualitati"e judgment is indeed in planning promotions at melas by media planners.

P!a+% place is the major reason behind the e"olution of rural marketing as a distinct discipline. # "illage as a place for promotion, distribution ? consumption is "ery different from a town

(3

or city, thus the general marketing theories cant be applied directly in rural markets. Reaching the right place is the toughest part in todays rural marketing, as most of the products reach up to the nearest townships of any "illage, but due to higher distribution costs, these products fails to reach the "illage as the distribution channel fails to put in the re+uired efforts. 8ost of the times, the rural retailers themsel"es go to the urban areas to procure these goods. Rural markets imply complex logistical challenges that show up as high distribution costs. S-5n-'-+an+% o' D-$tr-b t-on 5o matter how well de"ised a companys product, pricing or promotion strategy, the most crucial link in ensuring the success of rural marketing efforts is distribution. >istribution must be strengthened and this would raise in"estment cost barriers for new entrants. In Rural India, the selection and use of distribution channels is a nightmare. The reason for this is "ery clear when we consider that on an a"erage, 1rban and Rural India both ha"e approximately 4 million retail outlets. .owe"er, 1rban India has only 3,!!! towns where these outlets are located. ;n the other hand, Rural Indias 4 million outlets are located in <.4 lakh "illages. Thus, marketers are faced with the problem of feeding 4 million shops located in "astly di"erse areas each of which records an a"erage sale of only Rs.0,!!! per outlet. *urther compounding this problem is the fact that e"en this meagre sale is mostly on credit. The di"ersity in the distribution of shops is the self-limiting factor in terms of ser"icing the rural distribution network.

(0

The distribution of outlets howe"er shows that a marketer need not be present in all markets at all times. 2eing present in < lakh "illages is "irtually impossible for an organi%ation of any si%e. Rural wealth and demand is concentrated typically at satellite towns, district head+uarters, assembly markets and such central locations. Rural distribution has a rigid hierarchy of markets that make channel decisions relati"ely structured.

(<

It is essential for rural marketing companies to understand this hierarchy. Rural folk are habituated to tra"elling once a week for their weekly purchases to a satellite town. They do not expect such items to be present in e"ery "illage. *or durables where the outlay in"ol"ed is typically large, the purchase would be made in an assembly market for reasons of choice and a"ailability of ade+uate cash flow. This is due to the fact that it is at assembly markets that auction yards are present where the farmers congregate to sell their output. #fter such sale of produce, they are cash rich and can afford to make such purchases. It is therefore not necessary for a marketer of T@ sets to take their distribution channel all the way down to the "illage shop. # T@ will not be sold there as the cash flow does not exist at that point in the hierarchy of markets. # tele"ision distributor must be present at assembly markets which are much smaller in number, more controllable, easier to reach and ser"ice. -eeping the hierarchy in mind will help decide the optimum le"el of penetration re+uired to reach a critical mass of rural consumers. Haat$ .aats are the ner"e centre of Rural India. They are a readymade distribution network embedded in the fabric of rural society for o"er /!!! years. They ha"e been held on a regular basis across the length and breadth of the country for o"er /!!! years. Right from the time of 9handragupta 8aurya, .aats are seen as a place for social, cultural and economic interchange.

;ne in e"ery fi"e "illages with a population of o"er (!!! has a haat. In "illages with less than (!!! people this figure reduces to / in (! "illages. Typically, an a"erage haat will ha"e close to 4!! stalls. # haat usually ser"es around 0!!! "isitors. 9onsidering that the a"erage population of an Indian "illage is approximately /!!!, each haat ser"es 0 "illages. # study estimates that 3 ,!!! haats are conducted in rural India. These rural super markets are much larger than all the worldHs --marts and $al-marts put together. # lot of re-distribution also occurs through haats. This is because, a large number of retailers and sub-wholesalers buy from haats for their "illage stores. $hat is most attracti"e to marketers is that =!E R of sales in haats are on cash basis. Traditionally, in "illage shops a lot of credit sales occur due to the fact that in a small geographic area of a "illage, e"erybody knows e"erybody. 9onsidering that o"er 0!!! "isit a haat from 0 "illages, the system gets derelationalised. #part from the =!E cash sale, 0 to E is conducted on barter system and the rest 4 to 0E is on credit. #lso attracti"e to companies wishing to use the system is the low selling o"erheads. 7articipation fees at haats are a flat Re./ to Rs.0 per stall and this rate is common to a giant like .industan 'e"er and the smallest local seller. >istribution costs must be reduced through optimum utili%ation of the network. Thus, incorporating haats in the distribution strategy of a rural marketing organi%ation selling consumer goods and *89: products &typically once a week purchase items) is a tremendous opportunity. 7erhaps the other most important factor to consider while de"eloping rural distribution strategy is that the mo"e from transactional marketing to relationship marketing is most e"ident in the "illage market. # strong bond needs to be created with e"ery consumer e"en in the remotest "illage and the smallest town. 8arketing in Rural India is undoubtedly a long-haul exercise and one that in"ol"es great expense. ;nly those with a strong mind, a tough heart and stiff hands sur"i"e. There is also a need to realise that the dealer is the companyHs LunpaidL sales force. It is

(A

essentialto educate and in"ol"e him as he is the local company representati"e and is the only member inthe channel of distribution that is in direct contact with the final consumer. The dealersH feedback needs to be obtained as the direction for future strategy emanates here.

CHAPTER ?

(=

POTENTIAL OF RURAL CONSUMER ?.1 THE PARADIGM SHIFT In most of the rural areas in different parts of the country, there is considerable awareness on "arious latest products that are a"ailable in the market. This has been possible due to the penetration of cable and satellite channels that ha"e brought down the world at the fingertips of the common man. The media influenced the mindset of the rural consumer to such an extent that people who had money started purchasing the products unmindful of the costs, just to satisfy their needs as well as their ego. 2ut, the growth of rural market could be attributed to many other reasons that in one way increased the sales as well as the profits of the companies. ,ome of the important causes for the growth of rural markets are F S The rise in disposable income of the rural families S The economic boom S Timely rains S Rural population in"ol"ed themsel"es in business other than agriculture S Increase white-collar jobs in nearby towns S 9ommerciali%ation of agriculture S ,aturation of the urban markets S 8edia penetration in rural areas &particularly satellite channels) S :lobali%ation S Bconomic liberali%ation S Re"olution in the Information Technology S $omen empowerment S Impro"ing infrastructure .owe"er, there was a significant role of the corporate enterprises simultaneously in the de"elopment of rural market. Their timely inter"ention into the rural areas, their appropriate planning, their perception and identification about the growth of rural markets and the use of marketing strategies all ha"e e+ually contributed for the progress of rural markets. B"en though corporate houses were hedged with so many problems in the rural areas, they saw a galore of opportunities in the rural market and con"erted all the

4!

pessimistic characteristics of the rural market into affirmati"e attributes. They satisfied themsel"es with the a"ailability of limited infrastructure, saw a sign of prosperity rather than fear during the entry of competitors into the rural markets, showed excitement at the a"ailability of satellite channels in the rural households, "isuali%ed their cash bells ringing with the increase in purchasing power of the rural masses that came e+ui"alent to their urban counterparts. They traced a constant rise in the demand for those products that were once confined mostly to the urban houses. 2ut, blame it on the kind of awareness created by the companies F people started using the products for other purposes as seen earlier. In many "illages, one can see today the alternate use of the products other than for their actual purpose. 7eople in the state of 2ihar feed the cattle with .orlicks as a health drink to fatten themO ,imilarly, people in 7unjab use washing machine not for washing clothes but to make frothy lassi in huge +uantitiesO #nimals are rubbed with Iodex on their skins to relie"e them from muscular pains after a dayHs hard work. 7aints meant for houses are used on the horns of cattle for easy identification and theft pre"entionO The wea"ers in 5orth India wear condoms on their fingers as glo"es to wea"e fine threads while its lubrication allows them fine control on threads and protect their sensiti"e fingersO If companies felt happy with their increased sales and profits through this means and thought that they captured the rural markets, then it is time for them to re"iew their marketing strategies. They should understand that these results do not coincide with the application of the marketing tools and the technical expertise that are generally used to satisfy the customers as well as the company objecti"es. The implications of 3 7s of marketing mix or the use of 3 #s for successful rural marketing ha"e produced wrong results. #ll companies usually claim that they pro"ide the right product at the right place at right price with right kind of promotion. Then why did the rural consumer used for different purpose accept a right productQ $hy did he afford to spend either much or less on the product that has not deri"ed him the kind of benefit as claimed by the manufacturerQ $hy did the place of offer differ than to where and to whom it actually was supposed to be a"ailableQ $hy the right promotion has created wrong awareness in the minds of the target customersQ

4/

There was something missing in the marketing strategies of the companies while ser"ing the rural markets. ;therwise, the results should ha"e been more astonishing where the sales turno"er or the balance sheet would ha"e shown much more than what is presently achie"ed. Though, only the consumers in this way used few products, that use might be the result of the accidental or wrongful application by the rural consumers. The marketerHs planning about the product and the communication with the target customers should be perfect that produces the desired results. ?." RURAL INDIA0HUB OF POTENTIAL CONSUMERS IndiaHs consumer and household product companies will probably sell more goods in the countryHs "illages and towns as rural incomes increase, a sur"ey said. >emand for products such as toothpaste, instant coffee and deodorants in the nationHs "illages and small towns will increase by <! percent by (!/(, said the #ssociated 9hambers of 9ommerce and Industry of India, a 5ew >elhi-based association of companies. KKThe per capita income of rural and semi-urban populace will increase as the economic acti"ities grow there due to go"ernment focus on their industriali%ation,HH the association said. #bout ! percent of IndiaHs more than /./ billion people li"e in rural areas. The

go"ernment is spending more to build roads to connect "illages, expand irrigation networks and supply electricity to impro"e producti"ity and raise incomes. The countryHs consumer and household products market will expand to /.(4 trillion rupees &T( .< billion) by (!/( from about !! billion rupees now, the association said. #bout <! percent of all household products will be consumed in "illages and small towns, it said.9ompanies such as the local unit of 1nile"er and the countryHs biggest cigarette maker, IT9. LTD, are expanding their reach in the <4A,!!! "illages and 4, A3 towns with less than /!!,!!! people. Bxpanding 9onsumer 8arket IndiaHs economy has grown at an a"erage of more than A

4(

percent in the past three years. *inance 8inister 7. 9hidambaram said on >ec. (/ the countries gross domestic product may grow at about = percent in the year ending 8arch 4/. 'ast year, 7rime 8inister Man(o#an S-n5# un"eiled the 2harat 5irman, or 2uilding India, project with a plan to spend /. < trillion rupees by (!!= to build roads, pro"ide electricity to /!!,!!! "illages, extend irrigation to an additional /! million hectares &(3. million acres) and build < million houses. The country has (40 million farmers and agriculture accounts for about a fifth of the T billion economy. -olkata-based IT9, a cigarette maker that has di"ersified in the past six years into retail store networks to sell cookies, garments, incense sticks and matches, plans to set up 03 retail stores called 9houpal *resh in the next three years to sell fresh fruits and "egetables. It also plans to expand the number of its rural supermarkets called 9houpal ,agars to !! by (!/4 from // currently. HLL, the 8umbai-based local unit of 1nile"er, sells its products through <.4 million shops, reaching eight out of /! households in India. KKThere is so much potential for penetration and increased consumption in rural markets, @ HARISH MAN=ANI, chairman of .industan 'e"er, said last month. KK,e"enty percent of India is still in rural markets. In the longer term, rural markets will trend upward.HH $hile there is a general tendency to e+uate rural India to 2o7 market, here are some of the consumption numbers that will blow your mind 3<E of the soft drinks sales happen in the rural areas. Rural India accounts for 3=E of motorcycle sales. Rural India accounts for 0=E of 9igarettes sales. 04E of *89: sales happen at Rural India. Rural India ;pportunities Talcum powder is used by more than (0E of rural India. 'ipsticks are used by more than //E of the rural women and less than ((E of the urban women. 9lose to /!E of 8aruti ,u%ukis sales come from the rural market. .ero .onda, on its part, had 0!E of its sales coming from rural market in *P!=. 44 0

 Rural India has a large consuming class with 3/E of Indias middle-class and 0AE of the total disposable income accounting for consumption. 2y (!/! rural India will consume <!E of the goods produced in the country. In (! years, rural Indian 8arket will be larger than the total consumer markets in countries such as ,outh -orea or 9anada today, ? almost 3 times the si%e of todays urban Indian market. (!!E growth in consumption of washing machines, T@. =E increase in the rural consumer expenditure since (!!(. I5R 0!!billion market of consumer durables. I5R <0!!billion market of *89:. #gri inputs of I5R 03!!billons. ?.4 RURAL CONSUMERS LOOK FOR VALUE PRODUCTS ,a""y customers make it difficult for companies to penetrate the countryHs rural markets for goods and ser"ices J estimated at o"er Rs 0!,!!! crore annually. To compound the problem for companies, rural consumers are not swayed by successful urban marketing strategies. Rural consumers are clued-in to the "alue of a product because they are willing to research extensi"ely, said 8r. R.@. Rajan, 9hairman and 8anaging >irector, #nugrah ? 8adison #d"ertising 7"t. 'td. To illustrate the point, he ga"e the example of a farmer in 8eerut, near >elhi, who planned to replace tires for his bullock cart. .e examined a tire for nearly two hours. .e then compared the product and price in other shops and also asked one of his friends to test the tires +uality. $hen there was another tire buyer, the farmer watched carefully what he was doing and later tried the same. .e decided to buy the product after analy%ing the product for nearly six hours. 8r. Rajan was addressing the students of the ,chool of 8anagement, 2harath Institute of .igher Bducation and Research, here on *riday, on KRural 9ommunicationsH. 9ompanies need to do an in-depth study of the mindset of rural consumers in each region before de"eloping a communication package for a product. Bxperience of one product category 43

cannot be repeated with another, he said.

Rural India, we ha"e seen that on an a"erage, there are (-4 brands per product stocked. This means that if the marketer can ensure that his brand is a"ailable in the rural shop at the same price as that in the nearby town, he has fewer brands to compete with.

CHAPTER A CURRENT SCENARIO A.1 ROADBLOCKS OF INDIAN RURAL MARKETS 40

There are se"eral roadblocks that make it difficult to progress in the rural market. 8arketers encounter a number of problems like dealing with physical distribution, logistics, proper and effecti"e deployment of sales force and effecti"e marketing communication when they enter rural markets. The major problems are listed below. /. Stan)ar) o' !-,-n56 The number of people below the po"erty line is more in rural markets. Thus the market is also underde"eloped and marketing strategies ha"e to be different from those used in urban marketing. (. LoB !-t%ra+3 !%,%!$6 The low literacy le"els in rural areas leads to a problem of communication. 7rint media has less utility compared to the other media of communication. 4. LoB *%r +a*-ta -n+o(%6 #griculture is the main source of income and hence spending capacity depends upon the agriculture produce. >emand may not be stable or regular. 3. Tran$*ortat-on an) Bar%#o $-n56 Transportation is one of the biggest challenges in rural markets. #s far as road transportation is concerned, about 0!E of Indian "illages are connected by roads. .owe"er, the rest of the rural markets do not e"en ha"e a proper road linkage which makes physical distribution a tough task. 8any "illages are located in hilly terrains that make it difficult to connect them through roads. 8ost marketers use tractors or bullock carts in rural areas to distribute their products. $arehousing is another major problem in rural areas, as there is hardly any organi%ed agency to look after the storage issue. The ser"ices rendered by central warehousing corporation and state warehousing corporations are limited only to urban and suburban areas. 0. In%''%+t-,% )-$tr-b t-on +#ann%!$6 The distribution chain is not "ery well organi%ed and re+uires a large number of intermediaries, which in turn increases the cost and creates administrati"e problems. >ue to lack of proper infrastructure, manufacturers are reluctant to open outlets in these areas. They are mainly dependent on dealers, who are not easily a"ailable for rural areas. This is a challenge to the marketers. <. Man3 !an5 a5%$ an) )-,%r$-t3 -n + !t r%6 *actors like cultural congruence, different beha"iour and language of the respecti"e areas make it difficult to handle the

4<

customers. Traits among the sales force are re+uired to match the "arious re+uirements of these specific areas. . La+7 o' +o(( n-+at-on $3$t%(6 Uuick communication is the need of the hour for smooth conduct of business, but it continues to be a far cry in rural areas due to lack of communication facilities like telegraph and telecommunication systems etc. The literacy rate in the rural areas is rather low and consumers beha"iour in these areas is traditional, which may be a problem for effecti"e communication. A. S* r-o $ bran)$6 9ost is an important factor that determines purchasing decision in rural areas. # lot of spurious brands or look-alikes are a"ailable, pro"iding a low cost option to the rural customer. 8any a time the rural customer may not be aware of the difference due to illiteracy. =. S%a$ona! )%(an)6 >emand may be seasonal due to dependency on agricultural income. .ar"est season might see an increase in disposable income and hence more purchasing power. >I,7BR,B>
8#R-BT,/

RURAL

POPULATION IS HIGHL< DISPERSED AND RECUIRES A LOT OF

MARKETING EFFORTS IN TERMS OF DISTRIBUTION AND COMMUNICATION.

A." STRATEGIES B< COMMUNICATING AND CHANGING CUALIT< PERCEPTION 9ompanies are coming up with new technology and they are properly communicating it to the customer. There is a trade-oV between Uuality a customer percei"es and a company wants to communicate. Thus, this positioning of technology is "ery crucial. The perception of the Indian about the desired product is changing. 5ow they know the difference between the products and the utilities deri"ed out of it. #s a rural Indian customer always wanted "alue for money with the changed perception, one can notice difference in current market scenario.

B< PROPER COMMUNICATION IN INDIAN LANGUAGE

The companies ha"e reali%ed the importance of proper communication in local language for promoting their products. They ha"e started selling the concept of +uality with proper communication. Their main focus is to change the Indian customer outlook about +uality. $ith their promotion, rural customer started asking for "alue for money B< TARGET CHANGING PERCEPTION If one go to "illages they will see that "illagers using Toothpaste, e"en when they can use 5eem or 2abool sticks or :udakhu, "illagers are using soaps like 5ima rose, 2ree%e, 9inthol etc. e"en when they can use locally manufactured "ery low priced soaps. @illagers are constantly looking forward for new branded products. $hat can one infer from these incidents, is the paradigm changing and customer no longer price sensiti"eQ Indian customer was ne"er price sensiti"e, but they want "alue for money. They are ready to pay premium for the product if the product is offering some extra utility for The premium. B< UNDERSTANDING CULTURAL AND SOCIAL VALUES 9ompanies ha"e recogni%ed that social and cultural "alues ha"e a "ery strong hold on the people. 9ultural "alues play major role in deciding what to buy. 8oreo"er, rural people are emotional and sensiti"e. Thus, to promote their brands, they are exploiting social and cultural "alues. B< PROVIDING =HAT CUSTOMER =ANT The customers want "alue for money. They do not see any "alue in frills associated with the products. They aim for the basic functionality. .owe"er, if the seller pro"ides frills free of cost they are happy with that. They are happy with such a high technology that can full their need. #s L8otorolaL has launched, se"en models of 9ellular 7hones of high technology but none took oV. ;n the other hand, L5okiaL has launched a simple product, which has captured the market. B< PROMOTING PRODUCTS =ITH INDIAN MODELS AND ACTORS 9ompanies are picking up Indian models, actors for ad"ertisements as this helps them to

4A

show themsel"es as an Indian company. >iana .yden and ,hahrukh -han are chosen as a brand ambassador for 859 +uart% clock maker L;8B:#L e"en though when they ha"e models like 9indy 9rawford. B< ASSOCIATING THEMSELVES =ITH INDIA 859s are associating themsel"es with India by talking about India, by explicitly ,aying that they are Indian. 8-T@ during Independence >ay and Republic daytime make their logo with Indian tri-color. 5okia has designed a new cellular phone 0//!, with the India tri-colour and a ringing tone of L,are Wahan se achchaL. B< PROMOTING INDIAN SPORTS TEAM 9ompanies are promoting Indian sports teams so that they can associate themsel"es with India. $ith this, they in uni+e Indian mindset. ': has launched a campaign L': ki >ua, all the bestL. IT9 is promoting Indian cricket team for yearsI during world cup they ha"e launched a campaign LWeeta hai jitega apna .industan India India IndiaL. ,imilarly, $hirlpool has also launched a campaign during world cup. (.= 2P T#'-I5: #2;1T # 5;R8#' I5>I#5 9ompanies are now talking about normal India. It is a normal tendency of an Indian to try to associate himselfCherself with the product. If heCshe can @isuali%e himselfCherself with the product, he Cshe becomes loyal to it. That is why companies like >aewoo based their ad"ertisements on a normal Indian family. B< DEVELOPING RURAL0SPECIFIC PRODUCTS 8any companies are de"eloping rural-species products. -eeping into consideration the re+uirements, a firm de"elops these products. Blectrolux is working on a made-for India fridge designed to ser"e basic purposes6 chill drinking water, keep cooked food fresh, and to withstand long power cuts.

B< GIVING INDIAN =ORDS FOR BRANDS

4=

9ompanies use Indian words for brands. 'ike ': has used India brand name L,ampoornaL for its newly launched T@. The word is a part of the 2engali, .indi, 8arathi and Tamil tongue. In the past one year, ': has sold one lakh (!-inch ,ampoorna T@s, all in towns with a population of around /!,!!!. 2y the end of /===, roughly /(Thats Rs //3 crore worth of T@ sets sold in the "illages in a year. B< ACCUIRING INDIAN BRANDS #s Indian brands are operating in India for a long time and they enjoy a good reputation in India. 859s ha"e found that it is much easier for them to operate in India if they ac+uire an Bstablished Indian 2rand. Blectrolux has ac+uired two Indian brands -el"inator and #lways this has ga"e them the well-established distribution channel. #s well as trust of people, as people belie"e these brands. ,imilarly 9oke has ac+uired Thumps up, :old ,pot, 9itra and 'imca so that they can kill these brands, but later on they reali%ed that to sur"i"e in the market and to compete with their competitor they ha"e To reju"enate these brands. B< EFFECTIVE MEDIA COMMUNICATION 9ompanies are using 8edia Rural marketing. They can either go for The traditional media or the modern media. The traditional media include melas, puppetry, folk theatre etc. while the modern media includes T@, radio, e-chaupal. 'I9 uses puppets to educate rural masses about its insurance policies. :o"t of India uses puppetry in its campaigns to press ahead social issues. 2rook 2ond 'ipton India ltd used magicians effecti"ely for launch of -odak 9hap Tea in Btawah district. In between such a show, the lights are switched oV and a torch is ashed in the dark &B"ereadys tact). IT9Hs e-chaupal &chaupal is the common place where "illagers gather) has been the most elaborate and extensi"e "enture in this field so far. 9oncei"ed by IT9Hs international business di"ision and launched in (!!!, the e-chaupal project has since grown to around (, !! chaupals co"ering a population of around /.( million in states X8adhya 7radesh, -arnataka, #ndhra 7radesh, 1ttar 7radesh and 8aharashtra. Rural marketing re+uires the understanding of the complexities and this article re"iews some of the key issues. Indian agricultural industry has been growing at a tremendous pace in the last few decades. The

3!

rural areas are consuming a large number of industrial and urban manufactured products. The rural agricultural production and consumption process plays a predominant role in de"eloping the Indian economy. This has designed a new way for understanding a new process called Rural 8arketing. The concept of rural marketing has to be distinguished from #gricultural marketing. 8arketing is the process of identifying and satisfying customers needs and pro"iding them with ade+uate after sales ser"ice. Rural marketing is different from agricultural marketing, which signifes marketing of rural products to the urban consumer or institutional markets. Rural marketing basically deals with deli"ering manufactured or processed inputs or ser"ices to rural producers, the demand for which is basically a deri"ed outcome. Rural marketing scientists also term it as de"elopmental marketing, as the process of rural marketing in"ol"es an urban to rural acti"ity, which in turn is characteri%ed by "arious peculiarities in terms of nature of market, products and processes. Rural marketing differs from agricultural or consumer products marketing in terms of the nature of transactions, which includes participants, products, modalities, norms and outcomes. The participants in case of Rural 8arketing would also be different they include input manufacturers, dealers, farmers ;pinion makers, go"ernment agencies and traders. The existing approach to the rural markets has "iewed the markets as a homogeneous one, but in practice, there are significant buyer and user di"ergences across regions as well as within that re+uires a deferential treatment of the marketing problems. These di"ergences could be in terms of the type of farmers, type of crops and other agro-climatic conditions. ;ne has to understand the market norms in agricultural input so as to de"ise good marketing strategies and to a"oid unethical practices, which distort the marketing en"ironment. 8any of the inputs used for production process ha"e implications for food, health and en"ironmental sectors. Rural marketing needs to combine concerns for port with a concern for the society, besides being titled towards port. Rural market for agricultural inputs is a case of market pull and not market push. 8ost of the jobs of marketing and selling is left to the local dealers and retailers. The market for input gets interlocked with other markets like output, consumer goods, money and labour. The importance of rural marketing can be understood from the fact that today modern inputs i.e. diesel, electricity,

3/

fertili%ers, pesticides, seeds account for as much as !:reen Re"olution areas. *urther the percentages were higher at A/of land. ,trategic aspects Rural marketing in India is not much de"eloped there are many hindrances in the area of market, product design and positioning, pricing, distribution and promotion. 9ompanies need to understand rural marketing in a broader manner not only to sur"i"e and grow in their business, but also a means to the de"elopment of the rural economy. ;ne has to ha"e a strategic "iew of the rural markets so as to know and understand the markets well. In the context of rural marketing one has to understand the manipulation of marketing mix has to be properly understood in terms of product usage. 7roduct usage is central to price, distribution, promotion, branding, company image and more important farmer economics, thus any strategy in rural marketing should be gi"en due attention and importance by understanding the product usage, all elements of marketing mix can be better organi%ed and managed. B< ADOPTING LOCALISED =A< OF DISTRIBUTING 9ompanies recogni%e proper distribution channels. The distribution channel could be a big scale ,uper marketsI they thought that a similar system could be grown in India. .owe"er, they were wrong, soon they reali%ed that to succeed in India they ha"e to reach the nook and the corner of the country. They ha"e to reach the Llocal 7aan wala, 'ocal 2aniyaL only they can succeed. 859 shoe giants, #didas, Reebok, 5ike started with exclusi"e stores but soon they reali%ed that they do not enjoy much 2rand B+uity in India, and to capture the market share in India they ha"e to go the local market shoe sellers. They ha"e to reach to local cities with low priced products. B< ASSOCIATING THEMSELVES =ITH INDIAN CELEBRITIES 859s ha"e reali%ed that in India celebrities enjoyed a great popularity so they now associate themsel"es with Indian celebrities. Recently 'uxor $riting Instruments 'td. a W@ of :illette and 'uxor has launched 0!! L:ajgaminiL range of 7arker ,onnet .ussain special edition fountain pens, priced at Rs. 0!!!. 8r. 8#-21' *I># .1,,#I5 sighed that pen. $ho has created L:ajgaminiL range of paintingsQ 9ompanies are promoting players like 2haichung 2hutia, who is promoted by Reebok, so that they can associate their name with players like him and get popularity.

3(

MELAS 8elas are places where "illagers gather once in a while for shopping. 9ompanies take ad"antage of such e"ents to market their products. >abur uses these e"ents to sell products like W#5#8 :.1TI &:ripe water). 59#BR estimates that around half of items sold in these melas are *89: products.and consumer durables. Bscorts also display its products like tractors and motorcycles in such melas. PAINTINGS # picture is worth thousand words. The message is simple and clean. Rural people like the sight of bright colors. 9;-B, 7B7,I and T#T# traders ad"ertise their products through paintings. A.4 M3t#$ Abo t T#% In)-an R ra! Mar7%t M3t# no 16 In the aftermath of urban-rural con"ergence, rural market will be mainly an extension of urban markets and will e"entually embrace the product and brand lifestyles of the latter, supported by higher disposable incomes, aggressi"e retail promotion and ad"ertising. T#% r%a!-t36 Rural markets represent a distinct dynamic in how they come into being and make uni+ue demands on how the product is designed and how the brand is positioned and promoted. :reater the strategic attention to these uni+ue demands, assure greater the chances of productHs success in the rural market. M3t# no "6 The market si%e can be estimated based on mere demographic interpolation of current penetration le"els and sales "olumes and that e"en fringe presence or limited acceptance of lifestyle consumer products in rural market would translate into future market potential to be tapped. T#% r%a!-t36 *ringe acceptance of consumer products or brands is no indication of market potential. It actually would only result in higher incidence of brand and product mortality as more firms try to choke those segments with competing brands. Rural market dynamics

34

instead demand sustained effort at brand building and product acceptance. M3t# no 46 That rural market represents a more or less homogenous matrix of attitudes, "alues and purchasing beha"ior across regions leading to what may be termed Lone size fits allL approach. T#% r%a!-t36 The Indian rural market is a complex mosaic of mind-sets, cultures, and lifestyles. $hile education, employment, income, agricultural land ownership may still be the major deciding factors accounting for social differentiation, they do not yield reciprocal cohort beha"ioral patterns, with respect to consumption patterns, purchasing decisions and priorities of product ownership. M3t# no 46 That rural markets are highly price-inelastic and only suited for H"alue-for moneyH products as against premium +uality products. T#% r%a!-t36 >espite lower incidence of premium product purchases, the rural consumers across all income segments exhibit marked propensity to spend on premium high +uality products, which are backed by strong brand "alues, where they correspond to their own aspirations and +uality needs. The problem really lies in market not being able to offer a premium product in the specific context of rural demand.

CHAPTER ; RURAL VDS URBAN MARKET

33

;.1 RURAL INDIA CATCHING UP FAST =ITH URBAN INDIA Riding on economic growth, the a"erage expenditure on consumer durables in rural India is fast catching up with that of urban India. The 5ational ,ample ,ur"ey ;rgani%ation has stated this in its </ round of 5ational ,ample ,ur"ey &5,,) during the Wuly (!!3-!0 period. The data were collected from a ,ample of =,(=A rural households spread o"er ,=== "illages and 30,43< urban households in 3,<!( urban blocks. In (!!3-!0, expenditure on durable goods formed 4. 0 per cent &Rs (/. 3 out of Rs 0 =./ ) of a"erage per capita consumer expenditure in rural areas and 3.( per cent &Rs 3 ./< out of Rs //!3.<!) in urban areas. In /===-(!!!, their share was (.<( per cent in rural sector and 4.</ per cent in urban areas. L#s your income rises, the share of essential items in the total expenditure, especially food items, drops significantly. $ith rural income catching up with urban income, this trend is ob"ious,L said chief statistician 7ronab ,en. 7ercentage-wise, the number of rural households ha"ing motorcycles has gone up from ( per cent in /==4-=3 to . percent in (!!3-!0. #bout !.A percent rural households owned a car in (!!3-!0, compared with !.( percent in /==4-=3. #round (0.< per cent rural households had T@ sets during the same period as against percent in /==4-/==3. Blectric fans were found in 4A percent rural households, showing an increase of /(/4percentage points since /===-(!!!. Refrigerators were used in 3 per cent rural households in (!!3-!0,compared with / per cent in /==4-=3. ;." RURAL VS URBAN MARKETING0SUMMAR< NO. / ASPECT URBAN RURAL 8arketing ? ,ocietal 8arketing ? ,ocietal 9oncepts PHILOSOPH< Relationship 8arketing ? 9oncepts, >e"elopment 8arketing Relationship 8arketing 30 ?

A.

MARKET B. DEMAND C. COMPETITION CONSUMERS LOCATION LITERAC< INCOME E:PENDITURE NEEDS INNOVATIONDADOPTION PRODUCT A=ARENESS CONCEPT POSITIONING USAGE METHOD CUALIT< PREFERENCE PRICE SENSITIVE
LEVEL DESIRED DISTRIBUTION

.igh #mong

1nits

'ow In 8ostly

*rom

;rgani%ed ,ector 9oncentrated .igh .igh 7lanned, B"en .igh 'e"el *aster .igh -nown Basy Basily :rasped :ood Pes 8edium-high

1norgani%ed 1nits $idely ,pread 'ow 'ow ,easonal, @ariation 'ow 'e"el ,low 'ow 'ess -nown >ifficult >ifficult To :rasp 8oderate @ery much 8edium-low shops,

3 0

$holesalers, stockiest, @illage retailer,

CHANNELS

supermarket, EHaat$F stores, ? #"erage 'imited

specialty

<

TRANSPORT FACILITIES PRODUCT AVAILABILIT< PROMOTION

authori%ed showrooms :ood .igh 7rint, audio etc.

"isual T@, radio, print media few languages ;ccasionally

ADVERTISING

media, exhibitions languages >oor-to-door,

outdoors, to some extent. 8ore

PERSONAL SELLING SALES PROMOTION PUBLICIT<

fre+uently 9ontests, gifts, price :ifts, price discounts discount :ood opportunities 'ess opportunities

;.4 RURAL RETAILING

3<

The Indian rural market with its "ast si%e and demand base offers great opportunities to marketers. Two-thirds of countries consumers li"e in rural areas and almost half of the national income is generated here. It is only natural that rural markets form an important part of the total market of India. ;ur nation is classified in around 30! districts, and approximately <4!!!! "illages, which can be sorted in different parameters such as literacy le"els, accessibility, income le"els, penetration, distances from nearest towns, etc. F%B Fa+t$ ! E of IndiaHs population li"es in <( !!! "illages in rural areas. #ccording to the 59#BR study, there are almost twice as many Hlower middle incomeH households in rural areas as in the urban areas. /. #t the highest income le"el there are (.4 million urban households as against /.< million households in rural areas. (. 8iddle and high-income households in rural India is expected to grow from A! million to /// million by (!! . 4. In urban India, the same is expected to grow from 3< million to 0= million. Thus, the absolute si%e of rural India is expected to be double that of urban India. CASE STUD</ ITC E0CHOUPAL R ra! Ma!!$/ C#a *a! Sa5ar 9haupal ,agar is one of the first organi%ed retail forays into the hinterland. It was softlaunched on /0 #ugust. It is actually a warehouse for storing the farm produce that IT9 buys through its e-chaupals. The mall has come up in one part of this warehouse. It has been set up by the international business di"ision of tobacco major IT9. It has been initiated as rural shopping-cum-information centres in 8adhya 7radesh. The first rural mall has come up 3!-odd kilometers journey from 2hopal towards ,ehore. IT9 ,pent 4 years and Rs.A! crores on research and de"elopment of this concept including in"estments in B-choupal. Ob8%+t-,% IT9 describes the establishment as a set to create a high-+uality, low-cost fulfillment

channel for rural India. .owe"er, any organi%ation is dri"en by the profit moti"e which are ser"ed through this initiati"e6 Reap benefits from the market they ha"e created 9reating an entry barrier for other prospecti"e players IT9 has "ery effecti"ely integrated its profit and social moti"es. Con+%*t -,# Technical - LIt is definitely a pioneering "enture because no other Indian company has yet entered rural retailing with the all-under-one-roof concept.L 8alls stocking wide "ariety of products with floor space of !!! s+.ft, plus a trading %one and information centre. It is a .ub cum ,upermarket, which has been set up in a section of the IT9 rural warehouses. Fa+-!-t-%$ ,pread o"er 0 acres of land at ,ehore in 8adhya 7radesh6 /. Rural shopping malls will be open from < am to = pm. (. *eatures and facilities at these IT9 malls can o"ershadow those in the metros. The IT9 store sells e"erything that a rural consumer may ask for - sarees to kurtapyjamas to shirts &in the range of Rs ==-0!!), footwear, groceries, electronic durable from T@s to microwa"es, cosmetics and other accessories, farm consumption products like seeds, fertili%ers, pumps, generators and e"en tractors, motorcycles and scooters. 4. 2anking and automated teller machines will be standard at the malls. 3. Insurance products for farmers. 0. Bntertainment facilities, restaurants, public facilities and parking space will also be a"ailable. <. There is e"en a fuel pump in tie-up with 279' and a cafeteria. . 7arking lot for /<! tractors. A. There will be a primary healthcare facility to be ser"iced by a pri"ate healthcare ser"ice pro"ider. =. Information centres6 The company will create the facility for pro"iding online

3A

information on commodity rates and weather. /!. ,hopping malls will ha"e a training facility on modern farm techni+ues. //. *armers can come and log on to the Internet and check the pricing and sell their commodities. /(. There will also be godowns for storing the wheat and soybean and also for stocking products retailed at the mall.

OPERATIONAL COST IN COMPARISION TO MANDIS

QuickTime and a decompressor are needed to see this picture.

3=

R-$7 ana!3$-$ > +#a!!%n5%$ Radical shifts in computing access will break community-based business models. The sanchalaks are IT9s partners in the community, and as their power and numbers increase, there is a threat of unioni%ation and rent extraction. The scope of the operation6 the di"ersity of acti"ities re+uired of e"ery operati"e and the speed of expansion create real threats to efficient management. If IT9 fails to full the aspirations of farmers, they will look elsewhere for satisfaction.

CHAPTER G CONCLUSION $ith an approximate population of !! million people, the rural Indian market is important for multinational corporations to tap. #lthough rural Indians need to purchase consumer goods just as their urban counterparts do, rural Indian consumers ha"e a different set of needs that must be met by both package and product. ,pending time researching the rural Indian consumer as well as the market before di"ing in can help to pre"ent unnecessary struggles and failures. If the opportunity exists, partnering with an existing Indian company upon market entry can pro"ide se"eral key ad"antages to a company. 1nderstanding the a"ailable distribution networks in rural India is crucial to making a successful entry into the rural Indian market SOME GRO=TH AVENUES ARE FMCG*I99I says that in a clear defiance of the economic slowdown of the past /(

0!

months, IndiaHs *ast 8o"ing 9onsumer :oods &*89:) sector has grown consistently during the last three to four years, reaching a si%e of 1, T (0 billion &Rs. /(!,!!! crore) Rural consumers spend around /4 per cent of their income, the second highest after food &40 per cent), on fast mo"ing consumer goods &*89:), as per a R8#I study. R%ta-! the rural retail market is currently estimated at 1,T//( billion, or around 3! per cent of the 1,T (A! billion retail market. 8ajor domestic retailers like #@ 2irla, IT9, :odrej, Reliance and many others ha"e already set up farm linkages. .ariyali -isan 2a%aars &>98) and #adhars &7antaloon-:odrej W@), 9houpal ,agars &IT9), -isan ,ansars &Tata), Reliance *resh, 7roject ,hakti &.industan 1nile"er) and 5aya Pug 2a%aar are established rural retail hubs. P#ar(a+% t-+a!$#ccording to a report by 8c-insey, the rural and tier-( pharma market will account for almost half of the growth till (!/0. The tier-( market will grow to 33 per cent by (!/0, amounting to 1,T A.A billion. T%!%+o(( n-+at-on # :artner forecast re"ealed that Indian cellular ser"ices re"enue will grow at a compound annual growth rate &9#:R) of /A.3 per cent to touch 1,T (0.< billion by (!//, with most of the growth coming from rural markets. #lso, a joint 9onfederation of Indian Industries &9II) and Brnst ? Poung report re"eals that of the next (0! million Indian wireless users, approximately /!! million &3! per cent) are likely to be from rural areas, and by (!/(, A to(ob-!%$6 7assenger car and two-wheeler companies are dri"ing on rural roads to push sales. $hile growth in urban markets has been flat or negati"e, the rural markets are booming, insulated from economic downturn. Rural marketsH share in 8arutiHs o"erall sales during #pril-Wanuary (!!= has gone up to A.0 per cent from 4.0 per cent in the same period last year. Con$ (%r ) rab!%$ # sur"ey carried out by R8#I has re"ealed that 0= per cent of durables sales come from rural markets. #ccording to *I99I, 9onsumer goods segment

0/

were also obser"ed to post negati"e growth of 4E during *ebruary (!!= compared to positi"e //. E in the corresponding month of pre"ious year. The growth in total consumer goods is seen to erode due to fall in the growth of consumer non-durables category. $ith urban markets getting saturated for se"eral categories of consumer goods and with rising rural incomes, marketing executi"es are fanning out and disco"ering the strengths of the large rural markets as they try to enlarge their

LIMITATIONS Information collected is secondary in nature due to that chances of little de"iation in analy%ing the opportunities in rural market might be possible. ;n the basis 9ertain 7arameters comparison is made between rural and urban market but scope is limited to north India only. 2rand loyalty and perception of rural consumers towards any brand is not considered here. Rural consumers are not segregated on the basis of the income le"els as upper or middle class and comparisons are not made between two.

0(