Escolar Documentos
Profissional Documentos
Cultura Documentos
UDAIPUR
1
ACKNOWLEDGEMENT
who helped me during the course of my project work. Their valuable guidance
KANTI MOHAN SAINI for providing the facilities and incessant encouragement
I am also very grateful to all those respected persons of this organization who
contemporary project.
RAVINDER SAROY
2
Table of contents
01 Overview 4
02 Introduction 5
03 Rural marketing concept 6
04 Necessity of Exploring Rural Market 7
05 The Changing Scenario 8
06 The 4ps of rural Marketing 9
07 Challenges in rural marketing 11
08 Suggestions for rural market 13
09 Innovation with the rural marketing 14
10 A success Mantra Indian rural market (opportunities) 15
11 Conclusion 16
12 References 17
3
Overview
The Indian growth story is now spreading itself to India's hinterlands. Rural India, which
accounts for more than 70 per cent of the country's one billion population (according to
the Census of India 2001), is not just witnessing an increase in its income but also in
consumption and production.
Moreover, the rural consumer market, which grew 25 per cent in 2008 when demand in
urban areas slowed due to the global recession, is expected to reach US$ 425 billion in
2010-11 with 720-790 million customers, according to a white paper prepared by CII-
Technopak. That will be double the 2004-05 market size of US$ 220 billion.
According to the study, the rural market is seeing a 15 per cent growth rate. Fast
moving consumer goods (FMCG) sales are up 23 per cent and telecom is growing at 13
per cent.
FMCG
Several FMCG companies such as Godrej Consumer Products, Dabur, Marico and
Hindustan Unilever (HUL) have increased their hiring in rural India and small towns in
order to establish a local connect and increase visibility.
Leading FMCG companies such as Godrej Consumer Products, Marico and Hindustan
Unilever (HUL) have increased their hiring in rural India and small towns, in order to
boost sales and increase connect and visibility. In fact, Dabur sources close to 50 per
cent of its sales and marketing personnel from Tier-II and Tier-III cities.
Retail
The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of
the US$ 280 billion Indian retail market, according to a study paper, 'The Rise of Rural
India', by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Major domestic retailers like AV Birla, ITC, Godrej, Reliance and many others have
already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-
Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project
Shakti (Hindustan Unilever) and Naya Yug Bazaar have established rural retail hubs.
4
DCM Shriram Consolidated (DSCL) has undertaken the process of improving the
business model of the rural retail chain of the company, in order to strengthen the
company's system of product sourcing.
Pharmaceuticals/ Healthcare
According to a report by McKinsey, the rural and tier-II pharmaceuticals market will
account for almost half of the growth till 2015. The Tier-II market will grow to 44 per cent
by 2015, amounting to US$ 8.8 billion.
The Health Ministry is setting up a mechanism to screen people in rural areas for
lifestyle diseases such as diabetes. Union Health Minister, Mr Ghulam Nabi Azad, said
that in the case of diabetes, the government was working out a strategy to diagnose
those in the age group 30-40 years in rural areas, for diseases.
Introduction
India lives in her villages.
As described by Adi Godrej, Chairman , Godrej Group” The rural consumers is discerning and the
rural market is vibrant . At the current of growth , it will soon outstrip the urban market. The rural
market is no longer sleeping but we are.”
With more than 700 million people living in rural areas, in some 5,80,000 villages, about
two—third of its workforce was engaged in agriculture and allied activities with a
contribution of 29 percent of India’s Gross Domestic Product (GDP), India’s economy is
predominantly rural in character.
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. But now it is felt that with
the tempo of development accelerating in rural India, coupled with increase in
purchasing power, because of scientific agriculture, the changing life style and
consumption pattern of villagers with increase in education, social mobility, improved
means of transportations and communication and other penetrations of mass media
such as television and its various satellite channels have exposed rural India to the
outside world and hence their outlook to life has also changed. Because of all these
factors, rural India in now attracting more and more marketers.
5
Most MNCs that came in to India after 1999 targeted India upper middle class to earn
more revenues.
According to industry estimates rural India accounts for 74% of population and 58% of
indian rural disposable income.
According to data compiled by the National Council of Applied Economic Research rural
India now accounts for the 70% of toilet soap users, and 38% of two-wheelers
purchases come from India.
Atlanta based Coca-Cola company is one of the first global majors to have spotted the
potential spin offs from the country’s rural market.
It has perfected a unique supply chain to cater to india’s vast rural markets hinterland.
The results are working and coca-cola India rural penetration increased from 13 percent
in 2001 to 25 percent in mid 2003.
A typical village retail environment consists of 4-5 kirana shops, the size of such stores
varies depending on the size and population density of village where it serves.
The rural market in India is not a separate entity in itself and it is highly influenced by
the sociological and behavioral factors operating in the country. The rural population in
India accounts for around 627 million, which is exactly 74.3 percent of the total
population.
The Registrars of Companies in different states chiefly manage: The rural market
in India brings in bigger revenues in the country, as the rural regions comprise of the
maximum consumers in this country. The rural market in Indian economy generates
almost more than half of the country's income. Rural marketing in Indian economy can
be classified under two broad categories. These are:
The market for consumer goods that comprise of both durable and non-durable
goods
The market for agricultural inputs that include fertilizers, pesticides, seeds, and
so on
6
The concept of rural marketing in India is often been found to form ambiguity in the
minds of people who think rural marketing is all about agricultural marketing. However,
rural marketing determines the carrying out of business activities bringing in the flow of
goods from urban sectors to the rural regions of the country as well as the marketing of
various products manufactured by the non-agricultural workers from rural to urban
areas. To be precise, Rural Marketing in India Economy covers two broad sections,
namely:
The above data [table 1] indicates, the Indian rural market with its vast demand base, offers
great opportunities to companies. FMCGs demand in India nearly 53% comes from the rural
market. For consumer durables the figure is 59%, these results has evidently helped, going
by the significant share contributed by rural areas to the total revenue of several leading
consumer product companies. [Table-2]
7
Rural markets are already proving vital for company’s growth, clearly indicating that these
markets can not be ignored by big players
Relevant Facts?
Rural market has following arrived and the following facts substantiate this:
Particular In Rural
People 742 million
FMCG 65000 crore
Durables 5000 crore
Agri -inputs (incl. tractor) 45000 crore
2/4 wheeler 8000 crore
BSNL mobile connection 50% from villages/ towns (from 2 million)
Village Public Phone VPT 5.22 lakh from the six lakh villages
Rural HHs banking service 42 million
LIC sold policies in 2001-02 55 % in rural India
8
(1) The rural markets are of diverse nature. There are people from diverse
cultural, linguistic and religious background. No two markets are alike and it is
dispersed across India.
(2) Shift towards rural markets are mainly because of saturation and
competitiveness of urban market. Marketers do not want to neglect this huge
untapped market.
(3) The incomes of rural customers are also increasing. As seen earlier
disposable income of rural consumers have increased and they spend on FMCG
and consumer durables.
(4) Rising literacy has generated a demand of life style products. Lot of youth
move out of the village and visit surrounding cities. They come back and
influence decision making.
(5) Cable television has also contributed to an increase in life style. The reach
has increased and marketers are in a position to promote their products much
more easily
Most of the companies treat rural market as a dumping ground for the lower end
products designed for an urban audience. But, this scenario is slowly changing and
importance is given to the need of the rural consumer. Hence it is important to
understand the 4Ps of rural marketing with respect to a rural consumer.
1. Product
They identify FMCG by three things:
1. Color,
2. Visuals of animals and birds and
3. Numbers.
So a 555, 777, hara goli, pila hathi, lal saboon, saphed dantmanjan are the kind of
terms with which they identify brands. Hence it is very important for us to understand
that a lot needs to be done in terms of communications, media, marketing and branding.
There are a number of cases which suggest that to sell brands in the rural market, it is
necessary to simultaneously educate the consumers. If you have to create brand
communication, marketing efforts must be supported by education.
The following have to be kept in mind while the marketer makes a decision on
the product.
9
1. The product for the rural markets has to be simple, easy to use and provide after
sales service or maintenance.
2. The product has to be packed for low price and convenient usage.
3. The pack has to be easily understood by the rural consumer. The information on the
pack is preferred in local language communicating the functional benefit of the product.
2. Pricing
A rural customer is price sensitive and shops for value. This is mainly because of his
lower income levels than his urban counterparts. Hence the marketer has to find ways
of making the product affordable to the rural consumer. Banks offer loans for tractors,
pump sets, television sets and so on to make the product affordable to a rural
consumer. Smaller unit packs are preferred in the case of FMCG products to offer at
lower prices. The product packaging and presentation offers scope for keeping the price
low. Reusable packs or refills are also preferred and are seen as value addition.
3. Place or Distribution
Distribution of products is one of the biggest challenges of rural marketing. There are
CWC (Central Warehousing Corporation) and SWCS (State Warehousing Corporations)
set up in rural areas to store and distribute products. A three tier rural warehousing
setup exists:
CWC/SWCs
Co-operatives
Rural Godowns
CWC and SWCs reach up to the district levels. The co-operatives are at the mandi
level. The Rural Godowns are at the village level wherein they are owned by panchayat
heads. All these tiers provide warehousing facilities only to their own members. Hence it
is a big problem for a company to store its goods in rural areas.
4. Promotion
Communication to rural consumer is through organized media. More number of rural
consumer (~70%) listen to radio and many go to cinema.Rural communication can be
10
through Conventional media or through a nonconventional media. The most common
conventional media include: Print, Cinema, Television and Print. The Non-conventional
media include: Theatre,Posters, Haats and Melas.The conventional media have
excellent reach, less expensive and create a better impact. But at the same time, it is
not customized to each village and also offers unnecessary coverage at times. Low
literacy rates, culture, traditions, rural reach, attitudes and behavior are the other
problems in rural communication. An effective promotion should plan for a proper mix of
media. This is very important to create a mind share in the rural consumers. Hence,
talking to the customer in a language known to him, advertising the functional benefits
and demonstrating the product go a long way in capturing the rural market.
1. Standard of living: The number of people below the poverty line is more in
rural markets. Thus the market is also underdeveloped and marketing strategies have to
be different from those used in urban marketing.
2. Low literacy levels: The low literacy levels in rural areas leads to a problem of
communication. Print media has less utility compared to the other media of
communication.
3. Low per capita income: Agriculture is the main source of income and hence
spending capacity depends upon the agriculture produce. Demand may not be stable or
regular.
11
5. Warehousing : is another major problem in rural areas, as there is hardly any
organized agency to look after the storage issue. The services rendered by central
warehousing corporation and state warehousing corporations are limited only to urban
and suburban areas.
India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong
distribution system which helps its brands reach the interiors of the rural market. To
service remote village, stockists use auto rickshaws, bullockcarts and even boats in the
backwaters of Kerala.
Coca-Cola, which considers rural India as a future growth driver, has evolved a hub and
spoke distribution model to reach the villages. 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. LG Electronics
has set up 45 area offices and 59 rural/remote area offices to cater to these potential
markets
12
Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50- gm
packs. Hindustan Lever has launched a variant of its largest selling soap brand,
Lifebuoy. Coca-Cola has addressed the affordability issue by introducing the smaller
bottle priced at Rs 5. The initiative has paid off: Eighty per cent of new drinkers now
come from the rural markets. A series of advertisement for this was rune showing
people from diverse backgrounds featuring Aamir Khan.
1. Regarding the problems of physical distribution, the marketer may have a joint
network of stockist/ clearing-cum-forwarding (C&F) agents at strategic location for
facilitation of physical distribution for its products in the rural market. The main
advantage of this scheme is that the costs of physical distribution can be shared by the
companies and stockists. The combination of different modes of transport based on
availability of tracks will be beneficial to the companies. Presently, bullock-cart plays a
very vital role in rural distribution where the roads are not available. Some of the leading
companies use delivery vans in rural areas for resolving the distribution problems in
rural market. The delivery van takes the products to the retail shops in every corner of
the rural market and it enables the company to establish direct sales contact with
majority of the rural consumers which helps in sales promotion.
2. The rural market is composed of a number of retail sales outlets along with fair price
shops under the public distribution system. It is suggested that the government should
13
encourage private shopkeepers and cooperative stores to come forward and establish
their business in rural areas instead of the weekly market known as weekly bazaar.
Fertilizer companies have opened their outlets for proper distribution of fertilizer among
the farmers. Similarly, the companies dealing in consumer goods can apply this model.
The company may also appoint a number of retailers in and around the feeder towns
and attach them to the stockist who distributes the goods to the retailers as per the
potential of the market. This system has the benefit of penetrating into the interior areas
of the rural markets.
3. To solve the problems of sales force management, it is suggested that the company
takes due care in the recruitment and selection of sales people because the traits they
require are different from urban and suburban sales persons. For the rural markets, only
those sales people should be preferred for selection who is willing to work in rural areas.
They must be aware of the local language and must have the patience to deal with rural
customers and can discharge the duties of a bare-footed salesman. Administration of
such a large and scattered sales force, supervising and supporting them in sales calls,
guiding
them, attending to their official and personal problems, and motivating them for better
results should be an exacting task for the sales manager. Thus, the people operating in
rural areas should invariably be from the rural background and should have a
missionary zeal to serve the rural masses.
4. With reference to marketing communication in rural areas, the company should use
organized media-mix like TV, Radio, and cinema and POP (point of purchase)
advertising. Television is gaining popularity in the rural areas but due to poor supply of
electricity, radio is performing significantly better. Since, the rural people need
demonstration, short-feature films with disguised advertisement messages, direct
advertisement films and documentaries that combine knowledge and advertisements
will perform better rural marketing communication. Here the companies may also use
audiovisual publicity vans,
Innovative marketing of products is about leveraging the marketing mix, namely, the
four P’s: Product (Design and Packaging), Price, Place and Promotion in ways that has
not been before by the organization implementing the innovations.
14
Examples of Innovation in New Rural Marketing Mix :-
• ICICI BANK customized their rural ATMs, so they can operate biometric
authentication. ICICI rural ATMS are battery operated so that power failure is not
issue.
• Nokia develop affordable Mobile phones for rural markets with unique features
such as local language capabilities, present time/ call limits.
• Indian villages are now also benefiting from the IT revolution in India. Rural
people can use on-line service for crop information, purchase of Agri-inputs,
consumer durable and sale of rural produce online at reasonable price.
Agricultural information can get through the internet if each village has small
information office.
• ITC is setting up e-Choupals which offers the farmers all the information, 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.
o More than 90 % villages electrified, though only 44% rural homes have
electric connections
15
o Rural telephone density has gone up by 300% in the last 10 years; every
1000+ pop is connected by STD
o Post offices
o Melas (exhibitions)
o Bank branches
Proliferation of large format rural retail stores which have been successful also.
16
o Escorts rural stores
Conclusion:
Indian rural market has a vast size and demand base. Rural marketing involves the
process of developing, pricing, promoting, distributing rural specific product and a
service leading to exchange between rural and urban market which satisfies consumer
demand and also achieves organizational objectives. As part of planned economic
development, the government is making continuous efforts towards rural development.
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. The rural youth
today are playing a far more significant role in influencing the purchase decisions. They
may not be the end customers but often are the people who influence the purchase of
high value products and they decide on which brands to choose
The marketers have to come up with innovative ideas through which the villagers also
get involved in getting business from their respective villages.
E-Chou pals deliver relevant technology in the hands of the farmers, which can improve
the economic condition of the entire village
References
http://indianmba.com/faculty column/fc1030/fc1030.html
www.google.com
www.expresscomputeronline.com
www.indiainfoline.com
http://www.ibef.org/economy/ruralmarket.aspx
17