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The future lies with those companies who see the poor as their customers.
CK Prahalad to Indian CEO's, Jan 2000.
Lecture Plan
Course Plan Nature of Assignments Rural Marketing Issues, Opportunities & Challenges
RURAL MARKETING
Course Plan
Pricing Strategy
Pricing Influences Pricing Strategies Role of Retailer & Schemes/Margins
Distribution Strategy
Coverage challenges & dilemma Channels of Distribution Existing Distribution Models Emerging Distribution Models
Rural Marketing Nature of Assignments Case Studies from Indian experiences Visits to different rural markets, haats & melas Interviewing Rural Practitioners Conducting Rural Market Research Attachments with strong rural marketing organisations
8
RURAL MARKETING
Total
Rs 1,23,000 Crore
Source: Francis Kanoi Latest McKinsey Report estimates that by 2020, Rural Consumer Market 10 Will be worth Rs. 250,000 crores
12
Very Rich
1.6
41.3
63.3
54.7
25.0
14.7
Aspirants Destitutes
20.9 2001 - 02
12.2 2006-7
13
All figures in %
Annual Income
Above Rs 215,000 Rs 45,001215,000 Rs 22,001- 45,000 Rs 16,001 - 22,000 Rs 16,000 & Below
1995-96
0.3 13.5 31.6 31.2 23.4 100.0
2006-07
0.9 25.0 49.0 14.0 11.1 100.0
> Projections Based on 7.2% GDP Growth Consuming class households in rural nearly equal to urban. Rural Purchasing Power higher due to lower expenses on food, shelter, education & health
14
Issues In Rural
Distribution Understanding the rural consumer Communication Poor infrastructure
15
Distribution of Villages
Population
Less than 200 200-500 501-1000
No of villages
92,541 127,054 144,817
% of total villages
15.6 21.4 24.4
1001-2000
2001-5000 5001-10000 Total no of villages
129,662
80,313 18,758 593,154*
21.9
13.5 3.2 100.0
17% of villages account for 50% of rural population & 60% rural wealth
Source: Census 2001
16
Population
1 lac and above 50,000-99,999 20,000- 49,999 10,000- 19,999
No of towns
423* 498 1386 1560
% of total towns
8.2 9.6 26.9 30.2
Class V
Class VI Total no of towns
5,000- 9,999
less than 5000
1057
237 5161
20.5
4.6 100.0
17
Fewer brand choices in rural : number of FMCG brands in rural are half that of urban. Buy value for money, not cheap products
19
Traders,Small Farmers
Total
Rs 12,128
Source: NCAER
21 14
Satellite TV
Radio
Press
Cinema
TV
All Media
24
Percentage of Below the Poverty Line families declined from 46% to 27%
Rural Literacy level improved from 36% to 59%
25
26
Marketing Opportunities
Low penetration rates in rural
% of rural HH
Durables
CTV Refrigerator Mobile Phones
Urban
30.4 33.5 40.0
Rural
4.8 3.5 12.0
Total
12.1 12.0 18.0
FMCGs
Shampoo Toothpaste
Urban
66.3 82.2
Rural
35.2 44.9
Total
44.2 55.6
Source: NCAER
27
Marketing Opportunities
R1 - 4% R2 - 11% R3 - 37% R4 - 48% Low rural consumption in FMCGs (rich HHs) urban rural Annual consumption Rs 13,000 Rs 9,400
Rural consumption volumes (R1+R2+R3) Toothpaste 88% Toothpowder 79% Shampoo 88%
By 2017, rural consumption would have equalled 2005 urban levels Rural Household will become more choosy, more brand conscious Loose informal packs will give way to well packaged products Many companies will make a beeline Detergent story
The Seekers
The Aspirers
The Deprived
Affordable Indulgence
Destiny driven & resigned to Struggling & Aspiring for a fate better life Simple Needs State Need of the Hour
Source : Rama Bijapurkar : We are like that only