Introduction- RM

What is Marketing?
Marketing is ...

Business ability to respond to and

exploit emerging trends in environment
through exchange process leading to
create and retain the customers at a
profit
Marketing as Concept

 Consumers always buy products

which hold value
 Value = Benefits/ Cost
Marketing as process

Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) Money of Buyers)

Information
Marketing as Function
 Identifying Opportunities
 Marketing Information System
 Buyer behavior

 Develop Strategies
 STP (Segmentation, Targeting, Positioning)
 Implementing
 Implement strategies using Marketing Mix(4Ps)
 Controlling
 Marketing administration (Sales analysis, Market Share
analysis, Stocking Analysis)
Introduction to Rural marketing
 Percent of
  Persons population Males percent of males Females percent of females

Total 1,027,015,247   531,277,078   495,738,169  

Rural 741,660,293 72 381,141,184 72 360,519,109 72.72369399

Urban 285,354,954 28 150,135,894 28 135,219,060 27.27630601

Source : Census 2001

 The Union Budget for 2009-10 hiked the
allocation for the National Rural
Employment Guarantee Act (NREGA) to
US$ 8.03 billion, giving a boost to the
rural economy. This is in addition to the
ambitious Bharat Nirman Programme
with an outlay of US$ 34.84 billion for
improving rural infrastructure.
 The rural India's share in the country's
gross domestic product has benefited,
accounting for 51 per cent of GDP in
2005-06 from 46 per cent of GDP in
1993-94.
Rural disposable income

 Rent (0.94 per cent compared with 9.19 per

cent for urban households)
 Consumer services excluding conveyance
(6.48 per cent compared with 10.57 per
cent)
 Conveyance (6.63 per cent compared with
9.96 per cent)
 Entertainment (1.11 per cent compared with
3.11 per cent).
 Urban households spends more than 5
per cent of their incomes on fuel and
light, consumer services excluding
conveyance, conveyance, rent, and
cereals/cereal products and substitutes.

 These account for 51.27 per cent of

urban household expenditure.
 For the same five categories, the rural
household spends 43.89 per cent of its
total expenditure. It is the potential in this
difference that corporate India seeks to
exploit.
Road ahead
 According to international consultancy
firm Celent, rural markets in India will
grow to a potential of US$ 1.9 billion by
2015 from the current US$ 487 million.
Rural markets are growing at double the
pace of urban markets and for many
product categories, rural markets account
for well over 60 per cent of the national
demand.
 The dominant white goods and consumer electronics
manufacturers all have dedicated rural marketing campaigns in
place, which have become crucial to their company bottom-lines.
 LG Electronics expects rural revenues to grow from Rs.4180
crores (35 per cent of total revenue) in 2008 to Rs.5490 crores
(45 per cent) in 2009. Samsung expects rural markets to
contribute 30 per cent to its consumer electronics turnover in
2009.
 Philips is using its home lighting distribution network (1.8 million
outlets strong) to strengthen its rural footprint and the company
will use this network to sell irons, mixer-grinders, DVD players
and radios
 Similarly, Whirlpool expects 5-7 per cent growth in 2009
from small towns. Hindustan Unilever has recorded over
16 per cent growth in gross revenue in recent months, at
least half of which comes through its extensive rural
network.
 Goldplus is the Tata group's mass-market jewellery brand,
which hires unemployed youth as its rural ambassadors.
The youth are trained; they then educate rural people by
using educational films, flip charts and booklets. Goldplus
expects 50 per cent growth this year to account for a tenth
of the Tata group's jewellery business revenues
 Automobile use in rural India is measured by the auto
industry at 1-2 per thousand, compared with 10-11 per
thousand in cities. By using panchayats, primary
healthcare members and regional rural bank members
to reach potential buyers, Maruti's rural revenues
increased from 3.5 per cent of total sales to 8.5 per
cent. Maruti is reported to have sold more than 60,000
cars in rural markets between April 2008 and February
2009. The car company has even launched a
campaign - "Ghar Ghar Mein Maruti (a Maruti in every
household)" - specifically for these markets.
 Hero Honda's motorcycle sales grew 11 per
cent in 2008-09 fiscal against an average
sales growth of 1.9 per cent for the industry.
For the two-wheeler company, the share of
rural sales has gone up from 38 per cent in
2007-08 to 40 per cent in 2008-09. Hero
Honda in late 2007 had launched a rural
campaign called "Har Gaon, Har Aangan
(every village, every home)"
 Bharti Airtel's rural footprint has increased from
6 per cent in 2007-08 to 12.6 per cent until
February 2009. Airtel's average revenue per
user (a telecom industry metric) in the rural
regions has increased from Rs.100 to Rs.150 in
the same period. The company sees this is
indication of more cash available with the rural
consumer, and has even attributed this increase
to an increase in minimum support prices for
wheat and rice over the last two years.
 IFFCO Tokio General Insurance has tied-up
Insurance with fertiliser. For its Sankat Haran Policy
(non-crop insurance), the company offers farmers a
free insurance cover worth Rs.4000 with every bag
of fertiliser (the sale receipt is also the policy
document).

 "The fast moving consumer goods (FMCG) sector in

rural areas is expected to grow by 40 per cent as
against 25 per cent in urban areas," said Assocham
president Sajjan Jindal
Distinct discipline of Rural Marketing

 A debate continued for a long time

amongst the Indian marketers, both
practitioners and academicians on the
justification for existence of the distinct
disciple of rural marketing.
 Consequently, two schools of thought
emerged.
 The first school believed that the
products/ services, marketing tools and
strategies that are successful in urban
areas, could be transplanted with little
are no modification in rural areas.

 It perceived rural India, as a poor

extension of urban India.
 The second school saw a clear
distinction between urban and rural
India, and suggested a different
approach, skills, tools and strategies to
be successful in rural markets.
 The recent success and failures of the
corporate world in the rural markets have
clearly demonstrated that rural markets
cannot tapped successfully with an
urban marketing mindset in other words
our approach towards rural markets
needs to be distinct from the one
adopted for urban markets.
 What differentiates the two market is not
mere income, but a host of other
infrastructural and socio-cultural factors.

 In a large rural economy like India's,

rural marketing has emerged as an
important and distinct internal sub-
division within the marketing discipline.
Meaning of ‘RURAL’
 “places far away from towns or cities” by Collin's
cobuild Dictionary (2001)

 From sociology point of view rural is defined

as a group of people who are traditionalists in
outlook, rooted in the land, and who resist
change.

 However, the census of India defines rural as

that what is not urban, is rural.
 Urban is
 All locations within a municipality / corporation,
cantonment board or a notified town area
committee.
 All other locations satisfying all of the following
criteria:
 Minimum population of 5,000.
 At least 75% of male workforce engaged in non-

agricultural activities and

 A population density of over 400 persons per sq km.
Rural Marketing

 The term rural marketing is a synthesis

of two words Rural and Marketing.

 The word marketing is derived from the

latin word ‘Marcatus’ meaning goods or
trade or a place where business is
conducted.
 If ten expert define the term rural, each
would come up with different definition.
What is rural to HUL may not necessarily
be rural to LG / philips or somebody else
in terms of marketing and marketing
communication
 Most companies in the FMCG and agri-
input sector would define rural as a place
with a population up to 20,000
 Durable goods’ companies would
consider any town with a population of
below 50,000 as a rural market.
 Rural market mostly starts from where
the organized distribution ends
Rural Marketing Defined as

 The process of developing, pricing,

promoting, distributing rural-specific
goods and services leading to exchange
between urban and rural markets, which
satisfies consumer demand and also
achieves organizational objectives (Iyer)
Rural marketing scope
From / To Rural Urban
Urban 1. Consumables and Not concerned
durables agricultural
inputs.

2. Consumables

3. Consumer durables

Rural 1. Rural marketing, 1. Agricultural and

services and products allied production.

2. Rural artisans and

rural industry
products
(Mithileshwar, 2003)
Concept and Scope of RM
 Rural Marketing was earlier used as an
umbrella term to refer to all commercial
transactions of rural people, acquired a
separate meaning of great significance in
1990s.
 The evolution can be briefly seen in 3 phases.
 Phase 1 (before mid-1960s)
 Phase 2 (Mid 1960 – Mid 1990s)
 Phase 3 ( After Mid 1990s)
Phase I (Before mid – 1960s)

 Rural marketing referred to marketing of

rural products in rural and urban areas
and agricultural inputs in rural markets
 The local marketing of products like
bamboo baskets, ropes, products from
artisans sellers like black smiths,
carpenters, cobblers and pot makers
Phase II (Mid 1960s – Mid 1990s)

 Success of Green Revolution transferred many of the

poor villages into prosperous busy centers.
 The demand for agricultural inputs went up( eg soil
testing, high yield variety seeds, fertilizers, pesticides,
latest machine tools) have changed the rural scenario
 The formation of agencies like Khadi and village
industries commission, Girijan Cooperative Societies,
and APCO Fabrics.
 Because of this efforts from govt. lot of village
industries flourished and products like handicrafts,
handloom textiles, soaps, safety matches, crackers
etc, hit the urban market on a large scale.
Phase III (After Mid 1990s)
 Earlier, there was no rural market as such, the
existing were not sustainable and not large
enough to attract the attention of urban
marketers.
 They were inaccessible.
 Since 1980 India's industrial sector had gained
in strength and maturity.
 With support from govt and private players
there was sustainable rural development.
Which as let to higher spending power in rural
areas.
Attractiveness of Rural Market

 Urban market become congested with

too many competitors, they have
reached near saturation point.
 Rural markets has become the potential
for consumption of variety of products
and services
Factors for attractiveness in RM
 Large population
 Raising prosperity
 Growth in consumption
 Life-style changes
 Life-cycle advantages
 Market growth rates higher than urban
 Rural marketing is not expensive
 Remoteness is no longer a problem