market+ +an+introduction
TRANSCRIPT
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Rural Quotes
The future lies with those companies who see thepoor as their customers.
CK Prahalad to Indian CEO's, Jan 2000.
To get rich, sell to the poor.Pradeep Kashyap.
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Lecture Plan
Course Plan
Nature of Assignments Rural Marketing Issues, Opportunities& Challenges
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RURAL
MARKETING
Course Plan
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Rural Marketing Course Plan Details
Issues, Opportunities & Challenges
Rural Marketing Environment Defining Rural India
Evolution of Rural Marketing Rural Market Structure
Size of Rural market
The Rural Economic Scenario
Rural Economic Structure Incomes & Consumption
Physical Infrastructure
Marketing Infrastructure
Commercial Infrastructure and Govt. policies
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Rural Marketing Course Plan Details
Consumer Behaviour Cultural Factors
Technological Factors
Economic Factors
Characteristics of the Rural Consumer
Buying Behaviour Patterns
Customer Relationship Management and the Trade role
Rural Market Research Planning Rural Research
Field Procedures & Rural realities
Understanding the Rural Market Research Industry
Segmenting, Targeting & Positioning Demographic/Psychographic & Behavioural Segmentation
Targeted/Differentiated Marketing
Identifying/Selecting/Developing & Communicating the positioning
concept
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Rural Marketing Course Plan Details
Product Strategy Product Concepts & Classification
Rural Product Categories
New Product Development
Consumer adoption process
The Role of Fakes
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
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Rural Marketing Course Plan Details
Communication Strategy Challenges in Rural Communication The Communication Process
Developing Effective Communication
Rural Media
Role of Innovative Media
Innovation in Rural Markets Role of Innovation in Rural India
IT Interventions
Emergence of Organised Retailing
Financial Services in Rural India Need for Credit
Sources of Credit
Other Financial Products
Future of Rural Marketing
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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 ruralmarketing organisations
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RURAL MARKETING
Issues, Opportunities & Challenges
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Rural Market Has Arrived
742 million people
Rural consumption is bigger than urban FMCG's 53%
Durables 59% Source: NCAER Estimated annual size of the rural market
FMCG Rs 65,000 Crore
Durables Rs 5,000 Crore
Agri-inputs (incl. tractors) Rs 45,000 Crore 2 / 4 wheelers Rs 8,000 Crore
Total Rs 1,23,000 CroreSource: Francis Kanoi
Latest McKinsey Report estimates that by 2020, Rural Consumer Market
Will be worth Rs. 250,000 crores
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Rural Market Has Arrived
Some impressive facts about the rural sector. In the first 6 months of 2005-06, rural India bought
30 lakh Life Insurance policies
Of two million BSNL mobile connections, 50% in
small towns/villages. Of the six lakh villages, 5.40 lakh have a Village
Public Telephone (VPT). Additionally there are 2 lakhPCOs 90% of villages covered.
By end 2007, there are likely to be 11.05 crore ruralphone subscribers
For every Re.1/- per quintal increase in theProcurement Price for grains, Rs. 170 crores added torural economy
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Rural Market Has Arrived
55.6 million Kisan Credit Cards issued (against 60million credit-plus-debit cards in urban) resultingin tremendous liquidity.
Of HHs earning Rs. 20 lakh + per year, 34% in
rural India. Also 15% of Indias crorepatis 42 million rural HHs availing banking services in
comparison to 27 million urban HHs.
Investment in formal savings instruments: 6.6million HHs in rural and and 6.7 million in urban
Over 50% of HLLs Rs. 11700 crore sales turnoveris from rural markets
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0.8
1.6
26.8
54.7
25.0
20.9
2001 - 02
41.3
63.3
14.7
12.2
2006-7
Very Rich
ConsumingClass
Climbers
Aspirants
Destitutes
RURAL TARGET MARKETS - CLASSIFICATION
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Rural Income DispersalProjection
ConsumerClass
Annual
Income1995-96 2006-07
Very Rich Above Rs 215,000 0.3 0.9
Consuming
Class
Rs 45,001-
215,000 13.5 25.0
Climbers Rs 22,001- 45,000 31.6 49.0
Aspirants Rs 16,001 - 22,000 31.2 14.0
Destitutes Rs 16,000 & Below 23.4 11.1
Total 100.0 100.0
> 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
All figures in %
Source : NCAER Indian Market Demo ra hics Re o
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Issues In Rural
Distribution
Understanding the rural consumer
Communication
Poor infrastructure
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Distribution of Villages
Source: Census 2001
Population No of villages % of totalvillages
Less than 200 92,541 15.6
200-500 127,05
421.
4
501-1000 144,817 24.4
1001-2000 129,662 21.9
2001-5000 80,313 13.5
5001-10000 18,758 3.2
Total no of villages 593,154* 100.0
17% of villagesaccount for
50% of ruralpopulation &60% rural
wealth
Hardly any shopsin these 2.2 lac
villages
*Inhabited villages, total number of villages is 638, 691
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Distribution of Towns in India
Town Class Population No of towns % of total
towns
Class I 1 lac and above 423* 8.2
Class II 50,000-99,999 498 9.6
Class III 20,000- 49,999 1386 26.9
Class IV 10,000- 19,999 1560 30.2
Class V 5,000- 9,999 1057 20.5
Class VI less than 5000 237 4.6
Total no of
towns
5161 100.0
Source: Census 2001
90 % ofdurables
purchased byrural people
are fromthese 1900
towns
*10 lakh+ : 27, 5-10 lakh: 42, 1-5 lakh: 354
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Rural Consumer Insights
Rural India buys
Products more often (mostly weekly).
Buys small packs, low unit price moreimportant than economy.
Distribution and pricing are the mantras to
success in rural India.
Even expensive brands like Close up, Marie biscuits, Clinicshampoo
are doing well because of deep distribution.
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Rural Consumer Insights
In rural India, brands rarely fight with eachother, they just have to be present at the rightplace.
Many brands are building strong rural basewithout much advertising support. Chik shampoo, second largest shampoo brand.
Ghadi detergent, second largest brand.
Fewer brand choices in rural : number of FMCGbrands in rural are half that of urban.
Buy value for money, not cheap products
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MYTH 1: Rural Market Is aHomogeneous Mass
REALITY
Heterogeneous population
16 languages, 800+ dialects
State wise variations in rural demographics Literacy (Kerala 90%, Bihar 44%)
Population below poverty line (Orissa 48%, Punjab6%)
BigLandlords
Traders,Small Farmers
Marginal Farmers
Laborers, Artisans
Source: Planning Commission, GoI
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MYTH 2: Disposable Income Is Low
REALITY
Number of middle class HHs (annual income Rs45,000- 2,15,000)
Rural 27.4 million
Urban 29.5 million
Per Capita Annual Income (not Purchasing Power)
Rural Rs 9,481
Urban Rs 19,407
Total Rs 12,128 Source: NCAER
Rural incomes CAGR now estimated @ 15% vs10% in urban
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MYTH 3: Individuals Decide AboutPurchases
REALITY
Decision making process is collective
Purchase process- influencer, decider, buyer, one
who pays can all be different. So marketers mustaddress brand message at several levels
Rural youth brings brand knowledge to HH
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Infrastructure ImprovingRapidly
In 50 years only 40% villages connected by road,in next 10 years another 30%.
More than 90 % villages electrified, though only44% rural homes have electric connections.
Rural telephone density has gone up by 300% inthe last 10 years, every 1000+ pop is connectedby STD.
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Media Reach Improving Rapidly
70% of R1,R2, R3 can be reachedthrough mass media.
14
21
41
26
53
70
Satellite
TV
Radio Press Cinema TV All Media
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Climbing Social Indicators
Between 1981 to 2001
Number of pucca houses doubled from 22% to 41%and kuccha houses halved (41% to 23%)
Percentage of Below the Poverty Line familiesdeclined from 46% to 27%
Rural Literacy level improved from 36% to 59%
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Opportunity & Challenges
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Marketing Opportunities
Low penetration rates in rural
% of rural HH
Durables Urban Rural Total
CTV 30.4 4.8 12.1 Refrigerator 33.5 3.5 12.0
Mobile Phones 40.0 12.0 18.0
FMCGs Urban Rural Total Shampoo 66.3 35.2 44.2
Toothpaste 82.2 44.9 55.6
Source: NCAER
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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%
So this half ofthe populationconsumes over75% of FMCG
volumes
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Challenges in the Future
Reaching the product to remote rurallocations and entering more rural homes
(penetration)
Increasing rural incomes (market growth)
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Challenges in the Future
Making effective use of the largeavailable infrastructure
Post offices 1,38,000 Haats (periodic markets) 42,000
Melas (exhibitions) 25,000
Mandis (agri markets) 7,000
Public distribution shops 3,80,000
Bank branches 32,000
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Challenges in the Future
Using IT to transform markets
ITCs e-choupal and other IT initiatives
(EID Parry, Amul dairy information systemkiosk)
STD revolution/ mobile connectivity
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Challenges in the Future
Proliferation of large format rural retailstores
DSCL Haryali stores
M & M Shubh Labh stores
TATA/Rallis Kisan Kendras
Escorts rural stores Warnabazaar, Maharashtra (annual sale Rs
120 crore)
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An interesting Option - RURBAN
Describes the clusters of migrants from ruralto urban geographies
Rural psychography living in an Urbandemography
Strong purchasing power because despitelower incomes, low wasteful expenditures
Become carriers and promoters of brands intorural geographies on their annual trip backhome