The future of rural marketing

The future of rural marketing

Introduction India is an agro-based economy and the growth of most

of the other sectors of economy is driven by rural demand.

Urban market is reaching towards the saturation point, thus bringing in and urgent need to focus on rural development.

Moreover, more than 70% of India's population lives in villages and constitutions a big market for industry because of increasing disposal incomes and awareness level.

In comparison to just 5,161 towns in India there are 6, 38,365 villages in India. This in itself is an indicator where the real India resides. Companies are realizing slowly but surely that the key to gain true market leadership lies in tapping the rural potential.In recent years, rural markets have acquired significance in countries like China and India, as theoverall growth of the economy has resulted into substantial increase in the purchasing power ofthe rural communities.

MARKET GROWTH:• Market is growing at a rate of 3-4% per annum.• In 2001-02, LIC sold 55% of its policies in rural India.• Of two million BSNL mobile connections, 50% are in small towns / villages.• Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone

(VPT).• 41 million Kisan Credit Cards have been issued (against 22 million

credit-plus-debitc ards in urban), with cumulative credit of Rs. 977 billion resulting in tremendous Liquidity

• Of the 20 million Rediff mail sign-ups, 60% are from small towns. • 42 million rural households (HHs) are availing banking services in

comparison to 27million urban HHs.• Investment in formal savings instruments is 6.6 million HHs in rural

and 6.7 million HHs in urban.

“ A farmer went to near by small town to book a rent cab to attend an auspicious occasion near by village ,finding no cab available for rent he instantly purchased Brand new Mahindra Bolero”

With 742 million people, rural India is the largest potential market in the world estimated 1,25,000 crores

FMCG – 53%Rs.65,000

crores

Agri-inputs Rs.45,000

crores

2/4 wheelers Rs.8,000

crores

Consumer Durables

Rs.5,000 crores

The increase in procurement (minimum support price) MSP has contributed to a rise in rural demand. Government schemes like NREGS [National Rural Employment Guarantee Scheme, which guarantees 100 days of employment to one member of every rural household] reduced rural underemployment and raised wages. Also, farmers benefited from loan waivers [introduced in the last Union Budget]. The increase in rural purchasing power is reflected in rural growth across a number of categories.

Focused marketing strategies• To succeed in rural market, companies will

need to adapt the 4Ps of marketing and the 4As in their strategy – awareness, access, availability and affordability.

Focused Marketing Strategies Product – Developing relevant products to meet the specific

needs of rural consumers will exercise the minds of marketers.

For eg. We know that voltage fluctuation is a major problem in our villages, because of which bulbs last but a few days. Companies will put their R & D teams to develop filaments that can withstand violent fluctuations, thereby extending the life of the bulb.

Focused Marketing Strategies • Price As rural incomes continue to rise in the coming

years, we may see the share of low unit packs coming down somewhat and economy packs gaining share. Also as the reach of media and awareness level improve, we are likely to see companies shift their focus from trade to consumers.

Focused Marketing Strategies • Distribution / Place Challenge of reach will be addressed through

innovation. Project Shakti of HUL is one such successful example. Nehru Yuva Kendra ‘volunteers’ model through haats being piloted by MART for Colgate, is another such new model. Amway is already selling bio-fertilizers in rural India, through its famous multi-layer distribution model.

Proliferation of large format rural retail stores

TATA/Rallis Kisan Kendras Escorts rural stores DSCL Haryali stores M & M Shubh Labh stores Warnabazaar, Maharashtra ITC Choupal Sagar

Focused Marketing Strategies • Communication Indian advertising industry has to be firmly grounded

in rural perception, values and traditions. It has to drown itself in local colors, customs and modes of communication, to make itself relevant to rural society. It has to gain the trust of masses, by undercutting excessive dependency on western advertising.

BIJLI

SAMPOORNA

MAHASANGRAM

SAPNO KA GHAR

Launched New Refrigrtor for Rural and Semi urban market priced at 10,000

Range of TV’s with Devnagri script on display Priced at 12,000

Focusing on rural town with population less than 5000 with special economy model of color TV priced at 8000

Road Show in semi urban & Rural with mid priced consumer durables to provide Touch & Feel experience

SHAKTI

Operation JAGRUTI

Parachute

Rural initiative targeted villages population less than 2000, providing income generating opportunity through shakti vani

ASHA

OPERATION Jagruti, a village consumer contact campaign was launched with the objective of massive rural penetration targeted at the non-users and infrequent users of dentifrices.

Anti Loose Campaign and Temper proof Packaging in Smaller Variants

Low cost snacks & Beverages . Especially for girls aged between 12- 16.

E- Choupal

Chick

Chota Coke

Great Value Product

A rural shopping mall where farmers can sell their commodities and everything including cosmetics, garments, electronics, appliances and even tractors. It serves as an agri-sourcing centers, shopping centers, and facilitation centersa

Launched Coca Cola in Rs 5 with tag line “Thand Matlab Coca Cola”

US-based direct seller Amway Corporation, is looking to reverse its fortune with the launch of a range of low-priced fast moving

consumer goods (FMCG) products aimed at rural tier II & III cities.

CavinKare launched an aggressivecampaign to educate people on how to use shampoo through live ‘touch and feel’ in Rural Folks

Har Gaon Har angan

Panchayat scheme

Ghar Ghar ke pehchan

Mera sapna meri maruti

After securing its foothold in urban and semi-urban markets, it has launched a pan-India campaign — Mera Sapna Meri Maruti — to tap the vast potential of the rural market.

The promotional scheme ‘Ghar Ghar ki Pehchaan’ is aimed at taking highly accomplished product like Santro into the depth of rural India.

runs a panchayat scheme wherein it gives Rs 2,000 as incentive on every buy of a Spark

Har Gaon Har Angan seeks to build an ongoing relationship with millions of households in rural India through a network of 500 rural sales executives

Arogya parivar

Hume Jitna Hain

Elvista

initiative to build a sustainable, profitable business that improves access to healthcare among the underserved millions in rural India by creating awareness, enhancing local availability, and designing appealing and affordable health solutions

Campaign run rural part of north india , in which rural masses and key opinion leader are educated and aware about epilepsy

Elder has launched its new division to reach deep pocket of the rural hinterland with separate team of sales force

ASTRA Advance sales training for retail ascendance in rural areas

Samridhi

TATA ACE MAGIC

Gold Plus

Mahindra Samriddhi, an initiative of Mahindra Farm Equipment, eyes having 600 Mahindra Samriddhi centres and five million farmers under its ambit by 2020.

Titan Industries’ GoldPlus is designed for the jewellery preferences of the semi-urban and rural Indian customer.

TATA’s Rural Transport Vehicle for Rural and Semi Urban Landscape

Utsav

Miss Palampur campaign

Met Suvidha

Kamdhenu campaign

A Range of Colour solution intended for the Rural Mass & Market

Cadbury has rolled out campaign “ Miss Palanpur “ eyeing to captured Rural Mass Market

Met Suvidha (Rural) is a participating flexible Endowment Plan that combines savings and security to Rural Masses

The Kamdhenu campaign, a unique high-impact marketing and sales campaign through cattle loans to farmers

Market research

• As the rural market develops in the next few years, more qualitative studies will be needed to understand the rural consumer, his lifestyle, aspirations and motivations.

• PRA is one of the tool used in the social sector which involves rural people in the research process and they enjoy sharing and analyzing about themselves.

• Quantitative studies on demand estimation, market shares, customer satisfaction will need to be undertaken in the rural market as well, as demand grows and rural India becomes more attractive for marketers.

Consumer finance• The evolution of urban markets in the 90s was fueled by

the entry of consumer finance products as an outcome of the financial sector reforms in the Indian economy.

• Banks like ICICI and HDFC and others moving aggressively into the rural markets and durable companies like LG, Philips and others extending their distribution, it can be expected that the urban boom of 90s should be repeated in the rural market during the current decade.

Rural vertical• Companies will need to equip themselves, if they want to

succeed in the dynamic rural market . To begin with, top management commitment would be absolutely essential.

• The CEO would need to articulate a strong commitment to rural marketing, only then will the marketing team give its focused attention and sustained support to this growing market segment.

• HUL has already created a separate rural vertical with a team of RSMs, ASMs, SOs and RSPs committed exclusively to servicing the rural market. Rural has been given separate sales targets and the company is in the process of allocating separate sales promotion and advertising budgets for this market.

Retail and IT models

• India boast of a huge unorganized rural retailing system through the 4200 haats. However organized rural retailing has not taken deep roots in rural India .

• IT and connectivity impact the way business is done. Today with STD facility, the retailer can dial the town distributor instantly and fresh stocks would reach him in just a couple of days, because of better road connectivity.

Benefits of IT Driven business strategy

• Ease of access• Up-to-date content• Layout, design, consistent themes• Easy navigation• Higher interactivity• Access through multiple media• Higher use of non-textual information• Multiple languages• Lower transaction cost.

Rural managers• As the rural market is already bigger than its

urban counterpart, there is need to develop a good understanding about it among corporate managers. For this to happen rural marketing should be taught as a subject in every business school.

Glamorize rural marketing

• Rural is considered as unglamorous. Industry seminars on these subjects also evoke a similar response. This must change as the rural market in size is bigger than any of the other markets mentioned here.

• Industries associations (CII,FICCI,ASSOCHAM) government agencies and academic institutions should take upon themselves to give due importance to rural marketing.

Public private partnership In the coming years, it is hoped Companies

would join hands with the government in self-interest to increase the size of the pie, by creating economic activity in villages through micro-enterprises and mainstream these efforts, by linking them with large industry.

In 2009, Karnataka planned to privatize the development of rural roads in the state. The state has around 1,50,000 km of rural roads that cannot be developed with only government funds. Hence, the state planned to develop these roads through public-private partnership. The Secretary, Public Works, Ports & Inland Water Transport, Government of Karnataka, stated that government is keen towards designing a new policy for rural roads on the lines of Karnataka Road Fund Policy, Karnataka Tolling Policy and Karnataka Road Sector Policy 2009.

e-rural marketing

Conclusion

• Last but not the least , with the fast improving rural infrastructure and higher exposure to city life the sharp divide between urban and rural will get blurred. But this process has only just began.