RuralMarketing

Presented by:

Bulbul Sharma

Tanvi Gupta

Contents

Rural marketing What makes rural marketing

attractive Myths about Rural Market Challenges and Strategies for

Rural Marketing Case Studies

LG ITC e-Choupal

Conclusion

Rural Marketing

On account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. Thus a special marketing strategy emerged known as Rural Marketing.

Rural Marketing involves delivering manufactured or

processed inputs or services to rural producers or consumers.

What makes Rural marketing attractive Untapped rural potential

- 6,27,000 villages across the country

- account for 70% of population

- 60% of National demand for various product categories

Expansion of middle income household

-According to NCAER study, there are as many 'middle income and above' households in the rural areas as there are in the urban areas.

-There are almost twice as many 'lower middle income' households in rural areas as in the urban areas.

Improvement in Social Indicators -No. of “pucca” houses doubled from 22% to 41%

-No. of “Kuccha” houses halved from 41% to 23%

-Percentage of BPL families declined from 46% to 27%

-Rural literacy level improved from 36% to 59% in past two decades

Improvement in Infrastructure

- In 50 years,40% villages have been connected by road, in next 10 years another 30% would be connected

-More than 90% villages are electrified, though only 44% rural homes have electric connections

-Rural telephone density has gone up by 300% in the last 10 years

Low penetration rate -Low penetration rates in rural areas, so there are many

marketing opportunities –

 Durables Urban Rural

CTV 30.4 4.8

Refrigerator 33.5 3.5

FMCGs Urban Rural

Shampoo 66.3 35.4

Toothpaste 82.2 55.6

Myths About Rural Market

Rural Market Is a Homogeneous Mass

Disposable Income Is Low

Individuals Decide About Purchases

Myth 1: Rural Market Is a Homogeneous Mass

REALITY Heterogeneous population

16 languages

State wise variations in rural demographics Literacy (Kerala 90%, Bihar 44%) Population below poverty line (Orissa 48%, Punjab 6%)

Myth 2: Disposable Income Is Low

REALITY

Number of middle class HHs (annual income Rs 45,000- 2,15,000) Rural 27.4 million Urban 29.5 million

Per Capita Annual Income Rural Rs 9,481 Urban Rs 19,407 TotalRs 12,128

Source: NCAER,2002

Myth 3: Individuals Decide About Purchases

REALITY

Decision making process is collective

Purchase process-influencer, decider, buyer, pays can all be different. So marketers must brand message at several levels

Rural youth brings brand knowledge to HH

Challenges and Strategies

Availability

Affordability

Acceptability

Awareness

Availability

Challenge:

Regularly reach products to the far-flung villages.

India's 627,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas

Strategies

Strive to reach at least 13,113 villages with a population of more than 5,000

Trade off the distribution cost with incremental market penetration.

Can reach the rural market by the following ways:

`

Contd….

Hindustan Lever, to serve remote village,use autorickshaws, bullock-carts and even boats in the backwaters of Kerala.

Coca-Cola, 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.

Affordability

Challenge: to provide at cheaper price

Strategies:

Introduce small unit packs.

Godrej introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh — the so-called `Bimaru' States.

Contd….

Coca-Cola has addressed the affordability issue by

introducing the returnable 200-ml glass bottle priced at Rs 5.

Hindustan Lever, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm.

Acceptability

Challenge: to gain acceptability for the product or service

Strategies:

Offer products or services that suit the rural market

Easy to understand

Contd..

Because of the lack of electricity and refrigerators in the rural areas, Coca-Cola provides low-cost ice boxes — a tin box for new outlets and thermocol box for seasonal outlets.

HDFC tied up with non-governmental organisations and offered reasonably-priced policies in the nature of group insurance covers.

Awareness

Challenge: less exposure to the world, low literacy rate

Strategies:

Opinion leaders play a key role in popularizing products and influence in rural market so choose the appropriate opinion leader

Can use the following promotional methods:

Personal Interface

One on One contact programs are extremely efficient manner to reach the Rural Consumer

Provides an opportunity to Demonstrate Induce Trial Educate

Events -Using Culture to touch a chord

Events -Folk entertainment

Events : Melas

An opportunity to present Brand Stories using better Display tools Large Screens Animations

Melas can be used for Retail Sales Points Sampling Exercise Demonstration

Haats -Presence in the Market

42000 rural haats (supermarkets)

4500+ Visitors per haat. Average

Sales per day US$ 5000

300+ Sales outlets/haat.

Case Studies

LG

Established in 1997, LG Electronics India Pvt. Ltd., is a wholly owned subsidiary of LG Electronics, South Korea.

LG found the untapped potential in the rural market in India and to encash the opportunity it comes with rural marketing strategy.

4 A’s of Rural Marketing

Availability- Place 65 Remote Area Offices under

the branch offices that empowered to directly link for orders.

230 service centers.

2,600 mobile authorized service personnel for villages having residents below 10,000.

Affordability- Price

1998, LG launched its first low priced TV for rural consumers

-Sampoorna- Rs.3000 -Cineplus- RS 4900

Acceptability- Product-LG came out with Hindi and regional language menus

on its TVs.

-Introduced the low-priced “Cineplus” and “sampoorna” for the rural market.

-LG was the first brand to introduce gaming in TVs.

Awareness-Promotion

-Mobile Vans

-Exhibition

-Road Shows

ITC e-Choupal

ITC is one of India's foremost private sector companies diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Branded Apparel,Greeting Cards and other FMCG products.

Its International Business Division (ITC IBD) was created in

1990 as an agricultural trading company

In 1998, after competition forced , ITC-IBD taken the challenges to use information technology to change the rules of the game and create a competitive business.

Strategy

Use the Information Technology

Places computers with Internet access in rural farming villages

Each e-Choupal costs between US $3,000 and US $6,000 to set up and about US $100 per year to maintain.

Contd…

The farmers use the computer to access daily closing prices on local mandis

The farmers can also know about weather forecast (local) and best practices in the world from e-Choupal website.

Contd…

Use the e-Choupal to order seed, fertilizer, and other productsAt harvest time,

ITC offers to buy the crop directly from any farmer at the previous days closing price

Conclusion

“Rural market has an untapped potential like rain but it is different from the urban market so it requires the different marketing strategies and marketer has to meet the challenges to be successful in rural market.”