DISSERTATION WORK ON

“RURAL MARKETING IN INDIA”

BY:-SABHARANT BARANWAL

ROLL NO. 9101(MARKETING & FINANCE)

2008-2010

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, PUNE

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CERTIFICATE

This is to certify that the dissertation work titled “Rural Marketing in India” is a bonafide work done by Mr. Sabharant Baranwal, Roll No. 9101 of International School of Business & Media, Pune belonging to Marketing and Finance specialization batch 2008-10. As his guide I am satisfied with his work done and declare his dissertation work complete in a given period of time.

I wish him great success and best of luck for his future.

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ACKNOWLEDGEMENT

With immense pleasure I would take this opportunity to acknowledgement the invaluable assistance and cooperation extended to me by certain individuals for the successful completion of my dissertation work. I consider it as a privilege to thank all those who have helped me in completing my work.First of all I would to thank my guide Prof. Deepak Chakraborty for his constant motivation and valuable help throughout the work and whose support has helped me to complete my work in the stipulated period period of time. He persistently encouraged me to strive for excellence. He taught me to think critically and to have self-discipline. As my advisor, he was readily available and gave prompt advice during the dissertation process. I truly appreciate his guidance, patience, and dedication throughout my PGDBM study.

I express my sincere and profound gratitude to Mr. Avaneesh Jhumde (Academic chairperson), Dr. P.K De (Executive Director) for his kind support in guiding me, selecting a dissertation guide.I would also like to extend my warm feelings and sincere thanks to Mr. Sandeep (Librarian) for his ample help.I also acknowledge the help and cooperation of all the staff and my class mates who have directly or indirectly helped me in completion of my dissertation work successfully.

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RURAL INDIA…a new dawnRURAL INDIA…a new dawnIndia needs creative solutions to start a revolution which canIndia needs creative solutions to start a revolution which can take its villages fast forward in time – converting them intotake its villages fast forward in time – converting them into economically viable units and growth engines, harnessingeconomically viable units and growth engines, harnessing the power of the villagers, and opening up new horizons withthe power of the villagers, and opening up new horizons with the promise of a better tomorrow.the promise of a better tomorrow.

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INDEXINDEX

OBJECTIVE OF THE STUDY………………………………………………………6OBJECTIVE OF THE STUDY………………………………………………………6INTRODUCTION……………………………………………………………………7INTRODUCTION……………………………………………………………………7RURAL MARKETING CONCEPT…………………………………………………11RURAL MARKETING CONCEPT…………………………………………………11FEATURE OF INDIAN RURAL MARKET……………………………………….12FEATURE OF INDIAN RURAL MARKET……………………………………….12CHARACTERSTICS OF INDIAN RURAL MARKET……………………………13CHARACTERSTICS OF INDIAN RURAL MARKET……………………………13WHAT MAKES RURAL MARKET ATTRACTIVE……………………………… 15WHAT MAKES RURAL MARKET ATTRACTIVE……………………………… 15OPPURTUNITIES IN RURAL MARKET…………………………………………..19OPPURTUNITIES IN RURAL MARKET…………………………………………..19CLASSIFICATION OF RURAL CONSUMER…………………………………….19CLASSIFICATION OF RURAL CONSUMER…………………………………….19RURAL MARKETING MIX…………………………………………………………20RURAL MARKETING MIX…………………………………………………………204 A’S OF INDIAN RURAL MARKET………………………………………………214 A’S OF INDIAN RURAL MARKET………………………………………………21MYTH ABOUT RURAL MARKET………………………………………………….23MYTH ABOUT RURAL MARKET………………………………………………….23STRATEGIES TO BE ADOPTED IN RURAL MARKET………………………….24STRATEGIES TO BE ADOPTED IN RURAL MARKET………………………….24PROBLEMS RELATED TO RURAL MARKETING……………………………….28PROBLEMS RELATED TO RURAL MARKETING……………………………….28EFFECTS OF GLOBALIZATION ON RURAL MARKETING……………………31EFFECTS OF GLOBALIZATION ON RURAL MARKETING……………………31COMPANIES CASE PAPERS:COMPANIES CASE PAPERS:TATA TETLEY…………………………………………………………………….....34TATA TETLEY…………………………………………………………………….....34SOCIETY TEA……………………………………………………………………......37SOCIETY TEA……………………………………………………………………......37PARIWAR TEA……………………………………………………………………….40PARIWAR TEA……………………………………………………………………….40HINDUSTAN UNILEVER LIMITED……………………………………………….42HINDUSTAN UNILEVER LIMITED……………………………………………….42ITC LIMITED…………………………………………………………………………44ITC LIMITED…………………………………………………………………………44COCA COLA…………………………………………………………………………47COCA COLA…………………………………………………………………………47CONCLUSION……………………………………………………………………….49CONCLUSION……………………………………………………………………….49BIBLIOGRAPHY…………………………………………………………………….50BIBLIOGRAPHY…………………………………………………………………….50

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OBJECTIVE OF STUDY

The primary objective of this research is to gain a better understanding of the Rural Market of India does more and more companies in India are focusing on Rural India’The first two questions of this dissertation are: 1) Does Rural market has potential? And 2) is the relationship between rural market opportunities and performance stronger than the relationship between global market threats and performance? After answering this question it would be cleared that how much potential does rural markets has and also know various steps taken by different companies in order to tap rural market.Some Questions arises while studying this topic

1. Up to what extent rural market is affecting different aspects of Companies policies including culture, environment and business or marketing.

2. To study the different strategies used by the companies in this environment.3. To study the change in consumer behavior4. To study the threats and opportunities of rural market.5. What are the steps companies are taking to tap rural market?6. To study “Is Rural market has potential.”

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IntroductionIntroduction

Before gamboling into issues like where the Indian rural market stands and the opportunities for corporate to explore there... let's look at the definition of urban and rural India. The Census defined urban India as - "All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board etc or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square kilometer. Rural India, on the other hand, comprises all places that are not urban!"

Now for some facts and figures The Indian rural market today accounts for only about Rs 8 billion (53 per cent - FMCG sector, 59 per cent durables sale, 100 per cent agricultural products) of the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a long way ahead.

The Indian growth story is now spreading itself to India's hinterlands. Rural India, which accounts for more than 70 per cent of the country’s one billion population (according to the Census of India 2001), is not just witnessing an increase in its income but also in consumption and production.

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 Program with an outlay of US$ 34.84 billion for improving rural infrastructure.

According to a study on the impact of the slowdown on rural markets commissioned by RMAI and conducted by MART, the rural economy has not been impacted by the global economic slowdown, according to a study by the Rural Marketing Association of India (RMAI).

The study found that the rural and small town economy which accounts for 60 per cent of India’s income has remained insulated from the economic slowdown. Moreover, rural incomes are on the rise driven largely due to continuous growth in agriculture for four consecutive years.

Moreover, the rural consumer market, which grew 25 per cent in 2008 when demand in urban areas slowed due to the global recession, is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers, according to a white paper prepared by CII-Technopak. That will be double the 2004-05 market size of US$ 220 billion.

According to the study, while the durables market shrunk in urban India, the rural market is seeing a 15 per cent growth rate. Fast moving consumer goods (FMCG) sales are up 23 per cent and telecom is growing at 13 per cent.

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Time and again marketing practitioners have waxed eloquent about the potential of the rural market. But when one zeroes in on the companies that focus on the rural market, a mere handful names come to mind. Hindustan Lever Limited (HLL) is top of the mind with their successful rural marketing projects like 'Project Shakti' and 'Operation Bharat'. The lynchpin of HLL's strategy has been to focus on penetrating the market down the line and focusing on price point. Furthermore, activating the brand in the rural market through activities, which are in line with the brand itself, is what sums up HLL's agenda as far as the rural market is concerned informs MindShare Fulcrum general manager R Gowthaman. Amul is another case in point of aggressive rural marketing. Some of the other corporates that are slowly making headway in this area are Coca Cola India, Colgate, Eveready Batteries, LG Electronics, Philips, BSNL, Life Insurance Corporation, Cavin Kare, Britannia and Hero Honda to name a few.

We can safely say that until some years ago, the rural market was being given a step-motherly treatment by many companies and advertising to rural consumers was usually a hit and miss affair. More often than not, the agenda being to take a short-cut route by pushing urban communication to the rural market by merely transliterating the ad copy. Hence advertising that is rooted in urban sensitivities didn't touch the hearts and minds of the rural consumer. While, this is definitely changing, the process is slow. The greatest challenge for advertisers and marketers continues to be in finding the right mix that will have a pan-Indian rural appeal. Coca Cola, with their Aamir Khan ad campaign succeeded in providing just that.

Corporate are still apprehensive to "Go Rural." A few agencies that are trying to create awareness about the rural market and its importance are Anugrah Madison, Sampark Marketing and Advertising Solutions Pvt Ltd, MART, Rural Relations, O&M Outreach, Linterland and RC&M, to name a few. Also, the first four agencies mentioned above have come together to form The Rural Network. The paramount objective of the Network is to get clients who are looking for a national strategy in rural marketing and help them in executing it across different regions.

Interestingly, the rural market is growing at a far greater speed than its urban counterpart. "All the data provided by various agencies like NCAER, Francis Kanoi etc shows that rural markets are growing faster than urban markets in certain product categories at least. The share of FMCG products in rural markets is 53 per cent, durables boasts of 59 per cent market share. Therefore one can claim that rural markets are growing faster than urban markets," says Sampark Marketing and Advertising Solutions Pvt Ltd managing director R A Patankar.

Coca-Cola India tapped the rural market in a big way when it introduced bottles priced at Rs 5 and backed it with the Aamir Khan ads. The company, on its behalf, has also been investing steadily to build their infrastructure to meet the growing needs of the rural market, which reiterates the fact that this multinational has realised the potential of the rural market is going strength to strength to tap the same.

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Clearly the main challenge that one faces while dealing with rural marketing is the basic understanding of the rural consumer who is very different from his urban counterpart. Also distribution remains to be the single largest problem marketers face today when it comes to going rural. "Reaching your product to remote locations spread over 600,000 villages and poor infrastructure - roads, telecommunication etc and lower levels of literacy are a few hinges that come in the way of marketers to reach the rural market," says MART managing director Pradeep Kashyap.

Citing other challenges in rural marketing, Patankar says, "Campaigns have to be tailor made for each product category and each of the regions where the campaign is to be executed. Therefore a thorough knowledge of the nuances of language, dialects and familiarity with prevailing customs in the regions that you want to work for is essential. The other challenge is the reach and the available means of reaching out to these markets, hence the video van is one of the very effective means of reaching out physically to the rural consumers."

The fact of the matter remains that when compared to the Indian urban society, which is turning into a consumerism society; the rural consumer will always remain driven by his needs first and will therefore be cost conscious and thrifty in his spending habits. "Decision-making is still conscious and deliberated among the rural community. But nevertheless, the future no doubt lies in the rural markets, since the size of the rural market is growing at a good pace. There was a time when market predictions were made on the basis of the state of the monsoon but this trend has changed over the years; there is a large non farming sector, which generates almost 40 per cent of the rural wealth. Hence the growth in the rural markets will be sustained to a large extent by this class in addition to the farmer who will always be the mainstay of the rural economy," affirms Patankar.

"Although the melting of the urban - rural divide will take a while, this is not for want of the availability of the means but for want of the rural consumer's mindset to change; which has its own logic, which is driven by tradition, custom and values that are difficult to shed," he points out.

Fulcrum's Gowthaman says, "The biggest impending factor or deterrent on rural monies going up is that there is a general sense of trying to benchmark cost per contact (CPC). The television CPC is going to anyways be cheaper to rural CPC and unless and until the volume - value equation turns the other way round, you will not be able to spend disproportionate monies in the rural market."

For HLL, a one rupee or a five rupee sachet or the Kutti Hamam (the small Hamam) helps in giving the consumers a trial opportunity. While it does help in generate volume but not in terms of values. "Till the time that volume - value equation is managed better, the CPC is preventing anybody to look at rural at a large scale activation programme," reiterates Gowthaman.

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Ultimately, the ball lies in the court of rural marketers. It's all about how one approaches the market, takes up the challenge of selling products and concepts through innovative media design and more importantly interactivity.

Anugrah Madison's chairman and managing director RV Rajan sums up, "There is better scope for language writers who understands the rural and regional pulse better. I also see great scope for regional specialists in the areas of rural marketing - specialists like Event Managers, Wall painters, folk artists, audio visual production houses. In fact all those people who have specialised knowledge of a region are bound to do well, thanks to the demands of the rural marketers."

So the fact remains that the rural market in India has great potential, which is just waiting to be tapped. Progress has been made in this area by some, but there seems to be a long way for marketers to go in order to derive and reap maximum benefits. Moreover, rural India is not so poor as it used to be a decade or so back. Things are sure a changing!

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Rural Marketing - ConceptRural Marketing - Concept

In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has emerged. But often, rural marketing is confused with agricultural marketing – the latter denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers.

Significance

In recent years, rural markets have acquired significance in countries like China and India, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has taken shape. Sometimes, rural marketing is confused with agricultural marketing – the later denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers. Also, when we consider the scenario of India and China, there is a picture that comes out,huge market for the developed products as well as the labor support. This has led to the change in the mindset of the marketers to move to these parts of the world.

Also rural market is getting an importance because of the saturation of the urban market. As due to the competition in the urban market, the market is more or so saturated as most of the capacity of the purchasers have been targeted by the marketers.So the marketers are looking for extending their product categories to an unexplored market i.e. the rural market. This has also led to the CSR activities being done by the corporate to help the poor people attain some wealth to spend on their product categories. Here we can think of HLL (now, HUL) initiatives in the rural India. One of such project is the Project Shakti, which is not only helping their company attain some revenue but also helping the poor women of the village to attain some money which is surely going to increase their purchasing power. Also this will increase their brand loyalty as well as recognition in that area. Similarly we can think of the ITC E-Chaupal, which is helping the poor farmers get all the information about the weather as well as the market price of the food grains they are producing.In other view these activities are also helping the companies increase their brand value. So as it is given above the significance of the rural market has increased due to the saturation of the urban market as well as in such conditions the company which will lead the way will be benefited as shown by the success of HUL and ITC initiatives.

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Features of Indian Rural Markets:

Large, Diverse and Scattered Market: Rural market in India is large, and scattered into a number of regions. There may be less number of shops available to market products.

Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied with agriculture prosperity. In the event of a crop failure, the Income of the rural masses is directly affected.

Standard of Living and rising disposable income of the rural customers:

It is known that majority of the rural population lives below poverty line and has low literacy rate, low per capital income, societal backwardness, low savings, etc. But the new tax structure, good monsoon, government regulation on pricing has created disposable incomes. Today the rural customer spends money to get value and is aware of the happening around him.

Traditional Outlook: Villages develop slowly and have a traditional outlook. Change is a continuous process but most rural people accept change gradually. This is gradually changing due to literacy especially in the youth who have begun to change the outlook in the villages.

Rising literacy levels: It is documented that approximately 45% of rural Indians are literate. Hence awareness has increases and the farmers are well-informed about the world around them. They are also educating themselves on the new technology around them and aspiring for a better lifestyle.

Diverse socioeconomic background: Due to dispersion of geographical Areas and uneven land fertility, rural people have disparate Socioeconomic background, which ultimately affects the rural market.

Infrastructure Facilities: The infrastructure facilities like cemented roads, Warehouses, communication system, and financial facilities are Inadequate in rural areas. Hence physical distribution is a challenge to Marketers who have found innovative ways to market their products. As part of planned economic development, the government is making Continuous efforts towards rural development. In this age of liberalization,Privatization and globalization, rural market offers a big attraction to the Marketers to explore markets that are untapped.

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Characteristics of rural market

1) The rural markets are of diverse nature. There are people from diverse cultural, linguistic and religious background. No two markets are alike and it is dispersed across India.

2) Shift towards rural markets are mainly because of saturation and competitiveness of urban market. Marketers do not want to neglect this huge untapped market.

3) The incomes of rural customers are also increasing. As seen earlier disposable income of rural consumers have increased and they spend on FMCG and consumer durables.

4) Rising literacy has generated a demand of life style products. Lot of youth move out of the village and visit surrounding cities. They come back and influence decision making.

5) Cable television has also contributed to an increase in life style. The reach has increased and marketers are in a position to promote their products much more easily.

Indian Rural Market: A snapshot

Highlights:

Indian Rural sector has not been impacted by the global economic slowdown

India‘s Fast Moving Consumer Goods (FMCG) sector has grown consistently during the last three to four years, reaching a size of US$ 25 billion, thanks to rural markets

The Indian growth story has now spread to India's hinterlands. Rural India, home to about two-thirds of the country's 1 billion population, is not just witnessing an increase in its income but also in consumption and production.

Additionally, the rural economy has not been impacted by the global economic slowdown, according to a recent study by the Rural Marketing Association of India (RMAI). The study found that the rural and small town economy which accounts for 60 per cent of India's income has remained insulated from the economic slowdown. Moreover, rural incomes are on the rise driven largely due to continuous growth in agriculture for four consecutive years.Lets look at some key sectors that benefit from this trend

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FMCG

FICCI says that in a clear defiance of the economic slowdown of the past 12 months, India's Fast Moving Consumer Goods (FMCG) sector has grown consistently during the last three to four years, reaching a size of  US$ 25 billion (Rs. 120,000 crore) Rural consumers spend around 13 per cent of their income, the second highest after food (35 per cent), on fast moving consumer goods (FMCG), as per a RMAI study. The FMCG industry in India was worth around US$ 16.03 billion in August 2008 and the rural market accounted for a robust 57 per cent share of the total FMCG market in India.Most FMCG companies are now working on increasing their distribution in smaller towns and focusing on marketing and operations program for semi-urban and rural markets. Industry analysts state that the increased consumption is also the result of a growing middle class base in these markets. The total number of rural household is expected to rise to 153 million in 2009-10 from 135 million in 2001-02, suggesting a huge market.

Retail

The rural retail market is currently estimated at US$112 billion, or around 40 per cent of the US$ 280 billion retail market. Major domestic retailers like AV Birla, ITC, Godrej, Reliance and many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar are established rural retail hubs.

Pharmaceuticals

According to a report by McKinsey, the rural and tier-2 pharma market will account for almost half of the growth till 2015. The tier-2 market will grow to 44 per cent by 2015, amounting to US$ 8.8 billion.

Telecommunication

A Gartner forecast revealed that Indian cellular services revenue will grow at a compound annual growth rate (CAGR) of 18.4 per cent to touch US$ 25.6 billion by 2011, with most of the growth coming from rural markets. Also, a joint Confederation of Indian Industries (CII) and Ernst & Young report reveals that of the next 250 million Indian wireless users, approximately 100 million (40 per cent) are likely to be from rural areas, and by 2012, rural users will account for over 60 per cent of the total telecom subscriber base in India.

Automobiles

Passenger car and two-wheeler companies are driving on rural roads to push sales. While growth in urban markets has been flat or negative, the rural markets are booming, insulated from economic downturn. Rural markets' share in Maruti's overall sales during

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April-January 2009 has gone up to 8.5 per cent from 3.5 per cent in the same period last year.

Consumer durables

A survey carried out by RMAI has revealed that 59 per cent of durables sales come from rural markets.According to FICCI, Consumer goods segment were also observed to post negative growth of 3% during February 2009 compared to positive 11.7% in the corresponding month of previous year. The growth in total consumer goods is seen to erode due to fall in the growth of consumer non durables category.

What makes Rural Market Attractive?What makes Rural Market Attractive?

Rural market has following arrived and the following facts substantiate this:

742 million people Estimated annual size of the rural market

o FMCG Rs 65,000 Crore

o Durables Rs 5,000 Crore

o Agri-inputs (incl. tractors) Rs 45,000 Crore

o 2 / 4 wheelers Rs 8,000 Crore

In 2001-02, LIC sold 55 % of its policies in rural India.

Of two million BSNL mobile connections, 50% in small towns/villages

Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT)

41 million Kisan Credit Cards issued (against 22 million credit-plus-debit cards in urban) with cumulative credit of Rs 977 billion resulting in tremendous liquidity.

Of 20 million Rediffmail signups, 60 % are from small towns. 50% transactions from these towns on Rediff online shopping site

42 million rural HHs availing banking services in comparison to 27 million urban HHs.

Investment in formal savings instruments: 6.6 million HHs in rural and 6.7 million in urban. A majority of the total Indian population live in the numerous villages, scattered throughout the country. The rural population in India comprises

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the core of Indian society and also represents the real India. According to the 2001 Indian census, there are 638,365 villages in India and about 74% of Indian population lives in these villages. The number of people living in each of the Indian villages also varies considerably. It is found that most of the Indian villages have a population of less than 1,000, while there are only a few villages where more than 10,000 people live.

Religion, caste, and language are considered the major determinants of social and political organisation in rural India. More than 80% of the total rural population in India is Hindu and the other major religious communities include the Muslims, Buddhists, Jains, Christians, Sikhs, Parsis, etc. tribals or adivasis are an integral part of the rural population as well. Some of the prominent tribal languages spoken by the tribal population in India include Maithili, Santali, Konkani, Dongri, Meitei (Manipuri), Bodo, etc. About 70% of the total Muslim population in India speaks Urdu language. However, the languages spoken by the rural population in India largely vary on the native language of the location of these villages. India has one of the densest rural populations in the world. This huge density in the rural population in India puts immense pressure on the natural resources and also adversely affects the quality of life.

The rural population in India comprises several castes and tribes. Introduced in the Vedic period, the caste system still plays a major role in the formation of a village society in India. Traditionally, there are four broad categories of castes (varnas) in Indian villages. These castes include the Brahmins, Kshatriyas, Vaishyas and Sudras. According to Hinduism, the Brahmins are the highest class of the society and all other castes are liable to serve the Brahmins. They comprise a major portion of the entire rural population in India and are also involved in most of the decision making processes in the village. The Brahmins hold important posts in the Village Panchayats as well. Apart from these four castes, there is also a category of outcastes in the Indian villages. The people of this category were earlier called "untouchables" but now commonly referred to as "dalits". While the people of general castes live in the villages of plane lands, the tribes mostly live in the villages located in deep forests or in the hilly regions of India.

The tribal communities comprise a significant portion of rural population in India. Most of the tribal people live in the deep jungles and hilly regions in India and are engaged in agricultural activities. The tribal communities are also known as Adivasis and a majority of tribes in India live in the states of Orissa, Madhya Pradesh, Chattisgarh, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Bihar, Jharkhand, West Bengal, Mizoram, Andaman and Nicobar Islands, etc. The tribal communities in India are officially recognised as "Scheduled Tribes" by the Indian government, in the Fifth Schedule of the Constitution of India.

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A majority of the rural population in India lives on agriculture and linked occupations in the rural areas. Though, agriculture has been the primary occupation of rural people in India since the ancient period, the scenario is changing day by day. Many Indian villagers have engaged themselves in various non-agricultural occupations in the recent years. There is also a common trend among the Indian villagers to migrate to the urban areas to work as labourers or get into alternate professions. The literacy rate among the rural population in India has also increased significantly in the recent years. The current literacy rate in the Indian rural areas is as high as 65%, which is quite impressive.

The rural population in India provides the real picture of the Indian society. However, the Indian villagers face a lot of difficulties like poverty in their daily life. The authorities have taken many initiatives to improve the quality of life of the rural population in India, in the recent years.

RURAL DEVELOPMENT PROJECTSTotal Population of India : 1,027,015,247 (as on 1.3.2001 provisional)Rural Population : 741,660,293 i.e. more than 70%States/UTs : 28 States and 7 Union territoriesDistricts : 600Blocks : 6,000 Villages : 6,38,588(including uninhabited villages)Budgetary allocation for : 76,774 croresRural development programmesIn 10th PlanBudgetary allocation for 2004-05 : 18675.40 croresRural roads completed under : 60,400 km.PMGSY since inception of theschemeRural houses constructed under : 4.52 lakhIndira Awaas Yojana(IAY)during 2004-05

IAY and Credit cum Subsidy Scheme: 1562356 (Annual Target)546919 (Achievement upto Dec. 2004)Assistance provided for construction : Rs.200 croresof rural houses in the Tsumaniaffected areas under IAYSelf-Help Groups formed since 1.4.99 : 18,975,84till 13.1.05 under SGSYSHGs Swarozgaries assisted : 23,77,405Till 13.1.05 under SGSY

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Total credit mobilised under SGSY : 7035. 11 croresTill 13.1.2005Demand driven training : 1 crore and 10 lakh personsto be provided every year are to be trained every year by the Ministry ofRural Development and CAPARTNational Food for Work Programme : 14.11.2004 by Prime MinisterLaunched in the country on with Rs. 2020 crores as CashComponent and 20 lakh tones of food grainsDistricts identified under NFFWP : 150as most backwardAmount and Food grains released : Rs.297.91 crores and 20 lakhs MTunder NFFWP of food grains (2004-05)National Rural Employment Bill : 21.12.2004Introduced in Lok Sabha onDrinking water and Sanitation : Action Plan has been prepared Facilities in rural areas to cover all rural schools by 2006-07Accelerated Rural Water Supply : Programme(ARWSP)No. of habitation covered : 74868 (Annual Target)26162 (Achievement upto Dec. 2004)No. of Rural School covered : 116051 (Annual Target)26146 (Achievement upto Dec. 2004)Habitations covered under : 26,000Drinking water facility during 2004-05Scheme of computerization : 582 districts, 3236 taluks/tehsils/blocksof land records sanctioned in 471 sub-divisionsSchemes for rural development : Sampoorna Gramin Rozgar Yojana(SGRY) run by Ministry of Swaranjayanti Gram Swarozgar Yojana (SGSY) Rural Development Indira Awaas Yojana (IAY) Pradhan Mantri Gram Sadak Yojana (PMGSY) Watershed Development Programme under DPAP,DDP and IWDP (Hariyali) Computerization of Land Records Accelerated Rural Water Supply Programme Sector Reforms Project/Swajaldhara Rural Sanitation Programme DRDA Administration National Food for Work Programme

Feature of rural market

Unlike urban markets, rural markets are difficult to predict and possess special characteristics. The featured population is predominantly illiterate, have low income, characterized by irregular income, lack of monthly income and flow of income fluctuating with the monsoon winds.

Rural markets face the critical issues of Distribution, Understanding the rural consumer, Communication and Poor infrastructure. The marketer has to strengthen the distribution

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and pricing strategies. The rural consumer expects value for money and owing to has unsteady and meager status of weekly income; increasing the household income and improving distribution are the viable strategies that have to be adapted to tap the immense potential of the market.

Media reach is a strong reason for the penetration of goods like cosmetics, mobile phones, etc., which are only used by the urban people. Increasing awareness and knowledge on different products and brands accelerate the demand. The rural audience are however critical of glamorous ads on TV, and depend on the opinion leaders who introduce the product by using it and recommending it.

Opinion leaders play a key role in popularizing products and influence in rural market. Nowadays educated youth of rural also influences the rural consumers. Rural consumers are influenced by the life style they watch on television sets. Their less exposure to outside world makes them innocent and fascinated to novelties. The reach of mass television media, especially television has influenced the buying behaviour greatly

Opportunities

Infrastructure is improving rapidly - In 50 years only, 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; every 1000+

pop is connected by STD. Social indicators have improved a lot between 1981 and 2001 - Number of "pucca" houses doubled from 22% to 41% and "kuccha" houses

halved (41% to 23%). Percentage of BPL families declined from 46% to 27%. Rural literacy level improved from 36% to 59%.

Marketers can make effective use of the large available infrastructure

Post Offices 1,38,000

Haats (periodic markets)42,000

Melas (exhibitions) 25,000

Mandis (agri markets) 7,000

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Public Distribution Shops 3,80,000

Bank Branches 32,000

Classification of rural consumers

The rural consumers are classified into the following groups based on theireconomic status:

The Affluent Group: They are cash rich farmers and a very few in number. They have affordability but not form a demand base large enough for marketing firms to depend on. Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in this group.

The Middle Class: This is one of the largest segments for manufactured goods and is fast expanding. Farmers cultivating sugar cane in UP and Karnataka fall in this category.

The Poor: This constitutes a huge segment. Purchasing power is less, but strength is more. They receive the grants from government and reap the benefits of many such schemes and may move towards the middle class. The farmers of Bihar and Orissa fall under this category.

Rural Consumer InsightRural Consumer Insight

Rural India buys:o Products more often (mostly weekly)o Buys small packs, low unit price more important than economy.

In rural India, brands rarely fight with each other; they just have to be present at the right place.

Many brands are building strong rural base without much advertising supporto Chik shampoo, second largest shampoo brando Ghadi detergent, third largest brand

Fewer brand choices in rural: number of FMCG brand in rural is half that of urban.

Buy value for money, not cheap products.

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RURAL MARKETING MIX

MARKETING MIX‘a series of interconnected and interdependent marketing issues that need to be considered together’.

‘the set of actions, tactics, tools or variables that a company uses to promote and sell its brand or product in a market’.

Product Price Promotion Place

RURAL MARKETING MIXMIX DESCRIPTION

1)PRODUCT Need based consumption, Multiple use, Tough & Rugged, Price worthy.

1.a) BRANDING Products and Brands that have higher social acceptance. ( Making them change their product or brand is difficult )

1.b) PACKAGING Smaller packs, To resolve storage problem, Color & Convenience, Local language on the pack.

PRICE Following their income level, spending priorities in order of their needs, little extra for better quality but preferably towards lesserprice, prices of the substitutes.

PLACE Role of retailers, reach of distribution channels.

PROMOTION MEDIA VEHICLES TV, RADIO, PRINT, CINEMA,WALL/HOARDINGS, BUS STAND/BUS PANNEL, HAATS, JEEP BASED, SHOP FRONT, VAN BASED, MELAS, EXHIBITIONS, LEAFLETS, POSTERS, Etc.

4 A’s approach of Indian Rural Market

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The rural market may be appealing but it is not without its problems: Low percapita disposable incomes that is half the urban disposable income; large numberof daily wage earners, acute dependence on the vagaries of the monsoon; seasonalconsumption linked to harvests and festivals and special occasions; poor roads;power problems; and inaccessibility to conventional advertising media.However, the rural consumer is not unlike his urban counterpart in many ways.The more daring MNC’s are meeting the consequent challenges of availability,affordability, acceptability and awareness (the so-called 4 A’s)

» AvailabilityThe first challenge is to ensure availability of the product or service. India's627,000 villages are spread over 3.2 million sq km; 700 million Indians may live inrural areas, finding them is not easy. However, given the poor state of roads, it is an even greater challenge to regularly reach products to the far-flung villages. Any serious marketer must strive to reach at least 13,113 villages with a population of more than 5,000. Marketers must trade off the distribution cost with incremental market saturation. Over the years, India's largest MNC, Hindustan Lever, a Subsidiary of Unilever, has built a strong distribution system which helps its brands reach the interiors of the rural market.To service remote village, stockiest use autorickshaws, bullock-carts and even boats in the backwaters of Kerala. Coca-Cola, which considers rural India as a future growth driver, 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. LG Electronics defines all cities and towns other than the seven metros cities as rural and semi-urban market. To tap these unexplored country markets, LG has set up 45 area offices and 59 rural/remote area offices.

» Affordability The second challenge is to ensure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of who are on daily wages. Some companies have addressed the affordability problem by introducing small unit packs. Godrej recently 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. Hindustan Lever, among the first MNC’s to realize the potential of India's rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The move is mainly targeted at the rural market. Coca-Cola has addressed the affordability issue by introducing the returnable 200-ml glass bottle priced at Rs 5. The initiative has paid off: Eighty per cent of new drinkers now come from the rural markets. Coca-Cola has also introduced Sunfill, a powdered soft-drink concentrate. The instant and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and mutiserve sachet of 200 gm priced at Rs 15.

» AcceptabilityThe third challenge is to gain acceptability for the product or service. Therefore, there is a need to offer products that suit the rural market. One company which has reaped rich

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dividends by doing so is LG Electronics. In 1998, it developed a customized TV for the rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets in the very first year. 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. The insurance companies that have tailor-made products for the rural market have performed well. HDFC Standard LIFE topped private insurers by sellingpolicies worth Rs 3.5 crores in total premium. The company tied up with nongovernmental organizations and offered reasonably-priced policies in the natureof group insurance covers. With large parts of rural India inaccessible to conventional advertising media — only 41 per cent rural households have access to TV — building awareness is another challenge. Fortunately, however, the rural consumer has the same likes as the urban consumer — movies and music — and for both the urban and rural consumer, the family is the key unit of identity. However, the rural consumer expressions differ from his urban counterpart. Outing for the former is confined to local fairs and festivals and TV viewing is confined to the state-owned Doordarshan. Consumption of branded products is treated as a special treat or luxury.

» AwarenessHindustan Lever relies heavily on its own company-organized media. These arepromotional events organized by stockiest. Godrej Consumer Products, which istrying to push its soap brands into the interior areas, uses radio to reach the localpeople in their language.Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per cent ofrural households. It doubled it’s spend on advertising on Doordarshan, which alone reached 41 per cent of rural households. It has also used banners, posters and tapped all the local forms of entertainment. Since price is a key issue in the rural areas, Coca-Cola advertising stressed its `magical' price point of Rs 5 per bottle in all media. LG Electronics uses vans and road shows to reach rural customers. The company uses local language advertising. Philips India uses wall writing and radio advertising to drive its growth in rural areas.

Some Myths about Rural MarketsSome Myths about Rural Markets

I. Myth-1: Rural Market Is a Homogeneous Mass

Reality: It’s a heterogeneous population. Various Tiers are present depending on the incomes like Big Landlords; Traders, small farmers; Marginal farmers: Labors, artisans. State wise variations in rural demographics are present viz. Literacy (Kerala 90%, Bihar 44%) and Population below poverty line (Orissa 48%, Punjab 6%)

II. Myth-2: Disposable Income Is Low

Reality: Number of middle class HHs (annual income Rs 45,000- 2, 15,000) for rural sector is 27.4 million as compared to the figure of 29.5 million for urban sector. Rural

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incomes CAGR was 10.95% compared to 10.74% in urban between 1970-71 and 1993-94.

III. Myth-3: Individuals Decide About Purchases

Reality: Decision making process is collective. Purchase process- influencer, decider, buyer, one who pays can all be different. So marketers must address brand message at several levels.Rural youth brings brand knowledge to Households (HH).

Strategies

2.1 BY COMMUNICATING AND CHANGING QUALITY PERCEPTIONCompanies are coming up with new technology and they are properly communicatingit to the customer. There is a trade-o_ between Quality a customer perceives and a company wants to communicate. Thus, this positioning of technology is very crucial. The perception of the Indian about the desired product is changing. Now they know the deference between the products and the utilities derived out of it. As a rural Indian customer always wanted value for money with the changed perception, one can notice deference in current market scenario.

2.2 BY PROPER COMMUNICATION IN INDIAN LANGUAGEThe companies have realized the importance of proper communication inlocal language for promoting their products. They have started selling theconcept of quality with proper communication. Their main focus is to changethe Indian customer outlook about quality. With their promotion, ruralcustomer started asking for value for money.

2.3 BY TARGET CHANGING PERCEPTIONIf one go to villages they will see that villagers using Toothpaste, even when they can use Neem or Babool sticks or Gudakhu, villagers are using soaps like Nima rose, Breeze, Cinthol etc. even when they can use locally manufactured very low priced soaps. Villagers are constantly looking forward for new branded products. What can one infer from these incidents, is the paradigm changing and customer no longer price sensitive? Indian customer was never price sensitive, but they want value for money. They are ready to pay premium for the product if the product is o_ering some extra utility for the premium.

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2.4 BY UNDERSTANDING CULTURAL AND SO-CIAL VALUESCompanies have recognized that social and cultural values have a very strong hold on the people. Cultural values play major role in deciding what to buy. Moreover, rural people are emotional and sensitive. Thus, to promote their brands, they are exploiting social and cultural values.

2.5 BY PROVIDING WHAT CUSTOMER WANTThe customers want value for money. They do not see any value in frills associated with the products. They aim for the basic functionality. However, if the seller provide frills free of cost they are happy with that. They are happy with such a high technology that can ful_ll their need. As "Motorola" has launched, seven models of Cellular Phones of high technology but none took on. On the other hand, "Nokia" has launched a simple product, which has captured the market.

2.6 BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORSCompanies are picking up Indian models, actors for advertisements as this helps them to show themselves as an Indian company. Diana Hyden and Shahrukh Khan are chosen as a brand ambassador for MNC quartz clock maker "OMEGA" even though when they have models like Cindy Crawford.

2.7 BY ASSOCIATING THEMSELVES WITH INDIAMNCs are associating themselves with India by talking about India, by explicitly saying that they are Indian. M-TV during Independence Day and Republic daytime make their logo with Indian tri-color. Nokia has designed a new cellular phone 5110, with the India tri-colour and a ringing tone of "Sare Jahan se achcha".

2.8 BY PROMOTING INDIAN SPORTS TEAMCompanies are promoting Indian sports teams so that they can associate themselves with India. With this, they inuence Indian mindset. LG has launched a campaign "LG ki Dua, all the best". ITC is promoting Indian cricket team for years, during world cup they have launched a campaign "Jeeta hai jitega apna HindustanIndia India India". Similarly, Whirlpool has also launched a campaign during world cup.

2.9 BY TALKING ABOUT A NORMAL INDIANCompanies are now talking about normal India. It is a normal tendency of an Indian to try to associate himself/herself with the product. If he/she can visualize himself/herself with the product, he /she becomes loyal to it. That is why companies like Daewoo based their advertisements on a normal Indian family.

2.10 BY DEVELOPING RURAL-SPECIFIC PROD-UCTSMany companies are developing rural-speci_c products. Keeping into consideration the requirements, develops these products. Electrolux is working on a made-for India fridge designed to serve basic purposes: chill drinking water, keep cooked food fresh, and to withstand long power cuts.

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2.11 BY GIVING INDIAN WORDS FOR BRANDSCompanies use Indian words for brands. Like LG has used India brand name "Sampoorna" for its newly launched TV. The word is a part of the Bengali, Hindi, Marathi and Tamil tongue. In the past one year, LG has sold one lakh 20-inch Sampoorna TVs, all in towns with a population of around 10,000. By the end of 1999, roughly 12Thats Rs 114 crore worth of TV sets sold in the villages in a year.

2.12 BY ACQUIRING INDIAN BRANDSAs Indian brands are operating in India for a long time and they enjoy a good reputation in India. MNCs have found that it is much easier for them to operate in India if they acquire an Established Indian Brand. Electrolux has acquired two Indian brands Kelvinator and Allwyn this has gave them the well-established distribution channel. As well as trust of people, as people believe these brands. Similarly Coke has acquired Thumps up, Gold Spot, Citra and Limca so that they can kill these brands, but later on they realized that to survive in the market and to compete with their competitor they haveto rejuvenate these brands.

2.13 BY EFFECTIVE MEDIA COMMUNICATIONMedia Rural marketing is being used by companies. They can either go for the traditional media or the modern media. The traditional media include melas, puppetry, folk theatre etc. while the modern media includes TV, radio, e-chaupal. LIC uses puppets to educate rural masses about its insurance policies. Govt of India uses puppetry in its campaigns to press ahead social issues. Brook Bond Lipton India ltd used magicians e_ectively for launch of Kadak Chap Tea in Etawah district. In between such a show, the lights areswitched and a torch is ashed in the dark(EVEREADYs tact). ITC's e-chaupal (chaupal is the common place where villagers gather) has been the most elaborate and extensive venture in this _eld so far. Conceived by ITC's international business division and launched in 2000, the e-chaupal project has since grown to around 2,700 chaupals covering a population of around 1.2 million in _ve states { Madhya Pradesh, Karnataka, Andhra Pradesh, Uttar Pradesh and Maharashtra. Rural marketing requires the understanding of the complexities and this article reviews some of the key issues. Indian agricultural industry has been growing at a tremendous pace in the last few decades. The rural areas are consuming a large number of industrial and urban manufactured products.The rural agricultural production and consumption process plays a predominant role in developing the Indian economy. This has designed a new way for understanding a new process called Rural Marketing. The concept of rural marketing has to be distinguished from Agricultural marketing. Marketing is the process of identifying and satisfying customers needs and providing them with adequate after sales service. Rural marketing is deferent from agricultural marketing, which signees marketing of rural products to the urban consumer or institutional markets. Rural marketing basically deals with deliveringmanufactured or processed inputs or services to rural producers, the demand for which is basically a derived outcome. Rural marketing scientists also term it as developmental marketing, as the process of rural marketing involves an urban to rural activity, which in turn is characterized by various peculiarities in terms of nature of market, products and processes. Rural marketing defers from agricultural or consumer products marketing in

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terms of the nature of transactions, which includes participants, products, modalities, Norms and outcomes. The participants in case of Rural Marketing would also be deferent they include input manufacturers, dealers, farmers, opinion makers, government agencies and traders. The existing approach to the rural markets has viewed the markets as a homogeneous one, but in practice, there are significant buyer and user deference’s across regions as well as within that requires a deferential treatment of the marketing problems.These deference could be in terms of the type of farmers, type of crops and other agro-climatic conditions. One has to understand the market norms in agricultural input so as to devise good marketing strategies and to avoid unethical practices, which distort the marketing environment. Many of the inputs used for production process have implications for food, health and environmental sectors. Rural marketing needs to combine concerns for port with a concern for the society, besides being titled towards port. Rural market for agricultural inputs is a case of market pull and not market push. Most of the jobs of marketing and selling is left to the local dealers and retailers. The market for input gets interlocked with other markets like output, consumer goods, money and labor. The importance of rural marketing can be understood from the fact that today modern inputs i.e. diesel, electricity, fertilizers, pesticides, seeds account for as much as 70Green Revolution areas. Further the percentages were higher at 81of land. Strategic aspects Rural marketing in India is not much developed there are many hindrances in the area of market, product design and positioning, pricing, distribution and promotion. Companies need to understand rural marketing in a broader manner not only to survive and grow in their business, but also a means to the development of the rural economy. One has to have a strategic view of the rural markets so as to know and understand the markets well. In the context of rural marketing one has to understand the manipulation of marketing mix has to be properly understood in terms of product usage. Product usage is central to price, distribution, promotion, branding, company image and more important farmer economics, thus any strategy in rural marketing should be given due attention and importance by understanding the product usage, all elements of marketing mix can be better organized and managed.

2.14 BY ADOPTING LOCALISED WAY OF DIS-TRIBUTINGProper distribution channels are recognized by companies. The distribution channel could be a Big scale Super markets, they thought that a similar system can be grown in India. However, they were wrong, soon they realized that to succeed in India they have to reach the nook and the corner of the country. They have to reach the "local Paan wala, Local Baniya" only they can succeed. MNC shoe giants, Adidas, Reebok, Nike started with exclusive stores but soon they realized that they do not enjoy much Brand Equity in India, and to capture the market share in India they have to go the local market shoe sellers. They have to reach to local cities with low priced products.

2.15 BY ASSOCIATING THEMSELVES WITH IN-DIAN CELEBRITIESMNCs have realized that in India celebrities enjoyed a great popularity so they now associate themselves with Indian celebrities. Recently Luxor Writing Instruments Ltd. a JV of Gillette and Luxor has launched 500 "Gajgamini" range of Parker Sonnet Hussain special edition fountain pens, priced at Rs. 5000. This pen is signed by Mr. Makbul Fida Hussain a renowned painter who has created "Gajgamini" range of paintings. Companies

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are promoting players like Bhaichung Bhutia, who is promoted by Reebok, so that they can associate their name with players like him and get popularity.

2.16 MELASMelas are places where villagers gather once in a while for shopping. Companies take advantage of such events to market their products. Dabur uses these events to sell products like JANAM GHUTI(Gripe water). NCAER estimates that around half of items sold in these melas are FMCG products and consumer durables. Escorts also displays its products like tractors and motorcycles in such melas.

2.17 PAINTINGSA picture is worth thousand words. The message is simple and clean. Rural people like the sight of bright colours. COKE, PEPSI and TATA traders advertise their products through paintings.

Why Different Strategies?Why Different Strategies?

Rural markets, as part of any economy, have untapped potential. There are several difficulties confronting the effort to fully explore rural markets. The concept of rural markets in India is still in evolving shape, and the sector poses a variety of challenges. Distribution costs and non availability of retail outlets are major problems faced by the marketers. The success of a brand in the Indian rural market is as unpredictable as rain. Many brands, which should have been successful, have failed miserably. This is because, most firms try to extend marketing plans that they use in urban areas to the rural markets. The unique consumption patterns, tastes, and needs of the rural consumers should be analyzed at the product planning stage so that they match the needs of the rural people. Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. The main problems in rural marketing are:

Understanding the rural consumer Poor infrastructure Physical Distribution Channel Management Promotion and Marketing Communication

Dynamics of rural markets differ from other market types, and similarly rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or industrial consumer.

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PROBLEMS RELATED TO RURAL MARKETING

The rural market offers a vast untapped potential; it should also be recognized that it is not that easy to operate in rural market because of several problems. Rural marketing is thus a time consuming affair and requires considerable investments in terms of evolving appropriate strategies with a view to tackle the problems. The problems are:

Barter system In the developing country like India, even today the barter system i.e., exchange of goods for goods exists. This is a major obstacle in the way of development of rural marketing.

Market organization & staff The size of the market organization and staff is very important, to manage market system effective control. However the existing organizational setup particularly at district and block level needs to be strengthened in order make the services on various aspects available to the farmers timely and also easily accessible to them.

Other influencing factors in Rural Marketing Natural calamities and Market conditions (demand, supply and price). Pests and diseases, Drought or too much rains, Primitive methods of cultivation, lack of proper storage facilities which exposes grain to rain and rats, Grading, Transport, Market Intelligence (up to date market prices to villagers), Long chain of middlemen (Large no. of intermediaries between cultivator and consumer, wholesalers and retailers, Fundamental practices (Market Dealers and Commission Agents get good part of sale of receipts). Major Losers Small and marginal formers, 75% villagers are illiterates or semiliterate, they facing difficulties like proper paper procedures for getting loans and insurance. The farmers facing high interest rates for their credits (Local money lending system). Most of the credit needed for agricultural inputs like seeds, pesticides, and fertilizers.

The Major weakness and challenges Traditional mind not to react new ideas. Agricultural income mostly invested in gold ornaments and weddings. Low rural literature. Not persuading new thinking and improved products.

Underdeveloped people and underdeveloped markets The agricultural technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly through out the country. Some districts in Punjab, Haryana or Western Uttar Pradesh where rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough. In addition, the farmers with small agricultural land holdings have also been unable to take advantage of the new technology.

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Lack of proper physical communication facilities

Nearly 50 percent of the villages in the country do not have all weather roads. Physical communication to these villages is highly expensive. Even today, most villages in eastern part of the country are inaccessible during monsoon season.

Inadequate Media coverage for rural communication

A large number of rural families in own radios and television sets there were also community radio and T.V sets. These have been used to diffuse agricultural technology to rural areas. However the coverage relating to marketing is inadequate.

Many language and Dialects

The number of languages and dialects vary from state to state region to region. This type of distribution of population warrants appropriate strategies to decide the extent of coverage of rural market.

Low LiteracyThere are not enough opportunities for education in rural areas. The literacy level is as low (36%) when compared to all- India average of 52%.

Seasonal DemandDemand for goods in rural markets depends upon agricultural situation, as agriculture is the main source of income. Agriculture to a large extent depends upon monsoon and, therefore, the demand or buying capacity is not stable or regular.

TransportationMany rural areas are not connected by rail transport. Kacha roads become unserviceable during the monsoon and interior villages get isolated.

DistributionAn effective distribution system requires village-level shopkeeper, Mandal/ Taluka- level wholesaler or preferred dealer, distributor or stockiest at district level and company owned depot or consignment distribution at state level. The presence of too many tiers in the distribution system increases the cost of distribution.

Communication ProblemsFacilities such as telephone, fax and telegram are rather poor in rural areas.

Traditional LifeLife in rural areas is still governed by customs and traditions and people do not easily adapt new practices. For example, even rich and educated class of farmers does not wear jeans or branded shoes.

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Buying DecisionsRural consumers are cautious in buying and decisions are slow and delayed. They like to give a trial and only after being personally satisfied, do they buy the product.

Media for PromotionsTelevision has made a great impact and large audience has been exposed to this medium. Radio reaches large population in rural areas at a relatively low cost. However, reach of formal media is low in rural households; therefore, the market has to undertake specific sales promotion activities in rural areas like participating in melas or fairs.

Career in Rural MarketWhile rural marketing offers a challenging career, a rural sales person should require certain qualifications and specialized talent.

Cultural FactorsCulture is a system of shared values, beliefs and perceptions that influence the behavior of consumers. There are different groups based on religion, caste, occupation, income, age, education and politics and each group exerts influence on the behavior of people in villages.There is a belief among rural people that experience is more important than formal education and they respect salespersons who can offer practical solutions to their problems. Therefore, it is desirable that sales persons, especially those who have been brought up in cities are given a thorough training consisting of both theory and practical aspects of village life. The training will help these sales persons to align themselves with the market realities and settle down smoothly in their jobs.Rural market has a tremendous potential that is yet to be tapped. A small increase in rural income, results in an exponential increase in buying power.

Future TrendsMarkets which are not able to face the stiff competition posed by MNCs, can restore their profits in the rural sector. The market share of urban market when compared to the rural market is low, hence if Indian industries concentrate on rural markets their sales will increase. If rural markets are brought into the limelight of development, they pave way to prosperity. Prosperity of India lies in the prosperity of every Indian, hence no rural segment should be left untapped.

EFFECT OF GLOBALIZATION ON RURAL MARKETING

Rural Agricultural Marketing - Impact of Globalization: Contract Marketing

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The macro level changes due to the New Economic Policy have had a direct impact in the field of agricultural marketing. So the impact of globalization has been highlighted here.

As a result of globalization substantial investments in new ventures are being made by national as well as international corporations. A number of foreign companies are slated to enter the Indian market through collaborations with the well known Indian companies like Eagle Agro-farms, Maxworth Orchards, etc. It is clear that the wholesaler in the fresh products market as well as the processor will prefer contract marketing tie-ups with the farmers for sourcing his supply requirements.

The concept of contract farming is not new to India. Several years back, contract marketing was successfully tried in respect of "Hima peas". 'MARKFED' of Punjab also operated a scheme of contract marketing for green peas, Agrecotec proposes to setup country-wide retail network of shops for fresh fruit vegetable marketing. ,Direct marketing to consumer is already being done by the Mother Dairy through its outlets in Delhi.

The successful integration of production and marketing under Apni mandi' scheme in Punjab and the marketing managements of 'FRESH' in Hyderabad are clear signs that contract marketing is going to be increasingly resorted to in the years to come. “Pepsi Foods" also an another example of contract farming of potatoes and tomatoes. Under this farming farmers will be producing specific varieties or qualities tailored to meet the requirements of the processor or the fresh produce market.

The potential benefits of the contract farming are:- producers can reduce the market risk, post harvest losses can be reduced, technology can be transferred to the producers, contract serve as a security for increased access to credit by both producers and processors, contract may create a greater sense of common interest among the producers and induce greater involvement in group activities etc.

Common problems may be volatility in market price, there is risk that the processors may manipulate the quality standards, coordination problems may be there regarding delivery of inputs or produce, processors may lack the competence or capacity to deliver the require technical assistance, producers may become tied to a contract relationship by virtue of debt, specialization, or the disappearance of other markets and may be unable to adjust their production activities to changing conditions etc.

Many of these problems of contract farming will not arise where goodwill and credibility exist between the farmers and the concerned company.

Major Areas of Concern in the Rural Marketing Sector

1. Government should assume a more dynamic role in the field of agricultural marketing that of a strong buffer between global forces and local needs.

2. Emphasize value addition by giving a thrust to agro-processing industries at farm level so that the benefit of value addition is transferred to the producer.

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3. There is a need for professionalizing agricultural marketing as a subject of great practical application.

4. Creation of an effective market intelligence network, right from the importer in the global market to the producer in the remote corner of the rural India.

5. Institutional linkages should be emphasized upon to integrate the markets, for easy movement of goods and also to facilitate the inter-state trade.

6. Regular surveys and analytical studies on agricultural marketing should be conducted, so that appropriate policy adjustments and refinements whenever necessary.

7. Decentralization in the marketing system.

8. To introduce social marketing for bringing about a change in the behaviour and attitude through social advertising and social communication. Some fertilizer companies and commercial banks are taking up Village Adoption Programme under the social marketing.

9. A design frame work for information technology based Agricultural Marketing Network is essential. Computer installations at State as well as district marketing boards enhances the availability of trade information.

10. Economic incentives should be offered to the farmers to encourage them during low economic conditions.

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Company ProfileCompany Profile

Set up in 1964 as a joint venture with UK-based James Finlay and Company to develop value-added tea, the Tata Tea Group of Companies, which includes Tata Tea and the UK-based Tetley Group, today represent the world's second largest global branded tea operation with product and brand presence in 40 countries. Among India's first multinational companies, the operations of Tata Tea and its subsidiaries focus on branded product offerings in tea but with a significant presence in plantation activity in India and Sri Lanka.

The consolidated worldwide branded tea business of the Tata Tea Group contributes to around 86 per cent of its consolidated turnover with the remaining 14 per cent coming from Bulk Tea, Coffee, and Investment Income. The Company is headquartered in Kolkata and owns 27 tea estates in the states of Assam and West Bengal in eastern India, and Kerala in the south.

Products & BrandsProducts & Brands

The company has five major brands in the Indian market - Tata Tea, Tetley, Kanan Devan, Chakra Gold and Gemini -- catering to all major consumer segments for tea. The Tata Tea brand leads market share in terms of value and volume in India and the Tata Tea brand is accorded "Super Brand" recognition in the country. Tata Tea's distribution network in the country with 38 C&F agents and 2500 stockists caters to over 1.7 million retail outlets (ORG Marg Retail Audit) in India.

The company has a 100% export-oriented unit (KOSHER & HACCP certified) manufacturing Instant Tea in Munnar, Kerala, which is the largest such facility outside the United States. The unit's product is made from a unique process, developed in-house, of extraction from tea leaves, giving it a distinctive liquoring and taste profile. Instant Tea

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is used for light density 100% Teas, Iced Tea Mixes and in the preparation of Ready-to- drink (RTD) beverages.

With an area of approx 15,900 hectares under tea cultivation, Tata Tea produces around 30 million kg of Black Tea annually.

4P’s of Marketing of TATA TEA

1# Product:Product:

Bulk Tea

All grades of CTC Teas

All grades of Orthodox Teas

Organic Tea - Orthodox grades Teas are supplied in packaging as per ISO norms as well as customer requirements viz. 4-ply Kraft Paper Sacks, Multiwall Paper Sacks, Rigid T--Sacks, Polywoven Sacks, Currugated Fibre Carlons, Polylined Jute Bags etc.

Instant Tea Division caters to customer specific product and are used for light density 100% Teas, Iced Tea Mixes and in the preparation of Ready to Drink (RTD) beverages. Instant Tea powder is packed in bulk packages of 20/25/35 kg each.

Intant tea powder - heavy density

Instant tea powder - institutional density

Instant tea powder - grocery density

Micro milled instant tea powder

2#Price:Price:

Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that

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the brand can be associated with the myriad rituals, celebrations, festivals, “melas” and other activities where they assemble.

All the prices of the products depend upon the package ie 50gms or 100gms.

Normally a Penetrating Strategy is used frequently

3#Place: (Distribution)Place: (Distribution)

One of the ways could be using company delivery vans which can serve two purposes- it can take the products to the customers in every nook and corner of the market and it also enables the firm to establish direct contact with them and thereby facilitate sales promotion.

However, only the bigwigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Annual “melas” organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases. According to the India n Market Research Bureau, around 8000 such melas are held in rural India every year.

Rural markets have the practice of fixing specific days in a week as Market Days (often called “Haats’) when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as “Mandis” or Agri-markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns they will easily be able to cover a large section of the rural population.

4#Promotion:Promotion:

Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns.

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SOCIETY TEASOCIETY TEA

Company ProfileCompany Profile

Tea is a tradition in our country. As, no doubt, it is in yours as well. But slowly, surely, people all over are being a little more conscious about the tea that they drink. Slowly but surely, tea is being referred to as SOCIETY TEA. Surely, one more delightful indication of the world growing smaller. And in a way, of people coming closer. Now let's raise our cups, to this cheerful tradition and to our little world of big-tasting teas.

Benefits of Society Tea – Health BenefitsBenefits of Society Tea – Health Benefits

Want the least expensive answer to memory problem? Drink tea, every few hours a day, say recent findings by Unilever Research Laboratories. After much experiment with combinations of various kinds of drugs that supposedly enhanced memory power, the findings seek to subtly suggest that the most affordable remedy, without medical expenses involved, was already available and yet ignored.

Findings by Unilever point to a strong link between tea and an increase in mental alertness and other mental and physical attributes. Drinking tea every few hours can help prevent a decline in mental alertness and performance throughout the day.

Tea is a rich source of flavonoids. The flavonoids in tea are found to be effective in improving blood circulation and skin health. Research in Japan and Netherlands also indicate that tea prevents strokes and heart attacks, certain cancers, check cholesterol levels and inhibit formation of dental plaque.

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Studies have shown that black tea consumption reduces the risk of heart disease and stroke. It maintains a healthy circulatory system of arteries and veins.

Today researchers are finding that a steaming cup of tea can relieve more than just the stress of a harried day. Drinking the brew has been linked with a lowered risk of everything from tooth decay to heart disease to stroke.

In a study of more than 1000 Japanese men, the more green tea they drank, the lower their concentrations of blood cholesterol dropped. And recently, University of Minnesota researchers found a link between tea consumption and a decreased risk for cancers of digestive and urinary tract organs in women. Study on humans on tea and heart health, revealed that drinking more than five cups of black tea had the lowest risk of severe atherosclerosis.

SOCIETY TEASOCIETY TEA

4P’s of Marketing of SOCIETY TEA

1#Product:Product:

SOCIETY TEAAvailable in 50, 100, 250 & 500 grams respectively.

SOCIETY TEA - PET JARAvailable in 250, 500 grams and 1 Kg. only.

SOCIETY TEA BAGSIn Packs of 25, 50 & 100 respectively.

SOCIETY PREMIUMAvailable in 250 grams Jars on Request. only.

T - TOWN TEAAvailable in 250 & 500 grams Jar only.

SOCIETY PURE DARJEELING TEA

Available on request only.

2#Price:Price:

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The Pricing strategy used by Society Tea is somewhere in between penetrating and skimming, but the major part is occupied by Penetrating.

Prices of Tea are as per the product packages.

Eg;- 100 gms are @ Rs.20/-

3#Place: (Distribution)Place: (Distribution)

Rural markets have the practice of fixing specific days in a week as Market Days (often called “Haats’) when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as “Mandis” or Agri-markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns they will easily be able to cover a large section of the rural population.

Distribution of Society is all around the Urban and Rural Market.

The Manufacturer gives it to the wholesaler, wholesaler in turn gives it to the retailer and then finally to the customers.

4#Promotion:Promotion:

They arrested the eyes. There was something different about them. Something fresh. Something elegant. Little wonder then, that tea-lovers felt persuaded to pick them up and take them home. Yes, we're talking about the package.

As a matter of fact, everything was designed to appeal to the senses. From the packaging to the point-of-sales attractions. From the press advertisements to the posters. From radio jingles to TV commercials. The jingle "Tea. Tea. Tea…………." caught on so much that people we heard humming it, while walking into stores, waiting for trains, watching a cricket-match or generally to ease out their boredom.

Even children were heard singing it. One felt a freshness, a newness, a sense of contentment similar to the feeling one gets after each sip of Hasmukhrai & Co.'s teas. You couldn't expect any less from them. After all, they take so much trouble to create such exquisite blends of tea. Each of these pieces of communication was an invitation in every sense of the word. In fact, the first ad for SOCIETY Tea said "Welcome to the Society….". It was an invitation well accepted, for the society of tea lovers is growing larger, day by day. We're tempted to say " Tea cheers for the design."

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ParivarParivar Tea Limited Tea Limited

Company Profile:

A newly established company in the tea & coffee industry Board of Directors are the group members and is a partnership firm

Manufacturing Plant is at Vashi and head office is at Malad

Why go Rural?

Little has changed in the villages of India in the past decades. Schools have been built, but many still lack teachers and appropriate teaching methods. There are phone lines in many villages, but getting a dial tone is still a challenge. Electricity supply is at best intermittent. Health care is still limited in its availability.

India’s villages are dependent on agriculture for much of their sustenance. Drought is a common occurrence across much of India. As a result, villagers, for the most part, remain a poor lot - the per capita income of India’s villages is perhaps no more than Rs 12-18,000 (USD 240-360, USD1 = INR50) per annum, as compared to the national average of Rs 25,000 (USD 500).

Perhaps, most importantly, the opportunities available to villagers are not dramatically different from what they were many years ago. Villages in India are where you live if you have no other option. And yet, India is in its villages. 70% of Indians live there. Even as one India races ahead with optimism towards the future, there is another India which seems to be stuck in the past. If India as a nation has to progress, there is little doubt that India’s villages too have to progress.

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4P’s of Marketing of

PARIVAR TEA

1#Product:Product:

There are 2 types of tea:

General Tea Herbal Tea

2#Price:Price:

Prices are set according to the rural market / village. Prices are set after considering whether it is a general tea or a herbal tea. Prices will be a bit high for herbal tea, as It contains herbs which are costlier. Also as per the packages of tea

3#Place:Place:

The distribution pattern of our product will be different form the usual pattern. The first this is that the company will have a company outlet in each and every village which will eliminate the problem releting with middlemen. Along with this tea pouches will be available at every shop in villages.

4#PromotionPromotion ::

Initially we will be giving free sampling for the first user, thereby promoting the brand

Wall painting at different places Mouth to Mouth Publicity

Mobile Publicity with the use of vans and bicycles

Free tea at festivals and other occasion and also at our outlets

S T P of S T P of Parivar Tea LimitedParivar Tea Limited{{Segmenting / Targeting / Positioning}

1. Segmenting: Buyers behavioral segmentation

All variables are in some way or the other related to buyers behavior, which vary often confuses marketers. There is a difference between the buyers characteristics reflected in there geographic, demographics and psychographic profiles, and there buying behavior. Buyer behavior involves many elements like purchasing occasion benefits, user status, rate of product usage, loyalty rate, and attitude towards the product

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2. Targeting: -

The company targets the whole family ie anyone in the family can drink the tea. Also special for farmers as it also contains herbs which will refresh farmers

3. Positioning

A Marketer can position his product in various ways to develop or enhance it’s value to the consumer. He also do it according to :

Product Characteristics / Consumer Benefits Price Quality

Use or Application

Product User

Product Class

Culture Symbols

Competitors

Your company positions it’s products as a Quality product at fare prices and consumer benefits which is a herbal tea

HINDUSTAN UNILEVER LIMITED

IntroductionHindustan Unilever Limited (HUL) and its constituent companies have been in India since 1931.Over these decades, while HUL has benefited from the developments in the country, it has contributed equally to these developments. The company’s main contributions include developing and using relevant technologies, stimulating industrialization, boosting exports, adding value to agriculture and generating productiveemployment and income opportunities. HUL has been proactively engaged in rural development since 1976 with the initiation of the Integrated Rural Development Programme in the Etah district of Uttar Pradesh, in tandem with the company’s dairy operations. So the company is contributing towards rural India over three decades.This Programme now covers 500 villages in the district. Simultaneously, the factories that HUL has established in less-developed regions of the country have been engaged in similar programmes in adjacent villages. These factory-centred activities mainly focus on training farmers, animal husbandry, generating alternative income, health & hygiene andinfrastructure development. The company has acquired a wealth of experience and learning from these activities. The principal issue in rural development is to create income-generating opportunities for the rural population. Such initiatives are successful

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and sustainable when linked with the company’s core business and is mutually beneficial to both the population for whom the programme is intended and for the company.

Based on these insights, HUL launched Project Shakti in the year 2001, in keeping with the purpose of integrating business interests with national interests.

HUL envisions the creation of 1,00,000 Shakti Entrepreneurs covering 5,00,000 villages, and touching the lives of 600 million rural people by the year 2010.

Reasons for Project ShaktiThere are mainly three important reasons why the company like HUL has started with such a project:

1. Empowering women in rural IndiaThe objective of Project Shakti is to create income-generating capabilities for underprivileged rural women, by providing a sustainable micro enterprise opportunity, and to improve rural living standards through health and hygiene awareness. Several institutions like NGOs and Government bodies have been working closely, for nearly five years, to establish Self Help Groups (SHGs) of rural women in villages across India. Their experiments clearly indicate that micro-credit, when carefully targeted and well administered can alleviate poverty significantly. It was also learnt was that rural upliftment depends not only on successful infusion of credit, but on its guided usage for better investment opportunities This is where HUL's Project Shakti is playing a role increating such profitable micro enterprise opportunities for rural women.2. Catalysing prosperity in Indian villagesUnder the project, HUL offers a range of mass-market products to the SHGs, which are relevant to rural customers. HUL is investing significantly in resources that work with the women on the field and provide them with on-the-job training and support. This is a key factor in ensuring the stabilization of their fledgling businesses.HUL imparts the necessary training to these groups on the basics of enterprise management, which the women need to manage their enterprises. This translates into a much-needed, sustainable income contributing towards better living and prosperity.

3. Risk-free micro enterprise that yields high returnsA typical Shakti entrepreneur conducts a steady business which gives her an income in excess of Rs.1,000 per month on a sustainable basis. As most of these women live below the poverty line, and hail from extremely small villages (with populations of less than 2000), this earning is very significant, and almost twice the amount of their previoushousehold income. For most of these families, Project Shakti is enabling families to live with dignity, with real freedom from want. In addition to money, there is a marked change in the woman's status within the household, with a much greater say in decision-making. This results in better health and hygiene, education of the children, especially the girl child, and an overall betterment in living standards. The most powerful aspect about this model is that it creates a win-win partnership between HUL and the consumers, some of whom will depend on the organization for their livelihood, and builds a self-sustaining cycle of growth for all.

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The Current ScenarioThe model was piloted in Nalgonda district of Andhra Pradesh in 50 villages in the year 2000. The Government of Andhra Pradesh took the pioneering step of supporting the initiative by enabling linkages with the network of DWACRA Groups of rural women set up for their development and self-employment. Most SHG women view Project Shaktias a powerful business proposition and are keen participants in it. It has since been extended to in Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal with the total strength of over 40,000 Shakti Entrepreneurs.

Other activities: To improve the business skills of the SHG women, extensive training programmes are being held. Such workshops have already covered a large number of Shakti Entrepreneurs in Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Uttar Pradesh, Tamil Nadu, Chhattisgarh and Orissa. As part of their training programme, all HUL Management Trainees spend about 4 weeks on Project Shakti in rural areas with NGOs or SHGs. Assignments include business process consulting for nascent enterprises engaged in the manufacture of products such as spices and hosiery items.

ITC LIMITED

Introductione-Choupal is an initiative of ITC Limited (a large multi business conglomerate in India) to link directly with rural farmers for procurement of agricultural / aquaculture produce like soybeans, wheat, coffee, etc. The company has initiated an e-Choupal effort that places computers with Internet access in rural farming villages; the e-Choupals serve as both a social gathering place for exchange of information (choupal means gathering place in Hindi) and an e-commerce hub. e-Choupal is a Hindi word which means “village meeting place”. Market is a meeting place where vendors and customers come together to do transactions. e-Choupal is a virtual market place where farmers can transact directly with a processor and can realize better price for their produce. e-Choupal has the advantages of the market but spans very large varieties of vendors and customers. Geographical distances do not restrict participation in the e-Choupal. The main disadvantage of conventional market is that information asymmetry is inherent in the market where as e- Choupal provides for transparent transactions. This enables the participation of smaller as well as larger players. Elimination of some layers of intermediaries allows for larger share of profits to reach the lower end of value chain. The main attractiveness of e-Choupal is that it can be used for connecting large producers/small producers and small users/large users, thereby eliminating the need for

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hierarchy of brokers. Internet is used as a low transaction cost backbone for communication. Physical delivery of produce to the processor is still done through theexisting intermediaries. e-Choupal does not attempt total elimination of intermediaries, as intermediaries are indispensable in economy like India where intermediaries are adding value to the every step of value chain at a low cost. Intermediaries have the expertise in storage, transportation, quality assessment and counter party risk reduction, which are difficult to replicate. e-Choupal provides farmers with all the market information and this helps them to become market oriented. In e-Choupal intermediaries are leveraged but they are disintermediated from the market information flowing to the farmers.Unique Business Model: e-ChoupalThe e-Choupal model has been specifically designed to tackle the challenges posed by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries, who block critical market information from passing to the farmers and use that information for getting a big margin for themselves. The intermediaries capitalized on the economies of information and economies of physical things, which are tied together in a bundle. Due to this, the farmer does not get the proper price of its product & they continue to live below the poverty line. But e- Choupal sets things in order as it smoothens the flow of information to the farmers by disinter mediating intermediaries from the chain of information flow and at the same time leverages the physical transmission capabilities of the them as they deliver critical value at every link for a very low cost in a weak infrastructure environment. The project e-Choupal is ITC’s unique click & mortar initiative e-Choupal is an ICT (Information and Communications Technologies) platform for carrying out trade at a number of locations. In this, ITC sets up a back-up physical service support at the village level, called Choupal, through Sanchalak: a lead farmer, who acts as the interface between computer and the farmer. ITC accumulates information regarding weather, modern farming practices, and market prices from sources like Meteorological Department, Agri-universities, mandis (regional market) etc., and upload all information on to e-Choupal web site. All information is customized according to local farmers requirements and provided into the local language through computer set up by ITC in Sanchalak’s house. Sanchalak access this information and facilitates its dissemination to farmers. Information regarding weather and scientific farming helps farmers to select the right crop and improve the productivity of their farms. Availability of market information helps farmers to become market oriented. They know what price ITC is quoting and the price prevalent in the local market, thereby helping better price realization for farmers. Iffarmer decides to sell to ITC, Sanchalak works as the aggregator of small farmers produce to sell them to ITC. Sanchalak also aggregates farmers input purchase orders for various items like seeds, pesticides and places them directly with the suppliers through internet and facilitate supply of high quality farm inputs as well as purchase of farm produce at farmer’s doorstep with the help of intermediaries as shown in figure previously. It can be deciphered that e-Choupal has added critical value to the existingsupply chain through innovative application of information technology. ITC-IBD has successfully reached the vastly scattered farming villages of India and facilitated the smooth flow of rich information to them by disintermediating the intermediaries in flow of information. Power of information is working as the catalyst of transformation of the

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life of farmers by helping them to get improved yields from their farms and better price realization. Usually it is tough to maintain the expanding scale of reach and richness into the products or services but e-Choupal is achieving it easily and we find that overall value chain has been shifted horizontally on the scale of reach and richness. e-Choupal is an ICT platform that facilitates flow of information and knowledge, and supportsmarket transactions on line.· It transmits Information (weather, prices, news),· It transfers Knowledge (farm management, risk management)· It facilitates sales of Farm Inputs (screened for quality) and· It offers the choice of an alternative Output-marketing channel(convenience, lower transaction costs) to the farmer right at his doorstep· It is an interlocking network of partnerships (ITC + Met Dept + Universities + Input COs + Sanyojaks, the erstwhile CommissionAgents) bringing the “best-inclass” in information, knowledge and inputs.e-Choupal is, thus, distributed transaction platform that brings together sellers, buyers along with information and service providers. e-choupal is a model with a number of non-conventional characteristics namely:· customer centric· capable of being used for many commodities and multiple transactions· easily scalable once it is verified· uses local talent and local people and develops local leaders· can be extended to local as well as global procurers· stimulates local entrepreneurs to extend their innovativeness· uses all the existing institutions and legal frameworks and· many others can join the market as transaction time is low.Critical Success FactorsThe e-Choupal experience highlights that ICT platforms can provide rural connectivity and e-commerce support. These platforms have enormous potential provided they are conceptualized for the specific needs of the community and business. Some of the elements that helped the e-Choupal to work successfully are discussed below:

Comprehensive knowledge of rural markets: Rural markets are both economic and social networks and there is a strong connection between the operation of social and economic transactions. Understanding the operations is vital before the systems are conceptualized. Use of local population, as much as possible helped the network to get the acceptance closely.

Designing a Win-Win transaction model: The success of e-Choupal comes from the condition in which both the farmer and the processor share the benefits coming out of the elimination of middle men and hence due to timely information availability.

Leveraging the logistics channels: The existing logistics of the rural markets are leveraged but they are not able to exploit the information asymmetry (unlike that in a conventional market). In that sense e-choupal uses the local institutions but eliminates the information asymmetry that they used previously.

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Selection of Sanchalak: Both the selection of Sanchalak and the acceptance of Sanchalak by the community are very critical for the success of e-Choupal. ITC used a trial and error method for developing the procedure for selecting Sanchalaks. In the platform terminology Sanchalak is the interface for maintaining the platform. For the farmer the Sanchalak is the e-Choupal. Training and sensitizing him for the crucial role has been the main reason for the acceptance of the Sanchalak by the farmers. Sanchalak, thus, acts as the coordinator of the knowledge community, and a representative of farming community.

Evolving an appropriate user interface: The Technology interface used in rural areas has to be very simple. Interface has to be tried for rural settings and only after its validation it has to be used. Firstly, one has to understand the user pattern and secondly, it has to be tried, tested and validated. For example, farmers do not understand the concept of insurance. e-Choupal evolved a simple interfacing arrangement that a farmer can understand.

Bottom-up model for entrepreneurship: e-Choupal encourages enormous amount of creativity at the local level along with local entrepreneurship stimulation. The farmer and Sanchalak are free to use the e-choupal and develop new uses. e-Choupal unleashes the creative spirit in the rural India.

COCA COLA INDIA’S THIRST FOR THE RURAL MARKET

Company ProfileCompany Profile Coca-Cola was the leading soft drink brand in India until 1977 when it left rather

than reveal its formula to the government. After a 16-year absence, Coca-Cola returned to India in 1993, cementing its

presence with a deal that gave Coca-Cola ownership of the nation’s top soft-drink brands and bottling network.

Coke’s acquisition of local popular India brands including Thums Up, Limca, Maaza, Citra etc.: a strategic step & success.

In spite of growth, annual per capita consumption was only 6 bottles versus 17 in Pakistan, 73 in Thailand, and 800 in U.S.

With its large population and low consumption, the rural market represented a significant opportunity for penetration.

‘Thanda’ goes Rural 2002, CCI launched a new advertisement campaign: Featuring Bollywood star Aamir Khan. Tagline – ‘Thanda matlab Coca-Cola’

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Targeted at rural, semi urban customers. Idea was to position Coca-Cola as a generic brand for cold drinks. CCI began focusing on the rural market in the early 2000s in order to increase

volumes.

Some Live ExamplesSome Live Examples

1. One very fine example can be quoted of Escorts where they focused on deeper penetration. They did not rely on T.V or press advertisements rather concentrated on focused approach depending on geographical and market parameters like fares, melas etc. Looking at the ‘kuchha’ roads of village they positioned their bike as tough vehicle. Their advertisements showed Dharmendra riding Escort with the punch line ‘Jandar Sawari, Shandar Sawari’. Thus, they achieved whopping sales of 95000 vehicles annually.

2. HLL started ‘Operation Bharat’ to tap the rural markets. Under this operation it passed out low–priced sample packets of its toothpaste, fairness cream, Clinic plus shampoo, and Ponds cream to twenty million households.

3. BPCL Introduced Rural Marketing Vehicle (RMV) as their strategy for rural marketing. It moves from village to village and fills cylinders on the spot for the rural customers. BPCL considered low-income of rural population and therefore

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introduced a smaller size cylinder to reduce both the initial deposit cost as well as the recurring refill cost.

Conclusion:Conclusion:

Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.

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BIBLIOGRAPHY

1. www.google.com

2. www.nytimes.com

3. www.hbr.org

4. Harvard Business Review

5. Marketing Management by Philip Kotler

6. Wikipedia

7. Business Line

8. www.thehindu.com

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