Rural Marketing

RURAL MARKETINGRURAL MARKETINGRURAL MARKETINGRURAL MARKETING

SOME FACTS ABOUT RURAL SECTOR

• There are 42,000 rural supermarkets (haats) in India that exceed the total number of retail chain stores in the United States (35,000)

• Of the 20 lakh BSNL mobile phone connections, 50 percent are in small towns and villages

• Of the six lakh odd villages in the entire country, 5.22 lakh had a Village Public Telephone (VPT) as of March 2004

• The 41 million Kisan Credit Cards (KCC) issued in rural India exceed the 40 million credit-plus-debit cards issued in urban India

• Electricity consumption by the agricultural sector has shown a sharp increase from 17.6 percent of total consumption in 1980-81 to 29-2 percent in 1999-2000

• In 2001-02, the Life Insurance Corporation (LIC) sold 55 percent of its policies in rural India

DEFINING RURAL INDIA• The Census of India defines rural as:

– Any habitation with a population density of less than 400 per sq.km., where at least 75 percent of the male working population is engaged in agriculture and where there exists no municipality or board

• FMCG sector defines rural as:– An any place with a population up to 20,000

• Durable & Agri-input companies consider rural as:– Any town with a population below 50,000

DEFINITIONS

Definitions of Rural

Census

Village: Basic unit for rural areas is the revenue village, might comprise several hamlets demarcated by physical boundaries.Town: Towns are actually rural areas but satisfy the following criteria.•Minimum population >= 5,000•Population density >= 400/sq.km.•75% of the male population engaged in non-agri activity

RBI Locations with population up to 10,000 will be considered as rural and 10,000 to 100,000 as semi-urban.

NABARD All locations irrespective of villages or town, upto a population of 10,000 will be considered as ‘rural’.

DEFINITIONSDefinitions of Rural

Planning Commission

Towns with population up to 15,000 are considered as rural.

Sahara Locations having shops/ commercial establishments’ up to 10,000 are treated as rural.

LG Electronics The rural and semi urban area is defined as all other cities other than the seven metros.

What is Rural Marketing?

• According to the National Commission on Agriculture:– Rural marketing is a process which starts with a

decision to produce a saleable farm commodity and it involves all the aspects of market structure or system, both functional and institutional, based on technical and economic considerations and includes pre and post harvest operations, assembling, grading, storage, transportation and distribution

• Simply, It referred to marketing of rural products in rural and urban areas and agricultural inputs in rural markets

What is Rural Marketing?

• Rural Marketing is a two-way marketing process that includes the flow of goods and services from rural to urban areas and the flow of goods and services from urban to rural areas, as well as the flow of goods and services within rural areas

DIFFERENCE BETWEEN URBAN & RURAL

URBAN RURAL

Size and Characteristics

City has a large population size growing at a fast growth rate due to immigration from rural areas for education and employment. The population density is high. Towns are smaller urban units.

Village is a human settlement with a small administrative unit. It comprises few hundred households and the population growth due to immigration is insignificant.

Occupation Occupations are diverse, ranging from professionals, skilled, semi-skilled to unskilled workers. Occupational specialization is achieved with higher education and training to build skills.

Predominant occupations are cultivation and agricultural labour. People continue to practise traditional occupations. Skill upgradation with technology has been limited.

DIFFERENCE BETWEEN URBAN & RURAL

URBAN RURAL

Settlement Pattern

The city settlement is compact though spread over a larger area. Land use is residential, commercial, industrial, roads and streets, institutional and community facilities, etc.

Village has land for human settlement and for cultivation.

Structure of houses is permanent and often rises to more than one storey. Housing on rental is highly prevalent.

Houses are largely semi-pucca or kachha. They are owner occupied.

Primary resource base is production and distribution of industrial goods & services

Land is the primary resource for livelihoods. Other forms of resources are water bodies, forests, and mountains. Cows, buffaloes, and poultry are kept fro household need for milk, eggs & meat.

DIFFERENCE BETWEEN URBAN & RURAL

URBAN RURAL

Realms of activities

Interaction and mobility is spread over large geographical, social and economic area. Relationship is more complex with differentiation in personal and professional life. There is erosion of role of custom, tradition, and religion. Formal mechanisms of social control are needed in absence of community influence. Women have freedom in choice of activity and interest.

Restricted to smaller geographical, social and economic areas. Individuals are recognized or referred to on the basis of family, cast, and village. Individual behaviour is governed by custom, tradition, and religion. Conformance and compliance to mechanisms of social control is through family, kinship, and community. Woman have limited freedom in choice of activity or interest.

The Importance of the Rural Market

The Importance of the Rural Market More than 70% of country’s consumers are in the rural market More than half of national income is generated here

• Should All Firms Go Rural? For several products there is now enough demand in urban

markets But firms with huge ambitions have to necessarily tap rural

markets

The Rural Marketing Environment It can be studied under 2 heads, the Rural Consumer and the Rural Demand

1. The Rural Consumer• ‘Many Rural Indias’ within ‘Rural India’ and No Such Thing as a ‘Typical Rural

Consumer’

Rural Consumer contd…

A scattered lot, living in villages that vary widely in population size A heterogeneous lot as well Mixed picture in income and socio-economic position

Chapter 43: Rural Marketing in India

Highly stratified• Age mix • Region to region and state to state variation in economic

position• Occupation is now ‘beyond agriculture’ for over 1/3rd of the

workforce• Diversification of the rural economy brings new income

sources• New income is generated from agriculture as well as other

sectors• Heterogeneity in literacy rate too

– There is a huge literate population in rural India– There is heterogeneity in the literacy rate

• In lifestyle too, rural consumers do not fall into a single bracket

• The Expectation Revolution Rising expectations; the aspirations of the rural people

growing ahead of their income

• The Idea of a Stereotype does Not Fit Heterogeneity gives rise to variations in buying behaviour of

the consumers

Rural Consumer contd…Chapter 43: Rural Marketing in India

Rural Consumer contd…

Other Notable Influences on the Buying Behaviour of Rural Consumer

• Location and extent of exposure to urban lifestyles

• The situation in which the consumers use the products

• Availability of electricity

• The place of purchase

• The Influencers’ role

• Influence by youngsters in the family, bahus

• Influence of the village community

• Marketers’ efforts to reach out to the rural market

Chapter 43: Rural Marketing in India

• Size of the Rural Population More than 81 crore consumers; 73% of India’s population is rural

2. Rural Demand- Size and Composition of Rural Market Aggregate size of the rural market/demand

• Projected to reach Rs.16,700 bn in 2015

• A large market, larger than the urban

Steady growth and welcome shift in composition

• Several non-food products established in rural consumer basket

For many products, market is large despite low penetration rate

• The great India number trick

Chapter 43: Rural Marketing in India

In many products, rural consumption accounts for a larger share than urban

• Washing soaps, popular bath soaps, package tea, hair oils, batteries

• Sewing machines, radio, transistor, tape recorder, watches, B&W TV, bicycles, table fan, pressure cookers

In growth rate too, rural market overtake urban in many products

• Packaged tea, analgesics, washing soap, detergents, motorcycles

Rural Demand contd..Chapter 43: Rural Marketing in India

MARKETING MIX FOR RURAL MARKETS

• Marketing Mix ‘refers’ to the set of actions, tactics, tools or variables that a company uses to promote and sells its brand or product in a markets

• The marketing mix is a crucial elements of any marketing plan as it offers marketers a mix of products, services and prices, utilizes a promotion mix of advertising, sales promotion, direct marketing and personal selling to reach the target customers through distribution channels

• The 4 Ps of the marketing mix remain the same, both in urban and rural markets. However, marketers need to meet the challenges of availability, affordability, acceptability and awareness (4 As) of products and services that are peculiar to rural markets

The 4 Ps of Marketing: A re-look from the rural

perspective• The basic marketing-mix tools remain

the same both in rural and urban markets, but it is the challenges of the 4 As that compel the marketer to revisit the marketing tools when he ventures into rural markets

Availability • Total 6,38,000 villages in India; 742 million

Indians live in rural areas

• HUL : strong distribution system to reach the interiors of the rural market

• Coca-Cola : evolved a hub-and-spoke distribution model to reach villages

• LG has set up 45 area offices and 59 rural / remote area offices

Affordability • Low disposable income, daily wage earners attract

small unit packs.

• Godrej : introduced three brands of Cinthol, Fair Glow & Godrej in 50-gm. packs, priced at Rs 4-5 for MP, Bihar & UP—the so-called BIMARI states

• HUL : launched soap brand Lifebuoy, at Rs. 2 for 50gm.

• Coca-Cola : Introduced 200-ml glass bottle at Rs. 5. The Sunfill, a powered soft-drink concentrate, sachet of 25gm priced at Rs. 2

Acceptability• The third challenge is to gain acceptability for the

product or service

• LG Electronics : developed customized television christened it Sampoorna. It was a runway hit, selling 1,00,000 sets in the very first year.

• Coca-Cola : provides low-cost ice boxes, that is a tin box for new outlets and a thermocole box for seasonal outlets considering lack of electricity and the absence of refrigerators in rural areas

Awareness • Only 41 percent of rural households have access to

television—building awareness

• HUL : relies heavily on its own company-organized media. These are promotional events organized by stockists

• Godrej Consumer Products : uses radio to reach the local people in their own language

• Coca-Cola : uses combination of television, cinema and radio to reach 53.6 percent of rural households

• LG Electronics : uses vans, local-language advertising and road shows to reach rural customers

• Philips India : uses wall writing and radio advertising

• ICICI BANK customized their rural ATMs, so they can operate biometric authentication. ICICI rural ATMS are battery operated so that power failure is not issue.

• BP energy Sell smoke less, biomass run stoves (Oorja) for rural markets, priced attractively Rs.675.• Bank of India introduced Bhumiheen credit cards for

providing credit card facilities to landless farmers.• Noika develop affordable Mobile phones for rural

markets with unique features such as local language capabilities, present time/ call limits etc.

Examples of rural marketing mix

• Philip develop a TV ‘ Vardaan’ for rural markets. This TV work on the voltage 90-270 volts.

• Philips developed ‘ Free Power radio’ this radio do not require power and battery also. it run on simple winding of level provided in the set. The price of this attractive set is Rs. 995.

• LG developed CTV called’ CinePlus’ was launched in rural markets price Rs.5000

Examples of rural marketing mix

Examples of rural marketing mix

Hyundai increases focus on Rural India new promotional scheme titled - ‘Ghar Ghar Ki Pehchaan'. In this first of its kind initiative, Hyundai Motor would extend special schemes for government employees in rural areas and members of Gram Panchayats on the purchase of the Hyundai Santro Launched on May 1, the ‘Ghar Ghar Ki Pehchaan' scheme will continue till July 31, 2008. Through this special rural scheme Hyundai Motor India plans to touch base with at least 58 per cent of Indian villages with a population of 500 or more.

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