bc326overview of rural

8/8/2019 Bc326overview of Rural

1/23

Amity Business School

1


MBA M&S Class of 2010, Semester III

Overview of Rural Marketing

Garima Malik


2/23


Why Companies Go Rural

Urban Markets are getting Saturated.

A Huge Untapped Market.

Rising Disposal Income Remittances from Aboard

Impact of Media.


3/23


Some Impressive Facts About the Rural Marketing

There are 42,000 rural supermarkets (haats) inIndia that exceed the total number of retail chainstores in the United States.

In 2001-02 the Life Insurance Corporation (LIC)sold 55 percent are in small towns and villages.

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

The billing per cell phone in small towns in AndhraPradesh is higher than the billing in the capitalHyderabad city.


4/23


Rural Market Has Finally Arrived 50% of BSNL mobile connections in small

towns/villages.

482 crorepatis in rural Haryana, only 137 in Bangalore,

similar number in Kolkata or Hyderabad. 55.6 million Kisan Credit Cards (KCC) issued (against 60

million credit-plus-debit cards in urban) resulting intremendous liquidity.

As per National Council of Applied Economic Research

(NCAER), rural market accounts for 55% of LIC policies,70% of toilet soap consumption, and 50% of TV, fans,bicycles, tea and wrist watch consumption. So as atarget market, it is attractive not only because of the size,but also because of impressive growth potential.


5/23


BEIJING: LENOVO, CHINA'S LARGEST PERSONALCOMPUTER MAKER, AIMS TO SELL FIVE MILLIONCOMPUTERS IN RURAL AREAS WITHIN THREE YEARS, CHINADAILY REPORTED FRIDAY. (March 6th 2009)(THE COMPANY PLANS TO ESTABLISH 700 SALES AND SERVICE OUTLETS INTOWNS, AND TO COVER 320,000 VILLAGES ACROSS THE COUNTRYTHROUGH 7,800 SALES NETWORKS IN THE NEXT THREE YEARS).

Nokia eyes 3G, rural market with new phonemodels news, Nokia has tied up with SKSMicrofinance, which has 653 branches across15 states. Apart from this, Nokia tries to reachinto rural areas with 'showrooms on wheels' and

'rural care on the go'- marketing and servicingvehicles, respectively.


6/23


Of the 2 crore who have signed up for rediffmail , 60 percent are from smalltowns, of the one lakh who have transacted on the rediff online shoppingsite 50, percent are from the small towns.

Internet access in semi-urban and rural areas has increased through the sanchar Dhabas of BSNL operating in 3,617 out of 6,332 blocks in thecountry.

Electricity consumption by the agricultural sector has shown a sharpincrease from 17.6 percent of total consumption in 1980-81 to 29.2 percentin 1999-2000. During the same period the industry share has dropped from58.4 percent to 38.8 percent

Electricity consumption

Sector 1980 2000

Agriculture 17.6% 29.2%

Industry 58.0% 34.8%


7/23

Amity Business SchoolRural Marketing

(Overview

)

There is no single definitions of the term rural that

suits all the stakeholders operating in the ruralmarket.

Rural areas constitute a distinct market; they are not

just a poor extension of the urban areas.


8/23


RuralRural

(Census of India (2001) defines rural is)(Census of India (2001) defines rural is)

Rural as any habitation with a population density of less

than four hundred per sq. km. Where at least seventy fiver

percent of male working population is engaged in

agriculture and where there is no municipality board.

Or

( According to IRDA and NCAER)

Rural as villages with a population of less than 5,000, with75 percent of the male population engaged in agriculture

etc.


9/23


Rural Marketing

Rural Marketing has been defined as the process of developing,pricing, promoting, distribution rural specific goods and servicesleading to exchange between urban and rural markets which satisfiesconsumer demand and also achieves organizational objectives.

As per the National Commission on Agriculture, Rural marketing is aprocess which starts with a decision to produce a saleable farmcommodity and involves all aspects of market structure or system,functional and institutional based on technical and economic

considerations and includes pre and post harvest operations,assembling, grading, storage, transportation and distribution.

(Rural marketing in simple words, is planning andimplementations of marketing functions for therural areas).


10/23


Rural Marketing Vs Urban Marketing

Factors Differentiating Rural Marketing from UrbanMarketing

Infrastructure Availability: Electricity supply, availability offinance facility, education level, roads connectivity. Inthese infrastructural aspects, the rural market varieswidely from the urban market.

Income Streams: The patterns of income generationareas based on agricultural is seasonal and highlyunreliable unlike the fixed monthly income in the urbanareas. This creates a consumption pattern that is quitedifferent from the urban one.


11/23


3.Lifestyle: The lifestyle and daily routine of consumers intwo markets is markedly different. This ceratessignificantly different profiles of urban and ruralconsumers for the same product.

4. Social Cultural Background: Value system and thusperception towards goods/ services and consumption ingeneral is quite different in the two markets.

5.Accessibilty: The cost and logistics of accessingconsumers in a highly widespread and heterogeneousrural market are very different from those involved inreaching urban consumers concentrated in good numberin a single location. It demands two distinct marketing

approaches.


12/23


Media reach and habits: The reach of mediavehicle and media habits, varying widely in ruralan urban markets, requires different types ofpromotional strategy in these two markets.

Nature of Competition : The nature and intensityof competition amongst the brands is verydifferent in the two markets.

Consumer Behavior: The consumers responseto marketing stimuli differs widely in twomarkets. The rural consumer's behavior is quitedifferent from that of the urban buyers behavior.


13/23


Case Study

Akashganga


14/23


This case study is about a product and service namedAkashganga sold by a small, entrepreneurial business

named Shree Kamadhenu Electronics Private Ltd.

(SKEPL).

Akashganga is for diary farmers and it is intended to enableto them to increase their efficiency and productivity.

The Indian diary industry is plagued by several

problems, the major ones being low productivity of

Indian cows, the delays in processing milk, low qualitycaused by manual handling, corruption and

mismanagement, and, of course, endemic dilution of

milk with water.


15/23


Akashganga attempts to alleviate some of these issues. Akashganga is

a computerized system. When a farmer gets milk into the collection

point, it's weighed and the amount of fat measured and immediately

an entry is made on the farmer's swipe card.

The money can be collected immediately. This is marked contrast to

the previous system where the financial calculation was done later to

avoid holding up the queue of farmers ready for milking; the calculation

was done by hand and was somewhat complicated.


16/23


With the new system, calculation is done Automatically which makes it

possible to pay the farmer on the spot rather than having him wait for a

couple of days. Also the potential for cheating is reduced. An entry is made

electronically on the farmer's swipe card.

When SKEPL wanted to market this service, it ran up against

the skepticism of the Indian rural people against unproven

technology. This is the classic catch-22 situation as the farmer

does not trust the tool till he tries it, and is reluctant to try it tillhe trusts it.


17/23


SKEPL got around this problem by offering free trials anddelayed payment schemes stretching up to several months.

The company also provided responsive and efficient after-sales service. It established a service network covering therural areas, and typically would attend to a compliant within afew hours of receiving it.

It's important to note that the company's local presence

whether for marketing, sales or service helped tremendously,since the villagers would not be disposed to make a journey toa town or city to learn about their products.

The company also used a name Akashganga that Indian

villagers can relate to. This helped earn the trust of thevillagers.


18/23


Also, Shree Kamadhenu Electronics used local people for

marketing, sales, service, etc. This was a very important

factor that helped the farmers relate to and trust the

company.

Of course, the company had a solution that was superior in

terms of time, transparency, fairness, etc, and that played a

big role in their success.

As a result of these factors, SKEPL gained a threshold in

this large market and earned respect among farmers.


19/23


Successful stories in Indian Rural Market ITCs eChoupal

HLLs Project Shakti

Colgates Project Jargruti Escorts Rajdoot Motocycle

LG & Goodrej

Cipla & Ranbaxy Philips & Asian Paints

Marico ..Many More


20/23


Evolution of Rural Marketing

Phase I (Before the 1960s).

Phase II( 1960s-1990s).

Phase III( 1990s to Present)


21/23


Phase I (Before the 1960s)

Rural marketing referred to marketing of rural

products in rural and urban areas and

agricultural inputs in rural markets.

Agricultural produces like food grains and

industrial inputs like cotton , sugarcane etc.

The scope of farm mechanization equipment(tractors, pumps sets) and agricultural inputs like

fertilizers seeds and pesticides was very limited.


22/23


Phase II (1960s-1990s)

The green Revolution changes the face of rural India,ushering in scientific farming practices with the advent ofagricultural inputs and implements.

During this phase , apart from conventional agriculturalmarketing, a new area marketing of agricultural inputsemerged . This period saw the emergence of companiessuch as Mahindra & Mahindra , Escorts, SriramFertilizers and IFFCO.

During this period the marketing of rural productsreceived considerable attention through agencies likeKVIC( Khadi and Village Industries Commissions) andhandicrafts emporiums.


23/23


Phase III (1990s to the Present

The objective of rural marketing in the

current phase is the improvement of thequality of life .

This approach has been demonstrated

successfully by HLLs Project Shakti, ITC

e-choupal, AMARON Batteries.

bc326overview of rural

Documents