Rural Marketing

Defining Rural India

Organisation Definition Limitations

NSSO

(Census)

Population less than 5000

• Population density < 400 / Sq Km

• 75 percent of the male working population is

engaged in agriculture

•No Municipal corporation / board

• rural not defined

Planning

Commission

• Towns upto 15,000 population are considered

rural

Town characteristics

not defined

Cont’d

LG Electronics All places other than the 7

metros

Only clarifies what are the

cities

NABARD All locations with a

population upto 10, 000

considered “ rural”

Village & town

characteristics not defined

Sahara Commercial

establishments located in

areas servicing less than

1000 population

Population characteristics

unknown

FMCG COS Any area with primarily

agricultural based

occupation and with a

population of less than

20,000 as rural

Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S ( 2007)

(Cont.)

Durables &

Agri-input cos

Population upto

20,000 is rural

Marketing

Parlance

Organised

distribution &

media reach

ends

Jha, 2003 Urban, Rural &

Rurban

Rurban being

the overlap

between urban

& rural

Reasons

for

Going Rural

Size of the market

Largely Untapped

Too crowded Urban Market

Income on the rise/disposable income

Income from other than agriculture

Great success stories

HLL 50%

Colgate 50%

LG 50%

Asian Paints 60%

Dabur 40%

Videocon 40%

Cadbury’s 25%

Hero Hona 40%

Sorce ORG Marg and Fransis Kanoi

BOP_Rural.wmv

Encouraging Indicators/Initiatives for Rural Market Growth

Scientific methods – major impetus to Production of food grains Initiatives taken by banks for more branches and Kisan credit card to buy seeds, fertilizers, consumer goods on installment basis

Reputed Companies helping in changing lifestyles – Levers Britania ,Dabur, LG, Honda,Videocon

Government Policies – White Revolution – Milk products Yellow Revolution (poultry and edible oils); Blue Revolution – Aqua culture

Employment Schemes – JRY(Jawahar Rojgar Yojna, PMRY,Small Industries Training, Rural Electrification, Spend on Health and Sanitation, Medical and Health, Primary Education, Credit card for farmers; Waiver of Loans

Initiatives by leading organization in spreading awareness

Hindustan Levels Shakti, ITC Reliance etc; Media creating an

impact-creating awareness levels

PROBLEMS

IN

RURAL

MARKETING

Low per capita income/ Low

disposable income

Inadequate fixed income

(daily wages)

Majority – depends on Agricultural

Income

Acute dependence on monsoon

Consumption linked to harvest

Infrastructure problems

Roads, power

Low awareness

Too many languages

Communication- difficult & expensive

Geographic Spread

Digging for Diamond

Profile of the Rural Consumer >Low Literacy Level >Low Income Level p.doc >Massive Geographic Spread & heterogeneous market Urban population concentrated 3200 cities town Rural scattered over 630000 villages >Reference Group Health Workers Doctors Teachers Panchayat Members Rural Bank Managers District Managers Occupation – Principal Farming Trading Handicrafts Cattle & Poultry Farming >Media Habits Fond of music T.V Radio Video Films Generally they have a lot of reservation/inhibition rigid in their behaviour

RURAL CONSUMER CLASS The Affluent Class

The Middle Class

The Poor

RURAL CONSUMER BEHAVIOR

How does an individual decide to spread his

Available resources (time,money effort) on Consumption-related products.

That is – what they buy

why they buy

when they buy

where they buy it

how often they buy it

how often they use it

Poor

Aspirant Climbers

Well Off

Very Rich

Simple Model of Rural Consumer Behaviour

Need Recognition

Pre Purchase Search

Evaluation of Alternatives

Purchase Decision

Post purchase behaviour

Factors that Influence Rural Behaviour

Stimuli Inputs to any senses

Products

Package

Commercials

Brand image

Reference

Information cues about

the characteristics of the

product

Perception Depends on

Exposure Interpretation

Eg IFB had not adequately educated

farmers about the washing machine

-they thought It was a churn for making

large quantities of lassi (prosperous

village of Punjab)

Iodex – muscular pain

reliever used on animals

after hard days work in MP

Godrej hair dye on Buffaloes

To make them look better in

Village haats in Raichur

Attitude >Consumer belief

Consumer feelings

RURAL MARKET RESEARCH

SOURCES

FOR

CONDUCTING

RURAL

MARKET

RESEARCH

Primary Sources Retail shops/STD booths/ Mobile recharge points Tea Stalls Playgrounds/schools Chaupals (meeting point old/middle aged/ influential) Haats & Melas Influence Group

Secondary Sources Major sources providing rural data.doc

Government website www.censusindia.com www.indiastat.com www agroindia.com Private bodies (market research advertising agencies Indian Market Research Bureau Thompson Rural Index Guide to Rural Markets

Publications

Thomson Rural Market Index (TRMI):

• Hindustan Thompson Associates ltd.

developed TRMI

– guide to segment markets in the rural areas

in 1972

– improved it in 1986, they compiled a data

out of 335 districts based on 10 variables.

– Thomson Rural market Index.doc

SEGMENTATION Very Varied –hence proper segmentation very essential

Geographic:

Region North, East, West and South

Village size Climate Demographic

Age

Family Size

Gender

Income

Occupation

Education Caste Psychographics

(consists of psychological: sociology: anthropological)

Lifestyle Rigid ,changing attitude, urban influence Personality Authoritarian, Ambitious Behavioral

Occasions Regular, special occasion Benefits

User status regular user, first time user, non user

Usage rate Light, medium, heavy

Loyalty None, medium, strong

Attitude to Product ( positive, negative, hostile)

Different variables could be used.. multilevel segmentation

Approaches for segmenting the

rural markets • Size of village Population (ORG-MARG)

– Class I villages (>5,000)

– Class II villages (1,000-5,000)

– Class III villages (<1,000)

• Based on location w.r.t nearby town – Villages nearby Urban Centres

– Villages in Developing Districts

– Immobile & self-sufficient Asiatic villages

• Based on size of Farmland – Marginal farmer (upto 1 hectares)

– Small farmer (1 hectares-2 hectares)

– Small & Marginal farmers (2 hectares-4 hectares)

– Medium Farmer (4-10 hectares)

– Large Farmer (> & equal to 10 hectares)

Approaches for segmenting the

rural markets (cont.) • Based on Sociological Characteristics

– Proprietors of Land

– Rich Farmers

– Small & Marginal Farmers

– Tenant Farmers

– Agricultural Labourers

– Artisans & Others

• Oglivy Rural has divided India into 56 distinct socio-cultural regions

• Income

– Rural rich/Around Urban area/Above poverty line/below poverty line

• NCAER

– Destitutes (<16,000), Aspirants (16,000-22,000);Climbers (Till 45,000);

Consumers (Till 2,15,000) & Very rich

Approaches for segmenting the

rural markets (cont.) • Based on Development Level

– R1/R2/R3/R4product categories & R1.doc

• Based on Age Group Perspectives

– Pre-Independence

– Pain of Nation Building

– Pain of Liberalization (1985 onwards)

– Liberalization Children (1990 onwards)

– Millennium Children (1997 onwards)

DEVELOPMENTAL MARKETING Developmental marketing is a process through which

awareness is created

>could be demonstration

>could be presentation

>Free samples

>could be through eg tie up with Bank

tie up with Petrol/Diesel pumps

(Hyundai did with IOC and PNB and SBI subsidiaries

>30% sale of Hyndai from Rural/Semi Urban areas)

Awareness

Trial

Purchase

Post-Purchase Satisfaction

Colgate – program Operation Jagruti

Switch from Charcoal to Colgate tooth powder

HLL - Free samples of Lifebuoy

Cavin Kare – Free sample of Chik Champoo

Marico Industries – Parachute coconut oil

“Sudhata ki pehchan” –smell to differentiate between real and spurious

Rural Marketing Mix

Rural Product Product to be marketed with the requirements of the Rural Consumer should not be an extension of urban offerings

(Philips launched Free Power Radio – does not require Battery/electricity you wind it with a lever and radio runs For approximately 30 min.

Classification

Of

Rural

Products

FMCG

(HLL, Dabur, Marico, Colgate=Palmolive Coke, Pepsi)

Consumer Durables

TV ,Fridge, Fan, Presssure Cooker,

Cycle, Two wheelers, Sewing machines,

watch, mixer grinder, radio, music system,

Fans, Washing machines (Philips, LG, Videocon, Onida )

Services

Telecom, Banking, Health care ,Insurance

(Airtel, BSNL, SBI, PNB,Dena bank,)

Agri-inputs

Seeds, pesticides, tractors

(Rallis India, Bayer,)

Product

Life

Cycle

(PLC) Launch

Take Off Maturity Decline

Corporate Responses to Fakes

• Look-alikes- Spell-alikes & Duplicates

• Prices range from MRP to 60 % of MRP

• Margins range from 60 % to 300 %

• Legal action – awareness programmes – New

Package Development

Pricing

HP Rasoi Ghar.mpg

RURAL DISTRIBUTION

Physical Distribution Channel of Distribution

Transportation

Warehousing Communication

PHYSICAL DISTRIBUTION

Transportation Railways, Roads ,Waterways, Animals

Communication ITC using internet, Mobile users by fisherman

Warehousing (Three Tier Rural Warehousing Set Up)

Central/State Warehousing

Cooperatives

Rural Godowns

Levels of Distribution

Level Partner Location

1 Company Depot/ C &

FA

National/ State level

2 Distributor/ Van

Operator/ Super

Stockist/ Rural

Distributor

District level

3 Sub Distributor/ retail

Stockist/ sub

stockist/star seller

Tehsil HQ, towns and

large villages

4 Wholesaler Feeder towns, large

villages, haats

5 Retailer Villages, haats

The Great Rural Mall Hindi.mpg

Distribution Adaption( Indicative)

• Hub and Spoke Model, Example: Coca Cola

• Use of Affinity groups, Example: Project Shakti

• Haat Activation, Example: Colgate

• Syndicated distribution, Example: Cavin Care &

Amrutanjan

• Use of marketing co-operatives, Example:

Warna Bazaar in Rural Areas

• Mobile traders, Example: FMCG companies

ITC e-Chaupal.wmv

TRAITS OF A RURAL SALESPERSON

Hardworking Have Empathy Enthusiastic

Perseverance Knowledge Attitude Skills

Willingness to work in Rural Areas Adopting to cultural differences Down to earth approach Fluent in local language Developmental approach – Create not only Communicate

Common to both

Urban & Rural Sales person

Additional traits for making it Big in Rural Areas

RURAL COMMUNICATION

Effective Communication goes a long way in establishing the right

Messages and thereby more interaction with Potential Customers

Communication, however, is not complete if there is no feedback

It is very important to re enforce messages in Rural areas

Factors Affecting Rural Communication

Literacy level

Media Habits

Traditional approach

High resistance – more so initially

Lavish at occasions (eg Marriage)

Purchasing power also depending on weather- the crops

Inequitable distribution of wealth

Too many languages

Culture

Promotion- Adaptations for

Rural Markets

Conventional Non- Conventional Personalised

Television Haat and Mela Direct mailer

Radio Folk Media( puppet and

magic show)

POS (demonstration,

leaflet)

Press Video Van Word of mouth

Cinema Mandi Interpersonal

communication

Outdoor: Wall Painting,

Hoarding

Animator

Melas & Haats Melas Haat

1. 25,000 melas

2. Companies can concentrate

on the top 100 melas

3. Pushkar Mela in Rajasthan

4. Organised by the state

veterinary department

5. Product sales, promotion,

demonstration and database

generation

6. Cultural activities and rural

sports

1. Periodic markets located in larger

villages(> 40,000)

2. 10 – 50 villages are serviced

3. Sunday markets are most popular

4. Average number of outlets is 315

and average daily sales is about Rs

2 lakhs

5. Traders participate in at least 4

haats

6. 81 percent of the visitors are repeat

customers