Amity School of Business: Rural Marketing

Amity School of Business
BBA 6th Semester
Rural Marketing
Module-1
Astha S. Gupta
OBJECTIVE
MODULE-1
Introduction to Rural Markets and Rural Marketing Evolution of Rural Marketing Rural Marketing Vs Urban Marketing Profiles of rural/urban consumers Challenges and opportunities in rural market in India
Defining Rural Markets
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 . Where there exists no municipality or board.
Defining Rural Marketing

National Commission on Agriculture NGOs Corporate Rural Marketing Definition Decisions to produce Marketing products Function that manages all saleable farm commodities produced in rural areas to activities involved in involving all the aspects of urban areas assessing, stimulating and the market system or converting the purchasing structure, both functional power of rural consumers Marketing products and institutional, based on produced in rural areas in into effective demand for technical & economic specific products and rural markets considerations and includes services to create the pre & post harvest satisfaction & a better operations. standard of living for achieving organisational goals.
Key statistics:Snapshot of india

Area Population Population No. of villages 3,287mn sq km 1026.9 mn people Urban 28%, Rural 72% 6,38,365
Source- Census 2001
Myth
Rural people do not buy brands
Reality
Branded Consumption accounts for 80 % of sales for FMCGs
Rural consumers buy cheap products They seek value for money Rural market is a homogeneous mass
It is heterogeneous
The annual consumer durable market for products like colour tvs,washing machines, refrigerators and air conditioners is growing at 7-10 %. While the rural market is zooming at 25 % F.M.C.G Rs.65000 crores (53 % share in total revenues) Of the 20 lacs BSNL mobile phone connections, 50 percent are in small towns and villages. There are 42,000 rural supermarkets (Haats) in India that exceed the total number of retail chain stores in the United States (35,000)
Rs.45000 cr.for tractors Rs.8000 cr.for two and four wheelers. 50 % of Indias national income is generated in rural India. HLL,Colgate Palmolive ,Toyota 50 % revenues coming from rural areas. Hero Honda- 40 % Kinetic motors 30 % Godrej- 30%
Evolution of Rural Marketing

Phases of Rural Marketing
Phase I (Before 1960s)
-Age of agricultural marketing - Agricultural produces like foodgrains and industrial inputs like cotton , sugarcane,etc. were the primary - Rural economy was in a primitive stage. -Traditional farming methods - Unorganised market products.

Phase II (1960s-1990s) - Green revolution - scientific farming practices - Poverty-stricken villages turned into cash rich centres. - Exponential growth of agricultural production - Shift from Agricultural marketing to Marketing of agricultural inputs - Emergence of Mahindra & Mahindra, Escorts, Eicher, Sriram Fertilizers and IFFCO

Phase III (1990s to the Present - Marketing of consumables and durables - Economic reforms, increased plan outlay by state and central govt. - Competition
Scope of Rural Marketing

Keenly debated topic Definitions based on organisational/ institutional vision, mission & goals Need for a comprehensive and modular understanding Rural Marketing is a work in progress Multi disciplinary approach is necessary for sharper understanding
Rural Marketing Vs Urban Marketing

Infrastructure availability Income streams Lifestyle Socio-cultural background Media reach and habits Nature of competition Consumer behaviour
Profile of a Rural/Urban consumer

Age and stages of the life cycle Occupation and income Lifestyle Economic circumstances Personality and self concept
Profile of a Rural/Urban consumer

Contd..
Personality and psychological factors Perception and Brand belief Information search and pre purchase evaluation Rise of consumerism
Challenges in Rural Marketing

Distribution Understanding the Psyche of the Rural consumer Limited Knowledge Communication Cost per contact Sale of Fakes and spurious Products Budgetary allocations Urban orientation and bias Lack of right competence and commitment at frontline level
Opportunities in Rural Marketing

Rising rural prosperity Lesser dependence on agriculture and monsoon Increasing rural consumption Rural Marketing efforts Increasing sale of branded products Large population
Rural Marketing Mix

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
4 Ps of Rural Marketing
Product
Price
Place
Promotion
Every Product and promotion, which is a hit in cities , might not work in rural areas
Product :Product refers to anything that is capable of or can be offered to satisfy need or want? Price :Price refers to the amount the customers has to pay in order to acquire a product or services 3Cs of Pricing Customer Value Competitors Prices Cost to Company
Place : refers to point of sale. Promotion: This refers to all the activities undertaken to make the product or service known to and preferred amongst the user and trade.
Product
Product for rural market must be built or modified to suit the lifestyle and needs of the rural consumers . Product Strategies 1. New/Modified Product. 2. Utility Oriented Product 3. Avoiding Sophisticated Packaging. 4. Small unit packaging
Price
The villagers due to their limited resources are very price sensitive by nature. Pricing Strategies Large Volume low margin low cost/ value for money product Low volume-low price.
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 Hindustan Unilever, among the first MNCs to realise the potential of India's rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm 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.
Place
( A village as a place for promotion, distribution, and consumption is very different from town or city)
Place Strategy Segmentation Coverage of villages with 2,000 and above population Distribution up to feeder markets/ Mandi towns. Direct Contact with rural Retail
To service remote village, stockists use autorickshaws, bullockcarts 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 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.
Promotion
Promotion aspect always creates a challenge in rural markets because of the fact that village have thin population density and are widely spread over large remote areas.
Media Vehicles
Television Radio Print media Cinema Hoarding/Wall Painting
Examples of rural marketing mix

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.

Nokia developed affordable Mobile phones for rural markets with unique features such as local language capabilities, present time/ call limits etc. Philip developed 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 Hyundai increases focus on Rural India
New promotional scheme titled - Ghar Ghar Ki Pehchaan'. In this first of its kind initiative, Hyundai Motor extended special schemes for government employees in rural areas and members of Gram Panchayats on the purchase of the Hyundai Santro Launched on May 1,2008 the Ghar Ghar Ki Pehchaan' scheme was continued till July 31, 2008. Through this special rural scheme Hyundai Motor India plannned to touch base with at least 58 per cent of Indian villages with a population of 500 or more.
Additional Ps of Rural Marketing

Passion Passion to earn Goodwill for the company. Passion to serve and educate the consumer Passion to give 100% to the rural marketing effort Pace
4 As of Rural Marketing Mix

Affordability Availability Awareness Acceptability

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Amity School of Business

BBA 6th Semester