Introduction
Our country has a good level of ethnic and regional diversity. About three quarters of the
total population live in rural areas and most of them depend on agriculture for their
livelihoods. Agriculture contributes about 24.7% of gross domestic product (GDP). It also
contributes about 13.1% of total exports from India. This sector provides employment to
58.4% of the workforce of the country and the lifeover 650 million people. Nevertheless, the
condition of these people showed no significant improvement.
The development of the nation depends largely on the development of the rural population.
Mahatma Gandhi once said: "The way India is not Europe. India is not Calcutta and Bombay.
India lives in it several hundred villages.
Potential of rural market
India is an agrarian economy and the growth of different sectors of the economyDriven by
rural demand. urban market has reached saturation point, where focus and urgent need for
rural development. Furthermore, over 70% of Indian population in villages and in the
constitutions of a large market for the life industry due to rising disposable income and
visibility.
Compared to only 5,161 cities in India, there are 6,38,365 villages in India. This is in itself an
indicator of where the real India lives. Companies now recognize slow, butensure that the key
to real leadership in developing the potential of rural income. However, the rural sector in
India suffers from various problems. Some areas have enough money, but their level of
awareness and consumerism that is very low. But there are many areas where economic
empowerment, Education, health, etc., are major problems.
What is the Rural Marketing
Although there is a big growth market in urban, rural or latent market is still untapped,and
has enormous potential for growth. A rural market can be a market in a region where the
population is below 10, 000 have been defined. The rural market in India is scattered and
covers a wide geographical area. Indian market is divided into urban and rural markets.
Or urban market is flooded with low demand.
Or rural market has seen strong demand for the segment of the rural market, it contributes to
more income than their urban counterparts. marketing largely ruralis to reach an
understanding of the customer to meet their needs, the supply of goods and services and
ultimately the consumer, leading to more sales. The general impression is that only
agricultural inputs such as seeds, fertilizers, pesticides, animal feed and agricultural
machinery is a potential growth market in rural areas. However, there is a growing market for
consumer goods now. It 'was rated the rural market is growing five times the amount of its
urbanCounterpart.
The challenges of rural marketing
Although the rural markets, a great attraction for retailers is not easy to enter the market and
take a part of the market in a short time because of the following reasons.
Low literacy rate
There are not enough opportunities for Education in rural areas. The illiteracy rate is so low
(36%) than in all media by 52% in India.
seasonal demand
Demand for goods in rural markets depends on agriculturalSituation of Agriculture is the
main source of income. Agriculture, largely dependent on monsoon and therefore demand or
offer the ability is not stable or regular.
Transport
Many rural areas are not connected by rail. Kacha roads during the monsoon and isolated
interior villages are now unusable.
Distribution
A distribution system effectively requires Krämer village level, Mandal / Taluka level or
wholesalerspreferred dealer, distributor or stockier district and owned by storage or
distribution of transmission at the state level. The presence of too many layers in the
distribution system increases the cost of distribution.
Communication problems
Services such as telephone, fax and telegrams rather poor in rural areas.
Traditional life
Life in rural areas is still dominated by customs and traditions and people are not easily
adjusted for new practices. For example,rich and educated class of farmers do not wear jeans
or shoes of the brand.
Purchase
rural consumers are cautious when buying and decisions are slow and delayed. Want to give
it a try, and only after the person happy, they buy the product.
Media for Promotions
Television has done a great influence and the public has been exposed to this medium. Radio
reaches the majority of the population in rural areas at a relatively low cost. Yet, to achieve
the means of formal communicationlow in rural households, the market to undertake specific
promotional activities in rural areas such as participation in trade fairs or Melas.
Employment opportunities in rural market
While rural marketing offers a new challenge, a rural sales staff would require certain skills
and special talents.
Cultural factors
Culture is a system of shared values, beliefs and perceptions that influence consumer
behavior. There are several groups basedReligion, caste, occupation, income, age, education
and politics and each group has influence on the behavior of people in the villages.
There is a belief among the rural population that may occur more important than formal
education and their retailers that offer practical solutions to their problems. Therefore, it is
desirable that the sales led people, especially those which were established in the city made a
solid theoretical and practical aspects of the containedThe life of the country. The training
will help these sales people adapt to market reality and establish their work properly.
rural market has enormous potential, which remains to be tapped. A small increase rural
incomes, it follows an exponential increase in purchasing power.
Future Trends
Markets that are not in a highly competitive multinational companies that can meet late to
restore their profits in the rural sector. The market share of the urban market thanThe rural
market is low, so that when the Indian industry to focus on rural markets to increase their
sales. If markets are the focus of rural development has led, will open the path to prosperity.
India's prosperity lies in the prosperity of every Indian, so no rural area must be left unused
.......................
Rural Marketing - Presentation Transcript
1. ISSUES AND CHALLENGES RURAL MARKETING : BY : Mahavir jain (M.B.A,MKTG.) 2005-2007
Faculty of management studies Udaipur ,Rajasthan
2.
3. Structure of the presentation
o Rural India –an introduction
o Importance of rural marketing
o The rural market size
o Factors driving the growth
o Hurdles in rural marketing
o Major challenges for an Indian MBA
o Strategies for rural marketing
o Examples from the Indian corporate
4.
o DEFINATION OF URBAN AREA
o ACCORDING TO CENSUS-2001
o 1. All places falling within the administrative limits of a municipal
corparation,municipality,etc. and having a population of at least 5000.
o 2. At least 75% male working population in outside the primary sector.
o 3. The density of population should be at least 400 per square k.m.
5. Rural marketing framework :
o 1. THE RURAL TO URBAN TRANSACTIONS
o These mainly include agricultural products like food grains ,oilseeds, cotton ,sugarcane
[Link] finished products like handlooms, textiles, earthenware, brass- ware etc by rural industries,
craftsmen and artisans that find a market in the urban areas.
6.
o 2. THE RURAL TO RURAL TRANSACTIONS
o Here production and consumption is limited to rural areas. It includes agricultural
tools,baskets,ropes, household goods, earthenware etc produced by artisans like blacksmiths ,carpenters
and cobblers.
7.
o 3. URBAN TO RURAL FLOW
o It is the flow of manufactured traded goods namely consumables ,durables and agricultural
inputs etc.
8. IMPORTANCE OF RURAL MARKETING
o 1. Urban markets are becoming increasingly complex, competitive and saturated.
o 2. Large size of rural markets –
o 742 million people (73 % of the population)
o 200 million households (70% of total households)
9. FACTS SAYS IT ALL
o The annual consumer durable market for products like colour t.v’s,washing machines,
refrigerators and air conditioners is growing at 7-10 %.
o While the rural market is zooming at 25 % .
o HAVE A LOOK…..
o F.m.c.g – Rs.65000 crores (53 % share in total revenues)
o Rs.5000 [Link] agri inputs
10.
o Rs.45000 [Link] tractors
o Rs.8000 [Link] two and four wheelers.
o 50 % of India’s national income is generated in rural India.
o HLL,Colgate Palmolive ,Toyato – 50 % revenues coming from rural areas.
o Hero Honda- 40 %
o Kinetic motors – 30 %
o Godrej- 30%
11. Product penetration in terms of % of rural households YEAR 2003 22.3 3.17 3.53 4.77 24.91 O.35
o PRODUCT
o AUDIO SYSTEM
o MOTOR CYCLES
o REFRIGERATERS
o TELEPHONES
o TELEVISION
o WASHING MACHINE
12. Rural share in market for consumer goods
13. Income distribution (Million population) 2001-02 2009-10 2001-02
14. Distribution of Monthly Per Capita expenditure Source: Household Consumer Expenditure Survey,
January–June 2004
15. Lifebuoy Wheel Lipton Taaza Nirma Tata Salt Parle G 91% 88% 77% 70% 64% 61% Toilet Soap
Washing cakes/Bars Tea Washing powder / liquid Salt Biscuits Brand with highest penetration Category
Penetration CATEGORY
16.
17. CONTRIBUTING FACTORS
o 1. Agriculture revolution
Consistent good monsoons
Better procurement prices fixed for various crops.
Better yields due to many research programs (HYV seeds provided by the
government)
18.
o 2. New improved tax structures
o 3. Spread of education
o 4. Improved infrastructure
o 5. Better banking facilities
o (financial assistance given by NABARD)
o 6. Government schemes like IRDP,JRY.
o 7. Increased expenditure in plan outlay (from 14000 [Link] 7 th plan to 30,000 [Link] 8 th plan.
19. 8. Increased penetration of electronic media
20.
o 9. Life style changes
o 50 % of today’s rural income is not coming from the agriculture sector.
o Up gradation from local brands to branded ones and from low priced bands to premium
ones.
o Increasing influence of the youth in the buying decisions.
21.
o HURDLES IN RURAL MARKETING
o High distribution costs
o Low per capita disposable income that is half the urban disposable income.
o Large no. of daily wage earners
o Acute dependence on the vagaries of the monsoons
o Seasonal consumption linked to harvest and festivals
22.
o 6. Inaccessibility to conventional advertising media
o 7. Poor roads,power problems
o 8. Banking and credit problems
o 9. High initial market development expenditure
o 10. Wholesaler and dealer network problems
Contd.
23. 11. Highly dispersed and thinly populated markets 12. Social and cultural backwardness of the rural
masses. 13. Low level of exposure to different product categories and product brands. 14. Cultural gap between
urban based marketers and rural consumers. Contd.
24.
o MAJOR CHALLENGES
o AVAILABLITY
o First and the foremost challenge
o India's 6,38,365 villages are spread over 3.2 [Link].
o 720 mn people-reaching them is not easy
o Given the poor state of roads ,it is an even greater
o challenge.
25. Companies like H.L.L has made strong distribution Networks. To service remote villages stockiest use
Rickshaws, carts and even boats in the back waters of Kerala.
26.
o AFFORDABLITY
o With low disposable incomes, products need to be affordable to rural consumers ,most of
them are on daily wages.
o Some companies have addressed the affordability problem by introducing small unit packs :
o GODREJ Introduced Cinthol and Fairglow in 50 gram packs priced at rs.4
o coca-cola introduced Sunfill ( a powdered soft drink concentrate ) 25 gram pack priced at
rs.2
27.
o ACCEPTABLITY
o N ext challenge is to gain acceptability for the
o product or service.
o Therefore there is a need to offer products that suit the rural markets and conditions.
o coca-cola is providing low cost ice-boxes
o because of the lack of electricity and refrigerators
o in the rural areas.
28.
o AWARENESS
o With large parts of rural India inaccessible to conventional advertising media, building
awareness is another challenge.
Companies like H.L.L uses posters, banners and Wall paintings to create awareness.
29.
o STRATEGIES FOR RURAL MARKETING
30.
o Being first on the shelf
o It is very important because the brands rarely fight with each other as the retailers generally
stock a single brand in a product category.
31.
o Different means of advertising
o A. H aats and melas
o A survey by MART (marketing and research
o team revealed that 47000 haats and 25000
o melas take place every year in India.
o B. Performance arts including theatres,songs,dance puppetry, magic shows etc.
32.
o Advantages
o Large visitor turnaround.
o These melas are held during post harvest season,
o when the purchasing power of the people is more.
The companies provide touch and feel demonstrations and distributed free samples.
33.
34. Rural Markets advertising points
35.
36.
o HLL has played a dominant role in exploring the potential of rural India with its various
projects-
o 1. PROJECT STREAMLINE
o 2. PROJECT BHARAT
o 3. PROJECT SHAKTI
37.
o CAVIN CARE
o This company first come out with the concept of sachets and it revolutionize the whole
market, making the Chic shampoo the 2 nd largest selling shampoo in India
o What followed was the flood of products in small packing ranging from
toothpaste,facecreams,soaps,hairoil etc.
38.
o NIRMA
o This company introduced the innovative technique of using video vans for marketing Nirma
products .
o Advantages
o Reach to interior parts
o Offer opportunity for personal interaction .
o Similar strategies helped Ghadi to become the 3 rd largest selling detergent.
39.
o L.G
o The top brass closed down on 2 points
o 1. The company figured that it needed new cheaper products to lure the rural buyers .
o The company did this by introducing a cheaper range of TV's by the name of “
Sampoorna”.
o 2. More offices in small town was the need of the hour.
o The company went on in a office opening spree and currently it has 178 branch offices.
40.
o COCA-COLA
o 1. Increase in number of outlets from 80,000 in 2001 to 190,000 in 2005 resulting in
increased market penetration from 13 % to 28 %.
41.
o 2. It also tapped the local form of entertainment like annual haats and fairs and made huge
investment in infrastructure for distribution and marketing.
42.
o 3. It brought down the average price of its products from rs.10 to rs.5,therby bridging the
gap between soft drinks and other local options like tea, buttermilk or lemon water.
4. It doubled the spend on doordarshan
43.
o 5. It concentrated its entire advertising towards the rural customer.
o As a result the rural market accounts for 80 % of the new coke drinkers and 30% of its total
volumes.
44.
o I.T.C [Link]
o The company’s e-chaupal initiative is a novel idea which bypasses the brokers between the
Company and the farmers.
45.
o It is helping Indian agriculture to enhance its competitiveness by empowering Indian farmers
through the power of internet .
o This unique transformational strategy has become the subject matter of a case study at
Harvard b school ,has created for I.T.C a huge rural distribution infrastructure ,significantly enhancing the
company’s marketing reach.
46.
o Formed in 1946,it is a brand name managed by an apex cooperative organization ,Gujarat
co-operative milk marketing federation limited which today is jointly owned by some 2.41 million milk
producers in Gujarat.
o It has been a sterling example of right mix of rural marketing and has established itself as a
uniquely appropriate model for rural development.
47.
o Amul has spurred the white revolution in India and it is today the world’s biggest cheese
brand.
48.
49.
o ONIDA
o The company introduced its igo range of t.v’s
o priced cheaply at rs.5000 for 14 inches particularly to cater to the backward states like
Bihar, Rajasthan and Uttar Pradesh.
50.
o CONCLUSION
o 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