How much
You know
Rural India
What you know about
them
Defining
Rural India
The Census defines urban India as - "All the
places that fall within the administrative limits
of a municipal corporation, municipality,
cantonment board etc. or have a population
of at least 5,000 and have at least 75 per cent
male working population in outside the
primary sector and have a population density
of at least 400 per square kilometer. Rural
India, on the other hand, comprises all places
that are not urban!"
Understanding Different
Sectors
Primary:
Extracting raw material directly
from the earth for consumption or sale.
The share of primary sector has decreased
from the past four decades. In 1970 the share
of the sector was 50% which has reduced to
29% in 1995 and is now further reduced to
25%. Major businesses in this sector are
agriculture, agribusiness, fishing, forestry, all
mining
and
quarrying
industries.
Understanding Different
Sectors
Secondary:
into goods.
Transform the raw materials
Understanding Different
Sectors
Tertiary:
Involves sales or trade of Goods
and services.
Being Marketer What You need to
The
See
term "selling to the poor" has become almost a
pejorative.
The
bottom-of-the-pyramid
concept.
Emerging Market
opportunities.
Emerging Market opportunities
725
of India is rural- 6.38 lakhs villages- 17 %
have population above 2000.
By 2020 Indian rural market will be bigger than
South Korea and Canada and worth $577 Billion
Rural Contributes to 43% of Indian National
Income.
More than 50% of FMCG & Durable revenue
comes from Rural
Rural India accounted for around 35-38% of the
total mobile handset sales by 2010.
Rural Segment Quickly
Catching Up
The
Fast Moving Consumer Goods (FMCG) sector
in rural and semi-urban India is estimated to
cross US$ 20 billion by 2018 and US$ 100 billion
by 2025
The rural FMCG market expanded at a CAGR of
13.2 per cent to US$ 100 billion during 2009-15
In rural markets, durables like refrigerators as
well as consumer electronic goods are likely to
witness growing demand in the coming years as
the government plans to invest significantly in
rural electrification
The government of India only defines a
non-urban market. An urban market is the
one which has a population density of 400
people per sq/km. 7% of its population has
to be involved in non-agricultural activities
and there is a municipal body. If we go by
statistics, roughly around 70% of the
Indian population lives in the rural areas.
Thats almost 12% of the world population.
To
expand the market by tapping the
countryside, more and more MNCs are
foraying into India's rural markets.
Among those that have made some
headway are Hindustan Lever, CocaCola, LG Electronics, Britannia, Standard
Life, Philips, Colgate Palmolive and the
foreign-invested telecom companies.
Rural Marketing
Rural
marketing involves the process of
developing,
pricing,
promoting,
distributing rural specific product and a
service leading to exchange between
rural and urban market which satisfies
consumer demand and also achieves
organizational objectives.
It is a two-way marketing process wherein the
transactions can be:
2. Rural to Urban: Here, a rural producer (involved in agriculture) sells his
produce in urban market. This may not be direct. There generally are
middlemen, agencies, government co-operatives, etc who sell fruits,
vegetables, grains, pulses and others.
3. Rural to rural: These include selling of agricultural tools, cattle, carts and
others to another village in its proximity.
Urban to Rural: It involves the selling of products and services by urban
marketers in rural areas. These include: Pesticides, FMCG Products,
Consumer durables, etc. Amazon , Big basket-90cr (Hindrances: FDI)
Big Basket
Investing 90cr for recruiting Farmers.
It is raising fund of around 100 cr in March to build
direct network of farmers(60%) to deliver fruit and
veges accounting 20% of total revenue of Big
Basket.
This impacted in the growth of revenue 10% every
month.
Bigger margins and better quality control.
Has 21 collection centers and helping business to
grow at pace of .
Mode of operation and satisfaction among farmers.
Features of Indian Rural
Markets:
Large and Scattered Market: - The rural market of India is large and scattered
in the sense that it consists of over 63 crore consumers from 6,00,000
villages spread throughout the country.
Major Income from Agriculture: - Nearly 60 % of the rural income is from
agriculture. Hence rural prosperity is tied with agricultural prosperity.
Low Standard of Living: - The consumers in the village area do have a low
standard of living because of low literacy, low per capita income, social
backwardness, low savings, etc.
Traditional Outlook: - The rural consumer values old customs and tradition.
They do not prefer changes.
Diverse Socio-Economic Backwardness: - Rural consumers have diverse socioeconomic backwardness. This is different in different parts of the country.
Challenges
Primary: Climate- Government has committed
to double the income of farmers by 2022
Secondary: Tools-Technological revolution is
going change the dimensions of marketing
strategies in rural India.
JCB India showcases its Made-in-India range
of Material Handling product solutions.
Introduces three revolutionary products Telehandlers, Skid Steer Loaders and Super
Loaders.
Tertiary:
Skills
Marketing Strategies
Himalayas Neem Facewash
Himalayas Neem Facewash has become a
success in both the rural and urban markets
due to its problem-solving and solutiondriven capabilities for pimple prone skin,
helping brand Himalaya become a leader in
the Rs 1600 crore face wash market.
While the facewash category in In rural
India Himalaya has seen a 37-38% growth,
year on year .
What are consumers looking for today in
the skincare segment? What makes them
choose a product?
In
rural India there is an increasing need
to use products which urban India has
already got, so the focus remains on
making products available to them.
Himalaya provides herbal and natural
ingredients in the products as the brand
proposition leading to a positive
inclination of the consumer. They want
natural and safe products for the skin.
How has Himalaya managed to capture the
market share in rural areas for face-washes?
Product
Price
Via Product
They
have managed to increase the
consumption in the face wash category by
introducing Rs 15 pack and Rs 5 sachet recently.
We have also been able to look at increasing
consumption by bringing out bigger packs
because the face wash is a replacement to soap
and is hence indispensable.
If you run out of a tube then you are lazy to buy
a new one because you have soap at home.
Thats why they introduced 150 ml and 200ml
sizes.
Price
In
terms of the pricing, we are very
competitive but compared to all the
players in the market, we are providing
an affordable proposition.
Distribution
In
terms of consumption, we are the
highest reputed company for facewashes. We are available in close to one
million outlets across urban and rural
areas.
Will there be a special focus on the
rural market in the coming year?
They have been focusing on the rural market for the
past one year. They started with tweaking our media
plan towards addressing rural consumers. They have
brought in more free to air channels and
Doordarshan into our TV media strategy. They have
also used other media in the market, where TV
cannot be accessed. They realized that the rural
market of tier 2 and 3 towns like UP and Bihar were
not able to show awareness about the brand as
compared to the urban market, so they used the
local print medium there to address the target group.
They realised that girls in small towns and rural
areas wanted to use the face wash and realised
that Himalayas Neem face-wash was effective
for their pimple problem but they had a minimal
budget of Rs 100 for their personal care. A girl
in the rural areas has to buy talc, a face cream,
a shampoo which does not leave her with
anything to buy a face wash which earlier cost
Rs 55 per tube. That is where the Rs 5 sachet
works wonders helping us to penetrate the rural
market.
Then what strategy you need
Aspiration
as par to urban:
Inspiration: 69$ billion market bigger
then urban
Select right agency.
Cookie cutter model will not work: do
not imitate with urban strategies.
Adaption of technology is new way to
grow in rural.29% in 2013 to 50% in
2018.
Digital
marketing to engage youth.
Follow tradition and values. like using
opportunities at various events.
Bottom-up-approach.
Timing- Marketing cycle
Manager in rural expiate.
Calculate your per capita income.
Inclusive growth via new business
models.
Changing Realities of Rural
India
Survey done by Accenture
among
2800
rural
consumers
provided
a
unique insight into how
rural
consumers
are
changing.
What do rural consumer value
Value
66
71
59
Buy Brands
Trustworthy
functions of
brand
When do they buy
percentage
45
55
need
special occasion
What channel do they use
percentage
Cities
Towns & Rural
Market
17
83
Influencers
percentage
16
93
Panch
Shopkeepers
others
Media Influence
percentage
93
TV
OTHERS
Where do they plan to spend
more
Sales
49
51
Education
healthcare
Usage of Digital
percentage
50
50
digital
others
Aspirational
Networked
Three
dimensions
characterizing
RC
Discerning
Aspirational
Brand
Savvy-71% purchase Branded
Product.
Trading- 42% cited upgrading as a
reason spending more on a category.
Explorer- 72% brand switching for high
involvement and planned purchase.
Networked
Connected-
increased online and offline
interaction with urban counterparts.
Empowered-active role of women in
decision making.
Proactive- seeking multiple options for
collecting information.
Discerning
Street
Smart- more aware, not prone to
fraudulent schemes.
Value seeking- total value of
investment.
Social- information sharing with strong
peer effect.
Rural Consumer Segment
Increased
incomes,
growing awareness and
rising individual aspirations
are
creating
distinct
consumer
segments
in
India's hinterlands.
Traditionalist
Owner
of Conventional ideology.
Need base buying.
Economical buyers.
Steady Climbers
Comfortable
lifestyle.
Believe in social standing.
Buys branded products to compete with
urban counterparts.
Young enthusiast
Age
group between 18-21.
Highly tech savvy.
Believes in social image.
Act as influencers to lower group.
Progressive
Elite
rural group.
Boost high education and awareness.
Believe in quality.
STP For Rural Markets:
Companies are today developing different
brands in different pack sizes and
formulations to win over the consumers,
In reality they are dividing the markets
into attractive segments to reach them
efficiently, serve them effectively and
achieve results economically.
Segmenting
Segmenting is the process of dividing or
categorizing market into different groups
based on one or more variables.
Dividing
heterogeneous market into sub
markets
Heterogeneity population size, socio
cultural difference between regions,
difference in income level, family structure
Degrees of segmentation
[Link] marketing:
Most marketers used this in rural markets.
Eg ;Colgate palmolive successfully
marketed same toothpaste to all
consumers in urban and rural market.
Recently they introduced Cibaca when the
rural market became more demanding.
2. Segment marketing : Identifies
customers as different groups.
Britannia introduced smaller pack sizes
ofTiger biscuits in 1998,Rs4, Rs 2 Rs 1
pack
3. Niche marketing:
Serves selectively one or a few
customergroups, Niche marketing is used
when there is a small group with specific
need .
Our rurala mrket is not matured to this
level Eg: Hero Honda bikes, Nokia mobiles
4.
Micro marketing: Focus on individuals
or very small groups to satisfy a
particular taste or need Eg: Dabur
launched Anmol, a mustard and amla
based hair oil to target rural consumers
in northern markets who used loose
mustard oil.50 ml pack worth Rs
[Link] is divided into 2
Micromarketing is divided into
2 category
Local:
MRF introduced nylon bullock cart tyres.
They used the muscleman symbol as well
as their leadership in tyres. Finally the
communication revolved around the
brand name and its meaning viz.,
Pahalwan Muscleman. MRF became the
leader.
1.
[Link]: Individual can get the
product made exactly to his need Eg:
carpentry, tailoring.
Rural Product
The
acceptance
of
the
product in rural markets is
determined not only by,
consumer, needs and wants,
but also by the physical and
social environment
Three levels of Product
Features and Benefits
Stage
Marketing Activities
Idea Generation
New Product Development
(SWOT Analysis).
Idea Screening
Study the potential need
and wants of buyers, envi.
And competitors.
Concept testing
Collect more information,
Select best, determine
response,
Business Analysis
Proters Analysis
Product Development
Test Product feasibility
Test marketing &
Commericalization
Pricing
Rural market is still the most price
sensitive segment. The reasons for being
price sensitive could be many but its
ultimate effect on the profitability of the
company would be severe in the absence
of proper planning and product price
related decision making.
Price Sensitivity
Law of demand is applicable everywhere
whether it is a rural market or urban
market but it only tells the negative
relationship between price and quantity
demanded keeping other factors constant.
The degree of price sensitivity varies
from
product
to
product
and
consumer to consumer.
Factors influencing
Internal
External
4 As FOR SELECTING BEST PRICING STRATEGY
Availability,
Affordability,
Acceptability,
Awareness)
and
STRATEGIES FOR KEEPING LOW PRICE
AND GENERATING HIGH REVENUE
Price
can be kept low by small unit
packing: There is always a problem of
storage in rural areas, rather they dont
have the concept of storage. This is the
reason why sachets are popular in rural
areas as they are not only inexpensive
but also occupy less space.
Simple packaging: People living in rural areas
look for a product that offers them convenience
and utility. Simple packaging helps the company
to reduce cost. A company has to spend lot on
packaging while offering it to urban customers.
Coca Cola is going to offer sparkling drinks to its
rural consumers in 100 ml serves priced at 5
through its fountains-mounted trucks and
through Splash bars, which are low -cost
chillers with dispensers in rural regions.
Reusable
packaging: Rural customers
find a product more attractive if its
Packaging is reusable and refilled. It
boosts the demand for the product and
ultimately increases the companys
revenue.
Reducing cost of distribution:
Economy or Value Packs:
PRICING STRATEGIES IN CASE
OF CONSUMER DURABLES:
Financing
at low interest: EMIs
Increasing the term of payment of loan Flow of income and Consumption basket
pricing