Rural Marketing

Contents
1.

Rural Marketing.....................................................................................................................
Introduction.............................................................................................................................3
Rural marketing-Definition.....................................................................................................4
Phases in Rural Marketing.......................................................................................................5
Rural Environment..................................................................................................................6
Rural Income Trends...............................................................................................................9
Rural Infrastructure................................................................................................................10
Size of Rural Market..............................................................................................................11
Rural Vs. Urban Consumer Behaviour..................................................................................11
Scope of Rural Marketing......................................................................................................13

2.

Segmentation, Targeting & Positioning in Rural Markets...............................................

Segmenting............................................................................................................................14
Targeting................................................................................................................................18
Positioning.............................................................................................................................19

3.

Rural Marketing Mix...........................................................................................................

Product...................................................................................................................................20
Pricing....................................................................................................................................24
Place- Rural Distribution.......................................................................................................25
Promotion Mix.......................................................................................................................27

4.

Difference between Rural markets and urban markets...................................................

5.

Case Studies:.........................................................................................................................
Bharthi Axa Life insurance....................................................................................................32
Honda Motorcycle.................................................................................................................33
Zee Turner to concentrate on rural markets...........................................................................34
Chik Shampoo Developing products for the rural markets................................................35
Marutis mobile theatre ups sales for company in rural India................................................37
Unique Phones for India........................................................................................................38
Developing a Distribution Strategy.......................................................................................39
Nestle eyes a rural foothold...................................................................................................40
Bharti Airtel Rural Strategy...................................................................................................42
2

1.

Rural Marketing

Objectives

Rural market is now an acknowledged viable market.

It accounts for 56% of Indias total income, 64% of expenditure and 33% of savings.
Infrastructure is developing fast.
Roads 67% villages connected by all-weather roads.
Electrification of households 60%, has opened the market for durables.
Eight good monsoons, two-fold increase in the support price of food grains and major
shift to cash crops.
MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act)& Bharat
Nirman
Today, more than 50% of FMCG & durables, 100% of agricultural inputs and 40% of
two-wheeler sales come from rural markets.

Introduction
Marketing may aptly be described as the process of defining, anticipating and knowing
customer Needs, and organizing all the resources of the company to satisfy them. In fact,
satisfaction of Customers needs and wants provides the rationale for the firms existence.
Knowledge of Consumer behaviour, therefore, is vital for a firm to achieve its marketing
goals. The consumers Behaviour comprises the acts, processes and social relationships
exhibited by individuals, groups and organizations in searching, obtainment, use of, and
consequent experience with products and services. An understanding and knowledge of the
motives underlying consumer behaviour helps a firm in seeking better and more effective
ways to satisfy its customers. It helps to select appropriate sales and advertising strategies, and
to plan marketing programme in a more efficient manner. The rural market of India started
showing its potential in the 1960s. The 70s and 80s witnessed its steady development. And,
there are clear indications that the 21st century is going to see its full blossoming. In our
country, where research on consumer behaviour has been nominal, not much systematized
information is available about the rural consumers. Only a few enlightened companies, known
for their marketing orientation, viz., Hindustan Lever, Philips India, Asian Paints, Singer and
Larsen and Toubro have made concrete efforts in this direction. But, by and large, we have
still to understand the rural buyer, 3 his habits, attitudes and behaviour, particularly from the
marketing point of view. Many assumptions prevail about rural marketing. For instance, one
assumption is that the rural buyer is not very discriminating.

Once he is persuaded to buy a particular product, he develops a strong affinity for it, and if
satisfied, becomes brand loyal. As a result, Indian manufacturers are generally known to
prefer selling fewer items at higher prices than selling more items at lower prices.

A contrary view is that the rural buyer, being suspicious of the marketers hard sell
techniques, is quite discriminating, and is not easily persuaded. Yet another assumption is that
the rural buyer is not particularly keen about quality and packaging. Some other assumptions
can be quoted. But, all these need deep probing for arriving at valid and reliable conclusions.
Consumer research, thus, is indispensable for entering the rural segment of the market.

Rural marketing-Definition
Function that manages all activities involved in assessing, stimulating and converting the
purchasing power of rural consumers into effective demand for specific products and services
to create satisfaction & a better standard of living for achieving organizational goals.
Definitions of Rural
RBI

Locations with population up to 10,000

will be considered as rural and 10,000 to
100,000 as semi-urban.

Nabard

All locations irrespective of villages or

town, up to a population of 10,000 will be
considered as rural.

Planning Commission

Towns with population up to 15,000 are

considered as rural.

Sahara

Locations having shops/ commercials

establishments up to 10,000
Are treated as rural.

Census

Village: Basic Unit for rural areas is the

revenue village, might
Comprise several hamlets demarcated by
physical boundaries.
Town: Towns are actually rural areas but
satisfy the following criteria.
Minimum Population >=5,000
Population density>= 400/ sq. km.
75% of the male population
engaged in non-agro activity.

Phases in Rural Marketing

Sr. No

Time Frame

Phase One
(Pre 1960s)

1. Marketing rural products in rural and

urban areas
2. Agricultural marketing
3. Farming methods were primitive and
mechanization was low
4. Markets unorganized

Phase Two

1. Green Revolution scientific farming.

2. Better irrigation facilities, use of
fertilizers, pesticides, high yielding
variety
seeds,
application
of
implements like tractors.
3. White revolution Institutionalizing
milk production
4. Companies
like
Mahindra
and
Mahindra, Sri Ram Fertilizers and
IFFCO emerge
5. Rural products were also marketed
through agencies like KVIC
6. Birth of companies like Nirma

(1960s to 1990s)

Key Events & Trends

Phase Three
(1990s to 2000)

1. Demand for consumables and durables rise

2. Rural markets were not very accessible. The
poor infrastructure of widely scattered
villages made them unreachable & expensive
in terms of logistics.
3. Companies find growth in urban markets
stagnating or falling

Phase Four
(After 2000)

1. Rural marketing becomes the agenda for most

global and India companies.
2. Success of marketing models like Project
Shakti and ITC e-Choupal.
3. Several Govt. initiatives like farm loan
waivers, employment and rural infrastructure
development programs.

Rural Environment

Demographic Environment

Physical Environment

Social and Cultural Environment

Demographic Environment
1991

2001

2010

848

1029

1177

629

742

826

Rural population to total population

74

72

70

Male (million)

NA

381

425

Female (million)

NA

360

401

Number of rural households (million)

112

138

165

Family size (number)

5.55

5.36

5.01

Total Population
(in million)
Rural Population
(in million)

Source : Census 2001

Demographic Environment

 Though the rural proportion in population has come down moderately over the years,
there has been a considerable increase in absolute number of people living in rural
areas.
With the increased working population, the purchasing power of the rural population
has gone up from 40% in 1991 to 45% in 2011.
For marketers, the largest age group shapes the marketing environment. In the case of
rural, it is school going children and young adults who define the consumption
patterns of consumables and lifestyle products.
The potential for marketers in the rural sector can be assessed by the fact that 48% of
the rural population is below the age of 20.
Physical Environment

Inhabited villages classified by population size, 1991 and 2001

Villages in 1991

Villages in 2001

Number

Percentage

Number

Percentage

Less than 200

103,952

18

Less than 200

92,541

16

201-500

141,143

24

201-500

127,054

21

501-1000

144,998

25

501-1000

144,817

24

1001-2000

114,395

20

1001-2000

129,662

22

2001-5000

62,915

11

2001-5000

80,313

14

5000+

13,376

5000+

18,758

100

Total ( Inhabited
593, 154
Villages)

Total
(Inhabited
580,779
Villages )
All Villages Total

634,321

All Villages Total

100

638, 588

Source: Census 2001

The first two categories do not have any shop, the number of such villages has
decreased by five percent in the last ten years

Villages in this category are the most prosperous; they have 16 shops on an average.
17 percent of 2000+ villages account for 50 percent of the rural population and 60
percent of the rural wealth.

Social & Cultural Environment

Rural Economic Structure
Annual
Income
( at 1998-99 prices)

Income Class

1989-90
( % Households)

1998-99
( % Households)

<= 35,000

Low

67.5

48

35,001- 70,000

Low Middle

24

35

70,001 1,05,000

Middle

10

1,05,001- 1,40,000

Upper Middle

> 1,40,000

High

0.5

Rural Income Trends

Rural Infrastructure

Telecommunication

Parameter

20
02

200
8

2009

20
10

Rural Teledensity

10

21

26

Rural Subscriber
base (mn.)

62

175 219

Source: TRAI 2010

Size of Rural Market

The per capita GDP has grown at a compound annual growth rate (CAGR) of 6.2 per cent in India's
rural regions, since 2000.
Rural consumption per person is also believed to have increased by 19 per cent yearly in the period
2009-12, including some impulse-driven categories.

10

Rural India is today viewed as a major hub for investment by India Inc. In the period 2009-12,
spending in rural India touched US$ 69 billion.

Rural Vs. Urban Consumer Behaviour

S.

Aspect

Urban

Rural

Philosophy

Marketing and
societal
concepts, Green
marketing
and relationship
marketing

Marketing and
societal
concepts,
development
marketing, and
relationship
marketing

Market
(a) Demand
(b) Competition
(c) Consumers

High
Among units in
organized
sector
Concentrated
High
High
Planned, Even
High level
Faster

Low
Mostly from
unorganized
units
Widely spread
Low
Low
Seasonal variations
Low level
Slow

High
Known
Easy
Easily grasped
Good
Important

Low
Less known
Difficult
Difficult to grasp
Moderate
Less Important

N
o
.
1

Location
Literacy
Income
Expenditure
Needs
Innovation
adoption

Products
Awareness
Concepts
Positioning
Usage method
Quality
preference
Features

11

S. No.

Aspect

Urban

Rural

Price

Yes
Medium-High

Very much
Low-Medium

Sensitive
Level desired

Distribution
Channels
Transport facilities
Product availability

Wholesalers, Stockiest
Retailers, Supermarkets,
Specialty stores and
authorized show rooms
Good
High

Village shops
Haats and
Jatras
Average
Limited

Promotion
Advertising
Personal Selling
Sales promotion
Publicity

Print audio-visual media,

Outdoors, exhibitions etc.
Few languages
Door-to-door frequently
Contests, Gifts, Price
Discounts
Good opportunities

TV, Radio, Print Media

to
Some extent. More
languages
Occasionally
Gifts, Price discounts
Less

Scope of Rural Marketing

12

2.

Segmentation, Targeting & Positioning in Rural

Markets
13

Marketing Decision

Marketing Actions to be Undertaken

Segmenting

Identifying and developing profiles of market segments

Target

Evaluating segments and deciding the market coverage strategy

Positioning

Identifying , selecting and communicating competitive advantages

Segmenting
Segmentation helps distinguish 1customer profile from another, also facilitates understanding
of the needs of target buyers. This helps companies in creating more fine-tuned product
offerings and prices it appropriately for the target segment.
Heterogeneity in Rural India
Variable

Example

Socio Cultural Differences

Caste Based Habitations in Villages

Population Size & Density

Kerala Vs. Uttar Pradesh

Difference in Infrastructure

BIMARU states Vs. Karnataka

Media Exposure levels

Kerala Vs. Orissa

Literacy Levels

Kerala Vs. Bihar

Income levels & patterns

Farmers & Daily Wage Earners

Family Structure

Joint Families & Nuclear Families

Town Classification
Town
Classes
(E.g. Maharashtra)

14

Population

No. of towns

% of total towns % of population

Class
I
(Akola, Amravati, Jalgoan)

1 lakh +

423

8.2

61.5

ClassII
(Chalisgaon, Manmad)

50,000 +

498

9.6

12.3

ClassIII
(Chiplun, Dahanu)

20,000 +

1,386

26.9

15.0

ClassIV
(Alibag, Boisar,)

10,000 +

1,560

30.2

8.1

ClassV
(Birwadi, Ganeshpur)

5,000 +

1,057

20.5

2.8

ClassVI
(Panhala)

Less
5,000

237

4.6

.3

5,161

100.0

100.0

Total

than

Source: 2001 Census

TownClasses
(Eg. Gujarat)

Population

No. of towns

% of total towns % of population

ClassI
(Ahmedabad, Anand)

1 lakh +

423

8.2

15

61.5

ClassII
(Anjar, Bilimoria)

50,000 +

498

9.6

12.3

ClassIII
(Sanand)

20,000 +

1,386

26.9

15.0

ClassIV
(Alang,)

10,000 +

1,560

30.2

8.1

ClassV
(Atul,)

5,000 +

1,057

20.5

2.8

ClassVI
(Kalol)

Less than 5,000 237

4.6

.3

100.0

100.0

Total

5,161

Source: 2001 Census

Basis of Segmentation
Segmentation Criteria

16

Relevant Variables

Geographic

Demographic

Psych
ographic

Behavioral

Age & Lifecycle: Children, teens, young adults, elders, seniors

Family structure: Joint family, IJF, nuclear family
Landownership : Landless, marginal, small, large
Occupation: Self-employed, daily wage labourers, salaried, traders
Income: Deprived (<90), Aspirers (90-200), Seekers (200-500), Strivers
(500-1,000), Global (>1,000)
Gender
Education: Illiterates, semi-literates, literates
Type of home : Pucca, semi-pucca, kuccha

Lifestyle : Trendsetters, followers/adopters, traditionalists

Social Class : Upper, middle, lower

Occasions : Festivals, melas, weekly haats, functions

Benefits sought : Quality, convenience, VFM (e.g., Fullerton India)
Usage status: Potential user, ex-user, first time user, regular user (e.g.,
Ghari detergent)
Usage rate: Light, medium, heavy (Sachet packs)
Loyalty status: Strong, weak, non-loyal (e.g., Nirma villages, Wheel
villages, Escort villages, M&M villages)
Place of purchase: Village shop (daily), haats (weekly), nearby town
(monthly/occasionally), melas (occasionally)

Targeting

Segment Evaluation

Segment Selection

17

Region : East, West, North, South

Village Size : <1000, 1,000-2,000, 2,000-5,000, >5,000
Climate: Summer, Rainy, Winter. India is divided into 8 geo-climatic
regions, based on soil & climate.
SCR: 56 SCRs (e.g., Avadh, Bundelkhand, Rohilkand, Purvanchal & Braj
in UP)

Choosing a coverage strategy

Segment Evaluation
Company Objectives & Resource Competencies:

Short term & long term objectives

HUL, Asian Paints, Colgate Long term sustainable sales

HUL Project Shakti

ITC e-Choupal

Segment Selection

Undifferentiated Marketing- thanda matlab Coca Cola. Mass distribution &

advertising.

Differentiated / Targeted Marketing Tractor Marketing

Single segment concentration - Niche Marketing. E.g., HUL Lux, Liril, Breeze.

Coverage Strategy
Deciding the appropriate coverage strategy.
E.g., - Coca Cola An arms length from desire

Positioning
18

Act of occupying a distinctive place in the mind of the target segment

Steps involved

Identifying the unique features of the product/ service (USP)

Identifying the differences with respect to competition

Selecting differences having a greater competitive advantage

Communicating the best advantage to the target audience

Identifying the Positioning Concept

Product Differentiation chota coke, Colgate Herbal, Meswak, Neem, Babool

Service Differentiation warranty, free service coupons

People Differentiation Aamir Khan Coke, Sharukh Khan Sona Chandi

Chyawanprash

Image Differentiation - Rin detergent bar used the phrase Zara sa Rin along with
the characteristic flick of the finger, Colgate dental cream endorsed by a doctor

Communicating the Positioning Concept

3.

Thanda Matlab Coca Cola

Sprite Bujhaye Oly Pyaas Baki Sab Bakwas

Rural Marketing Mix

19

Marketing Mix refers to the set of actions, tactics, tools or variables that a company uses
to promote and sells its product in a rural market

Product

Anything that has a value in exchange

Challenges Availability, affordability, acceptability & awareness

Marketing Tools

Marketing Challenge

Product

Acceptability

Price

Affordability

Place

Availability

Promotion

Awareness

Product Concept

20

LG Electronics Sampoorna on-screen display in regional languages

LG Semi-automatic washing machine memory back-up frequent electricity
breakdown
Philips Free Power Radio winding of the spring allowed 30 minutes of
listening time
Eveready Industries Brass torches

Product Levels

Core benefit
Basic product
Expected product
Augmented product
Potential product

Product Level

Characteristics

Example

Core Benefit

Fundamental benefit/ services

Connectivity

Basic Product

Benefit/service into tangibles

Mobile Phone

Expected Product

Attributes & conditions buyers normally

expect

Good Battery life,

operation, durability

Augmented Product

Exceeding customer expectations

Built-in radio, camera, flashlight,

local language display

Potential Product

Encompassing all
transformations

augmentations

Rural Durable Usage Trends

NCAER has classified durables into three categories

21

&

ease

of

Solar power charging

 Group One (<INR 1000)

Group Two (INR 1000- 6000)
Group Three (INR 6000)
In group one the growth is as high as 75 percent
Electrical goods show the highest urban- rural disparity, why ?
Television( B & W) 195/1000HH in rural Vs 490/1000HH in urban
Colour TVs 48/1000 HH in rural Vs 304/1000HH in urban

Product Decisions

Quality Heavy watches as quality watches, tractor by the sound of the engine
Features John Deere Power steering to 35-hp tractor to provide efficiency &
convenience to farmers.
Design&StyleCooker handle on both side
Metal/ Alloy torchers
Dishwash bar with plastic coat on one side
Nokia 1100 with Anti slip grip

Branding in Rural Markets

Colours Lal Dant Manjan, Lal Sabun, Red Battery, Brooke Bond Red Label
Numbers Godrej No. 1, 555 Detergent Bar, 502 Pataka Chai, Brooke Bond A1
Visuals Wagh Bakri, Cycle Agarbatti
Brand Stickiness - Mahindra village, Escorts village

22

 Associated with affordability, ability to recognize, Convenience and product protection

Primary Level Protecting the product
Secondary Level Aesthetics
Packaging Material Frooti 65-ml tetra pack for Rs.3.50
Pack Size & Convenience Daily wage earners & the Sachets revolution. Sachet with
noozle Toothpaste, Ketchup.

Pricing
Setting the Price for Rural Products
Internal factors

External factors

Cost Promotion, Distribution (Shakti, e-choupal)

Price sensitivity of consumers

23

(50 paise sachet of Chik shampoo)

Pricing objective of the company
Profit maximization in the long-run (Tata
Swatch vs HUL Pureit)
Deeper penetration of the Market
(Britannia Tiger at INR 1, 2, 4 price point)
Keeping
up
with
competition
(Chik vs Clinic Plus)

Channel costs
Competition
Environment
Technology

Govt.

policy,

Economy,

Rural specific Pricing Strategies

Low Price Points

Britannia - Good Day INR 5

Dabur Amla Hair Oil INR 1 (sachet)
HUL Pepsodent INR 4 (sachet)

Low Cost Packaging

Sachets

Refillable/Reusable
Packs

Refillable - Health Drinks

Reusable Packing of fertilizers, Shell oil 10 litre bucket
pack

Highlight value, Not

Price

Hero Honda mileage, lower maintenance cost & higher

resale value

Coinage Pricing

Sachets Shampoos, Washing soap, Toothpaste, Cold

Cream

Product Sharing
Service

Tractors

Place- Rural Distribution

Main Problems in rural distribution:
24

 Large number of small markets

Dispersed population and trade
Poor connectivity to smaller villages
Low availability of suitable dealers
Inadequate banking/ credit facilities
Poor product display and visibility
Poor communication of offers and schemes
Inadequate power supply
Levels of Distribution
Level

Channel Partners

Marketplace

Company Depot/ C & FA /Super stockist

National/ State level

Distributor/ Van Operator/ Super Stockist/ Rural

Distributor

District level

Sub Distributor/ retail Stockist/ sub stockist/star seller

Tehsil HQ, towns and large

villages

Wholesaler

Large villages, haats

Retailer

Large and Small villages

Distribution Adaption
25

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

Building Marketing Channels in Rural Markets

Promotion Mix
Conventional
26

Non- Conventional

Personalized

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
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

Haat
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

27

Examples of Rural Place Strategy

1. ITC uses its e-choupal through internet to reach & communicate to rural people.
2. Ajanta India distributes its prouct (tooth paste, brush, shaving cream) through paan
walas
3. Many co. uses animal cart to carry product to remote places.

Promotion Types
Advertising
Sales promotions coupons, contests, demonstrations and sampling, Example: Tata
Shakti Haat Hangama
Direct marketing, Example: Videocon
Publicity, Example: Project Shakti and AP Online
Using a direct selling through a sales force, Example: Swasthya Chetna for Lifebouy
Push strategy Sales Force and Trade Promotion
Pull strategy Advertising and Consumer Promotion

28

Examples of Rural Promotion Strategy

1. Asian Paints selected some opinion leader and painted there walls to demonstrate that
color doesnot come off.
2. LIC makes use of pupet show to create awarness amongst rural area importance of
insurance

Examples of Rural Marketing Mix

ICICI Bank customized their rural ATMs, so that they can operate on biometric
authentication. Their ATMs are battery operated so that power failure is not an issue.

Bank of India introduced Bhumiheen credit cards for providing credit card facilities to
landless farmers.

Philips has developed a TV Vardaan for rural markets, which works on the voltage of
90-270 volts.

Philips has developed Free Power radio which does not require power, it runs on
simple winding of lever provided in the set.

29

4.

Difference between Rural markets and urban markets

Difference between rural and urban market: The market is a place where buyers and
Sellers Exchange Things . In lay man terms "It is a place where buyers and sellers
exchange goods/Service for some value in return such as Money" . So the Market is same
everywhere . But , The difference is in the consumer behaviour . There will be different
buyers in each market. This is because of different factors which Influence them. So the
same way there is a difference between Rural and Urban Market. The factors are so many
to define. There is a difference in all the marketing Variables. That is where most of the
companies approach with different Marketing Mix and Strategies to Rural Market. The
strategies differs from the urban to rural market. The companies which have understood
the phenomena of rural market have succeeded in the market, For Ex: HUL, ITC, Colgate,
Rajdoot Motorcycle. These companies have done a perfect home work and Implemented
in terms of effort and Operations. These companies approach shows that there is a
difference between Rural and Urban Market.
The Differences can be Infrastructure, Economy, Lifestyle, Socio- Cultural Background,
Availability or reach, Habits, Competition, Consumer Behaviour.
Infrastructure: The facilities like Electricity, Internet, Roads and Buildings, Educational
Institutions, Financial Institutions, Communication and Organised Market , Other
Facilities differs in urban and Rural market. In urban everything gets implemented soon
and Availability is also there. Where as in rural market everything takes a good amount of
time.

Economy: Here the Economy means, The earning Capacity in a rural Market. The cost of
Living always depends upon their way of earning. So, the Income levels are unreliable, as
Most of them are depended upon the seasons and Agriculture. So the Income levels cannot
beafixedone.
Lifestyle: The Lifestyle , that is living pattern of both the markets differ a lot. This can be
important factor which influences the companies to think of when they approach rural
market.
Socio- Cultural Background: Due to the illiteracy level, and Culture adaptability from
long time the rural market always gets differ than the urban market. The superstition and
other belief as well as the way of thinking towards products and goods differ in these two
markets.
30

Availability or Reach: Due to the areas which are diverted Geographically and
Heterogeneous market the reach is very difficult. The logistics for rural market is a tough
task than to reach the Urban Market.
Habits: The daily routine of the people makes them to cultivate different habits. Apart
from due to the awareness is low in Media terms there will be a difference in the habits.
Competition: The competition in the market for brands and Companies always differ . As
in rural markets it is always the channel Partner and Retailer plays a vital role. But where
as in Urban Market Brand Plays a great role.
Consumer Behaviour: Last but not least, The consumer behaviour is the task for the task
for the companies . The mindset of the rural consumer is completely different from Urban
Consumer. The Mindset of the consumer is different . For Ex: In urban market , to buy
Electronic Item the customer thinks of Brand and Its updated feature. where as in rural
market he thinks of in so many ways , such as money, Durability, Buying Capacity and so
on. So these mindset makes a difference in both markets

31

Case Studies:

5.

Bharthi Axa Life insurance

Bharti Axa General Insurance Company Limited has decided to give special focus on rural markets in
its total business plans.
Speaking to ET, Mr George Kurien, chief financial officer, Bharti Axa General Insurance Company Ltd
said that the penetration of general insurance companies is low in the rural markets probably because
it is difficult to service.
The market is also marked by the absence of big ticket business", he said adding that it is more of a
volume driven market. The company hopes to source 15 % of its business from the rural market in 4 to
5 years.
To service the rural markets the company will leverage on the network of Bharti Airtel retail centres.
Apart from this, the various self help groups, NGOs and the micro finance organizations etc would be
made use of in the rural markets.
Mr Kurien said that the company's next round of expansion in Tier II and Tier III cities. The company
has 70 offices at present. The number will go up to 70 by the end of the calendar year.
He said that the company will also introduce add on products. "In fact we are awaiting IRDA approval
for nearly a dozen such products", he said. The company also announced the launch of their
operations in Kerala by opening its office in the city. He said that four more branches would be opened
in the state before the end of 2009.

Question :
1.
2.
3.
4.

Who do you think are Bharti AXAc Customers in this case?

What kind of infra-structure will bharti Axa use or need in rural areas ?
How would Bharthi axa use rural environment for their benefit in this case ?
The company hopes to source 15 % of its business from the rural market in 4 to 5 years.Do
you think the company would be able to achieve that

32

Honda Motorcycle & Scooter India launched a campaign for its Dream
Series mass motorcycles Dream Yuga, Dream Neo and CD 110 Dream.
Honda Motorcycle & Scooter India launched a campaign for its Dream Series mass
motorcycles Dream Yuga, Dream Neo and CD 110 Dream. The TVC aims at bringing
together the dream series for consumers, who have varied needs and motivations,
through
the
users
point
of
view
in
the
100cc

110cc
segment.
The Dream Series is targeted at 20-40 year old, salaried, self-employed, shop owners,
farmers and skilled workers residing in rural or semi-urban cities.
According to YS Guleria, Vice president, Sales & Marketing, Honda Motorcycle & Scooter
India, Hondas leadership in technology has been well established in the market.
With the Dream Series, we aim to strengthen our presence in the mass motorcycle
segment. The Dream Series blends a range of motivations, along with the joy of buying a
bike. With the HET technology and reliable Honda engine at its core, the TVC campaign
further reinforces Hondas trusted technology and its commitment towards hinterlands.
Question :
1. What type of Economic structure of the targeted People is Honda motorcycle
looking for ?
2. What Will be the major Problem Faced by Honda motorcycle in rural India ?
3. How would Honda Use rural infrastructure for their benefit ?
4. Honda Hopes to target people from the age group of 20-40? What according to you
is the right Age group ?

33

Zee Turner to concentrate on rural markets

Zee Turner, the distribution arm of Zee Telefilms and Turner International India, has launched
new initiatives to increase penetration into the rural markets.
The initiatives, which offer cable operators special packages, are targeted at reaching viewers
in remote areas and small towns.
"Of the 43 million cable and satellite households in India, 15 million are in the rural areas.
This offers a huge potential and opportunity," Zee Turner COO Siddharth Jain said in a
statement here.
the distribution company said the packages had been designed keeping in mind the economic
profile, demographics and viewers choice.
The Zee Turner bouquet offers channels from the Zee stable like Zee TV, Zee Cinema and Zee
Music, and Cartoon Network, POGO and CNN from Turner International. Also, it offers other
channels like CNBC, Reality TV and Alpha regional channels.
Jain said Andhra Pradesh had been given special focus. "With a total of 7.3 million C&S
households, Andhra Pradesh is the single-largest contributor to the Indian C&S household
figure," he said.
The company is also planning roadshows for the rural markets, wherein the channels will be
taken to small villages in order to give them first-hand viewing experience.
Questions :
1.
2.
3.
4.

Who do you think are Zees Customers in this case?

How would Zee Use rural infrastructure for their benefit ?
How much is the potential of Rural market for Zee?
The distribution company said the packages had been designed keeping in mind the
economic profile, demographics and viewers choice. Comment on the Statement ?

34

Chik Shampoo Developing products for the rural markets

Chik shampoo is most remembered for one of the first ever innovations in the Indian personal
care industry sachet packaging. In fact the brand name Chik is an acronym for its founder
Chinni Krishnan, who is also known as the sachet czar in India. Way before Fortune at the
Bottom of the Pyramid became a customary marketing practice, the innovation helped Chik
take shampoos from the elite urban homes and fancy stores to every ordinary man in the
country. The format changed contours of the shampoo category in India. Even after many
years today, large Multi Nationals have followed suit and are targeting rural India for growth.
Also India is the only country in their portfolio of markets, where they have been compelled
to compete in sachets. In addition to an early packaging innovation, Chik shampoo has also
been credited with on-ground activities that were way ahead of their time. Executed at
individual village level, the brand first pulled crowd with sponsored Rajnikanth shows and
used an in-between time to show Chik ads. Live demonstrations of shampoo performance
helped village dwellers primarily comprising of shampoo proxy users understand a
distinctive before-after performance on softness and fragrance. After teaching how shampoos
were used, free samples were given which triggered need for a repeat experience, pushing
sales to approx 3 times in the region. Chik shampoo today is one of the most popular case
studies in management schools across the world. Innovative sachet packing, strategic pricing
(at Re.1 and 50p), unmatched distribution and agility to change with fast changing consumer
needscape has helped Chik Shampoo be the 2nd largest shampoo brand in the country.
The New CHIK Promise
For years Chik has promised and delivered on its promise of good conditioning and post wash
softness. In 2011, the brand upgraded launching high power formulations and promising a
new identity to its consumers. The brand is available in 2 high performance variants.
Chik Hairfall Control
The brand broke new ground with an all new Hair Fall Control variant that promises to
reduce hair fall up to 99% (due to hair breakage, lab tested against non-conditioning
shampoo). The shampoo is powered with nutrient rich amla that makes hair stronger from
within; and Henna, which conditions hair making it soft, tangle free & easily combable,
reducing hair breakage.

35

Chik Long & Strong

The second variant in the portfolio is Long & Strong. The shampoo has nutrient rich amla,
and protein rich badam that help hair grow longer and stronger.
Both the variant portfolio includes an affordable sachet at Re 1/- and a range of bottles that
offers high value - Rs. 10/- for 45ml, Rs. 32/- for 100ml, Rs. 60/- for 200ml, Rs. 110/- for
400ml, and is available at your nearest store
Accolades
In 2011, Chik shampoo was ranked as the 32nd most trusted brand (Personal care) in India by
the Brand equity survey of Economic times
Questions:
1.
2.
3.
4.

Comment On segmentation for the products Developed by Chik shampoo?

Comment On Targeting for the products Developed by Chik Shampoo?
Comment On Positioning for the products Developed by Chik Shampoo?
Give a outline for a promotion campaign to be held by chik shampoo in rural india
keeping in mind the above products ?

36

Marutis mobile theatre ups sales for company in rural India

Non urban markets account for 32% of the sales for India's second largest automaker, Hyundai.
"Nearly 70% of India resides in rural areas, which presents an enormous demand base and huge
market potential," says Arvind Saxena, director (marketing and sales), Hyundai. And General Motors
too sells 30% of its cars - mainly the Chevrolet Spark, Beat and Tavera - in rural India. "India is
happening in the villages," says Mayank Pareek, managing executive officer (marketing & sales) at
Maruti Suzuki India. A car is not a Tshirt that you sell to villagers and then forget about, he adds. "You
have to invest in gaining their trust and never betray it."
What's remarkable about Maruti's push is the nifty way in which it has been able to reach out to
potential buyers, from fruit growers in the north and turmeric growers in the south to fishermen in the
east and Alphonso mango growers in the west. It has helped Maruti up the rural tempo from just 3.5%
of total sales five years ago to 26% in fiscal 2012.
he entry level compact car Alto accounted for 36% of rural sales in 2011, with the Omni and the
WagonR contributing 13.6% and 12%, respectively. It is a godsend for automakers battling the
tightened purse-strings and high interest rates of a post-recession urban economy. "We realised that
while the world struggled to cope with recession (in 2008), a large chunk of rural India remained
unscathed," says Pareek. "Today a rural consumer is much younger, far more exposed (to
contemporary trends) and is getting more affluent," adds Parshu Narayanan, creative head and
managing partner of Publicis Capital, the advertising agency that made the ad film for Maruti. In his
aspirations and desires, he is no different from his urban counterpart, adds Narayanan.
At the centre of Maruti's communication strategy is a roadshow and a film screening inside a truck
kitted with a big Samsung LCD television, a split AC and push-back chairs. The short film tells a simple
story of an average villager who, after getting taken in by the persuasive skills of his WagonR-owning
friend, ends up buying one for himself. It's driven by a simple plot and identifiable characters; Average
Jais if you will, with names like Hari Prasad, Bimla, Dinkar, and Duggal Ji, aka chacha. It functions as a
fairly effective slice of life for most villagers. "The film takes care of his aspirations, both on the
functional and emotional planes," asserts Narayanan.

Questions

1. Give a outline for a promotion campaign to be held by Maruti Suzuki in rural india?
2. Is the Communication strategy efficient according to you ?
3. Suggest a new way of communication to maruti to communicate to rural market ?
4. Will only communication help Maruti to boost the sales in rural market ?

37

Unique Phones for India

Nokia is aggressively reaching out to Indian consumers. On May 3 the company unveiled a
range of 7 new handsets. With price tags ranging from $40 to $100, the phones offer many
voice and data features, and user interfaces in 75 different languages. The Nokia 1200 and
1208 come with a flashlight, localized languages, and a teaching mode.
Since many people in India's countryside often need to share one phone, Nokia's new models
include features enabling multiple users for each handset. For the first time, the phones have a
call-tracking application and a multi-phonebook to make phone sharing simpler for customers
at the bottom of the pyramid.
he sharing of the mobile phone allows many consumers in entry markets to experience the
benefits of mobility firsthand, bringing down the cost of ownership, says Soren Petersen,
Nokia senior vice-president in charge of emerging markets.
Question
1.
2.
3.
4.

Is the product concept used by nokia on right track, Suggest More ?

Comment on product Features related to Rural India ?
Comment on the pricing of the phones ?
Comment on the Target consumer for the above phones launched in india for tapping
rural market?

38

Developing a Distribution Strategy

Establishing cost-effective ways to get goods to Indias rural dwellers is the critical first step in
penetrating these markets. Smart companies have found that they need to focus on distribution even
before making the seemingly commonsense moves of identifying and approaching target customers.
Companies are using a variety of strategies to extend their distribution networks into the countryside
The most successful companies, though, have adopted a multipronged approach. The $7 billion
conglomerate ITC, for instance, has added three layers to its urban food distribution network, which
conforms to the conventional distributorstockist (wholesaler)retailer model. In rural areas with
populations of 10,000 to 20,000, where theres adequate transportation infrastructure but not enough
demand to support a traditional distributor, ITC relies on smaller-scale subdistributors who carry a
narrower assortment of products geared to local tastes.\
Question :

1. What is the challenge faced by the companies in rural areas ?

2. What are the different layers of distribution used by ITC ?
3. Suggest your Distribution strategy to overcome the challenged face by the companies
in rural areas?

39

Nestle eyes a rural foothold

During the last one year, it has launched two big product innovations - Maggi Rasile Chow
and Maggi Masala-e-Magic - specifically targeted at the hinterland and low income families.
Nestle India has taken several steps to widen its product portfolio to reach more consumers in
the hinterland and has considerably strengthened its distribution network.
During the last one year, it has launched two big product innovations - Maggi Rasile Chow
and Maggi Masala-e-Magic - specifically targeted at the hinterland and low income families.
Coming from a company which has traditionally targeted urban clientele, this attempt at
taking products further into Indian countryside happened even as Nestle hiked prices in select
stock keeping units (SKUs) in urban areas to get margins back on track.
Then, in some products, Nestle has successfully introduced lower priced SKUs such as
Chotu Munch at Rs 2 and single-finger Kitkat format at Rs 5 to further boost realisations.
According to the companys annual report, Maggi Rasile Chow has been developed especially
for rural/semi-urban markets to provide a low cost, tasty light meal that is fortified with
ironMaggi further leveraged its strength last year to drive affordable nutrition. The
Masala-e-Magic is a fortified taste enhancer with iron, iodine and Vitamin A.
But alongside targeting lower income families, Nestle continued to expand premium products
also. Anand Rathi Securities Shirish Pardeshi and Aniruddha Joshi pointed out in an analysis
that simultaneous uptrading and lower excise are driving realisations for Nestle.
The focus on expanding revenue of premium products (Maggi
Pazzta) and those under chocolates are driving up average realisations. Lower excise and
select price hikes of chocolates are also driving up realisations.
And on the distribution front too, Nestle has done quite a bit of improvisation. It has begun
connecting the all-powerful distributors (which play a major role in route-to-market) through
a uniform and integrated Distribution Management System besides also beginning the process
40

of advanced sales automation. This will increase transparency, accuracy, speed, enable
enhanced efficiencies in trade spends and ultimately, execution in the market. It will also
liberate the frontline sales force from some of their administrative burden and enable them to
focus more on their core function.
Pardeshi and Joshi also point towards enhanced focus on distribution and price-point-based
products, saying Nestle has added around 200,000 retail outlets annually for the last three
years. It is also focusing on products priced below Rs 10. Products at prices lower than Rs 10
help add customers and drive penetration in rural areas.
In dairy products, Nestle continued to hold its own despite record high prices of milk and
sugar last year. The Everyday brand has led volume growth in the dairy whitener category,
resulting in further increase in overall market share and consolidating the companys position
as market leader, the report said. The dairy segment comprises Nesvita Dahi and yogurt,
Nestle Slim Milk, Milkmaid Sweetened Condensed Milk.
In 2009, Nestle reported strong volume growth in all three major segments: milk and
nutritional products up 13%; prepared dishes and cooking aids rose by 22%.

Questions:
1. Comments on the Rural Marketing mix of nestle?
2. Is the pricing strategy of nestle Efficient enough to benefit nestle?
3. Suggest New product to nestle to be introduce in rural market which will add value to the
product portfolio of nestle?

41

Bharti Airtel Rural Strategy

Bharti Airtel was faced with the challenge of profitably serving the rural areas of India. It is
an extremely daunting task due to a variety of factors: rural users' low incomes, a widely
dispersed population, and a less than ideal public infrastructure (i.e., roads, electricity, etc.).
Specifically, Bharti Airtel had to address the following conditions:
The incomes of Indian rural residents are significantly lower than urban residents. The
average revenue per user (ARPU) for rural residents was typically less than US$2 per month.
Besides deploying a scalable network, Bharti Airtel also needed to establish a cost-effective
marketing, sales, and distribution channel to provide service promotion and customer
support.
Counter to these challenges were the significant opportunity that the Indian rural market
represented and Bharti Airtel's unique ability to address it.
The future growth of the Indian mobile market is expected to be driven by rural customers,
which account for about 70 percent of the country's total population (1.1 billion people) with
a teledensity of only 18.5 percent as of September 2009. Indian urban mobile penetration is
already over 100 percent.
Rural dwellers place a high value on communications. Contacting urban/overseas relatives
and friends often requires a long and sometimes treacherous trip to the nearest town to reach
a payphone.
Various studies (e.g., fishermen in the Indian state of Kerala and grain producers in Niger)
have shown that increased mobile service penetration in rural areas could have tremendous
socio-economic benefits for the rural population.
With its strong presence in the relatively untapped rural market (over 27 percent market share
as of September 2009), Bharti Airtel is well-placed to continue growth with its focus on
under-penetrated Indian regions with new revenue streams such 3G-enabled data services
and pay-TV.
1.
2.
3.
4.

Questions
Suggest a Marketing and sales stratrgy to Airtel ?
Suggest a promotion strategy to Airtel ?
Suggest a Distribution strategy to Airtel?

42