Chapter 10 Rural Market Myths

Chapter 10
Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.
Rural Services Marketing
Rural Marketing, 2e
Trace the growth of the services sector and its relevance for
rural markets.
Understand the growth of telecommunication services and

the role of M-VAS services in the marketing of products and
services in rural areas.
Identify the role of ICT (information, communication,

technology) in rural India and its relevance to the marketing
of products and services.
Understand the marketing of financial services in rural India

including banking and insurance.
Describe the improvement of healthcare services and the

emergence of new delivery models in rural India
Rural Marketing, 2e
Learning Objectives
Largest and fastest growing sector at 11%.
Contributes 57% of the GDP and employs 34% of the workforce
60% of the countrys 16.5 million enterprises are in rural

India
Rural services sector comprises mainly of retail trading,

transportation and communication, financial services,
healthcare, housing and construction, education and
community and social services
Rural Marketing, 2e
Services Sector in India
234 million subscribers as of September 2010

Grew over six times in five years
Rural Subscriber Growth
Rural Marketing, 2e
Telecommunications in Rural
India
Catalysts for growth:
Relevant and attractive schemes like:
Free lifetime validity of SIM card
INR 5 recharge vouchers
Coupling of cheapest handsets with cheapest call rates
Infrastructure sharing
Content in vernacular language
Rural Marketing, 2e
India
7.5 million Internet users in rural India contributing 16% of

the total.
Expected to grow to 300 million by 2014 as per CIIIMRB

report
Cellular companies tying up with various players to provide

rural-specific, real-time, customized informational services
on mandi prices, weather and other services
Rural Marketing, 2e
India
In mobile telephony, Bharti is the market leader with a 24%

share
Rural Subscribers and Market Share
Rural Marketing, 2e
India
VAS Providers in Rural India
Rural Marketing, 2e
Absence of reliable physical delivery systems have led to

growth of information and communication technology in
rural India
Rural ICT kiosks and rural BPOs

government and private players
Rural Marketing, 2e
initiated
by
both
ICT in Rural India
More than 65,00 ICT kiosks led by government sponsored

common service centres (CSCs)
Major ICT initiatives in Rural India
Rural Marketing, 2e
ICT in Rural India
Initiated by ITCs agribusiness division in 2000 aimed at

direct procurement channel
Hub and spoke model with ITC procurement centre as the

hub and e-Choupals as the spokes
Covers four million farmers spread over 40,000 villages

through 6,500 e-Choupals
4% to 7% reduction in true cost of contract
Version 3.0 to be rolled out by 2012 in collaboration with

Nokia Life Tools to provide additional reach of 16 million
farmers
Rural Marketing, 2e
ITCs e-Choupal
A publicprivate partnership to integrate commercial and

social goals through combination of IT and non-IT services
Follows a three-tier hierarchy:

Village
Level Entrepreneurs covering five to six villages
Service
Centre Agencies for training, managing and

expanding the business of VLEs
State
designed
scheme
agencies
for
implementation
of
the
Plan for one CSC for six census villages catering to 6,000
citizens
Rural Marketing, 2e
Common Service Centres
78% households save in rural
Average
annual
household
saving INR 22,690 in 2010.
85% save in cash; 25% in gold
Among formal channels, bank

deposits, insurance and postal
savings are most preferred
Critical needs in rural are:

Micro-savings
Frequent withdrawals
Branches
Commercial and regional
banks
32,000
Micro-finance institutions 46,000

Cooperative institutions
96,000
Post offices
135,000
Rural Marketing, 2e
Financial Services in Rural India
Moneylenders main providers of financial services
185 million potentially bankable households
Only 7% villages have banks
Non-branch initiatives include mobile ATMs, smart cards and

mobile banking
Use
of
SHGs,
MFIs,
post
correspondent/facilitators model
Focus on no-frills accounts, simple-to-use cash dispensing
Rural Marketing, 2e
offices
and
business
Banking Services in Rural India
Customer needs for consumption, healthcare, education and

emergencies
Dependence on informal sources down from 90% in 50s to

40% now
Major credit instruments in rural are:

MFI
loans
SHGBank
MFIBank
Rural Marketing, 2e
linkage model
linkage model
Microfinance and Credit

Services
Kisan
96
credit cards introduced in 199899
million cards as of August 2010
Up
to 20% of limit can be used for purchase of nonagricultural products
Chit
funds, especially in South India
Rural Marketing, 2e
Microfinance and Credit

Services
Insurance in Rural India

Life insurance
One
LIC
public sector and 22 private sector players

market leader with 71% share
Private
players have met objective of 25% policies for rural

in 2009-10
73%
of rural households aware and 19% policy owners

(MaxNCAER survey 200506)
Penetration
expected to cross 35% by 2012 (McKinsey

Global Institute)
Rural Marketing, 2e
Non-life insurance
Seven public sector and 18 private sector players
Distribution of products in rural markets largely through

agents, MFIs, banks and consumer goods companies
Micro-insurance introduced in 2005 growing dramatically
Rural Marketing, 2e
Insurance in Rural India
Rural health spending expected to grow from INR 700

billion in 2005 to 3,494 billion in 2025
Share of wallet expected to go up from 7% to 13% in same

period
Major challenges are inadequate physical infrastructure and

an acute shortage of skilled manpower
Rural Marketing, 2e
Rural Healthcare Services
Rural Healthcare Infrastructure
Rural Marketing, 2e
Estimated at INR 0.7 trillion in 2005; expected to grow to

INR 3.5 trillion by 2025
Medical services and pharmaceuticals account for nearly

75% with medical equipment contributing the balance
Rural Marketing, 2e
Rural Healthcare Market
Compounded Annual Growth Rate:

Medical services
15%
Pharmaceuticals
4.7%
Medical equipment
6.6%
The Healthcare Market

Rural Marketing, 2e
Rural Healthcare Market
Government Initiatives in Rural

India
Rural Marketing, 2e
Growth Drivers of Rural

Healthcare
Rural Marketing, 2e
Discussion questions:
1.
What problems of the rural community were addressed

through this mode?
2.
List the key reasons for the sustainability of this model.
3.
Do you think this model can be replicated in other

countries? If yes, how and in which countries?
Rural Marketing, 2e
Rural Marketing Case

Arogya Parivar
Highest growth sector
Rural Marketing, 2e
Rural Services Sector

Chapter 10 Rural Market Myths

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Chapter 10

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Rural Services Marketing

Understand the growth of telecommunication services and

Identify the role of ICT (information, communication,

Understand the marketing of financial services in rural India

Describe the improvement of healthcare services and the

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Largest and fastest growing sector at 11%.

Contributes 57% of the GDP and employs 34% of the workforce

60% of the countrys 16.5 million enterprises are in rural

Rural services sector comprises mainly of retail trading,

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Services Sector in India

234 million subscribers as of September 2010

Rural Subscriber Growth

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Catalysts for growth:

Relevant and attractive schemes like:

Free lifetime validity of SIM card

INR 5 recharge vouchers

Coupling of cheapest handsets with cheapest call rates

Content in vernacular language

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

7.5 million Internet users in rural India contributing 16% of

Expected to grow to 300 million by 2014 as per CIIIMRB

Cellular companies tying up with various players to provide

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

In mobile telephony, Bharti is the market leader with a 24%

Rural Subscribers and Market Share

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

VAS Providers in Rural India

Absence of reliable physical delivery systems have led to

Rural ICT kiosks and rural BPOs

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

ICT in Rural India

More than 65,00 ICT kiosks led by government sponsored

Major ICT initiatives in Rural India

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

ICT in Rural India

Initiated by ITCs agribusiness division in 2000 aimed at

Hub and spoke model with ITC procurement centre as the

Covers four million farmers spread over 40,000 villages

4% to 7% reduction in true cost of contract

Version 3.0 to be rolled out by 2012 in collaboration with

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

A publicprivate partnership to integrate commercial and

Follows a three-tier hierarchy:

Level Entrepreneurs covering five to six villages

Centre Agencies for training, managing and

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Common Service Centres

78% households save in rural

85% save in cash; 25% in gold

Among formal channels, bank

Critical needs in rural are:

Micro-finance institutions 46,000

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Financial Services in Rural India

Moneylenders main providers of financial services

185 million potentially bankable households

Only 7% villages have banks