RURAL MARKETING

Issues, Opportunities & Challenges

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 Rural Market Has Arrived
a x
million people
a Rural is bigger than urban
a FMCG's 53%
a Durables 59% Source: NCAER,


a Estimated annual size of the rural market

a FMCG Rs 65, Crore
a Durables Rs 5, Crore
a Agri-inputs (incl. tractors) Rs 5, Crore
a
/ wheelers Rs 8, Crore
a m tal Rs 1,23,000 Cr re

Source: Francis Kanoi,


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 Rural Market Has Arrived

a Some impressive facts about the rural

sector.
a In
-
, LIC sold 55 % of its policies in
rural India.
a Of two million BSNL mobile connections, 5%
in small towns/villages.
a Of the six lakh villages, 5.

lakh have a
Village Public Telephone (VPT)


 Rural Market Has Arrived
a  million Kisan Credit Cards issued (against


million credit-plus-debit cards in urban) with
cumulative credit of Rs 9xx billion resulting in
tremendous liquidity.

a Of
 million Rediffmail signups, 6 % are from

small towns. 5% transactions from these towns
on Rediff online shopping site

a
million rural HHs availing banking services in

comparison to
x million urban HHs.

a Investment in formal savings instruments: 6.6

million HHs in rural and and 6.x million in urban
 Rural Inc
e Dispersal
Pr ecti n
 figures in %

C nsu
er Annual
1995-96 2006-07
Class Inc
e
Very Rich Above Rs
5, 0.3 0.9
Consuming
Rs 5,-
5, 13.5 25.0
Class

Climbers Rs

,- 5, 31.6 49.0

Aspirants Rs 6, -

, 31.2 14.0

Destitutes Rs 6, & Below 23.4 11.1

m tal 100.0 100.0




   
 
 Issues In Rural

a Distribution
a Understanding the rural consumer
a Communication
a Poor infrastructure

 Distributi n  Villages
Population No of villages % of total
villages Hardly any shops
Less than
 9
,5  5.6 in these
.
lac
villages

-5 
x,5
.

5-  ,8x
.

-
 
9,66

.9

-5 8,33 3.5

x% of villages
5- 8,x58 3.
account for
5% of rural
Total no of villages 593,5  . population &
6% rural
wealth
Inhabited villages, total number of villages is 638, 69
x
u



 Distributi n  m ns in India
m
 
   
   


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    9 % of

durables
i
     purchased by
rural people
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     are from
these 9
i
     towns

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 Rural C nsu
er Insights

a Rural India buys.

a Products more often (mostly weekly).
a Buys small packs, low unit price more
important than economy.
a Distribution and pricing are the mantras to
success in rural India.

V#$% &
 % i!
  %'%

!   
($



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%)  
'
$%&% '%

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 Rural C nsu
er Insights

a In rural India, brands rarely fight with each

other, they just have to be present at the right
place.
a Many brands are building strong rural base
without much advertising support.
a Chik shampoo, second largest shampoo brand.
a Ghadi detergent, third largest brand.
a Fewer brand choices in rural : number of FMCG
brand in rural is half that of urban.
a Buy value for money, not cheap products
c
 MYmH 1: Rural Market Is a
H
gene us Mass
a REALITY
a Heterogeneous population ig
Landl rds

mraders,S
all Far
ers

Marginal Far
ers

Lab rers, Artisans

a 6 languages
a State wise variations in rural demographics
a Literacy (Kerala 9%, Bihar %)
a Population below poverty line (Orissa 8%, Punjab
6%)
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u  ! 


 
 MYmH 2: Disp sable Inc
e Is L 
REALITY
a Number of middle class HHs (annual income Rs
5,-
,5,)
Rural
x. million
Urban
9.5 million
a Per Capita Annual Income
Rural Rs 9, 8
Urban Rs 9, x
Total Rs 
,
8 Source: NCAER,


a Rural incomes CAGR was .95% compared to
.x % in urban between 9x-x and 993-9
Source:ETIG,

-3cj
 MYmH 3: Individuals Decide Ab ut
Purchases
REALITY

a Decision making process is collective

a Purchase process- influencer, decider, buyer, one

who pays can all be different. So marketers must
address brand message at several levels

a Rural youth brings brand knowledge to HH

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 Inrastructure I
pr ving
Rapidly
a In 5 years only % villages connected by road,
in next  years another 3%.

a More than 9 % villages electrified, though only

% rural homes have electric connections.

a Rural telephone density has gone up by 3% in

the last  years, every  pop is connected
by STD.
c
 Inrastructure I
pr ving
Rapidly

a x% of R,R
, R3 can be reached

through mass media. 





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 Cli
bing S cial Indicat rs

Between 98 to


a Number of pucca houses doubled from

% to %
and kuccha houses halved ( % to
3%)

a Percentage of BPL families declined from 6% to

x%

a Rural Literacy level improved from 36% to 59%

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pp rtunity

cx
 Marketing pp rtunities
a Low penetration rates in rural

0 of rural HH

Durables Urban Rural motal

a CTV 3. .8 
.
a Refrigerator 33.5 3.5 
.

FMCGs Urban Rural m tal

a Shampoo 66.3 35.
.

a Toothpaste 8
.
.9 55.6

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u  

 Marketing pp rtunities
a R - %
a R
- %
a R3 - 3x%
a R - 8%
a Low rural consumption in FMCGs (rich HHs)
urban rural
a Annual consumption Rs 3, Rs 9, 

a Rural consumption volumes (RR
R3)

a Toothpaste 88% u




a Toothpowder x9% 


 

 
 

a Shampoo 88% 



  c^
Challenges

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 Challenges in the Future

a Reaching the product to remote rural

locations and entering more rural homes
(penetration)

a Increasing rural incomes (market growth)

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 Challenges in the Future

a Making effective use of the large

available infrastructure
a Post offices ,38,
a Haats (periodic markets)
,
a Melas (exhibitions)
5,
a Mandis (agri markets) x,
a Public distribution shops 3,8,
a Bank branches 3
,

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 Challenges in the Future

a Using IT to transform markets

a ITCs e-choupal and other IT initiatives
(EID parry, Amul dairy information system
kiosk)

a STD revolution/ mobile connectivity

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 Challenges in the Future

a Proliferation of large format rural retail

stores
a DSCL Haryali stores
a M & M Shubh Labh stores
a TATA/Rallis Kisan Kendras
a Escorts rural stores
a Warnabazaar, Maharashtra (annual sale Rs
 crore)
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 Rural Qu tes

a The future lies with those companies who see the

poor as their customers.

a To get rich, sell to the poor.


 






 




 

 
 
 






 

 


 

 
 

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