lecture 1-introduction to rural marketing

8/8/2019 Lecture 1-Introduction to Rural Marketing

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Dr. Neeraj DixitAssistant Professor

IESMCRC

Rural Marketing-Introduction


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S ome Questionsy Q1: Why should you study this subject?y Q2: Agriculture contributes only24% to Indian GDP, then

why should bother about Rural India?y

Q3: How many of you are familiar with Rural India?y Q4: Why did you choose this Elective?


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Ch apter Learning Objectivesy Rural marketing-Some factsy Importance of Rural Marketingy Myths about Rural Marketsy The Rural consumer-Other Characteristics


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Quizy Q. How many crorepatis are there iny A. Rural Haryanay B. Bangaloey C. Hyderabady D. Kolkatta


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y Answer: 482 crorepatis in rural haryana comparable to137 approx. in Bangalore, Hyderabad or Kolkatta.


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Quizy How many States are there in India?

y How many Villages are there in India?

y How many Districts are there in India?

y How many MPs are there in India?


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y 28 states &7 Union Territories in India

y There are 638 ,365 villages in India

y There are 610 Districts in India

y There are 543 MP Constituencies


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Rural Marketing y According to a study by NCAER, Rural India has a higher

crorepati density than urban India.y The nearly20 million middle class homes in Rural India

equal the number in Urban India.y It is well known that for the same level of income, the

disposable surplus in rural areas is much higher because food,shelter, primary education and health are virtually free, while

almost 60%

to70%

of a households income is spent on theseessentials in Urban India.


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Rural India- S ome Factsy Majority of Indian Population(70%) lives in rural areas.y Rural India does not mean poor India.y Poverty is both in Urban & rural areas. Most of the labor

class in urban areas is of migrants from nearby areas.y They come in search of work. Some of them get work in

factories through their relatives, rest of them end up asrickshaw pullers, rag pickers, domestic servants and other

unorganized sector of urban community.


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Rural India- S ome Factsy Rural Community has following sectors:y 1. Zamindarsy 2.Farmersy 3.Landless Farmersy 4.Skilled Labory 5.Unskilled Labory 6.Self-employedy 7.Cattle rearingy 8.Cottage industriesy 9.Artisansy 10 .Unemployedn


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Rural India- S ome Factsy Though Zamindari has been abolished in but a section of rural

people who own major land holdings but do not work in the fieldsas farmers but engage laborers on wages and simply supervise andkeep watch on entire process of agriculture.

y A cultivator whose land holding is more than 5 acres is termed as afarmer

y Small farmer- A cultivator with a land holding of 5 acres or belowy Marginal farmer-a person with a land holding of less than2.5

acresy Agricultural laborers-A person without any land but deriving

more than 50% of his income from agriculture wagesy Non agriculture laborer- a person whose total income from wag

earning does not exceed Rs.200 per month.


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Rural India-some factsy Electricity consumption by the agricultural sector has shone

a sharp increase from17 .6% of total consumption in1980 -81 to 29.2% in 1999-2000 . During the same period theindustry share has dropped from 58.4% to 34 .8%

y More than half of annual sales(Rs.11 , 700 crores) of HULare from Rural India.

y Of the nearly 6.4 lakh villages in India, only20 ,000 villages

have population more than 5,000

.


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Rural Marketing y A Van rolls out from a district headquarter and parks itself in a

rural area. A few men on motorcycles go out to nearby villagesinforming men, women and children about the entertainment inthe evening and as the sun sets down, people from all thesevillages assemble near the van and sit down. A screen rolls out andabout 3000 people watch their favorite film, songs & dancesinterspersed by advertisements of leading consumer productcompanies. Its a captive audience for the advertiser and themessage goes straight to the target audience. The next day the vanrolls on its journey to other areas. This is Video on Wheels-ushering in a social change and creating new patterns of consumption throughout Rural India


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Rural marketing y In yet another village in Madhya Pradesh, a group of soya

farmers assemble in a cybercafe sponsored by ITC tocompare the prices in different mandis in India & majoroverseas markets. These rates are available to them oninternet on a large computer screen They also getinformation on weather, its impact on soil conditions & thecrop.

y In another village in rural Maharashtra a group of womenassemble to watch the serial-Sass bhi kabhi bahu thi- on Starplus TV channel. Welcome to rural India.


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Importance of Rural marketing y 1. Increasing competition in Urban Marketsy 2.Socio Economic Changes in Rural India


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Importance of Rural marketing Increasing competition in Urban Marketsy Urban markets have become highly competitive& in many

categories even getting saturation Ex- toiletries, packagedtea, batteries, durable white goods.

y

New demand is not there in urban markets, only replacementdemand & brand switching is being observedy Rural markets are the new markets which hare opening up

for most of the companies.y

Companies like HUL,Brook e Bond, Colgate, ITC haveexpanded in rural markets which offer growth opportunitiesto firms caught in intensive firm rivalry in Urban areas.


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Importance of Rural marketing S ocio economic c h anges in Rural Indiay Socio Economic changes are taking place in rural India

because of increase in productivity of farming(Green & whiterevolution)

y Increased productivity also means more income.y The process of income generation & creating hope for better

standards of living was also accelerated by companies & banksadopting villages for integrated rural developmentprogrammes.

y

The IRDP encompasses education, health, modern farmingpractices, land development & cooperative marketing of produce.


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Importance of Rural marketing S ocio economic c h anges in Rural Indiay The social change has been fuelled by the reach of Radio &

television. Radio & Television reach 95% & 85 % of populationrespectively.

y Rural people are watching all the satellite channels which is

impacting rural consumer lifestyle as much as that of the urbanconsumer.y Gobar gas technology is also changing rural India in a big manner.

Rural women today are less burdened as compared to scenario2 decades back.

y All these socio-economic changes largely fuelled by Technology,Govt. Policies, Corporate Strategies & satellite communicationmean more demand for consumer goods.


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy 27% of a rural customers income is spent on groceries. This

is followed by13% on agricultural inputs,8% on medicines& 7% on apparels & footwear.

y

There are 6800

mandis(agricultural markets)

set up by stategovernments to procure agricultural produce directly fromfarmers.

y There are 47 ,000 haats which are a major rural marketsystem in India.


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy Major Categories of Expenditure incurred by Rural

Consumersy Groceries- 26.5%y

Agri-inputs-13%y Medicines-8%y Apparel-7% y Fuel- 6% Vehicles- 6%y Interest repayment- 6%y Savings-5%


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S ize of t h e Rural MarketPackages Consumer products More than 2000 crores

Market for non- food items Rs20 ,000 crore-growing at 2.5% perannum

Consumption of Pesticides 68,000 tonnes-growing at12 % per annum

Consumption of Fertilizers 9 million tonnes-growing at10 % perannum

Tractors 1,00 ,000 nos. per year-growing at15% perannum

Pumps & Tubewell


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Rural C onsumptionConsumer expendables Rural share(%)

1. Tooth Powder 78 .85

2. Cooking oil 65.78

3. Tea 5

8.02

4. Toilet Soaps 57.25

5. Washing powder 54.83

6. Hair Oil 47 .24

7. Talcum powder 43 .12

8. Toothpaste 38 .94

9. Packaged Biscuits 38 .24

10 . Shampoo 25.37


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Rural C onsumptionConsumer Durables Rural Share(%)

1. Radio/Transistor 79.20

2. Bicycle 78 .08

3. Wrist watch(Mechanical

) 75.59

4. Table Fan 65.89

5. Sewing machine 64.34

6. B&W TV 62.65

7. Wristwatch(quartz) 54.00

8. Cassette Recorder 55.03

9. Pressure Cooker 51.51

10 . Ceiling fan 50.36


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Th e Rural C onsumerMyth s about Rural Markety There are several myths about rural markets which need to

be studied.y Myth No. 1: All villages are equally populatedy

2001 census says that about37% of all Indian villages havepopulation of 500 persons & only17% have population between 2,000 & 10 ,000 persons. This17% accounts for50% of the rural population & 60% of Rural wealth.


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Th e Rural C onsumerMyth s about Rural Markety Myth No. 2: Rural consumers are a homogenous lot.y MNCs believed that India was a homogenous market & thus

mass marketing strategies will work.y

Later on research showed that what to talk of India, evenrural India was not a homogenous market.y In 200 6-07 around 1% of rural consumers belonged to very

rich category,255 were consuming class,49% belonged to

climbers category,14% were aspirants &11% wereDestitute.


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Th e Rural C onsumerMyth s about Rural Markety Myth No.. 3: Being Illiterate, rural consumer is not able to

discriminate between Products & Brands.y The rural literacy has increased from36% in 1986 to 59% in

2001 census.y Rural buyers are more aware about brands because of

satellite television.y Rural youth & children are now educated & have more

information about new products & brands in the villages.


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Th e Rural C onsumerMyth s about Rural Markety Myth No. 4: Only low priced products will sell in Rural Indiay Being Price sensitive is different from being a buyer of low

priced products.y

Actual experience shows that to a rural buyer functionality &availability of a product from a reliable vendor are moreimportant than price.

y The rural buyer can be Tech Savvy also as seen in Net based

initiatives like E Choupal.


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Th e Rural C onsumerOth er Ch aracteristicsy Education profiley Low income levelsy Occupationsy Reference groupsy Media Habitsy Brand Conscious Customery Value for moneyy Seasonality of demand


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy Education Profiley large segment of Rural India is still illiteratey Mass audio visual media & van mounted audio visual

promotions very importanty Demonstrations on product usage are equally important


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy Low income levelsy Rural consumer is highly price sensitivey Low prices products work welly

Reduction of product size & packaging works very welly Ex. HUL-Sunlight detergent powder, Shampoo pouches,

Cough Syrup pouches


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy Occupationsy Majority of people are employed in Farming.y Other professions are like Teachers, Health workers,

craftsmen, poultry farming, cattle farming, pettyshopkeepers, pan shops, etc.


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy Reference Groupsy The main reference groups are the PHC workers, Doctors,

Teachers, Postman & Panchayat members & the village Baniaor mahajan.


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy Media habitsy Village people are fond of music & folklorey Ex. Maharashtra-Rural theatre is called as Tamashay

Ex. UP- Nautankiy However TV & Radio have replaced traditional forms of

entertainment.y Print media does not have as much impact as Electronic

media.


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy Brand Conscious Customery Today Rural consumers have been exposed to brands throgh

the electronic media.y

Many brands are preferred by Rural consumersy Ex. Ghadi Detergent powder & cake, Chik Shampoo


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy Value for moneyy Rural Consumers as like Urban Consumers are shoppers for

products with high value for money.y

Ex. Even though Fergusson Tractors are better than EicherTractors, farmers prefer Eicher because of better service &availability of spare parts.


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Understanding t h e Rural C onsumer-Facts about Rural Marketsy Seasonality of Demandy Major demand for Consumer durables is when the crops are

sold. Also demand rises when festivals are there as well as inmarriage season

y Kharif Crop-Sown in July when monsoon starts & harvestedin November. Ex. Rice & Bajra

y Rabi Crop- Sown around Dec & harvested around march.

Ex. Wheat & Mustard

lecture 1-introduction to rural marketing

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