rural marketing1-pdf-handouts
TRANSCRIPT
1
Rural Marketing
Session – 1Environment
Reaching , the unreachable consumer
“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”
Marcel Proust
Understanding Rural Markets
An Overview
India: The Diversity
17 % of the world’s population in 2% of its land mass 24 languages … 1642 Dialects All major religions …20000 ethnic groups 6, 38, 691 villages and 5,164 towns.70 % of population still Rural and agrarian. India India -- Not Just One Country !Not Just One Country !
Rural Market Has Arrived
742 million peopleRural is bigger than urban
FMCG's 53%Durables 59% Source: NCAER,2002
Estimated annual size of the rural marketFMCG Rs 65,000 CroreDurables Rs 5,000 CroreAgri-inputs (incl. tractors) Rs 45,000 Crore2 / 4 wheelers Rs 8,000 CroreTotal Rs 1,23,000 Crore
Source: Francis Kanoi, 2002
Rural Income Dispersal Projection
100.0100.0Total
11.123.4Rs 16,000 & BelowDestitutes
14.031.2Rs 16,001 - 22,000Aspirants
Rs 22,001- 45,000
Rs 45,001- 215,000
Above Rs 215,000
AnnualIncome
31.6
13.5
0.3
1995-96
49.0Climbers
25.0Consuming Class
0.9Very Rich
2006-07Consumer Class
Projections Based on 7.2% GDP Growth
All figures in %
2
Rural UrbanLow -7.3 -10.1Lower middle 2.5 -1.7Middle high 11.3 7.4
Income distribution (Million population)
288
130
4190
153
312
0
100
200
300
400
Low Low er middle Middle high
Rural Urban
2001-02
305
1779
272
170
352
0
100
200
300
400
Low Low er middle Middle high
Rural Urban
2009-10
Impressive growth in purchasing power
Annual growth (%)Urban 2.4 3.2Rural 3.4 4.5
68867740
9665
37954478
6070
0
2000
4000
6000
8000
10000
12000
1989-90 1994-95 2001-02
PC
I (R
s. p
er a
nn
u
Urban Rural
0.55 0.58 0.63
• Share of rural income to national income is declining1995-96 62%2004-05 60%
Rural Economy
• Ratio of rural PCI to urban PCI is increasing1995-96 0.582004-05 0.64
• Share of agriculture sector is declining and gained by service sector
Rural Urban1995-96 2004-05 1995-96 2004-05
Agriculture 43 32 4.4 3.7Industry 19 22 42 35service 38 47 53 61
Rural India
41 % are illiterate56 % HH have no access to electricity 70 % of HH’s have no bank account96 % have no telephones 6.7 % have two wheelers 1.3 % have 4 wheelers
Occupation Demographics(% of households)
0
10
20
30
40
50
Cultivator Pettyshopkeeper
Wage earner Salary earner Others
Urban Rural
• Major source of income for 75% rural homes is agriculture and wages
Know your Rural Consumer
• Low purchasing power (2001-02)Monthly PCI (Rs.)
Rural UrbanCultivator 805 1,467 Wage earner 522 636 Salary/Professionals 1,540 1,876 Business 1,112 1,637
• Consumption pattern (%)Rural Urban
Food 63.7 51.5Consumer goods 13.1 19.6Fuel, clothing & foot wear 14.8 13.9Medical 5.5 5.5Education 2.5 5.1Rent & taxes 0.4 4.5
3
Understand & Feel
We believe, Farmer is the face of Rural MarketsAs such to successfully explore Rural Markets, we must understand typical needs of the FarmerHaving done so, we must work-out a solution which when presented, makes the Farmer feel empoweredThe Mantra is “Do it in field and not in Boardrooms’
Press Availability
No. % No. % No. %
English 437 7 7704 16 8141 14
Hindi 2645 45 19422 39 22067 40
Other languages 2884 48 22688 45 25572 46
Total 5966 100 49814 100 55780 100
Languages Dailies Magazines Total
86 % language publications 86 % language publications 55500 + publications 55500 + publications
Channel Explosion
13
5575
200
137
50
50
100
150
200
250
1990 1991 1993 1995 1999 2002 2004
Source : Broadcasting Corporation of India & Industry estimates
DD1/2DD RegCableCNN
ATNZee TVStar PlusBBCPrime SpMTVSun TVDD (Info)
TVI, In MumbaiSun-2, Raj-2JJ TV, GECE TV, GeminiPTV, YesDiscovery, SonyESPN, NEPCABNI, Money TVVenus, Zee CinemaEl TV, DD4-16(Reg)Asianet, Jain TVUdaya TV
DD4-16(Reg) , AsianetJain TV, Star World, Star News, Surya TVAXN, Punj WorldDD Sports, FTV
Alpha TV, Ani Plan
Jaya TV, Raj ATN Ben & NGC
2 Out of 5 Indians are unreachable by Mass media
5186.460.7Any Media20.122.520.8Radio9.119.111.9Cinema
24.158.633.5Press33.476.145TV
RuralUrbanTotalReach %
……thatthat’’s 425 s 425 mnmn people, or Japan, France,UK and people, or Japan, France,UK and Germany put together !Germany put together !
…. 2 out 4 Rural households have access to electricity !
And those who have access to electricity …
Little UseOf electricity
4
The Change…
Soaps & Detergents– Most of rural India.
Because of Operation Shakti, etc ? OR,Because of entrepreneurial energy ?
PCC cereals for rural population - 12.34 kg/month PCC for urban population - 9.90 kg/month
96% rural households are self-owned.(oops! There are serious issues here…)
5 lakh ruralites have gone abroad. 27% holiday within country.– Conservative estimates
Tolerates traditional theatre / folk art. Wants Hindi movies, follows cricket…
Urban RuralFood 51.5 63.7Consumer goods 19.6 13.1Fuel, clothing & foot we 13.9 14.8Medical 5.5 5.5Education 5.1 2.5Rent & taxes 4.5 0.4
Distribution of Monthly Per Capita expenditure
Distribution of households by occupation of head of households
0
10
20
30
40
50
Cultivator Pettyshopkeeper
Wage earner Salary earner Others
Urban Rural
Rural Share 1989-90 1992-93 1998-99 2001-02Over 75%
1
Radio/ Transistors
2
Bicycle. Radio/Transistors
4
Bicycle. Radio/Transistors, Mechanical Wrist Watch, B&W TV 6
Bicycle. Radio/Transistors, Mechanical Wrist Watch, B&W TV, Pressure Cooker, Cassette Recorder
50-75%
5
Bicycle, Motor Cycle, Table Fan, Sewing Mechanical Wrist Watch 4
Table Fan, Sewing Machine, Mechanical Wrist Watch
7
Cassette Recorder, Pressure Cooker, Table Fan, Ceiling Fan, Sewing Machine, Motor Cycle, Quartz Wrist Watch
6
Table Fan, Ceiling Fan, Sewing Machine, Motor Cycle, Quartz Wrist Watch, Moped
30-50%
7
Moped, B&W TV, Cassette Recorder, Pressure Cooker, Electric Iron, Ceiling Fan, Quartz Wrist Watch
8
Moped, Motor Cycle, B&W TV, Cassette Recorder, Pressure Cooker, Electric Iron, Ceiling Fan
5
Moped, CTV, Mixer/Grinder, Scooter, Electric Iron 4
CTV, Mixer/Grinder, Scooter, Electric Iron
20-30% 2 Scooter, Mixer/Grinder 2 Scooter,
Mixer/Grinder 1 Refrigerator 1 Refrigerator
10-20%2
CTV, Refrigerator1
Refrigerator2
VCR/VCP, Washing Machine 2
VCR/VCP, Washing Machine
5-10% 1 Washing Machine 2 VCR/VCP, Washing Machine 0 - 0 -
Below 5% 1 VCR/VCP 0 - 0 - 0 -
Rural share in market for consumer goods
Product penetration - Case I(Ownership per thousand households)
0
40
80
120
160
200
AC VCP VC Car Mo ped Mo to rcycle SM Sco o ter
Rural Urban
Product penetration - Case II(Ownership per thousand households)
0
100
200
300
400
500
600
700
WM Fridge MG TB (C) TV (B) Elec tricIro n
Trans is to r Bicycle P C
Rural Urban
5
Product penetration - Case III(Ownership per thousand households)
0
500
1000
1500
2000
Fan Wrist Watch
Rural Urban
Products Total Stock (Million)
Rural Share (%)
Air Conditioner Family Car
Vaccum Cleaner11 6.8
VCP & VCR Washing Machine
Refrigerator42 18.0
Mixer Grinder Scooter
Color Television Electric Iron
Moped Pressure Cooker
189 37.2
Motorcycle Fan
Sewing Machine Television (B&W)
239 52.7
Wrist watch Transistor
Bicycle503 67.9
All Products (19) 984 55.5
Rural share in total stock
Rural-urban divide
Households (%)
Share in stock (19 products)
Average number of goods per
householdsUrban
Low 4.1 3.9 5.0Lower midlle 9.0 11.8 6.8Middle high 15.3 28.8 9.8
28.4 44.4 8.2
RuralLow 30.6 14.2 2.4Lower midlle 28.3 22.4 4.1Middle high 12.7 19.0 7.8
71.6 55.6 4.1
Factors explaining rural-urban divide
2001-02
31%
42%
8%
19%
Income Infrastructure Interaction Lifestyle
25%
15%46%
14%
Penetration Intensity of Use
Income Population
Factors affecting change in market size(between 1995-96 and 2001-02)
URBAN
44%
6%
42%
8%
RURAL
Health beverages
Factors affecting change in market size(between 1995-96 and 2001-02)
URBAN11%
34%
21%
34%
RURAL
19%
46%
17%
18%
Penetration Intensity of use
Income Population
Toilet soap
6
Factors affecting change in market size(between 1995-96 and 2001-02)
URBAN RURAL
65%14%
16%5%
77%
13%
8% 2%
Penetration Intensity of Use
Income Population
Shampoo The Rural Market has arrived
In 2001-02, LIC sold 55 % of its policies in rural India.Of two million BSNL mobile connections, 50% in small towns/villages.Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT) 41 million Kisan Credit Cards issued (against 22 million credit-plus-debit cards in urban) with cumulative credit of Rs 977 billion resulting in tremendous liquidity.Of 20 million Rediffmail signups, 60 % are from small towns. 50% transactions from these towns on Rediff online shopping site42 million rural HHs availing banking services in comparison to 27 million urban HHs.Investment in formal savings instruments: 6.6 million HHs in rural and and 6.7 million in urban
Distribution of Villages
Source: Census 2001
3.218,7585001-1000
24.4144,817501-1000
21.9129,6621001-2000
13.580,3132001-5000
100.0593,154*Total no of villages
21.4127,054200-500
15.692,541Less than 200
% of total villages
No of villagesPopulation
17% of villages account for 50%
of rural population & 60% rural
wealth
Hardly any shops in these 2.2 lac villages
*Inhabited villages, total number of villages is 638, 691
Distribution of Towns in India
Town Class Population No of towns % of total towns
Class I 1 lac and above 423* 8.2
Class II 50,000-99,999 498 9.6
Class III 20,000- 49,999 1386 26.9
Class IV 10,000- 19,999 1560 30.2
Class V 5,000- 9,999 1057 20.5
Class VI less than 5000 237 4.6
Total no of towns
5161 100.0Source: Census
2001
90 % of durables
purchased by rural people
are from these 1900 towns
*10 lakh+ : 27, 5-10 lakh: 42, 1-5 lakh: 354
Is “Rural Connect” tougher to establish than “Urban Connect”?
No, it is not but we make it tough for ourselves when, we presume,
“Rural customer” to be entirely different from the “Urban Customer”.“Rural customer” to be one homogenous set of customers.“Rural preferences” to be stationary in time.“Rural customer” wants everything cheap.Rural folk are hard-working “sonof the soils” who do not need conveniences.Rural customers are widely dispersed across Village level haats.
Rural Customer is not a homogenous set of customers with preferences frozen in time
MYTH 1: Rural Market Is a Homogeneous Mass
REALITYHeterogeneous population
16 languagesState wise variations in rural demographics
Literacy (Kerala 90%, Bihar 44%)Population below poverty line (Orissa 48%, Punjab 6%)
Big Landlords
Traders,Small Farmers
Marginal Farmers
Laborers, Artisans
Source: Planning Commission, GoI
7
MYTH 2: Disposable Income Is Low
REALITY Number of middle class HHs (annual income Rs 45,000-2,15,000)Rural 27.4 millionUrban 29.5 millionPer Capita Annual IncomeRural Rs 9,481 Urban Rs 19,407 Total Rs 12,128 Source: NCAER,2002
Rural incomes CAGR was 10.95% compared to 10.74% in urban between 1970-71 and 1993-94
Source:ETIG,2002-03
MYTH 3: Individuals Decide About Purchases
REALITY
Decision making process is collective
Purchase process- influencer, decider, buyer, one who pays can all be different. So marketers must address brand message at several levels
Rural youth brings brand knowledge to HH
Rural Consumer Insights
Rural India buys.Products more often (mostly weekly).Buys small packs, low unit price more important than economy.Distribution and pricing are the mantras to success in rural India.
Even expensive brands like Close up, Marie biscuits, Clinicshampoo are doing well because of deep distribution.
Rural Consumer Insights
In rural India, brands rarely fight with each other, they just have to be present at the right place.Many brands are building strong rural base without much advertising support.
Chik shampoo, second largest shampoo brand.Ghadi detergent, third largest brand.
Fewer brand choices in rural : number of FMCG brand in rural is half that of urban.Buy value for money, not cheap products
Infrastructure Improving Rapidly
In 50 years only 40% villages connected by road, in next 10 years another 30%.
More than 90 % villages electrified, though only 44% rural homes have electric connections.
Rural telephone density has gone up by 300% in the last 10 years, every 1000+ pop is connected by STD.
Infrastructure Improving Rapidly
70% of R1,R2, R3 can be reached through mass media.
14
21
41
26
53
70
SatelliteTV
Radio Press Cinema TV All Media
8
Climbing Social Indicators
Between 1981 to 2001 Number of pucca houses doubled from 22% to 41% and kucchahouses halved (41% to 23%)
Percentage of BPL families declined from 46% to 27%
Rural Literacy level improved from 36% to 59%
But Rural India Offers Huge potential
Growth from Rural India
Unilever (India) … 50% of its sales turnover of US$ 2.6 Billion is from Rural India. LG Electronics to double contribution from Rural India to US$ 1.6 Billion 53 & 59 % sales contribution for FMCG & Consumer durables respectively are from rural India .50% of subscription base for BSNL from Rural markets.India’s largest Insurance company (L.I.C) sells 50% of its policies in Rural India.60% of rediffmail.com subscribers from small towns
This market has not gone unnoticed …
High competition from Local manufacturers on price value equation.
Duplicates and Fakes have flooded this market
The Rural Spread
Population Dispersity
15.6
21.4
24.4
21.9
13.5 3.2
<200 200-500 501- 1000 1001- 2000 2001-5000 > 5000An avg. of 1 shop
For 15 villages
Source : Census Of India
Understanding this elusive consumer
9
The Rural Indian .. Male
Religious
Prefers to work hard Himself
Strong Family ties
Supports a family of six
Seeking Economy
Loves chatting with friendsAbout politics & trade affairs
Plays cards & Hangs out At Choupal
A Day in his life Up at 5.30
Trading
Field workField work
..my biggest assets.. Cattle
Prepare fodder
Take a bath, wash my clothes ..if needed !
Off to the fields
Chatting with friendsin evenings
The Rural Indian .. Woman
Religious
Guilt about spending on
Self
Conservative
Manages home and Assists husband in farm
Disturbed by vulgarity
Secretly seeks to be beautiful
Supports children
A Day in Her Life Women
ChildrenMy children's school Children help on fieldsGirl child helps at home
Preparing food for the family Alternative occupationsWomen help in the fields
Shopping habits
Buy small quantities - more frequently
Unit Price Critical Look for ‘acceptable performance”
- VFM
Make high-volume purchases
at weekly village markets
Personal acquaintance withneighborhood retailer-Only Influencer - Provides credit
What drives this consumer ..
Small packs with a low unit price – Britannia - Tiger biscuits– Cavin Kare - Chik shampoo– Coke (Small Coke for Rs. 5 only)
A little (of the product) goes a long way– Rin detergent bar claims that with just a little Rin, you can get
a whole lot of wash
Multiple uses from the same product– Dettol liquid for cuts, gargle for bad throat, washing clothes
as a disinfectant , dandruff etc– Jet mosquito coil for mosquito repellent and room freshener
10
Drivers for choice ..
Opinion leaders– If they are credible, they work– Sunlight detergent powder employs a doctor to endorse the
brand – Colgate dental cream endorsed by a doctor– Sarpanch - Anti Leprosy
Folklore and natural ingredients– Ganga soap claims that it contains milk and is made from the
water of Ganga, a river revered as holy by the majority of India’s Hindu population.
Therefore …
We have an emerging marketWhere Brands can establish themselves early .. But are riddled with problems of the 4 A’s
– Awareness– Availability – Acceptability – Affordability
Where can we touch the rural consumer
Touch Points..
At Home At Home At Work At Work
Touch Points..
At At Chaupals Chaupals Travel Travel
Touch Points
Mandi Mandi (Trade Places)(Trade Places) Retail Outlets Retail Outlets
11
Touch Points ..
Schools Schools Haats Haats (Periodic Markets)(Periodic Markets)
Touch Points ..
Source of water Source of water Places of WorshipPlaces of Worship
Communicating to the Rural Consumer
Communication Medium: One on One contact
One on One contact programs are extremely efficient manner to reach the Rural Consumer
Provides an opportunity to
– Demonstrate– Induce Trial– Educate
Personal Interface Personal Interface
Communication Medium Events - Using Culture to touch a chord
Communication Medium Events - Folk entertainment
Ragini - MPRamayan - UP
Qawwalli - UPMagic Show
12
Communication Medium Haats - Presence in the Market
42000 rural haats (supermarkets)4500+ Visitors per haat.Average Sales per day US$ 5000300+ Sales outlets/haat.
Unilever India – Haats
1. TG interaction2. Exchange offer3. Spot sales
1
3 2
Communication Medium: Events : Melas
25000+ Melas held every year.850+ outlets per Mela.Average sales per Mela: US$ 400000.Melas are for Religious/festive/tradingAnnual sale : US $ 1 Billion Nearly half the outlets are for manufactured goods Exposure at a low cost per contact
Provides Unique platform for communicating to rural Masses. An opportunity to present Brand Stories using better Display tools
– Large Screens – Animations – Gizmos
Larger retention time – Multiple Interactive games– Talent Hunt etc
Melas can be used for – Retail Sales Points – Sampling Exercise – Demonstration
Screening at Kumbh
Communication Medium: Events : Melas
Maha Kumbh
Clients– Unilever , Titan, Ministry of Environment, Medimix, GM Pens, Cavin
Care, Anchor, Khaitan, Maruti, Tata Tea
Achievements– Largest sampling exercise ever done;
Fair & Lovely sachets distributed to 4.1 million25000 packs worth 10560 family photographs taken as incentive
– 4 million people exposed through large screens– 15.8 million people exposed through branding of “Prayag” railway station– 17.4 million people exposed through branding of “Naini” railway station– 18 watches sold per day as against an average sale of 38 watches per
month by the local dealer
sampling
Sampling Branding at Prayag Station
Branding at Prayag Station Giant Screen
13
Communication Medium: Static Media
LG Wall Paintings
Vicks Buntings
Shopboards
Tinplates
Other Branding OpportunitiesPostal Stationery
Other Branding options … Giveaways
Family Snap
Umbrella
Choosing Media Vehicles
Tin Plating – Trees/ShopsLeafletsPostersBannersStreamers/Danglers
Co-operative Notice BoardShop Front PaintingTin Plating – HouseDealer BoardsVillage BoardsWell TilesCalendars/Lables
Van Based AdvertisingMelasDirect to HomeFolklore groupsExhibitions/Created events
Jeep based advertisingWall PaintingBus StandBus PanelsHaatsHoardingsPostal branding
Hig
hRe
ach
Low
Reac
h
High Frequency Low Frequency
Challenges in the future Challenges in the Future
Making effective use of the large available infrastructure
Post offices 1,38,000Haats (periodic markets) 42,000Melas (exhibitions) 25,000Mandis (agri markets) 7,000Public distribution shops 3,80,000Bank branches 32,000
14
Using IT to transform markets
ITCs e- choupal and other IT initiatives (EID parry, Amul dairy information system kiosk)
STD revolution/ mobile connectivity
Challenges in the Future
Proliferation of large format rural retail storesDSCL Haryali storesM & M Shubh Labh storesTATA/Rallis Kisan KendrasEscorts rural storesWarnabazaar, Maharashtra (annual sale Rs 40 crore)
Rural IndiaRural IndiaRural India
Irrigation1 Mn hectaresIrrigationIrrigation
1 Mn hectares1 Mn hectares
Drinking Water74,000 Habitations Drinking WaterDrinking Water74,000 Habitations 74,000 Habitations
RoadsVillages with 1000
population
RoadsRoadsVillages with 1000Villages with 1000
populationpopulation
Electrification125,000 Villagesi.e. 23 Mn more
people
ElectrificationElectrification125,000 Villages125,000 Villagesi.e. 23 Mn morei.e. 23 Mn more
peoplepeople
Housing6 Mn housesHousingHousing6 Mn houses6 Mn houses
Telephones 67,000 Villages
Telephones Telephones 67,000 Villages 67,000 Villages
Bharat Nirman Yojana [A 40 Bn US $ Plan To Be Implemented By 2009]
Rural Quotes
The future lies with those companies who see the poor as their customers.
CK Prahalad to Indian CEO's, Jan 2000.
To get rich, sell to the poor.Pradeep Kashyap.