rural mktg handout

8/14/2019 Rural Mktg Handout

1/14

Rural Marketing

Session 1

Environment

Reaching , the unreachable

consumer

The real voyage of discovery consists not inseeking new landscapes, but in having new eyes.

Marcel Proust

Understanding Rural Markets

An Overview

India: The Diversity

17 % of the worldspopulation in 2% of itsland mass

24 languages 1642Dialects

All major religions 20000 ethnic groups

6, 38, 691 villages and5,164 towns.

70 % of population stillRural and agrarian. IndiaIndia -- Not Just One Country !Not Just One Country !

Rural Market Has Arrived

742 million people

Rural is bigger than urban FMCG's 53%

Durables 59% Source: NCAER,2002

Estimated annual size of the rural market FMCG Rs 65,000 Crore

Durables Rs 5,000 Crore

Agri- inputs (incl. tractors) Rs 45,000 Crore

2 / 4 wheelers Rs 8,000 Crore

Total 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

Annual

Income

31.6

13.5

0.3

1995-96

49.0Climbers

25.0ConsumingClass

0.9Very Rich

2006-07ConsumerClass

Projections Based on 7.2% GDP Growth

All figures in %


2/14

Rural Urban

Low -7.3 -10.1

Lower middle 2.5 -1.7

Middle high 11.3 7.4

Income distribution (Million population)

288

130

41

90

153

312

0

100

200

300

400

Low Lower middle Middle high

Rural Urban

2001-02

305

17

79

272

170

352

0

100

200

300

400

Low Lower middle Middle high

Rural Urban

2009-10

Impressive growth in purchasing power

Annual growth (%)

Urban 2.4 3.2

Rural 3.4 4.5

6886

7740

9665

3795

4478

6070

0

2000

4000

6000

8000

10000

12000

1989-90 1994-95 2001-02

PCI(Rs.perann

u

Urban Rural

0.55 0.580.63

Share of rural income to national income is declining

1995-96 62%

2004-05 60%

Rural Economy

Ratio of rural PCI to urban PCI is increasing

1995-96 0.58

2004-05 0.64

Share of agriculture sector is declining and gained by

service sector

Rural Urban

1995-96 2004-05 1995-96 2004-05

Agriculture 43 32 4.4 3.7

Industry 19 22 42 35

service 38 47 53 61

Rural India

41 % are illiterate

56 % HH have no access to electricity

70 % of HHs have no bank account

96 % have no telephones

6.7 % have two wheelers

1.3 % have 4 wheelers

Occupation Demographics

(% of households)

0

10

20

30

40

50

Cultivator Petty

shopkeeper

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 51.5

Consumer goods 13.1 19.6

Fuel, clothing & foot wear 14.8 13.9

Medical 5.5 5.5Education 2.5 5.1

Rent & taxes 0.4 4.5


3/14

Understand &Feel

We believe, Farmeris the faceof Rural Markets

As such to successfullyexplore Rural Markets, wemust understand typical needsof the Farmer

Having done so, we mustwork-out a solution whichwhen presented, makes theFarmerfeel empowered

The Mantra is Do it in fieldand 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

LanguagesDail ies Magazines Total

86 % language publications86 % language publications

55500 + publications55500 + publications

Channel Explosion

13

55

75

200

137

50

50

100

150

200

250

1990 1991 1993 1995 1999 2002 2004

Source : Broadcasting Corporation of India & Industry estimates

DD1/2

DD RegCable

CNN

ATN

Zee TV

Star Plus

BBCPrime Sp

MTVSun TV

DD (Info)

TVI, In Mumbai

Sun-2, Raj-2JJ TV, GEC

E TV, GeminiPTV, Yes

Discovery, Sony

ESPN, NEPC

ABNI, Money TVVenus, Zee Cinema

El TV, DD4-16(Reg)Asianet, Jain TV

Udaya TV

DD4-16(Reg) , AsianetJain TV, Star World,

Star News, Surya TV

AXN,

Punj WorldDD Sports,

FTV

Alpha TV,

Ani PlanJaya TV, Raj

ATN Ben

& NGC

2 Out of 5 Indians are unreachable by

Mass media

5186.460.7Any Media

20.122.520.8Radio

9.119.111.9Cinema

24.158.633.5Press

33.476.145TV

RuralUrbanTotalReach %

thatthats 425s 425 mnmnpeople, or Japan, France,UK andpeople, or Japan, France,UK and

Germany put together !Germany put together !

. 2 out 4 Rural households haveaccess to electricity !

And those who have access toelectricity

Little Use

Of electricity


4/14

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, followscricket

Urban Rural

Food 51.5 63.7

Consumer goods 19.6 13.1

Fuel, clothing & foot we 13.9 14.8

Medical 5.5 5.5

Education 5.1 2.5

Rent & 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 Petty

shopkeeper

Wage earner Salary earner Others

Urban Rural

Rural Share 1989-90 1992-93 1998-99 2001-02

Over 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 Watch7

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 Iron4

CTV, Mixer/Grinder,

Scooter, Electric Iron

20-30%2

Scooter,

Mixer/Grinder 2Scooter,

Mixer/Grinder 1Refrigerator

1Refrigerator

10-20%2

CTV, Refrigerator1

Refrigerator2

VCR/VCP, Washing

Machine 2VCR/VCP, Washing

Machine

5-10%1

Washing Machine2

VCR/VCP, WashingMachine 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 C ar Mo pe d Mo to rc yc le SM Sc o o ter

Rura l Urban

Product penetration - Case II

(Ownership per thousand households)

0

100

200

300

400

500

600

700

WM F ridg e M G T B (C ) T V( B) E le ct ric

Iron

Tran s is to r B icyc le P C

Rural Urban


5/14

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 Cleaner

11 6.8

VCP & VCR

Washing Machine

Refrigerator

42 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

Bicycle

503 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

households

UrbanLow 4.1 3.9 5.0

Lower midlle 9.0 11.8 6.8

Middle high 15.3 28.8 9.8

28.4 44.4 8.2

RuralLow 30.6 14.2 2.4

Lower 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)

URBAN

11%

34%

21%

34%

RURAL

19%

46%

17%

18%

Penetration Intensity of use

Income Population

Toilet soap


6/14

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 smalltowns/villages.

Of the six lakh villages, 5.22 lakh have a Village PublicTelephone (VPT) 41 million Kisan Credit Cards issued (against22 million credit-plus-debit cards in urban) with cumulativecredit 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 shoppingsite

42 million rural HHs availing banking services in comparison to27 million urban HHs.

Investment in formal savings instruments: 6.6 million HHs inrural 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 totalvillages

No of villagesPopulation

17% of villagesaccount for 50%

of ruralpopulation &60% rural

wealth

Hardly anyshops in these2.2 lac villages

*Inhabited villages, total number of villages is 638, 691

Distribution of Towns in India

Town Class Population No of towns % of totaltowns

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 oftowns

5161 100.0 Source:Census2001

90 % ofdurables

purchased byrural people

are from these1900 towns

*10 lakh+ : 27, 5-10 lakh: 42, 1-5 lakh: 354

Is Rural Connect tougher toestablish 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 onehomogenous set of customers.

Rural preferences to be stationary in time.

Rural customer wants everything cheap.

Rural folk are hard-working son

of the soils who do not need conveniences.

Rural customers are widely dispersedacross 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

REALITY

Heterogeneous population

16 languages

State wise variations in rural demographics

Literacy (Kerala 90%, Bihar 44%)

Population below poverty line (Orissa 48%, Punjab 6%)

BigLandlords

Traders,Small Farmers

Marginal Farmers

Laborers, Artisans

Source: Planning Commission, GoI


7/14

MYTH 2: Disposable Income Is Low

REALITY

Number of middle class HHs (annual income Rs 45,000-2,15,000)

Rural 27.4 million

Urban 29.5 million

Per Capita Annual Income

Rural 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 whopays can all be different. So marketers must addressbrand 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 importantthan economy.

Distribution and pricing are the mantras tosuccess 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, theyjust have to be present at the right place.

Many brands are building strong rural base withoutmuch advertising support. Chik shampoo, second largest shampoo brand.

Ghadi detergent, third largest brand.

Fewer brand choices in rural : number of FMCG brandin 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 next10 years another 30%.

More than 90 % villages electrified, though only 44% ruralhomes have electric connections.

Rural telephone density has gone up by 300% in the last10 years, every 1000+ pop is connected by STD.

Infrastructure Improving Rapidly

70% of R1,R2, R3 can be reached throughmass media.

14

21

41

26

53

70

Satellite

TV

R ad io P res s C ine ma TV A ll Me dia


8/14

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 Hugepotential

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 Indiato US$ 1.6 Billion

53 & 59 % sales contribution for FMCG & Consumerdurables respectively are from rural India .

50% of subscription base for BSNL from Ruralmarkets.

Indias 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 goneunnoticed

High competitionfrom Localmanufacturers onprice valueequation.

Duplicates andFakes have floodedthis market

The Rural Spread

Population Dispersity

15.6

21.4

24.4

21.9

13.53.2

< 200 200 -500 501 - 1000 1001- 2000 2001- 5000 > 5000

An avg. of 1 shopFor 15 villages

Source : Census Of India

Understanding this elusiveconsumer


9/14

The Rural Indian .. Male

Religious

Prefers to work hard

Himself

Strong Family ties

Supports a family of six

Seeking Economy

Loves chatting with friends

About politics & trade affairs

Plays cards & Hangs outAt Choupal

A Day in his life

Up at 5.30

Trading

Field workField work

..my biggest assets..Cattle

Prepare fodder

Take a bath, wash myclothes ..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 acceptableperformance

- VFM

Make high-volumepurchases

at weekly villagemarkets

Personal acquaintance with

neighborhood 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


10/14

Drivers for choice ..

Opinion leaders

If they are credible, they work

Sunlight detergent powder employs a doctor to endorse thebrand

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 thewater of Ganga, a river revered as holy by the majority of Indias

Hindu population.

Therefore

We have an emerging market

Where Brands can establish themselves early .. Butare riddled with problems of the 4 As

Awareness

Availability

Acceptability

Affordability

Where can we touch the ruralconsumer

Touch Points..

At HomeAt Home At WorkAt Work

Touch Points..

AtAt ChaupalsChaupals TravelTravel

Touch Points

MandiMandi(Trade Places)(Trade Places) Retail OutletsRetail Outlets


11/14

Touch Points ..

SchoolsSchools HaatsHaats (Periodic Markets)(Periodic Markets)

Touch Points ..

Source of waterSource of waterPlaces of WorshipPlaces of Worship

Communicating to the RuralConsumer

Communication Medium:One on One contact

One on One contactprograms are extremelyefficient manner toreach the RuralConsumer

Provides an opportunityto Demonstrate

Induce Trial

Educate

Personal InterfacePersonal Interface

Communication MediumEvents - Using Culture to touch a chord

Communication MediumEvents - Folk entertainment

Ragini - MPRamayan - UP

Qawwalli - UPMagic Show


12/14

Communication MediumHaats - Presence in the Market

42000 rural haats(supermarkets)

4500+ Visitors per haat.

Average Sales per day US$5000

300+ Sales outlets/haat.

Unilever India Haats

1. TG interaction

2. Exchange offer

3. Spot sales

1

3 2

Communication Medium:Events : Melas

25000+ Melas held everyyear.

850+ outlets per Mela.

Average sales per Mela:US$ 400000.

Melas are forReligious/festive/trading

Annual sale : US $ 1 Billion

Nearly half the outlets are formanufactured goods

Exposure at a low cost percontact

Provides Unique platform forcommunicating to rural Masses.

An opportunity to present BrandStories 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 million

25000 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


13/14

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/Shops

Leaflets

Posters

Banners

Streamers/Danglers

Co-operative Notice Board

Shop Front Painting

Tin Plating House

Dealer Boards

Village Boards

Well Tiles

Calendars/Lables

Van Based Advertising

Melas

Direct to Home

Folklore groups

Exhibitions/Created events

Jeep based advertising

Wall Painting

Bus Stand

Bus Panels

Haats

Hoardings

Postal branding

HighReach

L

ow

Reach

High Frequency Low Frequency

Challenges in the future

Challenges in the Future

Making effective use of the large availableinfrastructure Post offices 1,38,000

Haats (periodic markets) 42,000

Melas (exhibitions) 25,000

Mandis (agri markets) 7,000

Public distribution shops 3,80,000

Bank branches 32,000


14/14

Using IT to transform markets

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

STD revolution/ mobile connectivity

Challenges in the Future

Proliferation of large format rural retail stores

DSCL Haryali stores

M & M Shubh Labh stores

TATA/Rallis Kisan Kendras

Escorts rural stores

Warnabazaar, Maharashtra (annual sale Rs 40crore)

Rural IndiaRural IndiaRural India

Irrigation1 Mn hectaresIrrigationIrrigation

1 Mn hectares1 Mn hectares

Drinking Water74,000 HabitationsDrinking WaterDrinking Water74,000 Habitations74,000 Habitations

RoadsVillages with 1000

population

RoadsRoadsVillages with 1000Villages with 1000

populationpopulation

Electrification125,000 Villages

i.e. 23 Mn morepeople

ElectrificationElectrification125,000 Villages125,000 Villages

i.e. 23 Mn morei.e. 23 Mn more

peoplepeople

Housing6 Mn housesHousingHousing6 Mn houses6 Mn houses

Telephones

67,000 Villages

TelephonesTelephones

67,000 Villages67,000 Villages

Bharat Nirman Yojana[A 40 Bn US $ Plan To Be Implemented By 2009]

Rural Quotes

The future lies with those companies who see thepoor as their customers.

CK Prahalad to Indian CEO's, Jan 2000.

To get rich, sell to the poor.

Pradeep Kashyap.

rural mktg handout

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