Rural India is potentially the largest segment of the Indian market. Executives have long recognized that to build real sales volumes they will have to reach outside the big cities. Case highlights the emerging trends in rural market Case is also about the initiatives taken by companies Like HUL and ITC to target Rural segment › Project Shakti and E-Choupal have been making inroads into rural India for years
According to MART › Rural India buys 46% of all soft drinks sold, 49% of motorcycles, 59% of cigarettes and 11% of rural women use lipstick. According to NCAER › Rural households form 71.7% of the total households in the country. › Spending in this segment is growing rapidly and consumption patterns are closing in on those of urban India.
Companies such as Unilever, Phillips and Nestle have long been known to Indias rustic dukaandaars, or merchants. Rural marketing involves persuading people to try and adopt products they may not have used before › Colgate has to build toothpaste by convincing › Coca-Cola is growing at 37% in rural markets, compared with 24% in urban areas. In rural India low penetration rates can be attributed to three major factors › Low income levels › inadequate infrastructure facilities › different lifestyles.
The objectives of Project Shakti › To create income-generating capabilities for under privileged rural women by providing a small-scale enterprise opportunity, and to improve rural living standards with greater awareness of health and hygiene In 2001, with rural self-help groups (SHGs) started to educate rural women, while also making them part of the companys marketing network This micro-enterprise offers low risks and high returns Direct-to-home distributors A typical Shakti distributor sells products worth Rs 10,000- 15,000 a month & earn Rs 700-1,000
The Shakti model was piloted in 50 villages of the Nalgonda district in Andhra Pradesh. › Now it has created 26,000 women distributors covering 80,000 villages. › By 2010, the goal is to recruit 100,000 Shakti distributors covering 500,000 of Indias more than 600,000 villages › Shakti project includes Shakti Vani (or voice), a social awareness program, and iShakti, a community portal
Increase in income Education to children Social Recognition to rural women Knowledge about health and Hygiene Knowledge of urban areas Enhancement of purchasing power ICICI partnership gave micro credit
ITCs enhanced distribution network came from the recognition that the existing agri-produce distribution channels › The company exports various agricultural products -- soybean, rice and wheat › In 2000, ITC embarked on an initiative to deploy technology to reengineer the procurement of soybeans from rural India E Choupal’s connectivity - both physical and informational -- between the farmer and the market that it facilitated has allowed ITC to use it for distribution of goods and services from the market to the farmer
The E Choupal infrastructure consists of: › A kiosk with Internet access in the house of a trained farmer, called a Sanchalak › A warehousing hub managed by the former middleman, called a Samyojak. › A collaborative network of companies orchestrated by ITC with a pan- India presence In 2004, ITC introduced the Choupal Sagar › A rural retail outlet at the hub. › First was set up at Sehore in Madhya Pradesh. › This is 7,000 sq. ft. mall sells consumer goods as well as agri-products
Better content of information Transport Cost Knowledge to access technology Weighing Accuracy Transaction Durations
Indian rural market is huge just to strengthen the distribution Reliance Infocomm, a mobile services provider. Its network now encompasses 240,000 towns and villages, accounting for 42% of the rural population Godrej Aadhaar -- plans to set up 1,000 stores across India in the next five years.
Success of HUL & ITC depicts many other MNC widen their base in rural markets. From the Goenkas to the Gulabchands, from the Tatas to the Thapars, every major Indian business group has plans to move into the hinterland The battle for rural wallets will include not just European and U.S. multinationals but also fast- growing Indian companies.
According to Raju, marketing to rural customers often involves building categories by persuading them to try and adopt products they may not have used before. "A company like Colgate has to build toothpaste as a category, which means convincing people to change to toothpaste instead of using neem twigs to clean their teeth, which was the traditional practice," he says. "This is difficult to do and requires patience and investment
Companies that have figured this out are doing better in the villages than in the cities. Soft drinks giant Coca-Cola is growing at 37% in rural markets, compared with 24% in urban areas. According to Hansa Research, a market research firm that has published a Guide to Indian Markets 2006, the penetration of consumer durables has risen sharply in Indias villages between