Course Seminar on : Rural Marketing: Opportunities, Challenges & Strategies Presented by : Satish N Nande ID No : ABM-08134 Master of Agribusiness Management Department of Economic
Contents Rural marketing Evolution of rural marketing What makes rural marketing attractive Opportunities of Indian rural marketing Myths about Rural Marketing Challenges and Strategies for Rural Marketing Case Study ITC e- Choupal Conclusion
Rural Marketing On account of green revolution, the rural area are consuming a large quantity of industrial and urban manufactured products. Thus a special marketing strategy emerged known as Rural Marketing. Rural marketing involvedelivering manufactured or processed inputs or services to rural producers or consumers.
What Makes Rural Markets Attractive ? Untapped rural potential - 6,27,000 villages across the country - account for 70% of population - 60% of national demand for various product categories
41 million kisan Credit Card have been issued Of the 20 million Rediffmail sign up, 60% are from small towns. 50% of transaction from these town . 42 million rural household are avaling banking services in comparison to 27 million HHs in urban HHs. Investment in formal saving instruments is 6.6 million HHs and 6.7 million HHs in urban.
1) 60 per cent of the Indian population lives in villages 2) In the period between 2003-04 and 2008-09, the Indian Government increased Agriculture Budget allocation by a significant 300 per cent. 3) The RashtriyaKrishiVikasYojana was launched in 2007-08 with an outlay of Rs.25 thousand crore 4) increase the flow of credit to agriculture gone up from Rs.87 thousand crore in 2003-04 to about Rs.2.5 lakhcrore in 2007-08
Improvement in infrastructure - In 50 years , 40% villages have been connected by road, in next 10 year another 30% would be connected -More than 90%villages are electrified ,through only rural homes have electric connection -Rural telephone density has gone up by 300% in the last 10 years
Improvement in social indicators between 1981 to 2001 -No. of “pucca” house doubled from 22% to 41% -No. of “Kuccha” house halved from 41% to 27% -Percentage of BPL families declined from 46% to 27% -Rural literacy level improved from 36% to 59% in past two decades
Low Penetration rate Low penetration rates in rural areas , so there are many marketing opportunities
Myhs about rural market 1) Rural market is a homogeneous 2) Disposable income is low 3) Individuals decide about purchases
Myh 1: rural market is a homogeneous mass REALITY Heterogeneous population Various tiers depending on the income State wise variation in rural demographics Literacy % in ( Kerala 90%, Bihar 44%) Population below poverty line (Orissa 48%, Punjab 6%)
Myth 2: disposable income is low REALITY Number of middle class ( annuals income Rs 45000-2,15,000) Rural 27.4 million Urban 29.5 million Per Capita annual income Rural Rs 9481 Urban Rs 19,407 Total Rs 12,128
Myth 3: Individuals Decide About Purchases Reality: Decision making process is collective Purchase process - can all be different
· Understanding the Rural Consumer · Poor Infrastructure · Physical Distribution · Channel Management · Promotion and Marketing Communication
1) Availability (Place) 2) Affordability (Price) 3) Acceptability (Product) 4) Awareness (Awareness) 4 A’ s approach of Indian rural market
1) Availabiliy Challenges Regularly reach product to the far-flung villages. Indias 627,000 villages are spread over 3.2 millions sq Km ; 700 million indians may live rural areas Strategies Strive to reach at least 13,113 villages with a population market penetration Can reach the market bye the following ways:
Conts….. Hindustan lever, to serve remote village ,use auto rickshaws ,bullock-carts and even boats in the backwaters of Kerala. Coca-Cola, has evolved a hub and spoken distribution Mosel to reach the village .to ensure full loads ,the company depot supplies ,twice a week, large distributors which who act as hub . These distributors appoint and supply ,once a week, smaller distributors in adjoining areas.
AFFORDABILITY Challenges : To provide at cheaper price Strategies : Introduce small unit packs.
acceptability Challenge: To gain acceptability for the product or service Strategies: Offer product or services that suit the rural market Easy to understand Coca-Cola company because of the lack of electricity and refrigerator in the rural area ,it provide low –cost ice boxes ,a tin box for new outlets and thermocol box for seasonal outlets.
Awareness Challenges : less exposure to the world , low literacy rate Strategies: Opinion leaders play a key role in popularizing product and influence in rural market so choose the appropriate opinion. Can use the following promotional methods:
Personal interface One on One contact programs are extremely efficient manner to reach the rural consumer. Provide an opportunity to Demonstrate Induce Trial Educate
Event : Melas An opportunity to present brand stories using better display tools Large screens Animations Melas can be used for Retail sale points Sampling exercise Demonstration
Haats : presence in the market 42000 rural haats Average 4500 +visitors per haats Sales per day US $ 5000 300 + sales outlet per haats
Strategies to be Followed 1) Marketing Strategy 2) Distribution Strategy 3) Promotional Strategy
Marketing Strategy Marketers need to understand the psyche of the rural consumers . intensive personal selling efforts Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas by utilizing the various rural folk media to reach them in their own language
Distribution Strategy using company delivery van which can serve two purposes Annual "melas fixing specific days in a week as Market Days (often called "Haats') "Mandis" or Agri-markets
Promotional Strategy the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc., with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns.
Example…….. · ITC is setting up e-Choupals, which offers the farmers all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access latest local and global information on weather, scientific farming practices as well as market prices at the village itself through this web portal - all in Hindi. It also facilitates supply of high quality farm inputs as well as purchase of commodities at their doorstep.
Conclusion Thus, looking at the challenges and the opportunities, which rural markets offer to the marketers, it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.
References 1. Rural Marketing, Ravindranath V. Badi and Naranyansa V. Badi, Himalaya Publishing, 2004 2. The Hindu - Business Line 3. www.deccanherald.com 4. www.indiantelevision.com