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Few Statistics about Rural India: …

Few Statistics about Rural India:
1. 46% of the soft drinks sales happen in rural areas.
2. Rural India accounts for 49% of motorcycle sales.
3. Rural India accounts for 59% of Cigarettes sales.
4. 53% of FMCG sales happen at Rural India.
5. Talcum powder is used by more than 25% of rural India.
6. Lipsticks are used by more than 11% of the rural women and less than 22% of the urban women.
7. ~ 10% of Maruti Suzuki’s sales come from the rural market.
8. More than 90 percent of rural households in Chhattisgarh, Jharkhand, Orissa and Madhya Pradesh did not have access to toilets within their premises
9. Connectivity –In 2006: 13% in rural India had to travel > 30minutes; 2008: just 2%!
10. When it comes to connectivity, Rural Indian BOP segment has grown more than urban in last year
11. Nearly 50% of the villages in the country do not have all weather roads, making physical communication to these villages highly expensive.

A survey by India's premier economic research entity, (NCAER) indicates that rise in rural incomes is keeping pace with the rise in urban incomes. Rural middle class is growing at 12%, close to the urban middle class which is growing at 13%.

In 20 years, rural Indian Market will be larger than the total consumer markets in countries such as South Korea or Canada today, & almost 4 times the size of today’s urban Indian market.

The marketers who understand the rural consumer and fine tune their strategy are sure to reap benefits in the coming years. In fact, the leadership in any product or service is linked to leadership in the rural India except for few lifestyle-based products, which depend on urban India mainly.

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  • 1. India’s Next Big Thing: The Rural Market Sujit Panigrahi, CTO, Convergent Technologies
  • 2. 10 observations about Rural India 1. Rural India constitutes 69% of India’s population. 2. 86% of Rural population earns < Rs. 100 per day (most of Indian BoP households earn Rs. 1300 p.m) 3. More phones than Radio in Rural India (100m subscriber base). 4. Only 0.29 per cent of the male population has reached the graduation level (0.04% for women) and 6.% of the rural males are educated up to the middle level. 5. 70% of the disabled in India lives in rural areas 6. Safe Drinking Water – 67% of rural households in Jharkhand didn’t have access to safe drinking water;
  • 3. 10 observations about Rural India 7. More than 90 percent of rural households in Chhattisgarh, Jharkhand, Orissa and Madhya Pradesh did not have access to toilets within their premises 8. Connectivity –In 2006: 13% in rural India had to travel > 30minutes; 2008: just 2%! 9. When it comes to connectivity, Rural Indian BOP segment has grown more than urban in last year 10.Nearly 50% of the villages in the country do not have all weather roads, making physical communication to these villages highly expensive.
  • 4. A survey by India's premier economic research entity, (NCAER) indicates that rise in rural incomes is keeping pace with the rise in urban incomes. Rural middle class is growing at 12%, close to the urban middle class which is growing at 13%. Punjab, Kerala, Haryana, Rajasthan, Gujarat, AP and Maharashtra are considered highly prosperous states.
  • 5. 10 Consumption Data to Blow your Mind 1. 46% of the soft drinks sales happen in rural areas. 2. Rural India accounts for 49% of motorcycle sales. 3. Rural India accounts for 59% of Cigarettes sales. 4. 53% of FMCG sales happen at Rural India. 5. Talcum powder is used by more than 25% of rural India. 6. Lipsticks are used by more than 11% of the rural women and less than 22% of the urban women. 7. ~ 10% of Maruti Suzuki’s sales come from the rural market.
  • 6. 10 Consumption Data to Blow your Mind 8. Rural India has a large consuming class with 41% of India’s middle-class and 58% of the total disposable income accounting for consumption. 9. By 2010 rural India, consumed 60% of the goods produced in the country. 10.Hero Honda, has more than 50% of its sales coming from rural market
  • 7. In 20 years, rural Indian Market will be larger than the total consumer markets in countries such as South Korea or Canada today, & almost 4 times the size of today’s urban Indian market.
  • 8. DEFINING THE RURAL MARKET
  • 9. Rural Markets for Modern India 1. U2R: Transactions of urban marketers who sell their goods and services in rural areas, like pesticides, fertilizers, seeds, FMCG products, tractors, bicycles, consumer durables, etc. 2. R2U: Basically agricultural marketing where a rural producer seeks to sell his produce in an urban market, like seeds, fruits and vegetables, milk and related products, forest produce, spices, etc. 3. R2R: Activities between two villages in close proximity to each other, like agricultural tools, handicrafts and bullock carts, dress materials, etc.
  • 10. Rural Population Statistics 83% villages with population below 2000 people
  • 11. ESTIMATED ANNUAL SIZE: RURAL MARKET 1. FMCG INR 65000 cr 2. Durables INR 5000 cr 3. Agri-inputs (including tractors) INR 45000 cr 4. Two / Four Wheelers INR 8000 cr TOTAL INR 123000 cr
  • 12. Understanding The Potential Of Rural Market 1. LARGE POPULATION: A. 742 million Indians constituting 138 million households reside in 6,38,365 villages (Census, 2001). 2. GROWTH IN MARKET: A. Market has been growing at 3-4% per annum adding more than one million new consumers every year. B. 12.2% of the world's consumers live in India. C. Rural households form 72% of the total households. D. Total income in rural India (about 43% of total national income) increased from around US$220 billion in 20042005 to US$425 billion by 2010-2011, a CAGR of 12%,
  • 13. Understanding The Potential Of Rural Market 3. IT PENETRATION IN RURAL INDIA: A. ‘Information Access' to education opportunities, exam results, career counseling, job opportunities, government schemes and services, health and legal advice and services, worldwide news and information, land records, mandi prices, weather forecasts, bank loans, livelihood options. B. Television has change the language of brand communication in rural India C. Affordable Web connectivity through various types of communication hubs is impacting the currency of information exchange. Possibilities of change are becoming visible.
  • 14. Understanding The Potential Of Rural Market 4. IMPACT OF GLOBALIZATION: A. Impact of Globalization felt in rural India on target groups like farmers, youth and women. B. Farmers, 'keep in touch' with the latest information. They keep their cell phones constantly connected to global markets. C. Price movements and products' availability in the international market place seem to drive their local business strategies. D. On youth its impact is on knowledge and information E. On women it depends on the socio-economic aspect
  • 15. Understanding The Potential Of Rural Market 5. INCREASING INCOME & PURCHASING POWER: • • Agricultural development programs of the Govt have helped to increase income in the agricultural sector. Greater purchasing power in rural markets. 6. ACCESSIBILITY OF MARKETS: • • • • The attraction of a market depends not only on its potential but also on its accessibility. Better road network for systemized product distribution Increasing number of companies are supplying village markets directly. Increasing direct contacts to villages helps product promotion & availability of the product in village shop.
  • 16. Understanding The Potential Of Rural Market 7. CONSUMER BEHAVIOUR CHANGES: A. Increased literacy and greater awareness in rural markets create new demands and discriminating buyers. B. Visible increase in the consumption and use of a variety of products 8. COMPETITION IN URBAN MARKETS: A. Intensified competition in urban markets increases costs and reduces market share. Therefore, Rural markets are increasingly attractive in relation to urban markets. B. Rajdoot Motorcycles, Bajaj scooters or Ambassador Cars find ready acceptance in rural markets as compared to urban markets where there is a proliferation of brands.
  • 17. Understanding The Potential Of Rural Market 7. NEW EMPLOYMENT OPPORTUNITIES: A. Government schemes like IRDP (Integrated Rural Development Programme), JRY (Jawahar Rozgar Yojana) and TRYSEM (Training Rural Youth for Self Employment) have created new employment opportunities. B. Co-operative and Public sector banks extending loans to rural people, thereby creating job opportunities. 8. GREEN REVOLUTION: 7. Green revolution to achieve self-sufficiency in food grain production > a major breakthrough in food grain production by the use of scientific methods in agriculture. At present, Rural India generates 299 million tons annually.
  • 18. Understanding The Potential Of Rural Market 9. GOVERNMENT POLICIES: A. Govts stress on self-sufficiency resulted in various schemes like Operation Flood (White Revolution), Blue Revolution, Yellow Revolution, etc. resulted in the production of 15 million tons of milk per annum. 10.BETTER CREDIT FACILITIES THROUGH BANKS: A. With co-operative banks taking the lead in the rural areas, every village has access to short, medium, longterm loans from these banks. B. Credit facilities extended by public sector banks through Kisan Credit Cards help the farmers to but seeds, fertilizers and every consumer goods on instalments
  • 19. Understanding The Potential Of Rural Market 11.GREEN CARD / CREDIT CARD FOR FARMERS: A. Govt initiated Kisan Credit Cards for farmers through public sector banks. B. Farmer’s choice to take short or medium term loans through these credit cards to buy seeds, fertilizers, etc. to enable him to produce more and increase income. 12.IMPROVED EXPORTS DUE TO EXPORT POLICY: A. Export Policy 2000 paved way for open market (OGLOpen General License System) status for agriculture. B. WTO’s Policy for agro-exports has increased exports of Indian agricultural produce thereby increasing incomes of the rural population.
  • 20. Understanding The Potential Of Rural Market 14.MEDIA: A. Mass Media has created increased demand for goods and services in rural areas. B. Smart marketers employ the right mix of conventional and non-conventional media to create increased demand for products. C. The role of cable television has been noteworthy in bringing about the change in rural people‟s mindset and influencing their lifestyles.
  • 21. Psychographic characteristics of Rural Consumers for verbal and non-verbal communication strategies RURAL MARKETING IS MARKETING TO A RURAL ‘MINDSET’; NOT A RURAL MARKET
  • 22. Think Rural – Ground Reality 1. Buying Decisions (age-wise) A. Less than 20 years : 8.43 B. 21-30 years : 18.69 C. 31-40 years : 30.84 D. 41-50 years : 26.16 E. 50 years and above : 15.88 76% of Market 2. Gender wise analysis shows that 64.48% are male and rest of them are females.
  • 23. Think Rural – Ground Reality 2. Education Levels A. Less than V : 0.93 B. Till VII : 34.57 C. Till X : 27.13 D. Till XII : 16.82 E. Graduation : 13.08 F. Beyond Graduation : 07.47 78% Market
  • 24. Think Rural – Ground Reality 3. Monthly Income A. Less than Rs. 2000 :11.21 B. Rs. 2001 - Rs. 5000 : 34.57 C. Rs. 5001 - Rs. 8000 : 24.32 D. Rs. 8001 - Rs. 10000 : 13.08 E. Rs. 10001 - Rs. 15000 : 11.21 F. More than Rs. 15000 : 05.61 Indication of Affordability
  • 25. Think Rural – Ground Reality 4. Preferred Mode Of Communication A. TV : 44.87 B. Mobile : 2.83 C. Radio : 10.28 D. Announcements : 7.47 E. News paper : 5.61 F. Poster : 4.68 G. Word of mouth : 17.77 H. Skits/plays : 6.55 Major factors: • Creating Awareness • Inducing Trials • Local Language
  • 26. Think Rural – Ground Reality 5. Purchase Practices A. Personal : 20.56 B. Small Group : 26.17 C. Mass : 53.27 Consumers Practice mass purchasing
  • 27. Think Rural – Ground Reality 6. Marketing Strategy A. Urban : 61.68 B. Rural : 2.80 C. Both : 35.52 Key success to an effective rural marketing is that it should be firmly grounded in rural tradition, rural perspectives, rural mentality and their values. Complete focus on local language, culture, customs and modes of communication.
  • 28. Think Rural – Ground Reality 7. Purchase Influencers A. Price/Discounts : 27.10 B. Brand/Company Name : 32.71 C. Celebrity endorsement : 15.88 D. Language : 10.28 E. Content : 8.41 F. Tagline : 5.62 Prices and discounts are not the sole parameters that drive their purchases. Rural customers are increasingly becoming brand conscious.
  • 29. Think Rural – Ground Reality 8. Perception On New Product/Brand A. Stick to existing one : 26.16 B. Experiment with the new one : 8.43 C. Try out when dissatisfying with existing one : 22.42 D. Try out on receiving positive feed back : 42.99 Rural consumers usually do not experiment with a new product unless something triggers them. The most influential triggering factor is positive feedback about the product from others.
  • 30. Behavioral Segmentation 1. Occasions : A. Festival, mela, jatra, weekly haat. B. Most durables are purchased during/after harvest season when farmers have cash in hand after selling their agricultural produce. C. Melas offer products at attractive prices D. Weekly Haat to purchase daily-use products 2. Benefits sought : A. Quality, convenience, value for money, service. B. Rural consumers are more concerned with the utility of the product than its appearance and sophistication. 3. User status: A. Rural consumers fall into the category of first-time users for most product categories. Focus on product trials and demonstrations is very crucial in rural market. B. Tag line for Ghari Detergent ‘Pehle Istemal karein, phir vishwas karein’ is to induce customers to try out the product.
  • 31. Behavioral Segmentation 4. Usage rate A. Usage for most FMCG products is relatively low among rural consumers due to poor affordability. B. Marketers have launched sachet packs for rural consumers and family packs for joint families. 5. Loyalty status A. Rural buyers take a long time to decide on a brand B. Once convinced, they are more brand loyal than their urban counterparts. 6. Place of purchase A. Village shops (Tea, kerosene) B. Haats (Food grain, pulses, vegetables), C. Nearest town (Fertilisers, seeds), D. Melas (Clothes, cheap jewelry)
  • 32. SOME SUCCESS STORIES
  • 33. Targeting – Coverage of Segments 1. Undifferentiated Marketing A. Mass distribution and mass advertising. B. eg. Many toilet soap users prefer medicinal value, cosmetic strength, economy and the feeling of freshness in their toilet soap. C. Medimix offers all these features and also claims that it is a beauty care Ayurvedic family soap. Coca Cola targets both urban and rural market with the same drink. 2. Differentiated Marketing A. Investigates and identifies differences between segments and tries to match the market offer to the desires and expectations of each segment. B. Eg. Companies developed 25-30 HP tractors for small or marginal farmers and 50 HP tractors for large farmers.
  • 34. Segmented Approach 1. Micro Marketing A. Tailoring of the product to satisfy a particular taste or need. B. Dabur launched Anmol, a mustard and amla-based hair oil, to target rural consumers in northern markets who used loose mustard oil. 2. Local Marketing A. Designing brands and promotions to suit the needs and wants of local customer groups on a geographical basis. B. Philips approaches rural buyers in AP and TN with two similar but different campaigns, with Actor Chiranjeevi and Actor Rajnikant. 3. Individual Marketing A. Tailoring and carpentry are examples of individual marketing B. Individual get the product made exactly according to specific need.
  • 35. Products for price conscious segment 1. Maharaja Appliance launched Bonus, a range of appliances for rural market. 2. Colgate’s 10 gm sachet of toothpaste. 3. LG launched Sampoorna, a low cost, no-frills television model. 4. Asian Paints launched Utsav Distemper to target the chuna powder popular in rural markets 5. Britannia introduced smaller pack sizes of Tiger Biscuits at Rs. 4, 2 and 1.
  • 36. DIGITAL EMPOWERMENT INITIATIVES FOR RURAL INDIA
  • 37. Digital Empowerment 1. Peoples Movement for Drought Affected using Social Media (Drought Help Group, Pune) Website : http://www.DroughtHelpIndia.org 'People's Movement to Help Drought Affected' links urban donors and drought affected villagers directly. Helps by donating water tanks, channelizing the blockages in streams and removing mud from village common ponds. 2. Human Welfare Association - MAHILA SHAKTI (HUMAN WELFARE ASSOCIATION) Website : http://www.hwavaranasi.in Works with underserved, disadvantaged and minority communities of Varanasi through education, literacy and livelihood by mobilising them through word of mouth, social networking, mobile SMS and by holding group meetings in 50+ villages around Varanasi.
  • 38. Digital Empowerment 1. Chinh Early education web channel (Chinh India) Website : http://chinh.in Supports social initiatives promoting causes of children and marginalised nomadic communities through harnessing traditional wisdom, art and culture and rediscovering them in contemporary contexts. Chinh's social media presence including associated blogs and video channels has recorded upward of 400,000 page views. 2. Vidya Poshak (Vidya Poshak ) Website : http://vidyaposhak.org/ More than 12,600 students have been assisted in 19 districts of Karnataka and five districts of Maharashtra.
  • 39. Digital Empowerment 3. Amrita Clinical Decision Support System by Newdigm Healthcare Website : http://www.newdigm.com Delivering healthcare in remote village areas by providing a decision-support technology for village health workers (VHW). 4. Panini Keypad from Luna Ergonomics Pvt Ltd Website : http://www.PaniniKeypad.com New mobile technology that allows people to type in in Hindi, Bengali, Telugu, Marathi, Gujarati, Tamil, Malayalam, Punjabi and a 17 other global languages from diverse linguistic families as Korean, Arabic and Russian.
  • 40. Digital Empowerment 3. Rang De Website : http://www.rangde.org Internet Platform for raising social capital from individuals and deploy it as long term loan to low income households. 4. Project Aasha by NIIT Website : http://www.niitaasha.com Sourcing, Training, Placement and Handholding of students from Rural India
  • 41. CLOSING THOUGHTS: The marketers who understand the rural consumer and fine tune their strategy are sure to reap benefits in the coming years. In fact, the leadership in any product or service is linked to leadership in the rural India except for few lifestyle-based products, which depend on urban India mainly.