Rural Marketing


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  • Rural Marketing

    1. 1. The Rural Indian Customer Presented to-: Prof . Arpita Shriwastava Presented by-: Mukesh Kumar Pandey (B-08-24)
    2. 2. Rural India <ul><li>70% Indians by population live in 638,387 villages </li></ul><ul><li>Population of rural India is 730 milliom </li></ul><ul><li>87% of villages have a population of < 2,000 </li></ul><ul><li>35% of villages lie beyond standard access </li></ul><ul><li>Number of “middle income and above” in rural areas favorably compares with urban India </li></ul><ul><li>Markets exist in every cluster of villages </li></ul><ul><ul><li>3.6 Million retail outlets </li></ul></ul><ul><ul><li>Served by traditional Kirana shops and Mandis </li></ul></ul><ul><ul><li>Products supplied from nearby semi-urban areas </li></ul></ul>02/10/10 Mukesh pandey,GSBA
    3. 3. FACTS ABOUT RURAL CUSTOMER <ul><li>The rural consumer is very conscious about getting value for money. </li></ul><ul><li>He understands symbols and colours better, and looks for endorsement by local leaders or icons. </li></ul><ul><li>He doesn't like to pay extra for frills he cannot use. </li></ul><ul><li>He has his daily routine, and there is no sense of urgency in his lifestyle. </li></ul><ul><li>He has a very high involvement in any product purchased, especially when he decides to buy high-end products, which cost a few hundreds or thousands of rupees. </li></ul>
    4. 4. 02/10/10 Mukesh pandey,GSBA
    5. 5. Distribution of Households by Occupation in Rural India Source: National Sample Survey Organisation, 2005 ( Nos. per thousand households) Occupation July 2000–June 2001 January–June 2004 Self-employed in non-agriculture 145 144 Agricultural labor 267 274 Other labor 110 89 Self-employed in agriculture 368 356 Others 110 89
    6. 6. Distribution of Households by Annual Income
    7. 7. <ul><li>SEGMENTATION </li></ul>02/10/10 Mukesh pandey,GSBA
    8. 8. 02/10/10 Mukesh pandey,GSBA R1 R2 R3 R4
    9. 9. Segmentation of rural customer by ICICI Bank <ul><li>The four categories are labelled as R1, R2, R3 and R4. The socio-economic categories are identifi ed as follows: </li></ul><ul><li>R1 and R2: Rich farmers who own land, have a pucca house and have at least one graduate as a family member. </li></ul><ul><li>R3: Middle level farmers who do not own land, have pucca houses and kaccha roofs and have a minimum education up to standard 5. </li></ul><ul><li>R4: Poorest of farmers who have kaccha houses and roofs and have never had any formal education. </li></ul>02/10/10 Mukesh pandey,GSBA
    10. 10. Continue…. <ul><li>The product offered to this segments: </li></ul><ul><li>R1: Farm equipment loans and insurance, savings accounts, high value policies, mutual funds and initial public offers (IPO). </li></ul><ul><li>R2: Working capital loans, crop loans, farmer savings accounts, personal accident and health insurance, weather insurance. </li></ul><ul><li>R3: Crop loans, commodity financing, farmer savings account, personal accident and health insurance, weather insurance. </li></ul><ul><li>R4: Micro-finance, jewel loans, health insurance, weather insurance. </li></ul><ul><li>Source: (Banerjee, 2006). </li></ul>02/10/10 Mukesh pandey,GSBA
    11. 11. The Eight Myths
    12. 12. The Eight Myths <ul><li>Poor Infrastructure Prevents Quality Product Delivery </li></ul><ul><li>Addressing Market Requires Reaching All Villages </li></ul><ul><li>Franchising is Only Option </li></ul><ul><li>Rural customer unwilling to pay for premium services </li></ul><ul><li>Rural Customers are Demanding </li></ul><ul><li>They will buy – awareness is all that is required </li></ul><ul><li>Packaging in small size is the only customization that is required </li></ul><ul><li>Business Opportunities are Limited </li></ul>02/10/10 Mukesh pandey,GSBA
    13. 13. Poor Infrastructure Prevents Quality Product Delivery <ul><li>The Myth </li></ul><ul><ul><li>Uneconomical Last Mile Logistics creates barriers for coventional distribution models </li></ul></ul><ul><ul><li>Infrastructure and Power makes technology enablement difficult </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Comat uses inexpensive off the shelf infrastructure to create delivery channel </li></ul></ul><ul><ul><li>Community is willing to offset costs in many situations </li></ul></ul><ul><ul><li>VSAT bridges digital divide and enable high-quality services delivery </li></ul></ul>02/10/10 Mukesh pandey,GSBA
    14. 14. Addressing Market Requires Reaching All Villages <ul><li>Myth </li></ul><ul><ul><li>Reaching all villages is essential </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Citizens prefer visiting larger villages for their multiple needs and their Masala Dosa </li></ul></ul><ul><ul><li>Their purchase is driven by Habit and not by Choice </li></ul></ul><ul><ul><li>Creating a distribution point for 5-10 villages at carefully chosen locations will cover 90% of population* </li></ul></ul><ul><ul><li>Distribution point for 25-30 villages will reach 70% of population* </li></ul></ul>02/10/10 Mukesh pandey,GSBA
    15. 15. Franchising in the Only Option <ul><li>Myth </li></ul><ul><ul><li>Franchising is only option that works </li></ul></ul><ul><ul><li>Cannot align remote staff with corporate culture </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Owned and Employee Operated Models can also be successful </li></ul></ul><ul><ul><li>Careful selection and training of remote staff creates a loyal and efficient workforce </li></ul></ul><ul><ul><li>Allows flexibility to experiment and innovate </li></ul></ul>02/10/10 Mukesh pandey,GSBA
    16. 16. Rural customer unwilling to pay for premium services <ul><li>Myth </li></ul><ul><ul><li>Rural customer is unwilling to pay for premium products and services </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Rural customers will choose premium services if they are available and deliver value </li></ul></ul><ul><ul><li>Citizens many times “TIP” Rs. 50 & Rs. 100 (keep the change) for a service worth Rs. 15 </li></ul></ul><ul><ul><li>These are land records, income and other certificates that are served across the counter </li></ul></ul>02/10/10 Mukesh pandey,GSBA
    17. 17. Rural Customers are Demanding <ul><li>Myth </li></ul><ul><ul><li>Rural customers are demanding and Impatient </li></ul></ul><ul><ul><li>They are quality conscious and unforgiving </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Absence of Choice, Sub-standard products and Cheap clones have reduced quality expectations </li></ul></ul><ul><ul><li>Citizens are patient and do not mind waiting their turn (do not value their time as much) </li></ul></ul><ul><ul><li>Much more forgiving product and delivery errors </li></ul></ul>02/10/10 Mukesh pandey,GSBA
    18. 18. They will buy – awareness is all that is required <ul><li>Myth </li></ul><ul><ul><li>Creating awareness drives product sales </li></ul></ul><ul><ul><li>Brand ambassadors are very effective </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Product usefulness and availability is important and serviceability is critical </li></ul></ul><ul><ul><li>Huge Influence of Peer Groups and Herd Mentality </li></ul></ul><ul><ul><li>Less Impulsive buying </li></ul></ul>02/10/10 Mukesh pandey,GSBA
    19. 19. Packaging in small size is the only customization required <ul><li>Myth </li></ul><ul><ul><li>Smaller size packaging is only product customization required </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Products have to address one or more areas below to succeed </li></ul></ul><ul><ul><ul><li>Cater to an “Immediate need” </li></ul></ul></ul><ul><ul><ul><li>Address an unmet demand for “quality of life improvement” </li></ul></ul></ul><ul><ul><ul><li>Transparency and Honesty in product information </li></ul></ul></ul><ul><ul><ul><li>Financing in case of capital investments </li></ul></ul></ul>02/10/10 Mukesh pandey,GSBA
    20. 20. Business Opportunities are Limited <ul><li>Myth </li></ul><ul><ul><li>Business opportunities including cross-selling are limited </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Several business opportunities exist, one has to look </li></ul></ul><ul><ul><li>A Rural BPO employing 100 local graduates processing US Cheque is operating effectively </li></ul></ul><ul><ul><li>Lower costs by using fixed infrastructure at night and appreciation of the community </li></ul></ul>02/10/10 Mukesh pandey,GSBA
    21. 21. Facts for modern rural Indian customer <ul><li>More wealth creation and economic activity in rural areas due to several schemes, chiefly NREGA. </li></ul><ul><li>Nearly two-thirds of all new 170 million mobile subscribers in 2009 came from the hinterland . </li></ul><ul><li>Every one in seven cars of Maruti Suzuki car in 2009 was sold in rural India. </li></ul><ul><li>The annual income of the 15-million-odd salaried rural households,is at around Rs 1 lakh, is close to their 23 million urban counterparts who earn Rs 1.14 lakh. </li></ul>02/10/10 Mukesh pandey,GSBA
    22. 22. Continued….. <ul><li>The Rs 1-lakh crore-odd market for consumer expendables like soaps, shampoos, skin-creams and tea—fast-moving consumer goods (FMCG) in industry parlance grew a handsome 20% plus in rural India, compared with 12-14% in cities </li></ul>02/10/10 Mukesh pandey,GSBA Sector wise contribution(FMCG)
    23. 23. Source <ul><li>Books referred </li></ul><ul><li>Rural marketing: Sanal Kumar Velayudhan </li></ul><ul><li>Web site </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>02/10/10 Mukesh pandey,GSBA
    24. 24. Thank You <ul><li>Rural communities will support quality products and services </li></ul><ul><li>Understanding the rural consumer and making relevant products/services available will improve rural lives </li></ul>02/10/10 Mukesh pandey,GSBA