1. “The real voyage of discovery consists not in
seeking new landscapes, but in having new eyes.”
Rural Marketing
Marcel Proust
Session – 1
Environment
Reaching , the unreachable
consumer
India: The Diversity
Understanding Rural Markets
17 % of the world’s
population in 2% of its
land mass
24 languages … 1642
Dialects
An Overview All major religions …
20000 ethnic groups
6, 38, 691 villages and
5,164 towns.
70 % of population still
India - Not Just One Country !
Rural and agrarian.
Rural Income Dispersal Projection
Rural Market Has Arrived All figures in %
742 million people Consumer Annual
1995-96 2006-07
Class Income
Rural is bigger than urban
FMCG's 53% Very Rich Above Rs 215,000 0.3 0.9
Durables 59% Source: NCAER,2002 Consuming
Rs 45,001- 215,000 13.5 25.0
Class
Estimated annual size of the rural market
Climbers Rs 22,001- 45,000 31.6 49.0
FMCG Rs 65,000 Crore
Durables Rs 5,000 Crore Aspirants Rs 16,001 - 22,000 31.2 14.0
Agri-inputs (incl. tractors) Rs 45,000 Crore
Destitutes Rs 16,000 & Below 23.4 11.1
2 / 4 wheelers Rs 8,000 Crore
Total Rs 1,23,000 Crore Total 100.0 100.0
Projections Based on 7.2% GDP Growth
Source: Francis Kanoi, 2002
1

2. Income distribution (Million population)
Impressive growth in purchasing power
400
312 12000
300
288
2001-02 9665
10000
PCI (Rs. per annu
200 153
130 7740
100 41
90
Rural Urban 8000 6886
6070
0 Low -7.3 -10.1 6000
4478
Low Low er middle Middle high 3795
Rural Urban Lower middle 2.5 -1.7 4000
0.63
400 Middle high 11.3 7.4 2000 0.55 0.58
352
305
300 2009-10 272 0
1989-90 1994-95 2001-02
200 170
79 Urban Rural
100
17
0
Annual growth (%)
Low Low er middle Middle high Urban 2.4 3.2
Rural Urban
Rural 3.4 4.5
Rural Economy
• Share of rural income to national income is declining
1995-96
2004-05
62%
60%
Rural India
• Ratio of rural PCI to urban PCI is increasing 41 % are illiterate
1995-96 0.58
2004-05 0.64 56 % HH have no access to electricity
• Share of agriculture sector is declining and gained by 70 % of HH’s have no bank account
service sector
Rural Urban 96 % have no telephones
1995-96 2004-05 1995-96 2004-05
6.7 % have two wheelers
Agriculture 43 32 4.4 3.7
Industry 19 22 42 35 1.3 % have 4 wheelers
service 38 47 53 61
Occupation Demographics Know your Rural Consumer
(% of households)
• Major source of income for 75% rural homes is agriculture and
50 wages
40
• Low purchasing power (2001-02)
30 Monthly PCI (Rs.)
Rural Urban
20 Cultivator 805 1,467
Wage earner 522 636
Salary/Professionals 1,540 1,876
10
Business 1,112 1,637
0 • Consumption pattern (%)
Cultivator Petty Wage earner Salary earner Others Rural Urban
shopkeeper Food 63.7 51.5
Consumer goods 13.1 19.6
Urban Rural Fuel, clothing & foot wear 14.8 13.9
Medical 5.5 5.5
Education 2.5 5.1
Rent & taxes 0.4 4.5
2

3. Understand &
Feel Press Availability
We believe, Farmer is the face Dailies Magazines Total
of Rural Markets Languages
As such to successfully No. % No. % No. %
explore Rural Markets, we English 437 7 7704 16 8141 14
must understand typical needs
of the Farmer Hindi 2645 45 19422 39 22067 40
Having done so, we must
work-out a solution which Other languages 2884 48 22688 45 25572 46
when presented, makes the Total 5966 1 00 4981 4 1 00 55780 1 00
Farmer feel empowered
The Mantra is “Do it in field 86 % language publications
and not in Boardrooms’
55500 + publications
2 Out of 5 Indians are unreachable by
Channel Explosion Mass media
250
Reach % Total Urban Rural
DD4-16(Reg) , Asianet
TVI, In Mumbai Jain TV, Star World,
Sun-2, Raj-2 Star News, Surya TV
200 JJ TV, GEC AXN, 200
E TV, Gemini Punj World
PTV, Yes
TV 45 76.1 33.4
DD Sports,
Discovery, Sony FTV
150 ESPN, NEPC
ABNI, Money TV 137 Press 33.5 58.6 24.1
ATN Venus, Zee Cinema
Zee TV El TV, DD4-16(Reg) Alpha TV, Cinema 11.9 19.1 9.1
100 Star Plus Asianet, Jain TV Ani Plan
BBC Udaya TV
75
Jaya TV, Raj Radio 20.8 22.5 20.1
Prime Sp ATN Ben
50 DD1/2
MTV 55 & NGC Any Media 60.7 86.4 51
Sun TV
DD Reg DD (Info)
Cable
0
CNN 5
13 …that’s 425 mn people, or Japan, France,UK and
that’
1990 1991 1993 1995 1999 2002 2004 Germany put together !
Source : Broadcasting Corporation of India & Industry estimates
And those who have access to
…. 2 out 4 Rural households have electricity …
access to electricity !
Little Use
Of electricity
3

4. The Change… Distribution of Monthly Per Capita expenditure
Soaps & Detergents
– Most of rural India.
Urban Rural
Because of Operation Shakti, etc ? OR,
Because of entrepreneurial energy ? Food 51.5 63.7
PCC cereals for rural population - 12.34 kg/month
PCC for urban population - 9.90 kg/month Consumer goods 19.6 13.1
96% rural households are self-owned.
(oops! There are serious issues here…) Fuel, clothing & foot we 13.9 14.8
5 lakh ruralites have gone abroad. 27% holiday within country.
– Conservative estimates Medical 5.5 5.5
Tolerates traditional theatre / folk art. Wants Hindi movies, follows
cricket… Education 5.1 2.5
Rent & taxes 4.5 0.4
Rural share in market for consumer goods
Distribution of households by Rural Share
Over 75%
1989-90
Radio/ Transistors
1992-93
Bicycle. Bicycle.
1998-99
Bicycle.
2001-02
Radio/Transistors Radio/Transistors, Radio/Transistors,
occupation of head of households 1 2 4
Mechanical Wrist
Watch, B&W TV 6
Mechanical Wrist
Watch, B&W TV,
Pressure Cooker,
50 Cassette Recorder
50-75% Bicycle, Motor Cycle, Table Fan, Sewing Cassette Recorder, Table Fan, Ceiling Fan,
Table Fan, Sewing Machine, Mechanical Pressure Cooker, Sewing Machine, Motor
40 Mechanical Wrist Wrist Watch Table Fan, Ceiling Cycle, Quartz Wrist
5 Watch 4 7 Fan, Sewing Machine, 6 Watch, Moped
Motor Cycle, Quartz
30 Wrist Watch
30-50% Moped, B&W TV, Moped, Motor Cycle, Moped, CTV, CTV, Mixer/Grinder,
20 Cassette Recorder, B&W TV, Cassette Mixer/Grinder, Scooter, Electric Iron
Pressure Cooker, Recorder, Pressure Scooter, Electric Iron
7 Electric Iron, Ceiling 8 Cooker, Electric Iron, 5 4
10 Fan, Quartz Wrist Ceiling Fan
Watch
20-30% Scooter, Scooter, Refrigerator Refrigerator
0 2 2 1 1
Mixer/Grinder Mixer/Grinder
Cultivator Petty Wage earner Salary earner Others 10-20% CTV, Refrigerator Refrigerator VCR/VCP, Washing VCR/VCP, Washing
shopkeeper 2 1 2 Machine 2 Machine
5-10% Washing Machine VCR/VCP, Washing - -
Urban Rural 1 2 Machine 0 0
Below 5% 1 VCR/VCP 0 - 0 - 0 -
Product penetration - Case I
Product penetration - Case II
(Ownership per thousand households)
(Ownership per thousand households)
200
160 700
600
120 500
400
80
300
40 200
100
0 0
AC VCP VC Car Mo pe d M o to rcycle SM S co o ter WM F ridge MG TB (C ) TV (B ) Ele c tric Tra ns is to r B ic yc le PC
Iro n
Rural Urban Rural Urban
4

5. Product penetration - Case III
(Ownership per thousand households) Rural share in total stock
Products Total Stock Rural Share
(Million) (%)
2000 Air Conditioner
Family Car 11 6.8
Vaccum Cleaner
1500 VCP & VCR
Washing Machine 42 18.0
Refrigerator
1000 Mixer Grinder
Scooter
Color Television
189 37.2
500 Electric Iron
Moped
Pressure Cooker
0 Motorcycle
Fan
239 52.7
Fan Wrist Watch Sew ing Machine
Television (B&W)
Wrist w atch
Rural Urban Transistor 503 67.9
Bicycle
All Products (19) 984 55.5
Rural-urban divide Factors explaining rural-urban divide
2001-02
Households Share in stock Average
(%) (19 products) number of 19%
31%
goods per
households 8%
Urban
Low 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 42%
Rural
Low 30.6 14.2 2.4
Income Infrastructure Interaction Lifestyle
Lower midlle 28.3 22.4 4.1
Middle high 12.7 19.0 7.8
71.6 55.6 4.1
Factors affecting change in market size Factors affecting change in market size
(between 1995-96 and 2001-02) (between 1995-96 and 2001-02)
Health beverages Toilet soap
URBAN RURAL URBAN RURAL
8%
14% 11%
25% 18% 19%
34%
44%
42%
34% 17%
15%
46%
6%
21% 46%
Penetration Intensity of Use
Penetration Intensity of use
Income Population
Income Population
5

6. Factors affecting change in market size
(between 1995-96 and 2001-02)
Shampoo The Rural Market has arrived
URBAN RURAL In 2001-02, LIC sold 55 % of its policies in rural India.
5% 8% 2% Of two million BSNL mobile connections, 50% in small
16%
13% towns/villages.
Of the six lakh villages, 5.22 lakh have a Village Public
Telephone (VPT) 41 million Kisan Credit Cards issued (against
22 million credit-plus-debit cards in urban) with cumulative
credit of Rs 977 billion resulting in tremendous liquidity.
14% Of 20 million Rediffmail signups, 60 % are from small towns.
65% 50% transactions from these towns on Rediff online shopping
77%
site
42 million rural HHs availing banking services in comparison to
27 million urban HHs.
Penetration Intensity of Use Investment in formal savings instruments: 6.6 million HHs in
rural and and 6.7 million in urban
Income Population
Distribution of Villages Distribution of Towns in India
Population No of villages % of total
villages Hardly any
Less than 200 92,541 15.6 shops in these Town Class Population No of towns % of total
2.2 lac villages towns
200-500 127,054 21.4 Class I 1 lac and above 423* 8.2 90 % of
durables
501-1000 144,817 24.4 Class II 50,000-99,999 498 9.6 purchased by
rural people
1001-2000 129,662 21.9 Class III 20,000- 49,999 1386 26.9 are from these
2001-5000 80,313 13.5 1900 towns
Class IV 10,000- 19,999 1560 30.2
17% of villages
5001-1000 18,758 3.2 account for 50%
Class V 5,000- 9,999 1057 20.5
of rural
Total no of villages 593,154* 100.0 population & Class VI less than 5000 237 4.6
60% rural
Source:
wealth Total no of 5161 100.0
*Inhabited villages, total number of villages is 638, 691 Census
towns 2001
Source: Census 2001
*10 lakh+ : 27, 5-10 lakh: 42, 1-5 lakh: 354
Is “Rural Connect” tougher to
MYTH 1: Rural Market Is a Homogeneous Mass
establish than “Urban Connect”?
REALITY
No, it is not but we make it tough for ourselves when, Big
we presume, Heterogeneous population Landlords
Traders,Small Farmers
“Rural customer” to be entirely
Marginal Farmers
different from the “Urban Customer”.
“Rural customer” to be one Laborers, Artisans
16 languages
homogenous set of customers.
“Rural preferences” to be stationary in time. State wise variations in rural demographics
“Rural customer” wants everything cheap. Literacy (Kerala 90%, Bihar 44%)
Rural folk are hard-working “son Population below poverty line (Orissa 48%, Punjab 6%)
of the soils” who do not need conveniences.
Rural customers are widely dispersed
across Village level haats.
Rural Customer is not a homogenous set of Source: Planning Commission, GoI
customers with preferences frozen in time
6

7. MYTH 2: Disposable Income Is Low MYTH 3: Individuals Decide About Purchases
REALITY REALITY
Number of middle class HHs (annual income Rs 45,000-
2,15,000)
Rural 27.4 million Decision making process is collective
Urban 29.5 million
Per Capita Annual Income
Purchase process- influencer, decider, buyer, one who
Rural Rs 9,481
pays can all be different. So marketers must address
Urban Rs 19,407
brand message at several levels
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 Rural youth brings brand knowledge to HH
Source:ETIG,2002-03
Rural Consumer Insights
Rural Consumer Insights
In rural India, brands rarely fight with each other, they
Rural India buys. just have to be present at the right place.
Products more often (mostly weekly). Many brands are building strong rural base without
much advertising support.
Buys small packs, low unit price more important
Chik shampoo, second largest shampoo brand.
than economy. Ghadi detergent, third largest brand.
Distribution and pricing are the mantras to Fewer brand choices in rural : number of FMCG brand
success in rural India. in rural is half that of urban.
Buy value for money, not cheap products
Even expensive brands like Close up, Marie biscuits, Clinic
shampoo are doing well because of deep distribution.
Infrastructure Improving Rapidly Infrastructure Improving Rapidly
In 50 years only 40% villages connected by road, in next 70% of R1,R2, R3 can be reached through
10 years another 30%. mass media. 70
53
More than 90 % villages electrified, though only 44% rural
homes have electric connections. 41
26
21
Rural telephone density has gone up by 300% in the last 14
10 years, every 1000+ pop is connected by STD.
Satellite Radio Press Cinema TV All Media
TV
7

8. Climbing Social Indicators But Rural India Offers Huge
potential
Between 1981 to 2001
Number of pucca houses doubled from 22% to 41% and kuccha
houses halved (41% to 23%)
Percentage of BPL families declined from 46% to 27%
Rural Literacy level improved from 36% to 59%
This market has not gone
Growth from Rural India unnoticed …
Unilever (India) … 50% of its sales turnover of US$ High competition
2.6 Billion is from Rural India. from Local
LG Electronics to double contribution from Rural India manufacturers on
to US$ 1.6 Billion
price value
53 & 59 % sales contribution for FMCG & Consumer
durables respectively are from rural India . equation.
50% of subscription base for BSNL from Rural
markets.
Duplicates and
India’s largest Insurance company (L.I.C) sells 50% of
its policies in Rural India. Fakes have flooded
60% of rediffmail.com subscribers from small towns this market
The Rural Spread
Understanding this elusive
consumer
Population Dispersity
<200 200-500 501- 1000 1001- 2000 2001-5000 > 5000
An avg. of 1 shop
For 15 villages
13.5 3.2 15.6
21.9 21.4
Source : Census Of India
24.4
8

9. A Day in his life
The Rural Indian .. Male
Up at 5.30 Prepare fodder ..my biggest assets..
Cattle
Plays cards & Hangs out
Religious At Choupal
Off to the fields Field work Field work
Prefers to work hard Loves chatting with friends
Himself About politics & trade affairs
Take a bath, wash my Trading Chatting with friends
clothes ..if needed ! in evenings
Strong Family ties Seeking Economy
Supports a family of six
A Day in Her Life
The Rural Indian .. Woman
Women in the fields
Women help Preparing food for the family Alternative occupations
Supports children
Religious
Guilt about
spending on Secretly seeks to be beautiful
My children's school Girl child helps at home Children help on fields
Self Children
Disturbed by vulgarity
Conservative
Manages home and
Assists husband in farm
Shopping habits What drives this consumer ..
Unit Price Critical
Small packs with a low unit price
Look for ‘acceptable
performance” – Britannia - Tiger biscuits
- VFM – Cavin Kare - Chik shampoo
Buy small quantities – Coke (Small Coke for Rs. 5 only)
- more frequently
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
Personal acquaintance with Make high-volume Multiple uses from the same product
neighborhood retailer purchases – Dettol liquid for cuts, gargle for bad throat, washing clothes
-Only Influencer at weekly village as a disinfectant , dandruff etc
- Provides credit markets
– Jet mosquito coil for mosquito repellent and room freshener
9

10. Drivers for choice .. Therefore …
Opinion leaders We have an emerging market
– If they are credible, they work
Where Brands can establish themselves early .. But
– Sunlight detergent powder employs a doctor to endorse the
are riddled with problems of the 4 A’s
brand
– Colgate dental cream endorsed by a doctor
– Sarpanch - Anti Leprosy – Awareness
– Availability
Folklore and natural ingredients – Acceptability
– Ganga soap claims that it contains milk and is made from the – Affordability
water of Ganga, a river revered as holy by the majority of India’s
Hindu population.
Where can we touch the rural Touch Points..
consumer
At Home At Work
Touch Points.. Touch Points
At Chaupals Travel Mandi (Trade Places) Retail Outlets
10

11. Touch Points .. Touch Points ..
Schools Haats (Periodic Markets) Source of water
Places of Worship
Communication Medium:
Communicating to the Rural One on One contact
Consumer
One on One contact Personal Interface
programs are extremely
efficient manner to
reach the Rural
Consumer
Provides an opportunity
to
– Demonstrate
– Induce Trial
– Educate
Communication Medium Communication Medium
Events - Using Culture to touch a chord Events - Folk entertainment
Magic Show Qawwalli - UP
Ramayan - UP Ragini - MP
11

12. Communication Medium Unilever India – Haats
Haats - Presence in the Market
42000 rural haats
(supermarkets)
4500+ Visitors per haat. 1
Average Sales per day US$
5000
300+ Sales outlets/haat.
1. TG interaction
3 2 2. Exchange offer
3. Spot sales
Communication Medium: Communication Medium:
Events : Melas Events : Melas
Screening at Kumbh
25000+ Melas held every Provides Unique platform for
year. communicating to rural Masses.
850+ outlets per Mela. An opportunity to present Brand
Stories using better Display tools
Average sales per Mela:
– Large Screens
US$ 400000.
– Animations
Melas are for – Gizmos
Religious/festive/trading Larger retention time
Annual sale : US $ 1 Billion – Multiple Interactive games
Nearly half the outlets are for – Talent Hunt etc
manufactured goods Melas can be used for
Exposure at a low cost per – Retail Sales Points
contact – Sampling Exercise
– Demonstration
sampling
Maha Kumbh
Clients
– Unilever , Titan, Ministry of Environment, Medimix, GM Pens, Cavin
Care, Anchor, Khaitan, Maruti, Tata Tea
Achievements Sampling Branding at Prayag Station
– 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 Branding at Prayag Station Giant Screen
month by the local dealer
12

13. Communication Medium: Static Media Other Branding Opportunities
Vicks Buntings
Postal Stationery
LG Wall Paintings
Shopboards
Tinplates
Other Branding options
… Giveaways Choosing Media Vehicles
Jeep based advertising Van Based Advertising
Wall Painting Melas
High Reach
Bus Stand Direct to Home
Bus Panels Folklore groups
Haats Exhibitions/Created events
Hoardings
Umbrella Postal branding
Co-operative Notice Board Tin Plating – Trees/Shops
Shop Front Painting Leaflets
Low Reach
Tin Plating – House Posters
Dealer Boards Banners
Family Snap Village Boards Streamers/Danglers
Well Tiles
Calendars/Lables
High Frequency Low Frequency
Challenges in the Future
Challenges in the future
Making effective use of the large available
infrastructure
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
13

14. Challenges in the Future
Using IT to transform markets
ITCs - c
e houpal and other IT initiatives
(EID parry, Amul dairy information system Proliferation of large format rural retail stores
kiosk) DSCL Haryali stores
M & M Shubh Labh stores
STD revolution/ mobile connectivity TATA/Rallis Kisan Kendras
Escorts rural stores
Warnabazaar, Maharashtra (annual sale Rs 40
crore)
Bharat Nirman Yojana Rural Quotes
[A 40 Bn US $ Plan To Be Implemented By 2009]
Housing
Housing
66Mn houses
Mn houses
Drinking Water The future lies with those companies who see the
Irrigation
Irrigation Drinking Water
74,000 Habitations
74,000 Habitations poor as their customers.
11Mn hectares
Mn hectares
CK Prahalad to Indian CEO's, Jan 2000.
Rural India
Rural India
Roads Electrification
Electrification
Roads 125,000 Villages
125,000 Villages
Villages with 1000
Villages with 1000 i.e. 23 Mn more
population i.e. 23 Mn more
population people
people
Telephones To get rich, sell to the poor.
Telephones
67,000 Villages
67,000 Villages
Pradeep Kashyap.
14