Rural India represents a large potential market segment. Major companies like HUL and ITC have developed initiatives targeting rural consumers, like Project Shakti and E-Choupal, which provide income opportunities and market connectivity to rural areas. These programs have helped boost sales in rural India and close the gap with urban consumption patterns. Reaching rural customers requires investment to build awareness of new product categories and overcome barriers like low incomes and lack of infrastructure.

2.  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

3.  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.

4.  Companies such as Unilever, Phillips and Nestle have long
been known to India's 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.

5.  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
company's 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

6.  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 India's more than 600,000 villages
› Shakti project includes Shakti Vani (or voice), a social
awareness program, and iShakti, a community portal

7.  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

8.  ITC's 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

9.  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

10.  Better content of information
 Transport Cost
 Knowledge to access technology
 Weighing Accuracy
 Transaction Durations

11.  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.

12.  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.

13.  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

14.  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 India's villages
between