The presentation discusses the potential of rural markets in India, highlighting key statistics such as 70% of the population living in villages and significant growth in rural GDP and spending. It emphasizes the importance of understanding rural consumer behavior, challenges faced by businesses, and strategies for effective market engagement. Notable examples of successful rural marketing initiatives by various companies illustrate the opportunities and innovative approaches in this sector.

1. Prepared by - Amar Saxena
Amar Saxena

2. Prepared by - Amar Saxena
Credits
This presentation is ENTIRELY based on the excellent study on
Rural Markets by Accenture. These studies are -
1. Accenture-Masters-of-Rural-Markets-Selling-Profitably-
Rural-Consumers
2. Accenture-Masters-Rural-Markets
3. Accenture-Rural-India-Markets-Research-2015
4. Accenture-Rural-Markets-Infographic
This presentation highlights some aspects from these studies.
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Rural India – some stats
• 70% Indians by population live in 650,244 villages
• 87% of villages have a population of < 2,000
• 35% of villages lie beyond standard access
• Number of “middle income and above” in rural areas favourably
compares with urban India
• Markets exist in every cluster of villages
o Over 14 Million retail outlets
• Just 4% are larger than 500 sq ft
• 3.6 million significant retail stores
o Served by traditional Kirana shops and Mandis
o Products supplied from nearby semi-urban areas
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India’s rural markets offer tremendous opportunity for
businesses
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Strong growth in Income and Spends
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* Rural GDP grew by 6.2% CAGR (Vs 4.7% for Urban centres
* Spending in Rural India reached $ 69 Billion (2012)
* 50% of India’s GDP; 70% of the population
* Agriculture accounts for just a quarter of the rural GDP
* Increase in procurement prices
* Increased spending by government in rural areas ($9 B in 2007)
* Improved access to finance and institutional credit
* Farm loan waivers; NREGA
You will ignore
Rural Markets at
your own Peril

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No wonder,
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Buying Behaviour
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Buying Behaviour …
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Three broad dimensions characterizing rural consumer
behaviour change
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Aspirational
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Networked
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Discerning
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Four Rural Consumer Segments
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Four Rural Consumer Segments …
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Behaviour change of the 4 consumer segments
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Mantra for profitable and sustainable rural growth
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Challenges
1. Reaching
− Inadequate distribution networks
− Partners with limited capabilities
− Long payment cycles
− Weak marketing channels
2. Acquiring
− Understand the cultural, economic
and demographic dimensions
− Very heterogenous
− Unique needs and wants of
specific rural customer segments
3. Retaining
− Providing reliable and consistent
after-sales service
− Building trust with local
communities
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- Use multi-pronged/robust approach
- Focus on market expansion
- Create sustainable channel
relationships
- Create trust and relevance
- Define a unique value proposition
for rural customers
- Engage the right set of influencers
- Device low cost models for after-
sales support
- Anchor customer relationships in
trust
- Invest in community development

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Rural Performance Index — degree to which rural markets are strategically important to
a company’s growth agenda
Rural Innovation Index — the level of innovation in a company’s product, packaging,
pricing, channels and operating models.

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The Rural Markets
Attractions
• Present huge opportunities
• Strengthens competitiveness
• Home to resources and talent
• Crucibles for business model innovation
Distractions
• Suffer from persistent structural handicaps
• Costly to enter
• Skilled local talent is hard to find
• Success demands flexible approaches
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What can we learn from successful companies
• Leading companies effectively create, shape and develop
markets
o Creating new strategies
o Customizing products
o Setting the right price points
o Generating awareness and promoting products thru right media
o Capturing and analysing data in novel ways
• Market Leaders adapt and optimize supply chains
o Optimizing sourcing processes
o Process outsourcing
o Reaching the customer
• Leveraging feeder towns
• Infrastucture sharing
• Technology – mobile retailing
• High performers co-create value thru innovative use of tech
o Tapping rural sources to fill talent needs
o Use technology as differentiator
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Busting Myths
What do rural consumers value?
• Rural consumers care only about price and seek stripped-
down, low-cost versions of products.
• Respondents attribute 66% weightage to brand image,
functionality and aesthetics when making purchase decisions,
while price carries a weight of 34%
When do rural consumers make big purchases?
• Rural consumers make most of their purchases after the
harvest season and during festivals and other special
occasions.
• 55% of survey respondents said they make purchases when the
need arises rather than waiting for special occasions.
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Busting Myths
What sales channels do rural consumers use?
• Rural consumers make most purchases within or in the
immediate vicinity of their villages, usually buying from the
local retailer.
• 83% of survey respondents claimed that they go to nearby
cities to make their bigger purchases
Who influences rural consumers?
• Traditional influencers— community leaders, village heads,
retailers, school teachers —still have the biggest impact on
rural Indian’s purchase decisions.
• Only 1% and 6% of survey respondents said that the key
influencer for their last big-ticket purchase was the village
head or the local shopkeeper, respectively.
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Busting Myths
Addressing Market Requires Reaching All Villages
• Reaching all villages is essential
• Citizens prefer visiting larger villages for their multiple needs
• Creating a distribution point for 5-10 villages at carefully
chosen locations will cover 90% of population
• Distribution point for 25-30 villages will reach 70% of popn
Franchising in the Only Option
• Only option that works; Cannot align remote staff with
corporate culture
• Owned and Employee Operated Models can also be successful
• Careful selection and training of remote staff creates a loyal
and efficient workforce
• Allows flexibility to experiment and innovate
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Busting Myths
Rural customer unwilling to pay for premium services
• Rural customer is unwilling to pay for premium products and
services
• Rural customers will choose premium services if they are
available and deliver value
• Have become very brand conscious and willing to pay
additional for quality and service
Rural Customers are Demanding
• Rural customers are Demanding and Impatient.
• Quality conscious and unforgiving.
• Absence of Choice, Sub-standard products and Cheap clones
have reduced quality expectations
• Citizens are patient and do not mind waiting their turn
• Much more forgiving product and delivery errors
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Busting Myths
They will buy – awareness is all that is required
• Creating awareness drives product sales
• Brand ambassadors are very effective
• Product usefulness and availability is important and
serviceability is critical
• Huge Influence of Peer Groups and Herd Mentality
• Less Impulsive buying
Packaging in small size is the only customization required
• Products have to address one or more areas below to succeed
• Cater to an “Immediate need”
• Address an unmet demand for “quality of life improvement”
• Transparency and Honesty in product information
• Financing in case of capital investments
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Summary - For winning Brand Loyalty
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27. 27
Mahindra tractors Samriddhi centres
Vodafone Communities of interests
Parivartan program Coca Cola University
Godrej: Chotukool – cheapest mini-refreigerator - specially designed for rural areas – sold using India Post
Pharmaceutical Advice on tax planning and working capital management
Amul Amul Yatra – inviting channel partners to Amul HQ
Dabur Project Double – double rural revenue and increase penetration
Tata Motors Tata Gram Mitras; and Motor Dada
Novartis Arogya Parivar
HPCL Rasoi Ghar
Ashok Leyland Ban Jao Malik; and Mileage Mukabla
Idea Cellular Refused subsidy from government
LG Sampoorna; 211 after sales initiative
ITC e-choupal
HUL Project Shakti; Perfect Village
Hero Honda Har gaon Har angan
Fostera Country’s first BPO
Tata Tata Kisan Sansar
Reuters Reuters Market Light; RML Direct Card
Maruti Video on Wheels
Rallis Rallis Kisan Kutumbh