Importance of rural markets is well recognized now. How can a marketers tap into this market - what are things that should know? what can they learn from experience of others?

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
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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