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Rural Marketing -notes for MBA students

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  1. 1. Introduction to Rural Marketing“The first five years of the newmillennium will belong neither tothe urban markets which havereached saturation and wheremargins are under pressure not tothe export markets, which sufferfrom inadequate infrastructureback home, and uncompetitiveprices overseas. It will belong torural marketing.”
  2. 2. RURAL MARKETINGIn the India context, the word‘RURAL’ is so much associatedwith agriculture and farmers that ruralmarketing tends to be seen as amarketing of inputs or outputsrelated to agriculture.
  3. 3. What is Rural Marketing?Rural marketing is a function which managesall those activates involved in assessing,stimulating and converting the purchasingpower into an effective demand for specificproducts and services, and moving them to thepeople in rural area to create satisfaction and astandard of living to them and therebyachieves the goals of the organization.
  4. 4. Rural vs UrbanOCCUPATION:Rural:Cultivators n few non –agricultural pursuits.Urban:manufacturing,trade,commerce,professions
  5. 5. Size of community Rural:open farms & small community are –vly co- related Urban:urbanity & size of community are +vly co- related
  6. 6. Density of populationRural:density of population is lowerthan urban
  7. 7. MobilityRural:social mobility less.Moremigration from villages to town.Urban:social mobility inreases withurbanity.
  8. 8. System of interactionRural:less numerous contacts perman.Predominance of personal &relatively durable relations.Urban:Greatercomplexity,superficiality &standarized formality in relations.
  9. 9. Although the melting of the urban -rural divide will take a while, this isnot for want of the availability of themeans but for want of the ruralconsumers mindset to change;which has its own logic, which isdriven by tradition, custom andvalues that are difficult to shed,
  10. 10. Attractiveness of rural marketRural markets have become the new targets tocorporate enterprises for two reasons :1. Urban market has become congested withtoo many competitors.2. The market have reached a near saturationpoint.
  11. 11. Various factors which have made rule markets viable:-1. Large population2. Raising prosperity3. Growth in consumption4. Life-style changes5. Life-cycle advantages6. Market growth rates higher thanurban7. Rural marketing is not expensive8. Remoteness is no longer a problem
  12. 12. Now for some facts and figures. The Indianrural market today accounts for only about Rs8 billion (53 per cent - FMCG sector, 59 percent durables sale, 100 per cent agriculturalproducts) of the total ad pie of Rs 120 billion,thus claiming 6.6 per cent of the total share. Soclearly there seems to be a long way ahead.Time and again marketing practitioners havewaxed eloquent about the potential of the ruralmarket. But when one zeroes in on thecompanies that focus on the rural market, amere handful names come to mind. HindustanLever Limited (HuL) is top of the mind withtheir successful rural marketing projects likeProject Shakti and Operation Bharat.
  13. 13. Clearly the main challenge that one faceswhile dealing with rural marketing is the basicunderstanding of the rural consumer who isvery different from his urban counterpart. Alsodistribution remains to be the single largestproblem marketers face today when it comesto going rural. "Reaching your product toremote locations spread over 600,000 villagesand poor infrastructure - roads,telecommunication etc and lower levels ofliteracy are a few hinges that come in the wayof marketers to reach the rural market
  14. 14. In 1998 HuL’s personal products unit initiatedProject Bharat, the first and largest rural home-to-home operation to have ever been preparedby any company. The project covered 13million rural households by the end of 1999.During the course of operation, HuL had vansvisiting villages across the country distributingsample packs comprising a low-unit-pricepack each of shampoo, talcum powder,toothpaste and skin cream priced at Rs. 15.This was to create awareness of the company’sproduct categories and of the affordability ofthe products.
  15. 15. Khaitan fans ad on a horse cart
  16. 16. The greatest challenge for advertisers andmarketers continues to be in finding the rightmix that will have a pan-Indian rural appeal.Coca Cola, with their Aamir Khan adcampaign succeeded in providing just that.
  17. 17. "Yaara da Tashan...” ads withAamir Khan created universal appeal for Coca Cola
  18. 18. "Yaara da Tashan..." ads with Aamir Khancreated universal appeal for Coca ColaCoca-Cola India tapped the rural market in abig way when it introduced bottles priced at Rs5 and backed it with the Aamir Khan ads. Thecompany, on its behalf, has also been investingsteadily to build their infrastructure to meet thegrowing needs of the rural market, whichreiterates the fact that this multinational hasrealised the potential of the rural market isgoing strength to strength to tap the same.
  19. 19. For HLL, a one rupee or a five rupee sachet orthe Kutti Hamam (the small Hamam) helps ingiving the consumers a trial opportunity.While it does help in generate volume but notin terms of values. "Till the time that volume -value equation is managed better.Ultimately, the ball lies in the court of ruralmarketers. Its all about how one approachesthe market, takes up the challenge of sellingproducts and concepts through innovativemedia design and more importantlyinteractivity.
  20. 20. Amul is another case in point of aggressiverural marketing. Some of the other corporatesthat are slowly making headway in this areaare Coca Cola India, Colgate, EvereadyBatteries, LG Electronics, Philips, BSNL, LifeInsurance Corporation, Cavin Kare, Britanniaand Hero Honda to name a few.
  21. 21. Interestingly, the rural market is growing at afar greater speed than its urban counterpart."All the data provided by various agencies likeNCAER, Francis Kanoi etc shows that ruralmarkets are growing faster than urban marketsin certain product categories at least. The shareof FMCG products in rural markets is 53 percent, durables boasts of 59 per cent marketshare. Therefore one can claim that ruralmarkets are growing faster than urban markets
  22. 22. Satellite dish antennas reach rural India
  23. 23. In 2000, ITC took an initiative to developdirect contact with farmers who lived in far-flung villages in Madhya Pradesh. ITCs E-choupal was the result of this initiative.
  24. 24. So the fact remains that the rural market inIndia has great potential, which is just waitingto be tapped. Progress has been made in thisarea by some, but there seems to be a long wayfor marketers to go in order to derive and reapmaximum benefits. Moreover, rural India isnot so poor as it used to be a decade or soback. Things are sure a changing
  25. 25. Typical shop in rural India stocked with sachets, etc