Rural Marketing -notes for MBA students

2. Introduction to Rural
Marketing
“The first five years of the new
millennium will belong neither to
the urban markets which have
reached saturation and where
margins are under pressure not to
the export markets, which suffer
from inadequate infrastructure
back home, and uncompetitive
prices overseas. It will belong to
rural marketing.”

3. RURAL MARKETING
In the India context, the word
‘RURAL’ is so much associated
with agriculture and farmers that rural
marketing tends to be seen as a
marketing of inputs or outputs
related to agriculture.

4. What is Rural Marketing?
Rural marketing is a function which manages
all those activates involved in assessing,
stimulating and converting the purchasing
power into an effective demand for specific
products and services, and moving them to the
people in rural area to create satisfaction and a
standard of living to them and thereby
achieves the goals of the organization.

5. Rural vs Urban
OCCUPATION:
Rural:Cultivators n few non –
agricultural pursuits.
Urban:manufacturing,trade,com
merce,professions

6. Size of community
Rural:open farms & small
community are –vly co-
related
Urban:urbanity & size of
community are +vly co-
related

7. Density of population
Rural:density of population is lower
than urban

8. Mobility
Rural:social mobility less.More
migration from villages to town.
Urban:social mobility inreases with
urbanity.

9. System of interaction
Rural:less numerous contacts per
man.Predominance of personal &
relatively durable relations.
Urban:Greater
complexity,superficiality &
standarized formality in relations.

10. Although the melting of the urban -
rural divide will take a while, this is
not for want of the availability of the
means but for want of the rural
consumer's mindset to change;
which has its own logic, which is
driven by tradition, custom and
values that are difficult to shed,

11. Attractiveness of rural market
Rural markets have become the new targets to
corporate enterprises for two reasons :
1. Urban market has become congested with
too many competitors.
2. The market have reached a near saturation
point.

12. Various factors which have made rule
markets viable:-
1. Large population
2. Raising prosperity
3. Growth in consumption
4. Life-style changes
5. Life-cycle advantages
6. Market growth rates higher than
urban
7. Rural marketing is not expensive
8. Remoteness is no longer a problem

13. Now for some facts and figures. The Indian
rural market today accounts for only about Rs
8 billion (53 per cent - FMCG sector, 59 per
cent durables sale, 100 per cent agricultural
products) of the total ad pie of Rs 120 billion,
thus claiming 6.6 per cent of the total share. So
clearly there seems to be a long way ahead.
Time and again marketing practitioners have
waxed eloquent about the potential of the rural
market. But when one zeroes in on the
companies that focus on the rural market, a
mere handful names come to mind. Hindustan
Lever Limited (HuL) is top of the mind with
their successful rural marketing projects like
'Project Shakti' and 'Operation Bharat'.

14. Clearly the main challenge that one faces
while dealing with rural marketing is the basic
understanding of the rural consumer who is
very different from his urban counterpart. Also
distribution remains to be the single largest
problem marketers face today when it comes
to going rural. "Reaching your product to
remote locations spread over 600,000 villages
and poor infrastructure - roads,
telecommunication etc and lower levels of
literacy are a few hinges that come in the way
of marketers to reach the rural market

15. In 1998 HuL’s personal products unit initiated
Project Bharat, the first and largest rural home-
to-home operation to have ever been prepared
by any company. The project covered 13
million rural households by the end of 1999.
During the course of operation, HuL had vans
visiting villages across the country distributing
sample packs comprising a low-unit-price
pack each of shampoo, talcum powder,
toothpaste and skin cream priced at Rs. 15.
This was to create awareness of the company’s
product categories and of the affordability of
the products.

16. Khaitan fans' ad on a horse cart

17. The greatest challenge for advertisers and
marketers continues to be in finding the right
mix that will have a pan-Indian rural appeal.
Coca Cola, with their Aamir Khan ad
campaign succeeded in providing just that.

18. "Yaara da Tashan...” ads with
Aamir Khan created universal
appeal for Coca Cola

19. "Yaara da Tashan..." ads with Aamir Khan
created universal appeal for Coca Cola
Coca-Cola India tapped the rural market in a
big way when it introduced bottles priced at Rs
5 and backed it with the Aamir Khan ads. The
company, on its behalf, has also been investing
steadily to build their infrastructure to meet the
growing needs of the rural market, which
reiterates the fact that this multinational has
realised the potential of the rural market is
going strength to strength to tap the same.

20. For HLL, a one rupee or a five rupee sachet or
the Kutti Hamam (the small Hamam) helps in
giving the consumers a trial opportunity.
While it does help in generate volume but not
in terms of values. "Till the time that volume -
value equation is managed better.
Ultimately, the ball lies in the court of rural
marketers. It's all about how one approaches
the market, takes up the challenge of selling
products and concepts through innovative
media design and more importantly
interactivity.

21. Amul is another case in point of aggressive
rural marketing. Some of the other corporates
that are slowly making headway in this area
are Coca Cola India, Colgate, Eveready
Batteries, LG Electronics, Philips, BSNL, Life
Insurance Corporation, Cavin Kare, Britannia
and Hero Honda to name a few.

22. Interestingly, the rural market is growing at a
far greater speed than its urban counterpart.
"All the data provided by various agencies like
NCAER, Francis Kanoi etc shows that rural
markets are growing faster than urban markets
in certain product categories at least. The share
of FMCG products in rural markets is 53 per
cent, durables boasts of 59 per cent market
share. Therefore one can claim that rural
markets are growing faster than urban markets

23. Satellite dish antennas reach rural
India

24. In 2000, ITC took an initiative to develop
direct contact with farmers who lived in far-
flung villages in Madhya Pradesh. ITC's E-
choupal was the result of this initiative.

25. So the fact remains that the rural market in
India has great potential, which is just waiting
to be tapped. Progress has been made in this
area by some, but there seems to be a long way
for marketers to go in order to derive and reap
maximum benefits. Moreover, rural India is
not so poor as it used to be a decade or so
back. Things are sure a changing

26. Typical shop in rural India stocked
with sachets, etc