Description
Rural Marketing is defined as any marketing activity in which the one dominant participant is from a rural area.
Rural Marketing
The Call of Rural India
Rural Markets - Promising Venture
Indian Rural Market : Fortune at the Bottom of the Pyramid a) 742 million rural customers b) 42,000 rural supermarket c) Investment in savings instrument- 6.7m households d) Estimated annual size of rural markets • FMCG Rs 65000cr • Durables Rs 5000cr • Agri-inputs(tractors also) Rs 45000cr • 2/4 wheeler Vehicles Rs 8000cr
Growth Story
• Liberalization of the economy – arrival of well known FMCG’s with greater distribution capabilities • High growth in rural area in 1990’s due to consecutively good monsoons • 600% increase in the Five year plan outlay for rural developmental activities
• 230% increase in flow of institutional credit in 1997-98 and 2004-05
Growth Story
• 41 m Kisan Credit Cards issued- Rs. 97000cr
• Increase in crop area, production and yield, facilities like fertilizers, electricity, quality seeds • Increased reach of Technological developments like cell phones etc.
Popular myths
• Rural people don’t buy brands
• Rural customers buy cheap products • Rural market is homogenous
4 A’s of Rural Marketing
• Availability Strong distribution Network, e.g. HLL, LG- widespread channels Coca Cola- Hub and spoke model • Affordability- Godrej (Cinthol, Fair glow etc.) • Acceptability – LG TV Sampoorna • Awareness
Challenges
• • Eleventh Five Year Plan: Special Focus on Agri & Rural To achieve 9 % growth projections - 4 % Farm growth is a must for self sufficiency, food security and for 2nd Green Revolution Deficit Areas for development of Rural Economy
Investment and Credit Deficit Infrastructure Deficit Market Economy Deficit Knowledge Deficit
•
1. 2. 3. 4.
Rural Distribution
• Marketers need to understand where rural consumers buy their goods and products • 90% of durables purchased from 20000+population towns
Rural Communication
• Strong Need To Build Reassurance And Trust About Product Quality, Service Support And Company Credentials In The Mind Of Consumers
• Best Medium - Face To Face Interactive Communication
AICDA MODEL
Awareness
Interest
Conviction
Desire
Action
Developing Rural Markets Through Information Technology
• e-Choupal by ITC
• Inagriline by EID Parry • Dairy portal by Amul • STD revolution
Rural Marketing Environment
Definition
? Rural Vs Urban
? 1951 – Urban Population was 17.2 %
? 2001 – Urban Population was 27.8 %
Census Definition
?
Rural Village:
?
Basic Unit for rural areas is the revenue village
?
Rural Town:
?
Minimum Population >= 5000 ? Population Density >= 400 per Sq.KM ? 75% of the male population engaged in non-agri activity
RBI Definition
? ?
Rural
?
Semi – Urban
?
Location with population up to 10,000
?
Urban
?
Location with population between 10,000 and 1,00,000 More then 1,00,000
NABARD Definition
?
All Location with population up to 10,000 is RURAL
Urban India All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square kilometres
Corporate Houses
Sahara – Shops and Commercial Establishments’ Up To 10,000
Evaluation of Rural Marketing
?
Phase I (Before 1960)
? Phase II (1960 - 1990)
? Agricultural Marketing ? Food Grains and Goods Like Cotton, Jute ? Unorganized Market ? Green Revolution ? Agricultural Input ? Emergence of Mahindra, Escorts, Eicher, Sriram Fertilizers and IFFCO ? Khadi and Village industries Commission (KVIC) ? Shilpa Melas
Evaluation of Rural Marketing
? Phase
? Last
III (1990 Onwards)
2 Phase
? Potential
? LPG
of IRM was not visible ? Infrastructure and Accessibility ? Urban Focus ? Extension of Urban Market
Definition of Rural Marketing
RM Is The Function That Manages All Activities Involved In Assessing, Stimulating And Converting The Purchase Power Of Rural Consumer Into An Effective Demand For Specific Product And Services And Moving A Better Standard Of Living And Thereby Achieving Organisational Goals.
Rural Market Structure
Rural Environment
• • • • • Demographic Environment Physical Environment Economic Environment Political Environment Technological Environment
Demographic Environment
Population
1981 683.3 524.0 1971 Total Population. (Million) Rural Population. (Million) 548.2 1991 848.3 628.8 2001 1026.9 741.6
Rural Proportion to Total Popn. (%) Source: Census 2001
80.1
76.7
74.3
72.2
• Rural proportion in population has come down. • Absolute numbers of people living in rural areas have increased. • Working population has increased. • Purchasing power of the rural population has gone up from 40% in 1991 to 42% in 2001.
Distribution of Population by Age Groups
Age groups 0–4 05 –14 15 – 19 20 – 34 35 – 54 55+ Total
Source: Census 2001
RURAL (%) 13 26 09 23 19 10 100
URBAN (%) 11 23 10 28 20 08 100
• Largest age group shapes marketing environment. • School going children and young adults form the largest consumers of consumable and lifestyle products. • Age group between 20 and 35 forms one fourth of India’s consumption base. • 48% of the rural population is below the age of 20.
Education
Rural Literacy 1981 1991 2001
% of literates
36
45
59
Census 2001
• Level of literacy influences the effectiveness of communication and demand for educational products. • Literacy rate has increased by 23% over last 20 years. • Improvements in socio economic status of the people. • Product and brand awareness improved and purchase decisions became more matured.
Household Pattern (Family Structure)
1991 Rural Urban Total
Households 112 (million) Family size 5.55 (number)
2001 Rural Urban Total 138 54 192
40
152
5.32
5.36
5.31
• Rural households have grown by 26 million during the last decade. • Increase in population created pressure on land and socio economic factors. • Average family size decreased. • Joint families broke apart to create nuclear families. • Range and number of branded products coming in increased.
Caste System
• Marketers need to be sensitive to the caste systems and practices. • While developing an advertisement or brand communication or promotion plan marketers need to ensure relevance of character and messages.
Cultural Differentials
• Society across the country is highly differentiated. • Presence of different regions and sub regions. • Presence of different religious, caste and linguistic groups. • No strict geographic boundaries for identifying differentials. • Socio cultural behaviour mapped as distinct socio cultural regions and used for STP
Occupational Pattern
• Demographic profile affects buying behavior. • Difference in buying behavior between salary earner and wage earner. • Three fourths of rural household heads are either cultivators or wage earners. • Daily wage earner has to account for variations in income. • Salary earner has an assured income. • Cultivators disposable income is highly seasonal
Physical Environment
Physical Environment
Settlements patterns 1.Scattered ,2.Clustered ,3. Combination of both Characteristics of Rural Households ? Houses are owner occupied (Farmers) ? Pattern is according to • 1.Kinship • 2.Caste • 3.Religious group
Classification of Village and Town based on population
Rural Market (per sq km) Town class < 200 1lakh and above 201-500 50,000-99,999 501-1000 20,000-49,999 .…..5000 ………….<5000
Economic environment
• Shift in lower income group to higher income group. • Per capita consumption expenditure increased 4 times over 20 years. • Saving pattern 42 million in rural to 27 million in urban.
Socio cultural Environment
Socio - Cultural Region (SCR) • A yard stick for segmentation and targeting. Urban and Rural socio-economic variables. ? Settlement pattern ? Occupation ? Realms of activity
Village Community
? ?
?
?
Pre Independence Post Independence It is self sufficient in terms of agriculture, economic infrastructure and political systems. Post independence it has undergone changes under the democratic system.
? ?
?
The elderly council (The Panchayat) is elected in the democratic system. Villages are well communicated. Migration to cities for jobs and batter life.
Caste System
? ? ? ?
Brahmins Kshatriyas Vaishyas Shudras
?
Zamindari
Political Environment
?
?
Panchayati Raj system under the 77th amendment. The Gram Sabha. (The general Assembly)
? ? ? ?
Decide developmental works. Suggest remedial measures. Scrutinize the decisions of panchyat. Review the annual financial statement of gram panchyats.
Technological Environment
?
Green revolution 1967-78
? ? ?
? ?
White Revolution In terms of improvement of livestock and the milk production.
? ?
High yield verities. Increased farm production. Modernization of methodology and equipments used.
Cooperatives like AMUL. Companies like Godrej Agrovet.
NGOs
? Independent
? Self
?Interest
Help Groups (SHG)
Groups (IGs)
? Government:
? NABARD,
KVIC, etc…… ? Help in providing vocational training, job opportunities, independent business opportunities, and basic Community Health services.
Constitution of Rural Market
• Evolution of rural market • Consumer Market
– Shift in consumer needs(1980-1990) – Steady reforms in economy(1990 onwards) – Households and Individuals
– Consumables-Food products, cosmetics, FMCG, garments – Durables- watches, bicycles, TV, Radio, 2 wheelers etc.
• Institutional Market
– Agriculture, Poultry, Health centers, Schools – Fisheries, cottage industries
– Consumables- pesticides, fertilizers, seeds, fuel – Durables- Tractor, Pump set, Genset, Harvestors etc.
• Service Market
– Individuals, Households and Production firms
– Services- Banking, Insurance, Credit, Healthcare, Tuition, ICT, Power etc.
Size of Market
• Rs. 123000 Cr, including FMCG, Durables and Agri products
Nature of Rural Market
• Developmental or Transactional….???? • Agri product companies • HPCL’s Community kitchens • HLL’s Project Shakti • A word of caution
– Extended support, Education and Training – Popularizing the concept at affordable prices
– Empower rural women for income generating capabilities
– Short term commercial goals to be avoided – Create Mutual benefit opportunities
Win - Win Situation
• NGOs and Corporate India
• SEWA – Self Employed Women’s Association, Gujarat based NGO
• ITC – Agri commodity retailer
Thank You
doc_306021457.ppt
Rural Marketing is defined as any marketing activity in which the one dominant participant is from a rural area.
Rural Marketing
The Call of Rural India
Rural Markets - Promising Venture
Indian Rural Market : Fortune at the Bottom of the Pyramid a) 742 million rural customers b) 42,000 rural supermarket c) Investment in savings instrument- 6.7m households d) Estimated annual size of rural markets • FMCG Rs 65000cr • Durables Rs 5000cr • Agri-inputs(tractors also) Rs 45000cr • 2/4 wheeler Vehicles Rs 8000cr
Growth Story
• Liberalization of the economy – arrival of well known FMCG’s with greater distribution capabilities • High growth in rural area in 1990’s due to consecutively good monsoons • 600% increase in the Five year plan outlay for rural developmental activities
• 230% increase in flow of institutional credit in 1997-98 and 2004-05
Growth Story
• 41 m Kisan Credit Cards issued- Rs. 97000cr
• Increase in crop area, production and yield, facilities like fertilizers, electricity, quality seeds • Increased reach of Technological developments like cell phones etc.
Popular myths
• Rural people don’t buy brands
• Rural customers buy cheap products • Rural market is homogenous
4 A’s of Rural Marketing
• Availability Strong distribution Network, e.g. HLL, LG- widespread channels Coca Cola- Hub and spoke model • Affordability- Godrej (Cinthol, Fair glow etc.) • Acceptability – LG TV Sampoorna • Awareness
Challenges
• • Eleventh Five Year Plan: Special Focus on Agri & Rural To achieve 9 % growth projections - 4 % Farm growth is a must for self sufficiency, food security and for 2nd Green Revolution Deficit Areas for development of Rural Economy
Investment and Credit Deficit Infrastructure Deficit Market Economy Deficit Knowledge Deficit
•
1. 2. 3. 4.
Rural Distribution
• Marketers need to understand where rural consumers buy their goods and products • 90% of durables purchased from 20000+population towns
Rural Communication
• Strong Need To Build Reassurance And Trust About Product Quality, Service Support And Company Credentials In The Mind Of Consumers
• Best Medium - Face To Face Interactive Communication
AICDA MODEL
Awareness
Interest
Conviction
Desire
Action
Developing Rural Markets Through Information Technology
• e-Choupal by ITC
• Inagriline by EID Parry • Dairy portal by Amul • STD revolution
Rural Marketing Environment
Definition
? Rural Vs Urban
? 1951 – Urban Population was 17.2 %
? 2001 – Urban Population was 27.8 %
Census Definition
?
Rural Village:
?
Basic Unit for rural areas is the revenue village
?
Rural Town:
?
Minimum Population >= 5000 ? Population Density >= 400 per Sq.KM ? 75% of the male population engaged in non-agri activity
RBI Definition
? ?
Rural
?
Semi – Urban
?
Location with population up to 10,000
?
Urban
?
Location with population between 10,000 and 1,00,000 More then 1,00,000
NABARD Definition
?
All Location with population up to 10,000 is RURAL
Urban India All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square kilometres
Corporate Houses
Sahara – Shops and Commercial Establishments’ Up To 10,000
Evaluation of Rural Marketing
?
Phase I (Before 1960)
? Phase II (1960 - 1990)
? Agricultural Marketing ? Food Grains and Goods Like Cotton, Jute ? Unorganized Market ? Green Revolution ? Agricultural Input ? Emergence of Mahindra, Escorts, Eicher, Sriram Fertilizers and IFFCO ? Khadi and Village industries Commission (KVIC) ? Shilpa Melas
Evaluation of Rural Marketing
? Phase
? Last
III (1990 Onwards)
2 Phase
? Potential
? LPG
of IRM was not visible ? Infrastructure and Accessibility ? Urban Focus ? Extension of Urban Market
Definition of Rural Marketing
RM Is The Function That Manages All Activities Involved In Assessing, Stimulating And Converting The Purchase Power Of Rural Consumer Into An Effective Demand For Specific Product And Services And Moving A Better Standard Of Living And Thereby Achieving Organisational Goals.
Rural Market Structure
Rural Environment
• • • • • Demographic Environment Physical Environment Economic Environment Political Environment Technological Environment
Demographic Environment
Population
1981 683.3 524.0 1971 Total Population. (Million) Rural Population. (Million) 548.2 1991 848.3 628.8 2001 1026.9 741.6
Rural Proportion to Total Popn. (%) Source: Census 2001
80.1
76.7
74.3
72.2
• Rural proportion in population has come down. • Absolute numbers of people living in rural areas have increased. • Working population has increased. • Purchasing power of the rural population has gone up from 40% in 1991 to 42% in 2001.
Distribution of Population by Age Groups
Age groups 0–4 05 –14 15 – 19 20 – 34 35 – 54 55+ Total
Source: Census 2001
RURAL (%) 13 26 09 23 19 10 100
URBAN (%) 11 23 10 28 20 08 100
• Largest age group shapes marketing environment. • School going children and young adults form the largest consumers of consumable and lifestyle products. • Age group between 20 and 35 forms one fourth of India’s consumption base. • 48% of the rural population is below the age of 20.
Education
Rural Literacy 1981 1991 2001
% of literates
36
45
59
Census 2001
• Level of literacy influences the effectiveness of communication and demand for educational products. • Literacy rate has increased by 23% over last 20 years. • Improvements in socio economic status of the people. • Product and brand awareness improved and purchase decisions became more matured.
Household Pattern (Family Structure)
1991 Rural Urban Total
Households 112 (million) Family size 5.55 (number)
2001 Rural Urban Total 138 54 192
40
152
5.32
5.36
5.31
• Rural households have grown by 26 million during the last decade. • Increase in population created pressure on land and socio economic factors. • Average family size decreased. • Joint families broke apart to create nuclear families. • Range and number of branded products coming in increased.
Caste System
• Marketers need to be sensitive to the caste systems and practices. • While developing an advertisement or brand communication or promotion plan marketers need to ensure relevance of character and messages.
Cultural Differentials
• Society across the country is highly differentiated. • Presence of different regions and sub regions. • Presence of different religious, caste and linguistic groups. • No strict geographic boundaries for identifying differentials. • Socio cultural behaviour mapped as distinct socio cultural regions and used for STP
Occupational Pattern
• Demographic profile affects buying behavior. • Difference in buying behavior between salary earner and wage earner. • Three fourths of rural household heads are either cultivators or wage earners. • Daily wage earner has to account for variations in income. • Salary earner has an assured income. • Cultivators disposable income is highly seasonal
Physical Environment
Physical Environment
Settlements patterns 1.Scattered ,2.Clustered ,3. Combination of both Characteristics of Rural Households ? Houses are owner occupied (Farmers) ? Pattern is according to • 1.Kinship • 2.Caste • 3.Religious group
Classification of Village and Town based on population
Rural Market (per sq km) Town class < 200 1lakh and above 201-500 50,000-99,999 501-1000 20,000-49,999 .…..5000 ………….<5000
Economic environment
• Shift in lower income group to higher income group. • Per capita consumption expenditure increased 4 times over 20 years. • Saving pattern 42 million in rural to 27 million in urban.
Socio cultural Environment
Socio - Cultural Region (SCR) • A yard stick for segmentation and targeting. Urban and Rural socio-economic variables. ? Settlement pattern ? Occupation ? Realms of activity
Village Community
? ?
?
?
Pre Independence Post Independence It is self sufficient in terms of agriculture, economic infrastructure and political systems. Post independence it has undergone changes under the democratic system.
? ?
?
The elderly council (The Panchayat) is elected in the democratic system. Villages are well communicated. Migration to cities for jobs and batter life.
Caste System
? ? ? ?
Brahmins Kshatriyas Vaishyas Shudras
?
Zamindari
Political Environment
?
?
Panchayati Raj system under the 77th amendment. The Gram Sabha. (The general Assembly)
? ? ? ?
Decide developmental works. Suggest remedial measures. Scrutinize the decisions of panchyat. Review the annual financial statement of gram panchyats.
Technological Environment
?
Green revolution 1967-78
? ? ?
? ?
White Revolution In terms of improvement of livestock and the milk production.
? ?
High yield verities. Increased farm production. Modernization of methodology and equipments used.
Cooperatives like AMUL. Companies like Godrej Agrovet.
NGOs
? Independent
? Self
?Interest
Help Groups (SHG)
Groups (IGs)
? Government:
? NABARD,
KVIC, etc…… ? Help in providing vocational training, job opportunities, independent business opportunities, and basic Community Health services.
Constitution of Rural Market
• Evolution of rural market • Consumer Market
– Shift in consumer needs(1980-1990) – Steady reforms in economy(1990 onwards) – Households and Individuals
– Consumables-Food products, cosmetics, FMCG, garments – Durables- watches, bicycles, TV, Radio, 2 wheelers etc.
• Institutional Market
– Agriculture, Poultry, Health centers, Schools – Fisheries, cottage industries
– Consumables- pesticides, fertilizers, seeds, fuel – Durables- Tractor, Pump set, Genset, Harvestors etc.
• Service Market
– Individuals, Households and Production firms
– Services- Banking, Insurance, Credit, Healthcare, Tuition, ICT, Power etc.
Size of Market
• Rs. 123000 Cr, including FMCG, Durables and Agri products
Nature of Rural Market
• Developmental or Transactional….???? • Agri product companies • HPCL’s Community kitchens • HLL’s Project Shakti • A word of caution
– Extended support, Education and Training – Popularizing the concept at affordable prices
– Empower rural women for income generating capabilities
– Short term commercial goals to be avoided – Create Mutual benefit opportunities
Win - Win Situation
• NGOs and Corporate India
• SEWA – Self Employed Women’s Association, Gujarat based NGO
• ITC – Agri commodity retailer
Thank You
doc_306021457.ppt