Rural Marketing

Project Report RURAL MARKETING

Submitted to: Submitted by: Shiv om mishra (06293G) VII sem., B.Tech. Computer Science Engg. JIET, Guna, MP

Mr.Sandeep srivastava Senior Lecturer PD Département JIET

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ACKNOWLEDGEMENT

I hereby regard my sincere thanks to Mr.Sandeep Srivastava, JIET Guna under whose guidance this project was undertaken.

I would also like to thank my friends who have so generously helped me. I got chance to recognize my gratitude to all staff P.D. department for making available all facilities to complete the projectwork. As well as to all others who extended the precious co-operation by providing all documents and details required for this work.

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Content Abstract 1. Introductions 1.1. Description of Project 1.2. Scope of Project 2. Facts and Figures 3.

Opportunity

4. Challenges 5.1

General Problem

5.2

4A’s Approach

6.Rural Marketing in india 7. Soft Drinks In Rural Market In India (A research paper study) 8.Some Myths 9.Strategy 9.1Marketing Strategy 9.2Distribution Strategy 9.3Promotional Strategy 10.Conclusion 11.Reference

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ABSTRACT Rural markets are an important and growing market for most products and services. The characteristics of the market in terms of low and spread out population and limited purchasing power make it a difficult market to capture. The Bottom of the pyramid marketing strategies and the

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A’s model of Availability,

Affordability, Acceptability and Awareness provide us with a means

of

developing

appropriate

strategies

to

tackle

the

marketing issues in rural areas. As a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to 200 million tones from 176 million tones in 1991, rural India has a large consuming class with 41 per cent of India's middle-class and 58 per cent of the total disposable income.

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1. INTRODUCTION 1.1 Description The concept ‘Rural’ and ‘Marketing’, though used very frequently in various forums, have eluded any precise and non- controversial definitions. When we join them, the resulting concept ‘Rural Marketing’ means different things to different persons. This confusion leads to distorted understanding of the problems of rural marketing poor diagnosis and, more often than not, poor prescriptions. The Indian rural market with its vast size and demand base offers great opportunities to marketers. Two – thirds of countries consumers live in rural areas and almost half of the national income is generated here. It is only natural that rural markets form an important part of the total market of India. Our nation is classified in around 450 districts, and approximately 630000 villages, which can be sorted in different parameters such as literacy levels, accessibility, income levels, penetration, distances 5

from nearest towns, etc. Rural marketing and urban marketing are identical as regards basic marketing structure. However, rural markets and rural marketing have special features and dilemmas as compared to urban markets. The rural markets offer a great scope for a concentrated marketing effort because of the recent increase in the rural incomes and the likelihood that such incomes will increase faster because of better production and higher prices for agricultural commodities. The rural markets dominate Indian marketing scene and need special attention for the expansion of marketing activities and also for providing better life and welfareto the rural people. Given the development, which has taken place in the rural areas under the five- year plans and other special programmes, today the rural market offers a vast untapped potential. Development programs in the field of agriculture and allied activities, health education, communication, rural electrification, etc have improved the lifestyles of poor and the illiterate and some market...

2.2

Scope

Rural markets are an important and growing market for most products and services. In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs cannot afford to ignore. With 128 million households, the rural population is nearly three times the urban.

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3.Facts and Figure These are some facts that make rural market attractive, Rural market

has

following

attributes

and

the

following

facts

substantiate this:  742 million people  Estimated annual size of the rural market  In 2001-02, LIC sold 55 percent; of its policies in rural India.  Of two million BSNL mobile connections, 50 percent; are in small towns / villages.  Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone (VPT).  41 million Kisan Credit Cards have been issued (against 22 million credit-plus-debit cards in urban), with cumulative credit of Rs. 977 billion resulting in tremendous liquidity.  Of the 20 million Rediff mail sign-ups, 60 percent are from small towns. 50 percent of transactions from these towns are on Rediff online shopping site.  42 million rural households (HHs) are availing banking services in comparison to 27 million urban HHs.

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

Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs in urban.

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4.Opportunities  Infrastructure is improving rapidly -

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 In 50 years only, 40 percent villages have been connected by road, in next 10 years another 30 percent would be connected.  More than 90 percent villages are electrified, though only 44 percent rural homes have electric connections.  Social indicators have improved a lot between 1981 and 2001  Number of "pucca" houses doubled from 22 percent; to 41 percent; and "kuccha" houses halved (41 percent to 23 percent).  Percentage of BPL families declined from 46 percent; to 27 percent;.  Rural literacy level improved from 36 percent to 59 percent. 

opportunities –

Durables

Urban

Rural

Total (percent of Rural HH)

CTV

30.4

4.8

12.1

Refrigerator

33.5

3.5

12.0

FMCGs

Urban

Rural

Total (percent of Rural

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HH) Shampoo

66.3

35.2

44.2

Toothpaste

82.2

44.9

55.6

Marketers can make effective use of the large available infrastructure – Post Offices

1,38,000

Haats (periodic markets)

42,000

Melas (exhibitions)

25,000

Mandis (agri markets)

7,000

Public Distribution Shops

3,80,000

Bank Branches

32,000

Proliferation of large format Rural Retail Stores, which have been successful also  DSCL Haryali Stores  M & M Shubh Labh Stores  TATA / Rallis Kisan Kendras  Escorts Rural Stores

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

Warnabazaar, Maharashtra (Annual Sale Rs. 40 cror



5.Challenge 5.1 General Problem

 Rural India buys  Products more often (mostly weekly).  Buys small packs, low unit price more important than economy  In rural India, brands rarely fight with each other; they just have to be present at the right place.  Many brands are building strong rural base without much advertising support.  Chik shampoo, second largest shampoo brand.  Ghadi detergent, third largest brand.  Fewer brand choices in rural areas; number of FMCG brand in rural is half that of urban.  Buy value for money, not cheap products

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5.2 The 4A approach The more daring MNCs are meeting the consequent challenges of availability, affordability, acceptability and awareness (the socalled 4 As)

5.2.1

Availability

The first challenge is to ensure availability of the product or service. India's 627,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy. However, given the poor state of roads, it is an even greater challenge to regularly reach products to the far-flung villages. Marketers must trade off the distribution cost with incremental market penetration.

5.2.2

Affordability

The second challenge is to ensure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of who are on daily wages. 13

Some companies have addressed the affordability problem by introducing small unit packs. Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh — the so-called `Bimaru' States.

5.2.3

Acceptability

The third challenge is to gain acceptability for the product or service. Therefore, there is a need to offer products that suit the rural market. One company which has reaped rich dividends by doing so is LG Electronics. In 1998, it developed a customized TV for the rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets in the very first year. Because of the lack of electricity and refrigerators in the rural areas, Coca-Cola provides low-cost ice boxes — a tin box for new outlets and thermocol box for seasonal outlets. 5.2.4

Awareness

Building awareness is another challenge. Fortunately, however, the rural consumer has the same likes as the urban consumer — movies and music — and for both the urban and rural consumer, 14

the family is the key unit of identity. However, the rural consumer expressions differ from his urban counterpart. Outing for the former is confined to local fairs and festivals and TV viewing is confined to the state-owned Doordarshan. Consumption of branded products is treated as a special treat or indulgence. Hindustan Lever relies heavily on its own company-organized media. These are promotional events organized by stockiest. Godrej Consumer Products, which is trying to push its soap brands into the interior areas, uses radio to reach the local people in their language.

6.Rural Marketing in India The concept of Rural Marketing in India has always played an influential role in the lives of people. In India, leaving out a few metropolitan cities, all the districts and industrial townships are connected with rural markets. The rural market in India is not a separate entity in itself and it is highly influenced by the sociological and behavioral factors operating in the country. The rural population in India accounts for around 627 million, which is exactly 74.3 percent of the total population.

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The rural market in India brings in bigger revenues in the country, as the rural regions comprise of the maximum consumers in this country. The rural market in Indian economy generates almost more than half of the country's income. Rural marketing in Indian economy can be classified under two broad categories. These are: •

The market for consumer goods that comprise of both durable and non-durable goods

•

The market for agricultural inputs that include fertilizers, pesticides, seeds, and so on .

The concept of rural marketing in India is often been found to form ambiguity in the minds of people who think rural marketing is all about agricultural marketing. However, rural marketing determines the carrying out of business activities bringing in the flow of goods from urban sectors to the rural regions of the country

as

well

as

the

marketing

of

various

products

manufactured by the non-agricultural workers from rural to urban areas. To be precise, Rural Marketing in India Economy covers two broad sections, namely: •

Selling of agricultural items in the urban areas

•

Selling of manufactured products in the rural regions

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Some of the important features or characteristics of Rural Marketing in India Economy are being listed below: •

With the initiation of various rural development programmes there have been an upsurge of employment opportunities for the rural poor. One of the biggest cause behind the steady growth of rural market is that it is not exploited and also yet to be explored.

•

The rural market in India is vast and scattered and offers a plethora of opportunities in comparison to the urban sector. It covers the maximum population and regions and thereby, the maximum number of consumers.

•

The social status of the rural regions is precarious as the income level and literacy is extremely low along with the range of traditional values and superstitious beliefs that have always been a major impediment in the progression of this sector.

•

The steps taken by the Government of India to initiate proper irrigation, infrastructural developments, prevention of flood, grants for fertilizers, and various schemes to cut down the poverty line have improved the condition of the rural masses.

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7.Soft Drinks In Rural Market In India NON-ALCOHALIC BEVERAGES IN INDIA In India, the Coca-Cola and Pepsi soft drink brands suffered a setback in August of last year due to a product contamination scare. Both have cut profit margins to the bone in order to fend off competition from low-priced local fruit drinks. Indian consumers are accustomed to drinking a variety of locallyproduced soft drinks that are sold in small stands throughout the country. Rural India is still a highly price-sensitive marketplace, so the major soft drink companies are forced to cut profit margins in 18

order to compete there. India’s purchasing power parity per capita of US$2,850 is representative of a nation in which the average consumer has insufficient income to engage in discretionary spending. Nevertheless, during the hot season, spur-of-the-moment beverage sales are commonplace. In order to position themselves for sales growth, the major soft drink companies priced a 200-milliliter bottle at the equivalent of 11 U.S. cents. Although that price is not sustainable beyond the short term, management hopes that it will be enough to wrest market share away from local products and substantially increase sales volume in 2004.Beverage companies cannot afford to ignore India's rural consumers if they wish to expand market share. According to data release by the PRB, only 28 percent of India's population lived in urban areas in 2003. On average, rural consumers have a lower income level than their urban counterparts and demand lower-cost beverage options.In order to remain cost competitive, soft drink companies have to contain the transportation costs involved in expanding their distribution network into widespread towns and villages. Faced with high fuel and vehicle costs, companies are turning to less expensive means of transportation including Ox carts & rickshaw. Another challenge facing the major soft drink companies is regaining consumer confidence in the aftermath of a well- publicized scandal over the...

8. Some Myths 

Myth 1: Rural Market is a Homogeneous Mass

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Reality: It's a heterogeneous population. Various Tiers are present depending on the incomes like Big Landlords, Traders, Small Farmers, Marginal Farmers, Laborers, Artisans. State wise variations in rural demographics are present viz. literacy (Kerala 90 percent, Bihar 44 percent) and population below poverty line (Orissa 48 percent, Punjab 6 percent). 

Myth 2: Disposable Income is Low Reality: Number of middle class HHs (annual income Rs. 45,000 - 2,15,000) for rural sector is 27.4 million as compared to the figure of 29.5 million for urban sector. Rural incomes CAGR was 10.95 percent, compared to 10.74 percent in urban between 1970-71 and 1993-94.



Myth 3: Individuals Decide About Purchases Reality: Decision making process is collective. Purchase process - influencer, decider, buyer, one who pays - can all be different. So marketers must address brand message at several levels. Rural youth brings brand knowledge to Households (HH).

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9.Strategies 9.1Marketing Strategy Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market, a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, "melas", and other activities where they assemble 9.2Distribution Strategy One of the ways could be using company delivery van which can serve two purposes - it can take the products to the customers in every nook and corner of the market, and it also enables the firm to establish direct contact with them, and thereby facilitate sales promotion However, only the bigwigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between noncompetitive

marketers

can

be

established

to

facilitate

distribution. Annual "melas" organized are quite popular and

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provide a very good platform for distribution because people visit them to make several purchases.

9.3 Promotional Strategy Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc., with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns.

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10. Conclusion Thus, looking at the challenges and the opportunities, which rural markets offer to the marketers, it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.

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Reference www.business.mapsofindia.com www.wikipedia.com www.pdfcoke.com www.mpvidhansabha.com

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