PENETRATING RURAL MARKETS THROUGH VILLAGE HAATS

By

Sagar Kundu

Rohit Kumar

TABLE OF CONTENTS

Introduction Rural India’s Traditional Haats The Big Picture Advantages Few Companies Initiatives Conclusion References

INTRODUCTION

The Indian rural haats were from ancient times. From barter system to modern transaction methods, every change were adopted by these haats. Though traditional, these Indian avatars of hypermarkets promise to drive marketing plans of companies as they eye the emerging rural market, accounting for over two-thirds of India's population, 56% of income, 64% of expenditure and 33% of savings

Though the Rs 50,000-crore sales that these weekly rural bazaars collectively generate every year may just be a fraction (under 3%) of all rural private consumption expenditure (Rs 20 lakh crore), their importance in rural life goes beyond sales

Almost every villager is a regular haat visitor, with over three-fourths visiting one every week. And two in every five visitors here are women. With the average distance between a haat and the nearest big town at 24 km (16 km in case of the most urbanised state in Tamil Nadu), these haats double up a shopping-cum-outing opportunity for millions of entertainment-starved rural Indians

RURAL INDIA'S TRADITIONAL HAATS

Rs 50,000 crore annual sales n Out of total footfalls around two-fifth are women

Large haat, in a 10,000+ village, caters to 57 villages attracts 12,000 visitors daily

Small haat, in a 5,000+ village, caters to 21 villages, average footfall of 5,600 a day

545 stalls appear in a large haat while around 327 stalls are set up in a small haat

98% rural people are regular visitors to haats 75% visit any particular haat almost every week Three-fifth come to buy specific products from haats

despite the fact that similar products are available in their villages

A buyer spends Rs 40 on purchase of FMCG products in a single haat day. It nears Rs 60 in UP and Maharashtra while is comparatively lower at Rs 22 in Orissa and AP

THE BIG PICTURE

Establishment of Haats

Before Inde-pendene 70%After In-depen-dence 30%

Location Of Haats5% 52%Temple Market Place35% 8%Bus Stop Others

Source:RMAI

States with max Haats Uttar Pradesh 10,380 Bihar 4,993 West Bengal 4,078 Jharkhand 3,996 Maharashtra 3,758

Stalls in Haats(in percent)

Source:RMAI

Agriculture Products 53%Manufactured Goods 19%Processed Goods 6%Handicrafts 5%Forest Goods 5%Services 4%Meat Poultry 3%Others 5%

BRAND AWARENESS FOR SPECIFIC FMCG PRODUCTS SOLD AT HAATS (%)

Source:RMAI

Shampoo

Bathing soap

Toothpaste

Talcum powder

Face cream

Detergent

Biscuits

Hair oil

Salt

Confectionary

0 20 40 60 80 100 120

FMCG PRODUCTS PREFERRED AT HAATS (%)

Groceries 63%Toilet soaps 60%Detergents 56%Tea 52%Shampoo 43%Biscuits 36%Matchbox 21%Cosmetics 18%Oral care 16%Mosquito repellent 12%

Source:RMAI

SALE OF FMCG PRODUCTS PER OUTLET ON A HAAT DAY (RS)

SSale of brandedFMCG

Total sales of FMCG(including unbranded)

Maharashtra 2,793 13,196

Bihar 3,450 12,490

Uttar Pradesh 2,864 7,229

Orissa 2703 5,205

Andhra Pradesh 339 1,741

Madhya Pradesh 421 4,231

Tamil Nadu 2,971 8,553

Average 2,224 7,521

AVERAGE NUMBER OF VISITORS IN A HAAT

Large Haat Small Haat

Maharashtra 22,300 10,500

Bihar 8,100 3,500

Uttar Pradesh 17,000 4,100

Orissa 3,700 3,000

Andhra Pradesh 6,800 3,700

Madhya Pradesh 11,000 4,600

Tamil Nadu 15,000 10,200

Average 11,900 5,600

SOURCE OF PURCHASE OF BRANDED FMCG FOR HAAT SELLERS

Wholesaler 72%Company Stockist 11%Retailers 18%

ADVANTAGES Brands rarely vie for attention because a shop in a rural

area usually wouldn't have place for too many SKUs (stock-keeping units)

They can build a strong rural base without much advertising support (like Chik and Ghadi, the shampoo and detergent brands). This could be due to product design and benefits as well as due to self-sustaining distribution/marketing models

Expensive brands too can do well - contrary to popular belief, rural consumers believe in value for money and do not buy cheap products (Close up toothpaste, Marie and Tiger biscuits and Clinic shampoo are doing well due to deep distribution)

Disposable surplus is not low in rural markets because the people there don't usually pay rent or spend much on food as grain and vegetables are from their own fields/homes. The number of middle-class households (those having annual income of Rs 45,000-2.15 lakh) are almost equal at 15.6 million in rural areas and 16.4 million in urban areas.

Another opportunity lies in making effective use of the infrastructure: 3.8 lakh public distribution shops, 1.38 lakh post offices, 42,000 haats, 32,000 bank branches, 25,000 melas (exhibitions) and 7,000 mandis (agricultural markets)

Large-format rural retail stores such as DSCL Hariyali , as well as IT initiatives like ITC"s e-choupal will help make inroads into rural markets

FEW COMPANIES TAKING INTIATIVESMEDIMIX

Focused brand-building initiatives—like participation at community events such as “melas” (village fairs),“haats” (markets), street theater, van campaigns, and puppet shows—generate positive word-of-mouth and influence buying decisions.

Medimix,” campaigned in mobile vans to promote its brand and give out product samples

COLGATE

Distributed free sample and toothbrushes at these haats for awareness of oral health

Taken initiatives to circumvent the limitation in communication channels by innovatively leveraging non conventional media. Wall paintings cinema vans weekly markets haat fairs and festivals

Promote the product as a substitute for neem twigs, salt , charcoal etc in rural belt

DABUR

In villages promote its hair oil as a substitute for mustard oil which village folks generally used.

In rural UP & Bihar With Swasthya Chetna Abhiyan project for Dabur Chyawanprash

Health camps set up for these haats so that health benefits are told to the customers coming there

SONATA

Sonata launched project Swades, aimed at changing people's mindsets and making them aware of the value of time in rural India

Sonata watches were also displayed at local melas (fairs) and haats (markets)

Gaily decorated mobile vans travelled around villages to generate interest

To customers, in the 20-to-35 year age group Sonata is talking to banks for micro

financing, so that more people can afford to buy watch

CONCLUSION

The haat system demonstrates the Indian ingenuity of keeping product prices low. No high shop rentals, salesmen salaries or investment in display shelves and shop interiors. The fee for putting up a stall is a ridiculous Rs 5, whether you are a poor woman selling vegetables or a multinational selling consumer goods.

More focus should be on better infrastructure on these haats like electricity, sheds etc.

Companies will directly communicate to the huge rural masses with very less advertisement cost and their products are directly sold without much intermediaries .

As income of rural people increase demand for branded goods will also increase rapidly

REFERENCES

www.rmai.in www.nextbillion.net/news/the-great-rural-goldrush www.tata.com/company/Articles www.indicus.net/media/index.php/newspaper/1559-a-

slice-of-life-in-peri-urban-india www.financialexpress.com/news/rural-supermarkets www.colgate.co.in www.dabur.com www.cholayil.com/medimix-ayurvedic-soap.aspx