A PROJECT REPORTOn

“Tools And Techniques In Rural Markets”

What Is a Rural Market With more than 700 million people living in rural areas, in some 5,80,000 villages, about two third of its workforce was engaged in agriculture and allied activities with a contribution of 29 percent of India’s Gross Domestic Product (GDP), India’s economy is predominantly rural in character.

India’s economy can be thought of as comprising of two main sectors, namely, the Rural Sector and the Urban Sector. The Rural sector is, in turn, composed of two main sub sectors i.e the agricultural sub sector and the non agricultural sub sector.

“India lives in villages”

-Mahatma Gandhi

Reasons for going Rural

Size of the market Largely Untapped Too crowded Urban Market Income on the rise/disposable income Income from other than agriculture Income flow from urban/abroad Better exposure – media

Rural India buys

Soft Drinks approx 45% of all soft drinks

Almost 50% motor cycles

Approx 55% of cigarettes

Half the total market for TV,Fans,Pressure cooker,bicycles,Washing soap,tea,blades,salt,tooth powder

Coca Cola is growing over 35% in Rural areas compared to Over 22 % Urban

According to Hasna Research, a market research farm that has published a Guide to Indian Markets 2006Consumer durables in Indian Villages risen sharply

TV Sales up by 200%Motorcycle by 77%

“The future lies with those companies who see the poor as their customers”

-CK Prahalad

“To get rich, sell to the poor”-Pradeep Kashyap.

Problems in Rural Marketing

Low per capita income Low disposable income Inadequate fixed income (daily wages) Majority – depends on Agricultural Income Acute dependence on monsoon Consumption linked to harvest Infrastructure problems Roads, power Low awareness Communication-difficult & expensive Too many languages Geographic Spread

Product Strategy and the 4As4AsAwarenessAffordableAcceptableAvailable

Companies like HUL, Colgate Palmolive, Coca Cola and LG have been able to address these challenges successfully

Rural Customer....... Understand them.....

Illiterate but not fools....

An Intelligent Thinker◦Loyality to regional brands◦Brand sitckness◦Understand symbols and colours better

A hard Bargainer◦Has his own way of evaluation (touch and feel

of product)

Techniques In Rural Markets

Argo Advertising◦No brands, no advertising◦'Me too' – communiation efforts◦Posters◦Farmers meets◦Leaflets◦Demo Farms\

Rural Marketing Common.... One follows other

What To Do?

Opinion leaders at the top of the hierarchy continue to play an important role in the decision making process.

In spite of multiple sources of communication few steps continues to dominate the communication process.

Women and children are emerging as demand genrators.

Word of mouth recommendation by users and sheer familiarity have a strong role to play in influencing decisions.

Apart from opinion leaders, educated village youths are increasingly influencing decisions especially of lifestyle products.

Care for every one......

Rich Villagers Aspiring middle class Bottom of the pryamid

Know The Local Language Marathi Rajasthani Hariyanvi Pahadi

Ideal Advertising

LG's Advertising Strategies for rural market...

LG launched its first low price T.V for Rural Consumers.

-Sampoorna- Rs. 3000-Cineplus- Rs. 4900

Promotion Mobile Vans Exibhition Road Shows

HULProject SHAKTI

Some Of the proucts sold through project Shakti

LUX at Rs. 5Lifeboy at Rs. 2Surfexcel sachet at Rs. 1.50Pond's Talc At Rs. 5Pepsodent Toothpaste At Rs. 5Fair & Lovely Skin Cream At Rs. 5

ITC – e CHOUPAL

Key success factor self sufficient infrastructure

IDEA

Has a customer base of over 17 million.

Promotional strategy (An Idea can change your life)

Idea as an instrument of democracy, bringing power to the people.

Social messaging to reach the hearts and minds of rural India.

Abhishek Bachchan- presented as a humble public servant, an agent of change.

Coca cola “THANDA MATLABH COCA COLA”

Coca Cola capture 17.34% rural market till 2009.

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NOKIA Variety of product Low Price Airtel sim free with nokia cell Teaching them how to use Low price cell phones Features useful to them

Nokia Rural Market

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Rural India In 2001-02, LIC sold 55% of its policies in rural

India. Of two million BSNL mobile connections, 50%

are in small towns / villages. Of the 20 million Rediffmail sign-ups, 60% are

from small towns. 50% 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.

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

Rural Consumer Insights

Rural India buys -

Products more often (mostly weekly). Buys small packs, low unit price more important

than economy. Rural market involves more intensive personal

selling efforts compared to urban marketing.

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.

Current scenario

Rural India, which accounts for more than 70 per cent of the country’s one billion population is not just witnessing an increase in its income but also in consumption and production.

The Union Budget for 2009-10 hiked the allocation for the National Rural Employment Guarantee Act (NREGA) to US$ 8.03 billion, giving a boost to the rural economy. This is in addition to the ambitious Bharat Nirman Programme with an outlay of US$ 34.84 billion for improving rural infrastructure.

According to a study on the impact of the slowdown on rural markets commissioned by RMAI and conducted by MART, the rural and

small town economy which accounts for 60 per cent of India’s income has not been impacted by the global economic slowdown.

The rural consumer market, which grew 25 per cent in 2008 when demand in urban areas slowed due to the global recession, is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers.

Several FMCG companies such as Godrej Consumer Products, Dabur, Marico and Hindustan Unilever (HUL) have increased their hiring in rural India and small towns in order to establish a local connect and increase visibility.

GlaxoSmithkline Consumer Healthcare (GSK) and Nestle and are now launching products specifically for rural markets.

At present 53 per cent of all FMCGs and 59 per cent of all consumer durables are being sold in rural India. The biggest FMCG Company in India HLL derives more than half of its Rs. 12,000 crore revenues from the rural markets.