Topic 1

The Indian rural market has gained significance in the recent times as the overall economic growth of the country has led to an improvement in the living standards of the rural people. The boon of the Green Revolution combined with government initiatives such as subsidies, loan waivers, minimum support prices (MSP) and employment schemes (MGREGS) have caused an increase in purchasing power. The real income of rural households is projected to rise from 2.8% in the past two decades to 3.6% in the next two. Higher incomes and exposure to urban lifestyles have also raised the aspirations of the rural populace, as they strive to improve their quality of life by gaining access to new technologies, products and services.

No of households (m) Demographic classification Rich ( income greater than Rs 1m per annum) Well off (income greater than Rs 0.5m per annum) Total % of Total Urban 4.8 29.5 34.3 54.4% Rural 1.3 27.4 28.7 45.6% Total 6.1 56 63.0

Source: Ministry of Communications & Information Technology, India Cut throat competition in urban areas has compelled many companies to look for new, unexploited markets. Rural India has emerged as an answer, owing to lack of strong presence by brands in most sectors as well as a high growth potential. Further, improvement in infrastructure prompted by government initiatives seems to have lowered entry barriers for many companies. Also, rural India is insulated against global economic downturns, which adds to its attractiveness. For companies looking to tap this market, the 4Ps of the Marketing mix have given way to the 4 As of Rural Market Mix: Affordability, Awareness, Availability and Acceptability.

Present Market Scenario: 1. FMCG: FMCG companies have realized a significant proportion of their sales from rural markets. They account for 70% of toilet soap and 50% of TV, fans, bicycles, tea and wrist watch consumption. At present rural India accounts for 34% in FMCG consumption. HUL has launched special initiatives to push its rural sales through Project Shakti and Shakti Amma television channel.Successful FMCG products have typically been low priced and available in small-unit packages. This is in line with the rural psychology of high aspiration and high price consciousness. Examples are ParleG priced at Rs. 2, Chik Shampoos sold in sachets priced at 50 paisa and 500gm packs of Godrej soaps priced at Rs 5. 2. TELECOM: RNCOS, a research agency, states that as penetration in the urban region has saturated, operators are vying for rural India and estimates that the subscribers base in rural markets will grow at a CAGR of 35% during 2011-12 to 201314. Mobile device manufacturers are also tailoring their products to this market. Nokia had earlier launched Nokia 1100 with a torch (large parts of rural India don't have electricity) and an alarm clock. In December 2008, it went one step further with the launch of Nokia Life Tools, which is a range of agriculture, education and entertainment services designed especially for the consumers in rural areas.Reliance Communications in a JV with Handygo Tech Pvt Ltd has introduced a Value Added Service,Behtar Zindagi, providing the people with weather reports, livestock information, mandi prices, fisheries, finance and wealth scheme advisories. 3. RETAIL: The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the Indian retail market. Traditionally, people in rural areas purchase products in haats, mandis and melas, which represent the unorganized retail industry. Today many companies are entering the rural markets with a model for organized retail. Examples include:

Hariyali Kissan Bazar, promoted by DCM Sriram caters to the requirements of farmers for farm equipments and other agricultural inputs. ITCs Choupal Sagar is another initiative that not only sells personal care and household utility items, but also buys farm produce Large format retail stores called Adhaar also have been set up by Godrej Agrovet

4. AUTOMOBILES Rural areas have traditionally been major markets for automobiles such as tractors and cars. But rising incomes and peoples aspirations have led to an increased demand for cars as well. Market leader in the small car segment, Maruti Suzuki India Limited, has registered almost a fifth of its sales from the non-metro areas across the country. Also, Mahindra & Mahindra is now selling more Scorpios in rural and semi-urban markets. The successes of these firms have encouraged others to venture into these markets. Bajaj Auto, the countrys second largest two-wheeler seller, is planning to offer a 150cc engine motorcycle to the rural areas. Another entrant is Toyota Kirloskar Motor,which is planning to sell 40% of its cars in rural markets in India. 5. CONSUMER DURABLES: Many companies are committed to modify their products to explicitly suit rural demands. For example, lighting solutions company BPL Techno Vision has launched its rechargeable light emitting diode (LED) lantern 'BPL Chirag' for the domestic rural market. Chirag needs only four hours of charging for five hours of light. This product addresses the problems of frequent power losses and fluctuating voltages in rural India. Challenges: Although rural India seems to be a huge unexploited market, there are certain deterrents that slow down firms undertaking ventures to tap rural markets. The biggest mistake is to consider the entry into rural markets a natural expansion of the existing urban markets. The requirement of the rural people is significantly different from that of the urban areas, owing to varied demographic, social, economic and psychological environments. Thus the market offerings have to be suitably modified to meet the exact requirements of the rural consumers. Villages in India are spread over large geographical areas, and sometimes have very low densities of population. About 68% of the market remains untapped due to inaccessibility. This makes the distribution of products and their

ready availability challenging. In fact, sales in rural India is influenced more by product availability than by advertisement. Added to this is the wide prevalence of fake brands, which flourish mainly due to illiteracy and lack of awareness. Local companies often copy the logo and colour schemes of established brands, while slightly modifying the product name in an attempt to fool customers into believing their fake products for the genuine ones. The disposable income of the rural populace is relatively low as compared to urban areas, seasonal, unstable and affected by uncontrollable factors like floods and droughts. This makes purchase of bulk consumer products rare. Hence people prefer goods that are low priced, or offer a good value for money. Small-unit packets are readily accepted as they represent convenience and affordability. Purchases in rural India are meant for consumption by the entire family as opposed to individual preferences. In this scenario, it is essential that products are developed such that they are fit for general purpose by all the members. This results in loss of opportunities for firms that gain by customization. On the whole, purchase decisions are influenced by deeply rooted social and cultural norms. The Joint family system is still common, and reference groups have a major impact on buying behaviour. Thoughtful consideration to all these factors is essential to make a mark on the rural audience. Marketers are often unable to obtain a true picture of the needs and wants of the rural people due todifficulties in conducting market research. Wide geographical spread and vast variation in languages increase the time and costs involved. Moreover, a conservative outlook often restricts women from taking the surveys. Advertisements and other forms of communication also have to be modified suitably to suit the tastes of the rural people. For example, it has been observed that people respond positively to bold fonts and bright colours such as red, green and yellow. The messages on advertisements should be written keeping in mind the sensitivities of the people and not offend anyone. Advertising in rural areas tend to be expensive as messages need to be translated in several local dialects to create optimum impact. Today companies are realizing the potential of the Indian rural markets and gradually expanding their steps in this direction. They still have a long way to go, but it is clear that the companies will eventually have to harness the rural markets for growth and opportunity.

Topic 2
Following are few factors that are accountable for the upcoming paradigms of rural marketing:

Increase in purchasing power and disposable income:Projects from the private companies and the ruralemployment initiatives by the governmental like NREGA (National Rural Employment Guarantee) schemes have given the rural population an opportunity to meet their daily needs. The loan waver in the agriculture sector and an increasing demand for labour in the urban areas, has given a boost to the income levels in the rural sectors. Consequent lifestyle up grade has added a new spectrum.

Accessibility of market: Improvement in the road systems linking the villages has led to a systematic product distribution system. Earlier, there was a trickle down of the stocks observed to the buyers in the interior villages.These days, companies use delivery cum promotion vans that travel 8-10 haats/markets daily as a part of direct contact with villagers. Competition in the urban market: The urban markets have got extremely saturated with the presence of all big players. This is very much evident in the automobile market. Motorcycles and scooters often find more acceptances in rural market as compared to urban market, since there is more proliferation of brands in the latter markets. Reduction of risk during recession: It has been observed that the companies which cater to both urban and rural markets tackle the recession in a better way. The demand for goods in the urban market often follows a cyclic whereas in the rural market it is steady.

The companies are bound to tailor the strategies depending on various factors to appeal to the rural market. For example, Hindustan Unilever Limited came out with the concept of Shakti Ammas (female social entrepreneurs)which was an innovative way of marketing products. This much needed transition can be weighed according to the 4 As model (Availability, Affordability, Acceptability and Awareness).

Availability deals with making the product reach the consumers. For this purpose a highly integrated extensive distribution network is necessary and in rural context, the company incurs higher cost towards the logistics as compared to urban areas. In case of Shakti campaign, the local Shakti Ammas are selected based on their popularity which allows faster access to products. Affordability involves pricing the product in such a manner that the people are attracted and at the same time it covers all the cost incurred.

Acceptability encompasses issues how the product or service could be made more acceptable to the rural consumers by incorporating attractive features. For example, Eveready came out with Jeevan-Sathi torches, with features like durable design and long life to make it more acceptable. Awareness is linked to the issues of promotion of product in rural areas. The promotion needs to be adapted to the village environment, the local language and means of communication used. The best places to promote could be the frequently visited local haats and melas, the local festivals. Agricultural cycles require a major consideration too.

Classifications of rural customers:

Affluent group: These include cash rich farmers who have affordability but not form a demand base large enough for marketing firms to depend on. Middle class: This segment is an user of manufactured goods. Poor: The largest segment which Purchasing power is less but they receive the grants from government and reap the benefits of many such schemes and may move towards the middle class.

Challenges in rural marketing:

Different profiles of the consumers: Due to dispersion of geographical areas and uneven land fertility, rural people have disparate socioeconomic background, which ultimately affects the rural market Regional diversity:To make tailor made campaigns, a thoroughknowledge of the nuances of language, dialects andfamiliarity with prevailing customs in the regions is essential. Seasonal market: The rural customer remains driven by his needs first and will therefore be cost conscious and thrifty in his spending habits. Since most of the people depend on agriculture for their livelihood, the failure of monsoon can completely paralyse the purchasing power. Spurious brands: Cost is an important factor that determines purchasingdecision in rural areas. A lot of spurious brands or look-alikes are available,providing a low cost option to the rural customer.

Rural Advertising: The psyche of the rural customer is slightly different from that of the urban customers. Hence the advertising has to be done in a way that can make the rural customers connect with the product and feel that it is aligned with the rural lifestyle. The greatest challenge for advertisers andmarketers continues to be in finding the right mix that will have a pan-Indian ruralappeal. Hence, the advertising mix needs to be inclined towards non-conventional yet effective medium like Puppetry, Folk Theatre Song, Wall Painting and promotion in the local haats. Thus, the rural customer can be attracted to the product either on the basis of strong product customisation or an advertising campaign that targets the right customers.

Marketing Mix in the rural markets

The rural market has a tremendous potential to be explored. The companies need to give a special focus on the packaging, as the smash able element will form a direct connect with the customers. However the rural marketing will be successful only if the companies align the product in tandem with the needs and awareness of the rural customers.

Many marketers have adopted the 4As strategy to cater to the requirements of the rural population. Awareness Rural consumer is not much aware about brands. They rely more on local brands. To develop reliability factor in them towards new brands it is necessary to publicize the brand awareness by NGOs working actively in the region. This can be done through mouth publicity by any known resident of the same village also. E-Chaupal program of ITC is helping it in making brand image. Illiteracy makes them unable to read basic text about the brand identification. It is easy to sale spurious products in rural market. RC Cola and Hello chips, copy of Pepsi and Lays respectively are getting sold widely. Therefore packaging plays an important role. It is better to give short name of the product in local language. Pictorial representation on packaging will also help.

Availability Due to poor access to rural markets, poor infrastructure and irregular or no power supply to rural areas it is a difficult task for firms to make products available all the time in the reach of the rural consumers. Therefore Tata tea has started selling its tea through new channel of distribution.It decided to partner with NGOs, which have greatest reach to the rural people, acting as the first tier and followed by 2 other tiers from villages. Rural youth become Mobile Rural Distributor at level 2 and Small Rural Retailer become tier 3. HULs Shakti Amma and Shaktimaan projects are on the same lines. Firms cannot stick to any one supply chain model. They have to be flexible to use all possible means of transport according to the terrains requirement to achieve maximum operational efficiency. Trucks, auto rickshaws, cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas can be used to deliver products to the market. Affordability A product which caters to the need or want of consumers and is within paying capacity of the consumer can be sold in rural market. Keeping this in mind LG launched its first low price T.V in rural market -Sampoorna(at Re 3000) and Cineplus(at Re 4900), Nokia developed cell phones at affordable prices for its rural consumers. FMCG companies came up with sachets and small packs because in rural market low price pack is preferred rather than economy pack. They started selling shampoo sachets priced at Re 1 or Re 2, Pepsodent toothpaste at Re 5, Lifebuoy soap in 50 grams pack at Re 2, Surf-excel sachet at Re 1.50, Fair & Lovely Cream at Re 5. Most of the FMCG products are in the range of Re 1 to 10. There is no need to provide sophisticated packaging but value packs need to be provided. Acceptability Firms have to understand rural customers need. Automotive, salt, FMCG, telecom, insurance, soft drinks, cigarettes, TV, fans, pressure cooker, washing soaps, tea, blades, tooth powder are the goods and services which are excelling in the rural market. Rural consumers prefer utility oriented products. At the same time product should be compatible with the infrastructure available in rural areas. Coca-Colas Parivartan program provided low-cost iceboxes as families could not depend on refrigerators due to regular power cuts. Advertising strategies in rural market Rural society is mostly agrarian society. Rural people can be easily contacted by a rural salesperson in afternoon which generally comes under their leisure time. Since most of the rural people live in joint families therefore almost all the family members especially demand generators of that household can be contacted directly. This will also build face-toface relationship between salesperson and customers.

It is easier to get group response in rural market, if they are demonstrated well about a product. At the same time due to less electronic entertainment devices they are fond of folk theatre, puppetry shows, melas etc. This can be an opportunity to address the rural mass and increase the awareness about particular product. LIC and BBLIL (KadakChhap Tea) both have used this strategy to market their product. Outcomes of this strategy even can further improved by inducing trials. Utsav range of Asian paints was launched by painting Panchs house or any public building to demonstrate the quality of the product. Wall painting has been effective, economical and long lasting way of advertising in rural market. Considering all the opportunities and challenges available in the rural market, Go Rural is the slogan of marketing gurus. Though lots of hurdles are there in this path still firms find it easy to vie for a share of the already divided urban pie but it should not be done at the cost of reducing products features. Changing consumption pattern and improvement in rural infrastructure promise a bright future for the firms who intend to Go Rural

Topic 3
While there are sceptics about pay-offs from building brand for Rural India, the marketers cannot deny the facts: nearly 136 Million households still reside in rural areas even by broadest classification- which comes to more than 800 Million population. Total income in rural India (about 43% of total national income) is expected to increase from around US$220 billion in 2004-2005 to US$425 billion by 2010-2011, a CAGR of 12. The market penetration is still significantly low in rural areas and there is increasing Brand Awareness in Rural Markets. As seen from the chart above, there is a huge population out there in India, who has buying power- with higher untapped potential compared to Urban India.

As Dinesh Malhotra, GM of Rural arm of Lintas points out: With media exposure and increasing literacy levels, people in rural India are now demanding a better lifestyle. The Rural lifestyle is changing. The educated rural yuppie (males in the 15-34 age group) is more educated now- they often send money to their families home from the cities they work in. This also has created Bandwagon Effect to some extent- often these people, when come back to villages, are the new role models of other population in the villages. With their Brand conscious consumption, they also have a deep impact on the villagers. Word of mouth publicity is after all, most effective publicity in building brand in rural areas. Because his cousin from city purchases the same, a consumer from rural areas will go to local kiryana shop and demand Head & Shoulders- and not Shampoo. He will ask for Medicare or Lifeboy- not just a low-priced soap. This shows that the Branding campaigns of these companies did actually have its impact. When urban consumers are using Shampoo sachets, they forget that these sachets were introduced first for penetration and increasing Sales & Awareness amongst Rural India. In Rural areas, the strategy for a firm to create its own brand is significantly different than in urban areas. This is not just due to income level- though that plays an important part in it- but also due to the fact that this is the market where life has revolved around deep rooted community values, joint families, and social customs and taboos. Here, marketers need to understand that the traditional routes of market entry and brand building employed in urban India are often not feasible. From the size of products in case of shampoos, to its pricing strategy to its position- all or some have to be tweaked to get in this market. In fact, some companies enter with totally different product for rural markets- like Neem by Colgate-Palmolive. Here, the company tried to create Brand awareness of it by combining the traditional norm of brushing teeth in villages in form of twigs of Neem with its toothpaste.

While creating a Brand, the company needs to consider some of the following aspects:

For a rural customer, a branded product is bigger investment than their urban counterparts. They expect value for money- hence the company should try to exceed their perceived expectations in quality of Product. The biggest influencing factors of Advertisement for Rural consumers are often: Word of Mouth, Advice of retailer/distributor, Hoardings and Road-shows, TV and Radio Ads. Depending on product and consumer demographics, this may vary- but company should try to achieve maximum effective coverage through this mediums. Like in case of Shampoos, companies should try to make their products available at affordable rates or sizes to the rural consumers. Eg: Chhota Coke, Single use products like Razors. For consumer durables, Aesthetics, warranties and recommendations of Shop-keeper plays a huge role on consumer decisions. Rural households are prone to me more swayed by Brand Ambassadors like Amitabh Bachchan or Sachin Tendulkar compared to urban households. While positioning a product, one has to try to use local beliefs, culture or traditions to ones advantage- or at least special attention should be given that it is not in conflict with them.

Thus, while a company might face number of obstacles in creating a successful brand in rural market, the benefits it will receive in long term will often outweigh the efforts. Also, one has to take care that after Branding, availability of the product and satisfaction of consumers are next important steps it fulfils

topic 4 images

Mela In village

RURAL MARKETING-CHALLENGES AND OPPORTUNITIES

There is a great opportunity for the marketers in the rural areas. Two-thirds of countries consumers live in rural area. Naturally the rural markets form an important part of the total market of India. Our nation have around 450 districts, and approximately 630000 villages with different parameters such as literacy levels, accessibility, income levels, distances from nearest towns, etc. Around 700 million people, or 70% of India's population, live in villages in rural areas. 90% of the rural population is concentrated in villages with a population of less than 2000. Going rural can be said as the new marketing mantra.

How much worth the rural market is can be well explained from the Coca-Cola case. Coca-Cola India doubled the number of outlets in rural areas from 80,000 in 2001 to 160,000 in 2003, which increased market penetration from 13 per cent to 25 per cent. It brought down the average price of its products from Rs 10 to Rs 5, thereby bridging the gap between soft drinks and other local options like tea, butter milk or lemon water. It also tapped local forms of entertainment like annual haats and fairs and made huge investments in infrastructure for distribution and marketing. The rural market accounts for 80 per cent of new Coke drinkers and 30 per cent of its volumes. The rural market for Coca-Cola grew at 37 per cent over the last year, against a 24 per cent growth in urban areas. Per capita consumption in rural areas has doubled in the last two years. The success of a brand in the Indian rural market is unpredictable also it is very difficult to measure the rural market. While the rural market certainly offers a big attraction to marketers, then why not any company can easily enter the market and come out with sizable share. This is mainly because of the reason that the rural market is covered with variety of problems. The main problems in rural marketing are: PhysicalDistribution Channel Management Promotion and Marketing Communication The problems of physical distribution and channel management adversely affect the service as well as the cost aspect. But the biggest of all the problems is how to communicate and reach these 700 million people. This can be done by using various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the celebrations, festivals, melas and other activities where they assemble.