Study On Potential

Channels For
Promotion Of
Consumer Durables In
Rural India
BY

VAIBHAV DIXIT

PG20095673

Submitted To-

Mrs. Kavita Shukla

INTRODUCTION

The Indian rural market with its vast size and demand base offers a huge
opportunity that MNCs and Indian companies cannot afford to ignore
With 150 million households, the rural population is nearly three times the
urban. The FMCG, automobile, manufacturing, IT, agriculture, finance &
insurance companies are moving into the rural markets in a big way as it
is a goldmine that has not been effectively tapped into because of lack of
understanding about consumer behavior, distribution system and
communication channels. Participants attending this program will get
educated and enlightened on the elements of “Go to Market” strategy for
their organization and benefit from this large business opportunity.

When rural customers discover the new and exciting choice of

brands available in urban markets, a demand for these brands is
created in rural areas. Marketers have entered the rural markets by
extending the distribution of their existing offering or developing
a separate marketing strategy for the rural markets. When Titan,
the watch manufacturer, found rural consumers purchasing their
Sonata brand of quartz watches, they formulated a marketing
strategy tailored to the requirements of the rural market.
There is an increase in the launch of new products and brands
in rural areas. In many product categories like cigarettes, biscuits,
soaps, etc., specific brands are developed only for rural markets.
The rural market, in both durables and non-durables, can be
developed through new products and suitable positioning.

REASONS FOR THE INTEREST

There are quite a few reasons for the growing interest in rural
markets. A very straight forward reason is the growth of these
markets, as in the case of the television market.
The growth in the television market is also because of the low
penetration levels of the product in the rural market. A number
of products exhibit a growth rate of more than 10 per cent in
the rural market (see Table ).

TABLE 1.1

Growth in Rural Markets by Product Categories

Product Category Growth (%)

After shave lotions 51.9
Jams/Jellies 37.8
Butter/Margarine 36.4
Napkins 32.3
Acne preparations 28.3
Sanitary napkins 24.6
Air fresheners 24.5
Phenyls 20.8
Packaged atta 17.3
Perfume/deodorant/cologne 16.3
Shampoo 14.2
Hair dyes 14.1
Hair remover 11.0

Source: Dobhal, 2005.

The vast untapped potential, increasing income and purchasing

power, improved accessibility and the increasing competition
in urban markets make rural markets an attractive destination for
jaded marketers of products and services. Entry into rural markets
reduces the risk of depending only on the urban market.

Non-durables
Consumption levels for certain products continue to be low for
non-durables despite the growth in rural markets. ORG-MARG
fi gures indicate the pharmaceutical sales in rural India to be
Rs 28.71 billion compared to the total domestic sales of Rs 155.34
billion. Rural sales, thereby, work out as 18.5 per cent of total
sales in the country. While per capita annual drug expenditure
in India is Rs 151, in rural areas this fi gure is a meagre Rs 39 per
person. The demand for health care, if anything, is higher in
rural markets than in urban markets. According to a National
Council for Applied Economic Research (NCAER) survey, the prevalence
rate of illness for men is higher in rural areas at
105.5 per 1,000 population as against 98.2 in the urban areas. For
women, it is at similar levels in urban and rural areas—at 108.4
per 1,000 population (Gothivarekar, 2003).
The cellular phone industry has a large number of subscribers
in rural areas. Out of its consumer base of 540,000 subscribers, BPL
has close to 200,000 subscribers in rural areas of Maharashtra,
Kerala and Tamil Nadu. In Andhra Pradesh and Karnataka,
Bharti has about 30 per cent of its total subscriber base in smaller
towns and villages (Law, 2000). The share of 30 per cent is low
compared to the potential for cellular phones in rural market,
and this is reflected in the high growth in the sales figures for the
product in the rural markets.

Durables
While sales figures are useful to understand the consumption
levels for non-durables, ownership is the appropriate measure for
consumption of durables. The ownership level of durables in rural
areas is low compared to urban areas. While 81 per cent of urban
households own at least one ‘asset’, as defined by the Census of
India, less than 60 per cent of rural households can lay claim to
ownership of at least one consumer durable item (see Table).
TABLE

Households Owning Specified Consumer Durables

Households (%)
Sl. No. Consumer Durable Rural Urban
1 Radio, transistor 31.5 44.5
2 Television 18.9 64.3
3 Telephone 3.8 23
4 Bicycle 42.8 46
5 Two-wheeler 6.7 24.7
6 Car,Jeep, Van 1.3 5.6
7 None of the specified assets 40.5 19
8 At least one of the assets 59.5 81

Source: Census of India, 2001.

The estimated demand for consumer non-durables reflects

the potential in the rural markets waiting to be tapped. The market
size for nail polish is estimated to be around Rs 270 million in rural
areas as against only Rs 81 million in urban markets. The potential
rural market for lipsticks is estimated at around Rs 250 million in
rural areas as against Rs 131 million in the urban segment. Face cream
demand in the rural market is estimated at about 1,099 tonnes compared
to about 426 tonnes in the urban market. The potential market
for shampoo in rural areas is about 2,257 tonnes while it is about
718 tonnes in urban markets. The rural market for mosquito repellents
is estimated at around Rs 173 million as against Rs 79 million
for urban market (Guha Ray, 1998).

Current Consumption a Pointer to Potential

The purchase and use of certain durables and non-durables by consumers
in rural areas is more than that by consumers in urban areas. Some of
these items are sewing machine, cassette recorder,radio/transistor,
bicycle, wristwatch, table fan, black-and-white
television and pressure cooker (NCAER, 1998).
In the case of all fast moving consumer goods (FMCGs) taken
together,sales in rural markets contribute to 30 per cent of the overall
sales.

Rural Market Share of Consumption

Non-Durable Product Share of Rural Market (%)
Washing cakes/bars 65
Batteries 64
Blues 57
Iodised salt 54
Safety razor blades 53
Washing powders 47
Toilet soaps 44
Tea 43
Biscuit 39
Shampoo 38
Toothpaste 31

Source: Dobhal, 2005.

ORGANISATIONS REWORK THEIR STRATEGIES

FOR RURAL MARKETS
Marketers have reworked their marketing strategies developed
for the urban markets to suit the rural markets.
It is not only the price but the message, media, channel and
products are also tailored to meet the needs of the rural markets.
 Union Carbide has heavy brass torches for the rural markets
instead of the slick plastic torches it has for the urban
markets.
 Velvette shampoo was introduced in sachets and helped
develop the rural market for shampoos as it was readily
accepted.
 Castrol, an engine oil brand, has developed a movie with
the lead characters having brand names and the message
for the product woven into the story.

This approach reflects the recognition by marketers of the

differing characteristics of rural markets and urban markets.
Rural markets are unique for the following reasons:
 The wants of rural consumers are not necessarily the same
as those of urban consumers. These wants are shaped by a
number of factors, including the environment. The rural
consumer who buys a vehicle for meeting his transportation
needs may want a rugged rather than a sleek vehicle.
Marketers today are alert to these preferences.
 Social and cultural practices have an important influence
on rural consumer behaviour. A marketer cannot ignore
the influence of community on purchase and use behaviour
as this can affect the product and the advertising message
used. The presence of a community washing-place would
mean that washing soaps are not products used in private
but used in front of others.
 Again, television viewing is still largely community viewing
and hence rural audiences are not comfortable with sensuality
or sexuality.
 Culture infl uences perceptions and behaviour. The preference
for colour, size, shapes and taste are all infl uenced by
culture. The perceptions of products vary because of these
influences. An example of this is the perception of value
according to size. Philips introduced large music systems
instead of the compact ones it has for urban markets.
 The influence of culture on communication is an important
factor in promotion decisions. The importance and respect
for elders influence the message source. The meaning that
symbols carry needs to be taken into account in promotional
decisions. Marketers, thus, use names and symbols from the
epic Mahabharat for promotion.
 The nature of occupation also infl uences the marketers’
strategy. Agricultural workers prefer to pay a smaller purchase
price because of the prevalence of a daily wage system.
 The popularity of small packs is a result of this.
 Rural institutions are different from those in urban areas.
The social, political and economic institutions are signifi -
cant for marketers. An important rural institution that infl
uences marketing is the weekly village market. Recognising
the importance of this institution marketers use them to
reach the rural consumer. Colgate-Palmolive, for example,
uses the weekly village markets to promote its products.

Use of Consumer Durables

Rural consumers exhibit a skewed use of consumer durables
possibly reflecting the lack of suitability of the current products
available in the market. The rural consumers require products
suited to their needs. Rewards await the marketer willing to
invest in understanding their needs and translating them into
products and services.
Rural markets, with a share of 71 per cent of the population,
own about 54 per cent of the total stock of consumer durables.
The opportunity for marketers of durables is present as the
average number of durable goods owned per rural household
is only 3.84 compared to 8.19 in urban areas. The use pattern,
however, is skewed. For instance:
 More than half the rural households own bicycles and
mechanical wristwatch.
 About 49 per cent of the rural households have radios or
transistors.

Of the 22 durables examined in a study by NCAER, 10 had

penetration levels above 10 per cent. The ownership of these
durables is given in Table 2.12.
A barrier to adoption of a number of consumer durable goods
that require electricity to operate, is the lack of electricity in many
rural households. Thirty-seven per cent of the rural-urban difference
in the penetration levels for consumer durable products is
explained by the lack of the spread of electricity in rural areas.

Expenditure on Consumer Non-durables

The estimated market size of a basket of 22 products for rural
markets was Rs 415.5 billion in 1998–99 at 1995–96 prices compared
to Rs 371.3 billion for urban markets. In 1995–96, the market
for the basket of goods in rural area was Rs 378.6 billion and
for urban areas it was 292.5 billion. The rural buyers consume certain
non-durable products regularly, and this buying behaviour
refl ects their lifestyles. The rural household spends, on an average,
Rs 3,384 per year for 22 consumer non-durable products that
include toiletries, cosmetics, packaged foods, washing products,
etc. The urban households spend on an average Rs 7,559 a year for
the 22 consumer non-durables. The average expenditure among
rural households in the eastern region was the lowest at Rs 2,744;
and in the western region, it was the highest at Rs 4,060 per annum
for the 22 consumer non-durables. The rural household in the
lowest income group spent Rs 2,639 a year and the highest income
group spent Rs 9,381 a year.
TABLE

Ownership of Durables
(Per 1,000 households)
Product Rural (1998–99)
Bicycle 605.8
Cassette Recorder 246.1
Electric Iron 109.2
Fan (Ceiling) 280.3
Fan (Table) 177.7
Geyser (Instant) 0.5
Geyser (Storage) 0.7
Mixer/Grinder 43.9
Motorised 2 Wheeler (Moped) 24.2
Motorised 2 Wheeler (Motor Cycle) 28.1
Motorised 2 Wheeler (Scooter) 29.0
Pressure Cooker 178.1
Pressure Pan 4.3
Radio (Portable) 491.6
Refrigerator 34.6
Sewing Machine 71.1
TV (B&W) 195.5
TV (Colour) 48.4
VCR/VCP 2.8
Washing Machine 9.8
Wrist Watch (Mechanical) 823.9
Wrist Watch (Quartz) 400.9

Source: NCAER, 2003.

TABLE
Expenditure per Household for 22 Consumer Non-durables
by Income Group
Income Group Expenditure per Household (Rs)
< 35,000–L 2,639
35,001–70,000–LM 4,176
70,001–105,000–M 5,846
105,001–140,000–UM 8,158
>140,000–H 9,381
Total 3,921

Source: NCAER, 2003.

TABLE 2.14

Penetration Rates for 22 Consumer Non-durable Items

among Rural Households

(Purchasing households per '000 households)

Consumer Non-durable No. of Households

Body Talcum Powder 368.5

Cigarettes 186.8

Face Cream 148.2

Cooking Medium (oil) 898.2

Cooking Medium (vanaspati) 365.5

Electric Bulbs 475.9

Electric Tubes 109.6

Footwear (casual) 639.7

Footwear (leather) 502.9

Footwear (sports) 241.7

Hair oil/Cream 731.4

Health Beverages 51.6

Lipstick 11.8

Nail Polish 31.4

Packaged Biscuits 231.1

Shampoo 81.0
Tea 835.8

Toilet Soap 979.2

Toothpaste 329.7

Toothpowder 370.3

Washing Cake 918.2

Washing Powder 553.7

Source: NCAER, 1998.

Media to Create Product or Brand Knowledge

Marketers use novel and exciting media that brings out the

advantages of the product or brand. These include processions

and tableaus, contests, audio-visual vans and point-of-purchase

channels. Excitement-oriented activities such as processions, tableau,

fl oats, etc., are common place in the rural markets. For example,

Hindustan Lever dressing up a propagandist as ‘Superman’

to demonstrate super washing power of Rin. In rural towns, such

promotional activities are vital to create and build awareness

about the product and communicate its message.

Audio-visual vans and point-of-purchase are the emerging

non-conventional media that are used to create product or brand

knowledge. These have emerged as important methods to reach

the rural audience and are treated separately.

Educating and Persuading the
Rural Consumer
Use of interactive media and demonstration and sampling are

used in order to educate and persuade the rural consumer.

TRADITIONAL NON-CONVENTIONAL MEDIA

The non-conventional media includes traditional media and

certain other media. Traditional media include puppetry and

folk theatre. The reach of rural audience by these media is good.

These media also have the ability to create interest in the consumers;

hence the involvement of the audience is higher. The

disadvantages include the difficulty of reaching the large number

of potential audience with a standardised programme and also

therefore increasing the cost per thousand to reach the audience.

The quality of delivery depends on the skill of the performer.

PUPPETRY This is a form of theatre where the puppeteer uses

puppets to tell a story. Puppetry is more effective than documentary

films.

Song and drama division of the Government of India uses

puppets in its campaign to promote various government projects.

Life Insurance Corporation of India used puppets to educate

rural masses about life insurance. The number of enquiries was

found to have increased because of the puppet shows.

FOLK THEATRE Presents stories in a short rhythmic form with

simple tunes. This presents information in an interesting manner.

Variations in folk theatre form exists.

Coca-Cola used folk dance to promote Thums Up soft drink.

The musical entertainment was called Thums Up Chowfulla. This

is based on Lavni, a traditional folk dance of Maharashtra. The

potential consumer has to buy a 600 ml bottle of any of the Coca-

Cola products to get a free ticket to the Thums Up Chowfulla. The

programme in Bhawaninagar in Maharashtra attracted 35,000

people from the neighbouring villages.

THE EMERGING NON-CONVENTIONAL MEDIA

Demonstrations and Sampling
Marketers find it effective to give demonstrations of their products

as these educate the buyer. Some demonstrations provide or

allow trial usage of the product, thus building brand knowledge

and preference .

Wall Paintings
Wall paintings are an economical medium. They have durability as

it stays as long as the weather allows it. They also do not cost

except to do the painting. Retailers normally welcome painting

of their shop as it makes the shop look better. The additional advantage

is that the image used can be tailored to the local situation.

Audio-Visual Van
This is a vehicle that goes to selected villages and towns on weekly

market days to communicate the benefi ts of the product in question

in a way that’s relevant to the target audience. Each van is

festooned with a banner or painted in gay colours. It uses display

boards whenever it stops to address the populace and its

repertoire includes audio, video, fi lm playback equipment, microphones

and other demonstration facilities. It also passes out

product literature and can conduct market surveys if required.

As part of the rural campaign, Sansui planned a launch of

200 mobile buses by the end of 2001, at an investment of Rs 1 million

for each bus. The company has launched a mobile bus, which

has shelves, fi lters and a generator. The side walls are made up of
see-through glass. The slogans are expressed in local language.

The bus travels across small towns where there are no dealer

outlets. The bus gives demonstration about the entire range

of Sansui CTVs and VCD player. The person who intends to buy Sansui
CTV through the campaign will have to go to the nearest

market (Mehta, 2001).

The van in addition to the audio-visual presentation may

also have games as part of the programme. The Thums Up

Gumbat Gari is a marketing campaign covering 154 villages in

Maharashtra. As a part of this initiative, a mobile van with complete

Thums Up branding tours villages and invites people to

buy any Coca-Cola product and play a game free. The van has a

magician and promoters and invites consumers to participate in

various games. The campaign was for a period of 25 days from

14 November to 9 December 2006 (Chatterjee, 2003). Colgate-

Palmolive makes use of audio-visual vans for promoting to the

rural markets.

The audio-visual van promotion can be part of a more elaborate

contact programme. To compete with Maruti Udyog Ltd’s small

car M-800, Hyundai Motor India launched road shows to promote

its offering Santro. An example of a typical road show is the

one organised by the company in the state of Uttar Pradesh (UP).

In a state like UP, it teams up with the company’s dealer in Agra

and pitches tent at Mathura, which becomes the hub for the twoday

show. While the cars are on display at Mathura, a publicity van

with video, audio and a test drive car leaves for adjoining villages

to explain the features of the product and invite for seeing the

‘Show-room on Wheels’ and also talk to the fi nanciers. The show

then moves on to another hub (Govardan, 2004).

Van promotion interspersing brand communication between

song and dance sequences from films is less attractive than what

it used to be particularly in the villages of southern India. The

reason for this is the availability of satellite television with a choice

of films in the rural areas of south India (Rajan, 2005).

Point-of-Purchase (POP) Channels

This comprises a series of audio-visual sites located in shops in

rural feeder towns. A typical installation consists of a colour television,

a video cassette recorder (VCR) and a generator. Entertainment

programmes are aired with advertisements.