MARKETING OF CONSUMER GOODS AND

SERVICES
Adi Godrej, Chairman of Godrej Group has
rightly observed:

“The rural consumer is discerning and the

rural market is vibrant. At the current rate
of growth, it will soon outstrip the urban
market. The rural market is no longer
sleeping but we are.”
MARKETING OF CONSUMER GOODS AND SERVICES

• Industry Survey (2012) of over 100

companies shows that half of the senior
executives are keen to tap the rural
market.
• However, they are concerned about:
– Lack of infrastructure facilities like road
connectivity,
– teledensity
– availability of skilled manpower and
– seasonal demand.
MARKETING OF CONSUMER GOODS AND
SERVICES
Growth in Rural Income
• Modern farming methods
• Cultivation of cash crops
• Poultry, dairy, small scale industries
• Movement of people to cities and remittance of
money from NRIs etc.
• Cottage and Village Industries
• Hotels, Transport, Insurance, Banking, BPO,
Education Centres, Traders
• Government Welfare Schemes
• Service Class working in nearby towns
 Marketing of consumer
goods and services
• Why target rural consumers?
• 833 million people-nearly 70% of the
Indian population
• GDP contribution: 50%
• 36% of FMCG revenue
• About 30% of villages account for 80% of
over all FMCG sales in rural areas.
• 45% of telecom revenue
• 50% of two wheeler sales
 LARGE CONSUMER BASE
• India’s rural population is about 2.5 times the
population of USA
• The estimated global population in 2010 was 6908
million and our country with 2.4% of the world
surface area accounts for 17.5% of the world
population. USA accounts for 7.2% of surface area
with only 4.5% of the world population.
 MARKETING OF CONSUMER GOODS AND
SERVICES

• Why target rural consumers?

• Severe competition in urban markets
• To treat agriculture as a business
• Creates employment opportunities
Example: Fisheries, Insurance, BPO
operations, development of industries
• Rural tourism: Example: Rural areas of
Rajasthan, Plantations in South and East,
Wine tourism in Maharashtra, Village
tourism
 MARKETING OF CONSUMER GOODS AND
SERVICES

• Why target rural consumers?

• A large consumer base -Over 70% of the
population lives in rural areas
• Increase in disposable income-How?
• Less foreign competition
• Brand loyalty, Product life cycle advantage
(Washing powder growth 6% in urban and
20% in rural)
 RURAL MARKETING
• Development of Rural Marketing

• Agricultural Marketing
• Agricultural Inputs Marketing
• Consumer Goods Marketing
 Marketing of consumer
goods and services
• Rural market is growing since 1980s
• 48% of income, 56% of expenditure and
33% of savings come from rural India
• Bigger than urban market for FMCG and
Durables with 53% and 59% respectively of
the total market
• Rural area account for 21% of Pharma
market and 50% of the sale of motor cycles
 Marketing of consumer
goods and services
• LIC sold 55% of the policies in
rural India
• About 35% of the mobile users in
rural areas
• 41 million kisan credit cards issued
exceeds 22 millions credit/debit
cards issued in urban India
 Marketing of consumer
goods and services

• The number of middle and higher income

group ( Rs 70,000 plus income) in rural
(21.7 million) and urban (24.2 million) are
nearly the same.
• Many companies are active in rural
market: Example: HUL 50%, Colgate
40%, Hero 50%, LG 40%, Cavin care
40%, Godrej 30%, Cadbury 30%, Bharti
Airtel/Vodafone(35%) ( 2012)
 Marketing of consumer
goods and services
• SOCIAL CLASS: The rural society
consists of a hierarchy of classes or
grades of people. Social class is
determined by a combination of
factors such as education,
occupation, income, wealth etc.
The type of durable owned by a
household gives an indication of the
grades of people
Marketing of consumer goods and
services
• It has been observed that level of
education coupled with increase in
income has significant influence on
usage of Colour TV, Refrigerator and
Two wheelers. For example
penetration of Refrigerator is only
4.8% whereas it is 33% among
graduate rural consumers.
 Marketing of consumer goods
and services
• CLASSIFICATION OF CONSUMER
BASED ON INCOME
• Destitute < Rs 90,000
• Aspirants: Rs 90,000 to Rs 2 Lakhs
• Climbers: Rs 2 Lakhs to Rs 5 Lakhs
• Well off Rs 5 Lakhs to Rs 10 Lakhs
• Affluent: .Rs 10 Lakhs
 Marketing of consumer goods and services
Classification of consumer

Category Products 1995-96 2006-

2007

The affluent Jeep/Car 1.6% 5.6%

The well-off Motor cycles, 2.7 5.8

AC,Colour TV.
Refrigerator
The climbers Moped,B&W 8.3 22.4
TV, Audio,
Grinder
The aspirants Bicycle, fans, 26 44.6
iron

The destitute Watches? 61.4 21.6

radio?
 Marketing of consumer
goods and services
• HIERARCHY OF NEEDS
• Category A( Immediate use to the
family): Bicycles, wrist watches, electric
fans

• Category B(Breaks the monotony of

house work and source of
entertainment): Sewing machines, Kitchen
appliances , stereo set, Basic TV

• Category C (Supplement income,

entertainment and comfortable house
hold working) : Colour TV, Moped, Motor
cycles, Refrigerators
 Marketing of consumer goods
and services
• Products that are well established in
Rural market:
• Bicycles, motor-cycles, agri inputs,
tractors, radio, coffee, tea, tobacco,
bathing and washing soap and textiles.
• Products that have entered the
markets in recent years:
• Ready made garments, baby care products,
packaged food stuffs, consumer durables,
cosmetics and toiletries, mobile phones,
computers
 Marketing of consumer
goods and services
• Rural consumption is more compared
to urban market:
• Bicycles, mechanical watches,
tailoring machines.
• Products where rural consumption
growth rate is higher than urban
markets:
• Packed tea, bathing and washing cake
 RURAL/URBAN MARKET SHARE
PRODUCT RURAL URBAN
Bicycles 78% 22%
Mechanical watch 83 17
Washing cake 76 24
Motor Cycles 48 52

Colour TV 37 63
Washing machine 17 83
Refrigerator 28 72
Nail polish 24 76
Toothpaste 47 53
Shampoo 35 65
Face cream 28 72
Mineral water 05 95
Noodles 03 97
Chocolates 04 96
MARKETING OF CONSUMER GOODS AND
SERVICES

• The rural youth in the age group of 20-

25 years, play a major role in the
purchase decisions of the family.
• Their exposure to mass media is high
• They view television and cinema and
enjoy seeing cricket matches and action
movies.
• They are the target group for products
like toothpaste, shampoo, soft drink,
deodorant, television model, audio
system, mobile phone etc.
 MARKETING OF CONSUMER GOODS AND
SERVICES

• They are moving from bicycles to

motor cycles
• Even branded clothes and shoes have
entered rural homes, though the
sales volumes are low at present
• Marketing researchers can meet them
at telephone booth, playground,
retailer shop and village square
 MARKETING OF CONSUMER GOODS AND
SERVICES
Needs Traditional Products New Products
Brushing Teeth Neem stick, Charcoal powder Tooth powder,
Burnt husk, Common salt tooth paste

Washing Vessels Coconut fibre, Ash, Washing cake,

Brick powder, Tamarind powder and liquid

Transport Bullock cart, Horse cart, Scooter, Tractors

Cycle Motor Cycle,

Irrigation Canals, Wells, Ponds Bore wells, Pumps

Generators

Hair Wash Green gram,Tur dhal, Shampoo

Shikakai powder
 MARKETING OF CONSUMER GOODS AND
SERVICES
Product 1995-96 2001-02 2009-10
Shampoo 27 32 33
Toilet soap 50 53 55
Washing cake 69 71 76
Washing powder 50 51 55
Scooter 30 39 40
Motor cycle 45 47 48
Car/Jeep 2 8 11
 MARKETING OF CONSUMER GOODS AND
SERVICES
Ownership of Assets (%) Total Rural Urban
Houses with Telephone 63.20 54.30 82.00
(Mobile/Landline)

Houses with Television 47.20 33.40 76.70

Houses with Computer 9.40 5.10 18.70

Houses with two wheeler 21.00 14.30 35.20

MARKETING OF CONSUMER GOODS AND
SERVICES

Number of Consumption Population

towns/cities (%) (%)
48 cities/towns 25% 12%

7834 small towns 25% 18%

6,40,000 villages 50% 70%

 MARKETING OF CONSUMER GOODS AND
SERVICES

• Private initiatives
• Agricultural input companies
• Consumer goods companies
• Software for land records, community
certificate, commodity prices
• e-choupal
• Microfinance
• Pharma Companies
 MARKETING OF CONSUMER GOODS AND
SERVICES
• Uluberia, located 40 Km from Kolkata has about 80
Shuttlecock manufacturing units.
• There are about eight merchants who supply duck
feathers. These duck feathers are procured from
Murshidabad, Malda, Birbhum and South Dinajpur.
Indian badminton players play with shuttlecocks
made from duck feathers.
• The Industry provides employment to about 5000
people and generates business of Rs 200 crores.
 MARKETING OF CONSUMER GOODS AND
SERVICES

• Example: Killa Raipur near Ludhiana

(population 25,000) has 250 cars, 300
tractors, washing machine/TV in most of
the houses.
• Hansdehar village (Haryana) has created a
website
 MARKETING OF CONSUMER GOODS AND
SERVICES
• Agro-entrepreneur

• Agro-Dutch Industries Limited promoted by

Malvinder Singh Bhinder is the world’s
largest Mushroom producing firm.
• The fully integrated plant spread over 150
acres produces about 60,000 tonne of
processed mushrooms in a year.
• The company located in Chandigarh caters
to international food chains like Unilever,
Heinz and US Food Service and accounts
for 85% of India’s mushroom exports
clocking Rs 200 crore turnover.
 MARKETING OF CONSUMER GOODS AND
SERVICES
• Honey Producer

• Ajit Singh Kapoor of Kashmir Apiaries

(Annual sales: Rs 100 crores) based at
Doraha near Ludhiana is the country’s
biggest honey producer-exporter.
• It collects 9000 tonnes of honey from
about 2000 farmers and processes it at
the state of the art plant spread over 20
acres.
• The company markets its honey under
brand name ‘Little Bee” in foreign
countries.
 MARKETING OF CONSUMER GOODS AND
SERVICES
• Farm tourism involves farm based activities such as
ploughing the field, irrigating the land, weeding ,
applying nutrients, harvesting, riding bullock
carts/tractors, milching animals, staying in farm
house and enjoying local food etc .
• Farm tourism provides employment and income to
locals and brings in economic stability in rural
areas.
• At the same time, it provides opportunities for
urban people to go back to roots and live close to
nature far away from the man-made urban
environment.
 MARKETING OF CONSUMER GOODS AND
SERVICES

• Wine Tourism
• Winers in Maharashtra have initiated Wine Tourism.
• The idea of having Wine Tourism is to have visitors
stay in winery, see the vineyard and get a feel of wine-
making process. This will also allow to relish the drink.
• There are about 50 wineries in and around Nashik and
most of the Vineyards offer a guided tour along with a
session on their tasting room. Wine tours are usually
spread across the entire day
 MARKETING OF CONSUMER GOODS AND
SERVICES

• Konkan Bhumi Prathisthan, is an

organisation that promotes rural tourism
in Konkan area
• In collaboration with Maharashtra Tourism
Development Corporation conducts
Konkan Alphonso Mango Tourism
Festival and arranges a bus tour and stay
in villages for the visitors.
MARKETING OF CONSUMER
GOODS AND SERVICES
• Kolkota based Jalans of Keventer
group has started tissue culture
production of Bananas in West
Bengal. The company provides
plantlets, agriinputs and buys the
entire produce. It has set up ripening
chambers in Durgapur, Malda and
Siliguri
 MARKETING OF CONSUMER GOODS AND
SERVICES

• Gowardhan Dairy (Go Cheese) organises Milk and

Cheese Tour of their dairy situated in Mancher, near
Pune.
• It is one of the biggest dairies in Asia with a modern
farm and 3000 cows. It has an exclusive nursery for
calves.
• The company is providing opportunities for students
and Mahila Mandals to visit the dairy complex and
understand the various operations in the dairy farm.
MARKETING OF CONSUMER GOODS AND
SERVICES

• Ghari is a popular detergent brand (Sales

Rs 2000 crores) in UP, MP and
Maharashtra.
• The company sells the product at an
affordable price to consumers by keeping
a low profit margin (9%) compared to
competitive products (30%).
• Similarly, Wheel is the single largest
detergent brand (in value) in our country
and is very popular in rural areas due to
affordable pricing.
MARKETING OF CONSUMER GOODS AND
SERVICES

• Parle G- Rs 5000 Crore Brand

• Parle G Is the most penetrated FMCG
brand in the country. The largest selling
biscuit brand in the world, Parle G biscuit
is integral part of the lives of rural
Indians for the last 75 years.
• The company did not increase the price
for about fifteen years since 1995.
• Affordable price has been the major
factor for the dominance of the brand.
 MARKETING OF CONSUMER GOODS
AND SERVICES
• IPCA Laboratories has initiated Jeevan
Rekha” programme to create awareness
about heart diseases among rural
population. The programme includes
health check up camps, use of mobile
clinics, visit to Govt hospitals and private
doctors.
• Elder Pharmaceuticals, Aventis Pharma,
Glaxo have created rural market division
to explore the rural markets
 MARKETING OF CONSUMER
GOODS AND SERVICES
• The Gyandoot project was started in 2000 by a group
of civil servants in Dhar district of Madhya Pradesh.
It is a low cost self-sustainable and community owned
rural IT system and caters to the needs of villagers.
The Centres known as Soochnalaya are managed by
unemployed educated rural youth- Soochaks-
Charges are levied for a wide range of services
related to agriculture, health, education and
applications for services delivered by the Government
relating to land ownership, poverty alleviation.
Marketing of consumer goods and
services

•The Swiss Multinational, Novartis has started

“Arogya Parivar” to create awareness about health
and hygiene among rural masses. A group of rural
health educators move from village to village
conducting group meeting of villagers. They identify
patients and convince them the need for medical
treatment. The focus is mainly on women and
children. The social business model has treated over
10,000 patients and had built up rapport with doctors,
health workers and medical shops in rural areas.
MARKETING OF CONSUMER GOODS AND
SERVICES

• Example: LIC Motivating villagers through

Bima Gram
• LIC pays back 25% of the premium collected or
Rs 25,000 whichever is less for undertaking
development work in villages. The village
population should be between 1000-5000,
acquisition of 100 policies in an year.
• Over 50% of policies sold by LIC are in rural and
semi-urban areas.
 MARKETING OF CONSUMER
GOODS AND SERVICES
• Poompughar, the Tamilnadu Govt
owned Handicrafts development
corporation has started a one stop
outlet i.e. URBAN HAAT at the temple
town of Mahabalipuram. The outlet
has over 100 stalls , an exhibition
hall, food court and sells its products
to domestic and foreign tourists.
 Marketing of goods and
services
• The Handloom export corporation of India
and the central cottage industries corporation
of India have jointly developed a Portal that
shows a wide range of handicrafts and
handloom products. e-payment facilities and
online tracking of shipments are available.
• The computerized network developed by
Mitra technology connects over 10,000
artisans with wholesalers and retailers in
Orissa
 MARKETING OF CONSUMER
GOODS AND SERVICES
• Western Union Services India Private
Limited is a village centric
organization with 60% of network in
rural India. The company is engaged
in money transfer through post
offices, bank branches, and sub-
agents who receive on 1%
commission.
• Nokia Life Tools is a range of services
which includes agriculture, education,
entertainments designed specially for
consumer in small towns and villages.

• Life Tools will be available even in the

entry l
 MICROFINANCE
• There are millions of people who operate small
business i.e. Micro Enterprises such as making
candles, papads, mudpots, bamboo baskets,
selling vegetables, running grocery/tea/pan
shops, cattle rearing, tailoring etc
• Small enterprises require credit for raw materials
and equipments
• Micro credit refers to loans and credit needs of
micro enterprises. It means providing poor
families with small loans to engage in productive
activities
 MICROFINANCE
• Micro credit is normally offered to a group of
people or individual.
• Main issue for the poor is access to credit and not
of cost of credit
• Example: A grocery shop with an investment of
Rs 20,000/ is able to generate income of Rs 1.50
lakhs and profit of about Rs 8000/- after meeting
interest and other expenses.
• Grameen Bank of Bangladesh-
• NGOs, professionals, private and public sector
banks active in the area of microfinance
 MICROFINANCE
• Self employed women's association (SEVA)
started Mahila seva co-operative bank (1974) in
Gujarat. Provides banking services to poor,
illiterate , self employed women

• SKS microfinance-Baharat Financials - is one of

the fastest growing MFIs in the world. It has
about 1500 field branches, 15,000 employees
and has disbursed about Rs 9000 crores. Has tied
up with companies to provide basic mobile
phones, water purifiers and solar lights.
 Marketing of consumer
goods and services
• Tea: Largest producers of tea in the
world- It is the second largest
market after soft drinks- Branded tea
constitutes about 60% of tea
market- Strong brands of tea/loose
tea is preferred in rural areas-tea
consumption is growing at 6% per
annum against 3% in urban market-
 Marketing of consumer
goods and services
• Taj Mahal, Red label, Taaza-HUL and
Agni,Kannan devan tea, Chakra gold and
Gemini tea-TATA, Wag Bakri are popular
brands
• Promotion: TV advts, wall paintings, small
packs, dealer incentives
• Distribution-Tata tea: Rural distributors -
mobile rural wholesalers-tea shops,
grocery merchants
 Marketing of consumer
goods and services
• BOTTLED SOFT DRINKS: Younger
generation product- Consumption once in
a fortnight/month- Relatively high during
marriages and festivals-
• Hub and Spokes method of distribution
• Wall paintings, dealer incentives, local TV
advts, newspaper advt, films in cinema
houses
 Marketing of consumer
goods and services
• Toilet soap: Penetration about 85%-
In many households single cake is
used by all members in the family-
Used for body/hair wash- price
sensitive product- popular brands-
lifebuoy, lux,hamam, rexona,Godrej
no 1, Cinthol,Nirma
• Supply through Rural distributors
 Marketing of consumer goods and
services
• SHAMPOO penetration is only 15% in rural
market-used by by young daughter or
daughter-in-law but bought by head of the
family or male member. Older generation
prefers natural products-small unit pack
popular- Chik,Nyle,Clinic plus and Sunsilk
are popular brands
• Lengthy distribution required to service
rural markets
• Promotion: AVP vans, local TV, film shows
in cinema houses, dealer incentives
 Marketing of consumer
goods and services
• Motor Cycles: Largest producers of two
wheelers in the world-low penetration
-20% in rural market- Target users:
Younger generation, large farmers,
traders, employees
• Hero Splendour-most successful brand-
• Hero has about 5000 small sales and
service outlets and over 1000 mobile
service clinics
 Marketing of consumer
goods and services
• Automobile penetration is very low- Maruti
has initiated PANCHAYAT SCHEME focusing
on large farmers, traders, commission
agents-has identified over 50,000 villages
with high potential-Appointed about 3000
rural sales executives under their dealers
for generating demand-Tie up with
Shriram finance to offer hassle free
finance to customers
 Marketing of consumer
goods and services
• Reaching the Rural Consumers
• About 90% of consumer durables are
purchased from district
headquarters/towns with less 10
lakh population. There are about
7000 towns and companies can
appoint dealers to cover the rural
markets
 PROFILE OF RURAL
CONSUMER
Penetration of modern FMCGs
continues to be low in rural areas:
Examples: Soft drinks (9.8%),
Mineral water (3.8%), Noodles
(2.2%), Candies (13.8%),
Chocolates (3.1%), jam (1%),
Ketchup (1%), Instant coffee
(8%)
 Marketing of consumer goods and
services
• Modern FMCGs- How to increase sales? A
few points
• Target younger generation/schools
• Participate in rural melas
• Sampling of products
• Regional television channels
• Services of distributors sales staff to
cover village level retailers
• Rural stockist to cover village retailers
• Incentives to rural retailers