RURAL INDIA MARKETING

STRATEGY
Changing game in slowdown
RURAL MARKET
 Rural marketing- process involves
 Developing
 Pricing
 Promoting
 Distributing
 Two way marketing process
 Urban to rural
 Rural to urban
 Rural to rural
RURAL MARKET ENVIRONMENT
 DEMOGRAPHIC
◦ Population
◦ Growth of purchasing power
◦ Age of 48 percent of population below 20
◦ Literacy rate
◦ Family structures
◦ Occupation
 PHYSICAL
◦ Scattered population
◦ 24% village with population below 500, no shops
◦ Only markets is weekly haats
◦ Villages with populatin above 2000 have 15-16 shops
RURAL MARKETING ENVIRONMENT
 SOCIAL AND CULTURAL
◦ Caste system
◦ Conservative society
◦ Less exposure to media
◦ Strong opinion leadership
 ECONOMIC
◦ Moving from lower incomes to higher incomes
◦ From kuchha houses to pukka houses
◦ From food products only to durables and branded products
RURAL MARKETING ENVIRONMENT
 TECHNOLOGICAL
◦ Green revolution
◦ White revolution
◦ NGO movement

 POLITICAL
◦ Panchayati Raj- 3 level
◦ Sarpanch at the block
◦ Gram Sabha
Rural market potential
 The rural consumer market, which grew 25 per cent in 2008, is
expected to reach US$ 425 billion in 2010-11 with 720-790 million
customers, according to a white paper prepared by CII-Technopak,
in November 2009.

 The figures are expected to double the 2004-05 market size of US$
220 billion.

 The Union Budget for 2010-11 has hiked the allocation under the
National Rural Employment Guarantee Act (NREGA) to US$ 8.71
billoin in 2010-11, giving a boost to the rural economy.
Some facts about rural market
consumption
While there is a general tendency to equate rural India to BoP market, here
are some of the consumption numbers that will blow your mind

 46% of the soft drinks sales happen in the rural areas.

 Rural India accounts for 49% of motorcycle sales.

 Rural India accounts for 59% of Cigarettes sales.

 53% of FMCG sales happen at Rural India.

Rural market consumption facts
cont…
Rural India Opportunities

 Talcum powder is used by more than 25% of rural India.

 Lipsticks are used by more than 11% of the rural women and less than
22% of the urban women.

 Close to 10% of Maruti Suzuki’s sales come from the rural market.

 Hero Honda, on its part, had 50% of its sales coming from rural market in
FY’09.
Rural market
S.NO Product Percentage

1 Toilet soap 12

2 Shampoo 10

3 Toothpaste 7

4 Talcum 12

5 Hair oil 12

6 Skin creams 20
Rural market
S.NO Products Percentage

1 Washing cakes 13

2 Washing powder 9

3 Bathroom cleaners 17

4 Scourers 7
Rural market opportunities
 Rural India has a large consuming class with 41% of India’s middle-class
and 58% of the total disposable income accounting for consumption.

 By 2010 rural India will consume 60% of the goods produced in the
country.

 In 20 years, rural Indian Market will be larger than the total consumer
markets in countries such as South Korea or Canada today, & almost 4
times the size of today’s urban Indian market.
Slowdown in rural demand
 Consumption of food and beverages slipped slightly in rural India due to
increased prices.

 Personal care and household products sales grew.

 Reason could have been food inflation which strained the overall demand.

 Margins were affected, due to low pricing strategy, but sales grew overall.
Rural India Jan-aug 2010 Vs Jan-Aug 2009

S.NO Commodity %value Value Volume

Contribution Growth % Growth %

1 FMCG - 1 -

2 Personal Care 16 8 3

3 Household Care 10 7 10

4 Food & Beverages 74 -1 -2

Change in Market Strategy
In order to overcome the decreased demand in rural market different
companies took different measures to maintain profits

 FMCG sector
◦ Dabur-focus on price point and increased direct market contact by
company sales
◦ HUL- additional distributors and offering lowered price products.
◦ P&G- offering more affordable product
◦ Emami- launching smaller denomination product packs and innovative
below the line activities.

 Personal and household care segments

◦ Slashed prices to boost volumes
Alternate measures to overcome slowdown

 Pricing Strategy

◦ Discount strategy
◦ Optional product pricing. 
◦ Low cost/cheap products
◦ Refill packs/reusable packaging
◦ Application of value engineering
◦ Avoid sophisticated packaging
◦ Product bundle pricing
◦ Coinage pricing
Alternate measures to overcome slowdown

 Promotional Strategy

◦ Organize Melas

◦ Wall Paintings

◦ Gram Panchayats

◦ Through NGO’s ( Tata tea)

◦ Schools and religious places for target and promotion

◦ Mass media promotion through radio.

Alternate measures to overcome slowdown
Distribution strategies

◦Through co-operative societies

◦Public distribution system

◦Multi-purpose distribution centres

◦Distribution up to feeder markets

◦Mandi towns shanties

◦Haat

◦Jathras

◦Melas

◦Agricultural input dealers etc.

Alternate measures to overcome slowdown

 New product designs

A close observation of rural household items indicates the importance of redesigning

or modifying the products. The manufacturing and marketing men can think in terms of
new product designs specially meant for rural areas keeping their lifestyles in view.

 Study the Products

We need to understand the product in such a way that we know how to market it and
who can be the target market .
Summarize
 We cannot get stuck in only one strategy
 The companies should not always follow what the market is following
 Understand the problem well before coming up with any solution
 Trial and Error method do work
 Urban and rural markets are completely different as consumer base itself is
diverse
 The promotional methods discussed has it’s special significance
Presentation by
 Priyanka Mandla
 Sahil Narang
 Suprita Tamrakar
 Sirish Amatya
 Shraddha Mukul