Chapter 1

Chapter 1
AMMA PROJECT SHAKTI OF HUL-from pverty to self-sufficiency
Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural Marketing, 3/Ed Pradeep Kashyap
Rural Markets
• Mobile phones introduced in rural India in
2005 registered 20m connections in 5
years, as against 15 years to touch the

same figure in urban India.
• Maruti sold 2L cars in rural India in 2010-

11.
• Durables sales registered 29% growth as

compared to 10% urban in 2010.
• FMCG growth was as twice as urban India .

Learning Objectives - Changing
rural India
• Define rural India and rural markets

• Identify common rural myths
• Understand the rural marketing myths and the

challenges related to it
• Understand the characteristics of the evolving rural

consumer
• Describe the emerging rural India

Definition of Rural
Organizati
Definition of Rural Limitation
on
Minimum population 5,000

The term “rural”

 Population density 400 per sq.
is not defined,
Km.
nor is the upper
Census  75% males in agricultural
limit of
activities
population for
 80 crores in rural areas (in 6 lakh
villages
villages)
Widening of
• Similar to Census except that the definition allows
IRDA percentage for male population in a larger market
towns is 25% and not 75% to be considered
as rural
Rural: All locations with a population of

Distinction
up to 10,000
RBI Semi-urban: All locations with a
defined only by
population
population between 10,000 and 100,000

Definition of Rural
Organization Definition of Rural Limitation

fewer than 5000 residents
Population density of less than 400
NSSO
per sq km
75% male as agriculturalists

What led the Rural India grwoth ?

Rapid infrastructure development
Pro-rural Govt plans
Two-fold increase in minimum support

price

Rural Myths
Rapid urbanization

• Urbanisation was rapid upto 1980 but the UN Polulation
database revealed that Urban increase rate only 0.75%
higher than rural and showing a slowing trend largely due to
the National Rural Employment Guarantee Scheme
(NREGS) due to which rural people are not willing to
migrate.
An agrarian economy
• Non-farm activity already 60%; expected to rise further
to 70%
• This increases family income and provides a more
constant stream of income to rural households.
Rural Marketing
• Rural marketing is a process of

developing, pricing, promoting, and
distributing rural specific goods and
services leading to desired exchange with
rural customers to satisfy their needs and
wants, and also to achieve organizational
objectives.

Rural Marketing Mix
The 4 Ps of marketing – price, product,

place and promotion – replaced by 4 As in
rural markets are designed as a more
appropriat strategy for rural markets, as 4
Ps of marketing are mainly for urban
markets.
A rural marketer should design the product

as per the rural enviornment and needs.

“When you look at adversity, the mother of that is

opportunity,” said V Raja, GE Healthcare CEO. “When
you (have) that mindset, invariably you’ll find a way
for your product to reach your customer.”
“I believe in the democratisation of energy. The poor

shouldn’t have to depend on power plants and
politicians,” said Harish Hande, who won the 2011
Magsaysay award -- Asia’s equivalent of the Nobel
Prize -- for his work. (Founder of SELCO)

Rural Marketing Mix
Affordability

PCI rural is just half of the urban PCI.
Need to create low-cost product for rural

needs.
Rural consumers want value and not just the
cost.
Success stories
Sachets revolution, etc.
Chick Shampoo Pradeep

(1980)
Rural Marketing, 3/Ed Kashyap by Cavinkare
Rural Marketing Mix
Availability - Reaching the Last Mile ??
6.38 lakh villages spread over 3.2 million sq.km.

Higher ticket items, banks, etc rural peopel visit
nearby smaller towns.
No proper secondary data at village level - making

distrubution decision difficult.
Success stories - frugal engineering.
HUL's Shakti model. (2002) Shakti Amma

Colgate's bicycle entrepreneurs. (2011) Shaktiman

Rural Marketing Mix
Awareness

Low literacy rates.
TV - an imp medium for awareness, half of

TV sets sold in rural india due to which
demand for products like faireness creams
increases.
Other means of awareness - wall paintings,

vans, roadshows, nautinkis.
Rural Marketing Mix
Acceptability
Urban product may not necessarily fit into rural

markets.
When does a product said to be acceptable to rural

consumer ?
When it adds value, asset and not mere consumption.
Product should be more versatile and adatable to

rural area, example Chinese made mobile phones -
low cost, durable, easy to use and its buil-in torch is
useful in “no electricity conditions”

So, when does a product is said
to be suitable for rural
markets?

The Evolving Rural Consumer
• Previously: poverty-stricken, illiterate stereotype,
fear of change & reluctance to spend.

• Is today's rural consumer Value driven ? - looks for
products that add to status (eg, mobile phones, readymade
clothing, etc)
• Increasing literacy and exposure to mass media,

increasing aspiration levels, benefit-driven
• Better road infrastructure leading to increased mobility
• Highest change amongst youth, increasing their role as

influencers

The Evolving Rural Consumer
• Changing cultural and social norms (literacy/women

empowerment/liberal/non-vernacular/rural youth)
• Rise in nuclear families creating new roles for women

- deciding factor in kitchen utensils, soaps, food items.
• High use of 7-8m self-help groups (SHGs), especially

for women - one SHG member in every 2 households -
who keeps travelling to nearby towns for their
meetings
• Marketers need to focus on creating awareness and

excitement amongst women and youth

Rural India: The Exploding Middle Class -
the sleeping giant woken up
• 164 million households accounting for 56% of India’s
total income, 64% of expenditure and 33% of savings

• 67% road connectivity, 30% tele-density, 60%
electrification
• 377 million mobile users
• 14 million DTH subscribers
• 96 million Kisan Credit Cards

• Appox 60% rural population uses mobile phones
Higher growth in durables as well as FMCGs as
compared to urban

Rural India
•More than 50% of FMCG

revenue comes from rural
India
•100% of agri inputs
•40% of two wheelers
•43.6% of car makers

Rural India: The Exploding Middle Class (more
than 32% middle class lives in rural India)
2020
• Pyramid transforming into a diamond

Rural India: The Exploding
Middle Class
• Lower cost of living leads to higher proportion of
disposable income

• Rural infrastructure being developed in the areas of
roads, electrification, education and health
• Increase in agricultural productivity and shift to cash

crops increasing agricultural income
• Rural markets accounts for 56% of India's total

income, 64% of expenditure and 33% of savings.

Rural Marketing Case
Rural Markets
Homework (Assignment No. 1):

1. Despite the diverse heterogeneous nature of rural
markets, why are marketers focusing on rural
markets?
What steps should a company take to tap the huge

potential in rural markets? Discuss this with regard to
the 4 Ps of marketing.
2. Which are the factors that have led to increased

income in rural masses ?
Points to ponder over:

•How should marketers tackle the huge diversity seen
in rural markets? Pradeep Kashyap
Rural Marketing, 3/Ed
Successful Mantra for Entering
Rural Markets

Think like a businessman with the feelings of a
social worker

Rural Marketing Discussion
1. Which are the three farmers' bills tabled and converted

into law and later cancelled by the current union govt ?
2. What pros and cons can you make out of these bills ?
3. What differences can you spot between urban marketing

and rural marketing ?

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Chapter 1

AMMA PROJECT SHAKTI OF HUL-from pverty to self-sufficiency

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Copyright © 2016 Pearson India Education Services Pvt. Ltd

• Maruti sold 2L cars in rural India in 2010-

• Durables sales registered 29% growth as

• FMCG growth was as twice as urban India .

Copyright © 2016 Pearson India Education Services Pvt. Ltd

• Understand the rural marketing myths and the

• Understand the characteristics of the evolving rural

• Describe the emerging rural India

Rural Marketing, 3/Ed Pradeep Kashyap

Minimum population 5,000

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural: All locations with a population of

Rural Marketing, 3/Ed Pradeep Kashyap

Organization Definition of Rural Limitation

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Pro-rural Govt plans

Two-fold increase in minimum support

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

• Rural marketing is a process of

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural Marketing, 3/Ed Pradeep Kashyap

The 4 Ps of marketing – price, product,

Copyright © 2016 Pearson India Education Services Pvt. Ltd

A rural marketer should design the product

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

“I believe in the democratisation of energy. The poor

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Need to create low-cost product for rural

Sachets revolution, etc.

Chick Shampoo Pradeep

6.38 lakh villages spread over 3.2 million sq.km.

Copyright © 2016 Pearson India Education Services Pvt. Ltd

No proper secondary data at village level - making

Success stories - frugal engineering.

HUL's Shakti model. (2002) Shakti Amma

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

TV - an imp medium for awareness, half of

Other means of awareness - wall paintings,

Urban product may not necessarily fit into rural

Copyright © 2016 Pearson India Education Services Pvt. Ltd

When does a product said to be acceptable to rural

Product should be more versatile and adatable to

Rural Marketing, 3/Ed Pradeep Kashyap

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

• Increasing literacy and exposure to mass media,

• Better road infrastructure leading to increased mobility

• Highest change amongst youth, increasing their role as

Rural Marketing, 3/Ed Pradeep Kashyap