Rural Marketing 01, March Week 1

MAKING SENSE OF THE BOTTOM OF THE PYRAMID

Why are the rural markets so attractive?
Since 2000, per capita GDP has grown faster in Indias rural areas than in its urban centers: 6.2 %
CAGR versus 4.7 %
Between 2009 and 2012, spending in rural India reached $69 bn, significantly higher than the $55 bn
spent by the urban population
A staggering 12% of the worlds population resides in Indias rural areas
Change in rural consumption patterns and lifestyle
THE CHALLENGES 4As
ACCEPTABILITY
(PRODUCT)
Electricity and other
infrastructure
restrictions
Offering products
that suit the market
Coca-Cola s low-
cost ice boxes
Mobile phones with
applications in local
language
TATA Swach
LG Electronics
Sampoorna TV
AFFORDABILITY
(PRICE)
Low disposable
incomes
Daily wages
Coca-Colas smaller
bottle at Rs 5
HULs variant of
Lifeboy
Product Bundle
pricing, Example: HUL
Operation Bharat
Making available the
loan facility by having
alliance with banks
AVAILABILITY
(PLACE)
7,00,000 villages,
spread over 3.2
million sq km
highly dispersed
Poor infrastructure -
challenge to
regularly reach
products to the far-
flung villages
Different
distribution models
adopted by various
players
AWARENESS
(PROMOTION)
Inaccessibility to
conventional
advertising media
Media penetration
only 57%
For a rural consumer,
outing is confined to
local fairs and
festivals
TV viewing is confined
to the state-owned
Doordarshan

Source: The Rural Marketing Book- Kashyap. P & Raut. S
MarQuest from
KEY TO SUCCESS IN RURAL MARKETS
26%
26%
34%
40%
40%
59%
0% 10% 20% 30% 40% 50% 60% 70%
Localisation
Pricing
Sales force excellence
Marketing Campaigns
Customer Service
Selling and distribution efficiency
REDEFINING THE 4PS FOR RURAL MARKET
PRODUCT
Simple and
convenient to use
Simple, cost
effective packaging
Functional benefits
Product literature:
easy to understand

Examples: HULs Breeze
2 in 1, LGs
Sampoorna TV,
BOIs Bhumiheen
Credit cards
PRICE
Affordable
Smaller units
Value engineering to
reduce prices

Examples: Godrej Cinthol
and FairGlow 50 gm
packs, Lux 25gm
packs, Philips no
battery no power
radio Rs. 995, Tata
tea Agni Sholay (50
gm for Rs. 6.50)
PLACE
Local
vendors/retailers
Cooperative
societies
PDS
Village weekly
markets, feeder
markets
Fairs and festivals

Examples: ITCs e-
choupal, HULs
mobile vans
PROMOTION
Word of mouth
through local opinion
leaders, Panchayat
Puppet shows, street
plays, folk theatre
Mobile publicity vans,
advertising on walls

Examples: Asian Paints
painted opinion
leaders houses, ICICI
Prudential Haats,
Mandis
In your opinion, what are the top three imperatives for profitable and sustainable growth in
rural markets ?
Source: Accenture Survey
Rural Marketing 02 - A sneak peek
REACHING THE RURAL CUSTOMERS THE AVAILABILITY CHALLENGE
Now that we know that Sales and Distribution is probably the most important factor for
profitability in rural markets, we will go through the various selling and distribution models
for rural markets in India with examples and pros /cons
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