RURAL MARKETING

1. RURALMARKETING MS-611

2. What makes Rural Marketing attractive • 6,27,000 villages across the country • Account for 70% of population • 60% of National Demand for various product categories. • INDIA GLOBAL AVERAGE 70% Rural 30% Rural 30% Urban 70% Urban

3. RURAL SCENE IN INDIA • A recent World Bank-NCAER Survey on rural access to finance indicates - • 70% of the rural poor do not have a Bank Account and 87% have no access to Credit from formal source. • India has an extensive Banking Infrastructure comprising over 46,000 Rural & Semi Urban Branches of Commercial Banks over 14,000 branches of RRBs, around 12,000 branches of DCCBs and nearly 1,00,000 cooperatives credit societies at the village level.

4. RURAL SCENE IN INDIA There is at least one retail credit outlet on average For about 5,000 rural people, which translates into one outlet for every 1,000-house holds. • 30% of population still lives below poverty line. • Indebtedness is the main feature. Rural poverty is linked to unemployment, under employment, low levels of productivity, severe demographic pressures and illiteracy.

5. RURAL SCENE IN INDIA Out of 6,34,321 villages in India, only 9,000 villages have more than one branch. As on March 2006 each bank branch is catering services to 12 villages. The population per rural branch declined from 2,01,854 in 1969 to 16,000 at present (as on March 2006). The proportion of borrowings of rural house holds from institutional sources increased from 7% in 1951 to more than 60% at present.

6. RURAL SCENE IN INDIA Despite large network of branches, majority of rural poor remained outside banking purview. Rural poor need credit frequently and mostly in small quantities for consumption purposes. In India, almost 27.09 percent of the rural population and more than 23.62 percent of the urban population are below the poverty line.

7. Who are They? Personal characteristics Product usage patterns Why do They Buy? Needs Purchase Motivations How do They Buy? Decision-making unit (DMU) Decision-making process What do They Buy? “Whole” Product or Service Set of product and non-product capabilities that meet buying objective Set apart from competition Where do They Buy? Appropriate channel design Understanding the Customer

8. Expansion of Middle income household • According to study, there are as many “middle income and above” households in the rural areas as there are in the urban areas • There are almost twice as many “lower middle income” households in rural areas as in the urban areas

9. Improvement in Social Indicators • No. of “ Pucca” houses doubled from 22% to 41% • No. of “ Kucca” houses halved from 41% to 23% • Percentage of BPL families declined from 46% to 27% • Rural literacy level improved from 36% to 59% in past two decades

10. Improvement in Infrastructure • In 50 years, 40% villages have been connected by road, in next 10 years another 30% would be connected • More than 90% villages are electrified, though only 44% rural homes have electric connection • Rural telephone density has gone up by 300% in last 10 years

11. Myths About Rural Market • Rural market is a Homogeneous Mass • Disposable Income is Low • Individuals decide about Purchases

12. Myth 1 : Rural market is a Homogeneous Mass • REALITY • Heterogeneous population • 16 languages • State wise variations in rural demographics • Literacy ( Kerala 90%, Bihar 44% ) • Population below poverty line ( Orissa 48%, Punjab 6% )

13. Myth 2 : Disposable Income is Low • REALITY • No. of Middle class Households ( annual income Rs 45,000 – 2,15,000 ) • Rural 27.4 million • Urban 29.5 million • Per Capita Annual Income • Rural Rs 9,481 • Urban Rs 19,407 • Total Rs 12,128

14. Myth 3 : Individuals decide about Purchases • REALITY • Decision making process is collective • Purchase process – influencer, decider , buyer , pays can all be different. So marketers must brand message at several levels • Rural youth brings brand knowledge to household

15. Opportunities in the Rural Sector

16. DEVELOPMENT Rural Land Use Heritage Stock Transfers Rural Business Centres JVs/Investment Opps Construction Contracts Facilities Management TOURISM/LEISURE Destination Estates Eco-Tourism Woodland Colony Spas/Wellbeing Sports and Leisure Trails/Safe Play Day Visitor Attractions PROMOTION Seminars Conferences Publications Forecasting Market Research Film making locations Media/PR SERVICES IT/Connectivity Affinity Products Estate Audit/Review LDF Monitoring Planning Bureau Retained Strategic Advice Trouble-shooting Grant Applications ENVIRONMENT Alternative Energy Biomass Bio-Diversity EIAs Green Audit and Charter Landscape Planning Coastal/Maritime Projects RURAL SOLUTIONS FORWARD PROGRAMME 2005-10 HOUSING Affordable Rural Live-Work Leisure Accommodation Extra Care Assistive Living Employer-led EUROPE Eire Wales Licensing Old Europe New Member States Scottish Office CONSTRUCTION Rural Youthbuild Projects Traditional Skills Team Training/Education Centre Fit-out Maintenance Service Buildings at Risk COMMERCIAL Rural Workspace Estate Management Rural Estate Agency Marketing/Lettings Equity Investment IRE Funds Industrial Storage SOCIAL SOLUTIONS Charities Independent Sector Social Economy Sustainable Communities Education/Welfare Social Inclusion

17. Objective Beneficiaries Implementing Agencies Technical Consultant To address the marketing needs of rural producers through a web based e-commerce solution Indian Rural Producers NGOs & government agencies NIC/NICSI RuralBazar – Product Profile

18. RuralBazar – Unique Features • Built in product Catalog that can be easily extended to accommodate new products • Can be installed as a • Product showcasing site • Site that showcases products & accepts offline payments • Site that showcases products & accepts offline as well as online payments • Can be installed at • State Level • District Level

19. RuralBazar – Customer Services • Comprehensive Search Facility • Search within a Product Family • Search within a price range • Search by State • Search by District

20. RuralBazar – Customer Services • Order confirmation & tracking • Offline as well as Online • Multiple payment options • Online through credit cards • Offline through Demand Draft/Postal Order • Personalised serviceto registered users • Online help

21. RuralBazar – Producer Services • RuralBazar Client Software • Provides a simple and easy-to-use interface for updation and maintenance of product catalog, producer’s profile, discount info etc. • Uploads data automatically through e-mail • Automatic emails for producerswhenever a new order is placed • Advertising and discount campaigns • Demand analysis reports

22. Operationalization - Main Players • National Informatics Centre • Client Organization • NGO • Government Agency

23. Responsibilities - NIC • Provide application software (and upgrades) for RuralBazar • Train the client organization • Provide technical consultancy

24. Responsibilities - Client Organization • Procure and set up the necessary computing and communication environment • Identify the location of the computing environment • Collect product and producer profile from the producer • Intimate order requirement to the producer

25. Responsibilities - Client Organization • Identify warehousing and shipment options • Monitor product shipment • In case online payment is to be enabled, establish a tie-up with • an acquiring/merchant bank account • a payment gateway • Update the content of the web store

26. RuralBazar - Current Status • Product launched recently • Concept and prototype was test run for Tripura ( http://purbasha.nic.in ) • Government of Tamil Nadu implementing on a pilot basis for two districts ( http://ruralbazar.tn.nic.in ) • Being implemented as a part of CIC project for North-East ( http://cicserver.nic.in/ruralbazar )

27. RuralBazar – The Road Ahead • Integration with wireless network to • Interact with customers over any communicating device • Communicate with remote producers thereby resolving the last-mile problem

28. Opportunities for innovation 1. Development of an Information platform A virtual space where people and organizations working on market access can find and exchange information The information Platform will be developed in coordination with FIDAMERICA (www.comercioactivo.org) and IFAT (www.IFAT.org), and will be linked to the IFAD Rural Poverty Portal

29. Opportunities for innovation 2. Knowledge sharing & best practices An internal assessment of IFAD experience in market access was carried out. The document: “Taking stock of IFAD Experience in Market Access” was one of the products of the pilot phase The document: “Taking Stock of Tools, Service Providers and Best Practices in Market Access – The top 20” is being prepared. It examines what the leaders in market access provide in terms of resources and services

30. Opportunities for innovation 3. Business Development Services Trying out new forms of institutional arrangements by which rural producers take direct and increasing responsibility for hiring and assessing business development services 4. Making use of information and communication technologies to facilitate rural producers in accessing information • Interaction with Finnish organizations • Two pilot projects (Peru and Tanzania)

31. The Institutional Triangle IFAD Project (Enabling Agency) CONTRACTS PARTICIPATION Service Provider (Delivery Agency) PARTICIPATIONCONTRACTS RuralProducers Source: A Practitioner’s Guide for Institutional Analysis of Rural Development Programmes, IMI, IFAD.

32. Challenges and Strategies • Availability • Affordability • Acceptability • Awareness

33. 4 A’s of Rural Marketing

34. Availability • Challenges • Regularly reach products to the far-flung villages • India’s 6,27,000 villages are spread over 3.2 million sq. km ; 700 million Indians may live in rural areas

35. Contd…. • Strategies • Strive to reach at least 13,113 villages with a population of more than 5,000 • Trade off the distribution cost with incremental market penetration

36. Contd…. • Can reach the rural market by the following ways :- • Retail Outlet • Chaupals • Mandi ( trade place) • Travel • Haats ( periodic markets) • Place of worship

37. Contd…. • Hindustan Lever, to serve remote village, use autorickshaws, bullock-cart, and even boats in the backwaters of Kerala • Coca-Cola, has evolved a hub and spoke distribution model to reach the villages. To ensure full loads, the company depot supplies, twice a week, large distributors which who acts as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas.

38. Affordability • Challenges • To provide at cheaper price • Strategies • Introduce small unit packs • Godrejintroduce 3 brands of Cinthol, Fair glow and Godrej in 50gm. Packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar, and Uttar Pradesh – the so-called ‘Bimaru’ states.

39. Contd…. • Coca-Cola has addressed the affordability issue by introducing the returnable 200ml glass bottle priced at Rs5 • Hindustan Lever, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50gm.

40. Acceptability • Challenges • To gain acceptability for the product or service. • Strategies • Offer products or services that suit the rural market • Easy to understand

41. Contd…. • Because of the lack of electricity and refrigerators in the rural areas , Coca-Colaprovides low cost ice boxes – a tin box for new outlets and thermocol box foe seasonal outlets. • HDFC tied up with non-governmental organizations and offered reasonably-priced policies in the nature of group insurance cover

42. Awareness • Challenges • Less exposure to the world, low literacy rate • Strategies • Opinion leaders play a key role in popularizing products and influence in rural market so choose the appropriate opinion leader

43. Contd…. • Can use the following promotional methods :- • Personal Interface • One on one contact programs are extremely efficient manner to reach the Rural consumer • Provides an opportunity to • Demonstrate • Induce trail • Educate

44. Contd…. • Events • Using culture to touch a chord • Folk entertainment • Magic show • Ramayan in U.P.

45. Contd…. • Melas • An opportunity to present Brand Stories using better Display tools • Large screens • Animations • Melas can be used for • Retail sales points • Sampling exercise • Demonstration

46. Contd…. • Haats • Presence in the market • 42,000 rural haats (supermarket) • 4500+ visitors per haat average • Sales per day US$5000 • 300+ sales outlets / haats

47. Challenges • Self-sustainability • Less no. of transactions per service • Hence, more number of services is required • Entrepreneurial skills • Women office bearers • Network connectivity • Technical and Business Handholding • Financial reconciliation on daily basis • Monitoring on daily basis

48. Main Challenges • Infrastructure: still limited in rural Africa • Investments: Governments need to do more and budget allocations should factor ICTs in rural development concerns • Policies: should be implemented more vigorously to ensure rural and community access (legal/institutional/regulatory frameworks) • Integration of ICTs in sectors that support rural development: agriculture, forestry, etc • Private Sector involvement still limited – incentives needed Supporting R&D: more support needed for innovation and appls • Building e-rural economy: using ICTs to open up the rural economy and introduce new wealth creation opportunities especially for women and youth • Stronger lobby on ICT and Rural development issues • More applications/local content + use of local languages

49. Domain Analysis - Challenges • Sale of products mostly confined to Rural haats; therefore • May not fetch a very good price for the products • Limited demand; low turnover;low income • Chance for product improvement is limited • Limited awareness in the global market • Products not available all the time in most of the places • Full financial benefits not realised by the rural producer • Nearly impossible to analyze the market

50. Rural Kiosk - vision • Is a center which would provide: • Government to Citizen Services (G2C) • Government to Business Services (G2B) • Business to Business Services (B2B) • Business to Citizen Services (B2C) • Citizen to Citizen Services (C2C) To provide opportunities for Government Departments, Public and Private Service providers, SHG entrepreneurs to create and manage services addressed to the rural citizens and markets and operate franchises