; RuraL Marketing
Learning Center
Plans & pricing Sign in
Sign Out
Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

RuraL Marketing


  • pg 1
									        SVKM’s Narsee Monjee Institute of Management Studies (NMIMS)
                        School of Distance Learning

Name of the Student:-……………….………………..
G R Number: - ………………………………………..
Study Centre: - …………………………………….
Year of Registration: - ………………………………….
Programme Name:-
Course {Subject}:-………………………………………
Question :-

Briefly explain the Project Shakti by HUL?

Answer :-

HUL has been proactively engaged in rural development since 1976 with the initiation of the
Integrated Rural Development Programme in the Etah district of Uttar Pradesh, in tandem with
the company’s dairy operations. This Programme now covers 500 villages in the district.
Subsequently, the factories that HUL continued establishing in less-developed regions of the
country have been engaged in similar programmes in adjacent villages. These factory-centered
activities mainly focus on training farmers, animal husbandry, generating alternative income,
health & hygiene and infrastructure development.

Shakti is HUL& apos;s rural initiative, which targets small villages with population of less
than 2000 people or less. It seeks to empower underprivileged rural women by providing
income-generating opportunities, health and hygiene education through the Shakti Vani
programme, and creating access to relevant information through the iShakti community portal.

Shakti is a pioneering effort in creating livelihoods for rural women, organised in Self-Help
Groups (SHGs), and improving living standards in rural India. Shakti provides critically
needed additional income to these women and their families, by equipping and training them
to become an extended arm of the company's operation.

Started in 2001, Shakti has already been extended to about 80,000 villages in 15 states

Shakti already has about 25,000 women entrepreneurs in its fold. A typical Shakti
entrepreneur earns a sustainable income of about Rs.700 -Rs.1,000 per month, which is double
their average household income. Shakti is thus creating opportunities for rural women to live
in improved conditions and with dignity, while improving the overall standard of living in
their families.

Shakti Vani is a social communication programme. Women, trained in health and hygiene
issues, address village communities through meetings at schools, village baithaks , SHG
meetings and other social fora. In 204, Shakti Vani has covered 10,000 villages in Madhya
Pradesh, Chattisgarh and Karnataka. The vision is to cover 80,000 villages in 2005.

iShakti, the Internet-based rural information service, has been launched in Andhra Pradesh, in
association with the Andhra Pradesh Government's Rajiv Internet Village Programme.
The service is now available in Nalgonda, Vishakapatnam, West Godavari and East Godavari
districts. iShakti has been developed to provide information and services to meet rural needs in
medical health and hygiene, agriculture, animal husbandry, education, vocational training and
    employment and women's empowerment. The vision is to have 3,500 kiosks across the
    state by 2005

    The model was piloted in Nalgonda district of Andhra Pradesh in 50 villages in the year 2000.
    The Government of Andhra Pradesh took the pioneering step of supporting the initiative by
    enabling linkages with the network of DWACRA Groups of rural women set up for their
    development and self-employment. Most SHG women view Project Shakti as a powerful
    business proposition and are keen participants in it. It has since been extended to in Andhra
    Pradesh, Bihar, Chattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh,
    Maharashtra, Orissa, Punjab, Rajasthan, Tamilnadu, Uttar Pradesh and West Bengal with the
    total strength of over 40,000 Shakti Entrepreneurs.

    OTHER ACTIVITIES: To improve the business skills of the SHG women, extensive training
    programmes are being held. Such workshops have already covered a large number of Shakti
    Entrepreneurs in Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Uttar Pradesh,
    Tamilnadu, Chattisgarh and Orissa

    As part of their training programme, all HUL Management Trainees spend about 4 weeks on
    Project Shakti in rural areas with NGOs or SHGs. Assignments include business process
    consulting for nascent enterprises engaged in the manufacture of products such as spices and
    hosiery items.

    Participated States

o                  Andhra Pradesh
o                  Karnataka
o                  Madhya Gujarat
o                  Chhattisgarh
o                  Maharashtra
o                  Orissa
o                  Punjab
o                  Rajasthan
o                  Tamilnadu
o                  Uttar Pradesh
o                  West Bengal
o                  Bihar
o                  Haryana
o                  Jharkha ]

    Shakti is working closely with the rural development departments of the state governments, as
    well as large number of NGO’s across the geographies it currently operates in.
Question :-

“Distribution is the key to Rural Success” Explain the statement in reference to various types of
distribution strategy

Answer :-

Rural Market

The definition for rural market is one used by Census of India as it has advantages of relevance,
simplicity and measurability

Rural is defined as that which is not Urban. Urban is:

       All locations with a municipality/corporation, cantonment board or a notified town area;
       All other locations satisfying all of the following criteria:
   a)   a minimum population of 5,000;
   b)   at least 75 percent of the male work force engaged in non-agricultural activities; and
   c)   a population density of over 400 per sq. km.

Indian Rural Market
India is a country with nearly three-fourth of its consumers in rural areas and one half of the
national income is generated in rural market.

The last three decades there has been a marginal reduction in the rural population expressed as
percentage of the total population; there has been a steady growth in rural population in terms of
absolute numbers. In terms of households, rural market consists of more than 12 crore
households, forming over 70 percent of households in the country.

Rural marketing in India has very peculiar characteristics:

   1. Scattered market: The urban population of India is concentrated in 3,200 cities and
      towns; rural population is scattered across 5, 70,000 villages. And of them, only 6,300
      villages or less than 1.1 percent, have a population of more than 5,000 each. More than
      1.5 lakh villages or 25 percent are in the category of 200 people or less. Hence rural
      demand is highly scattered.
   2. Socio economic position: Rural consumers have lower purchasing power/low per capita
      income. Nearly 60 percent of the rural income comes from agriculture. More than half of
      the households are in the income category of less than
       Rs. 25,000 per annum.

   3. Cultural diversity and heterogeneity of market: There are 5, 70,000 villages, half a
       dozen religion, 33 languages, 1650 dialects and diverse subculture makes Indian rural
       market a heterogeneous market.
   4. Literacy level: Rural India has literacy rate of 28percent compared with 55 percent for
       the whole country. This calls for different type of marketing communication for rural
Apart from the above mentioned characteristics, rural consumer behaviour, place of purchase,
purchase frequency, purchase place etc are strikingly different from that of urban consumer.

Market attractiveness

Rural markets have proved to be very attractive for corporate and the size of market is increasing
year by year. The increased income/purchasing power of the rural consumer and the improved
income distribution have enhanced rural demand for several products.

With a population already in excess of one billion people, India has caught the eye of
multinational corporations across the globe as a place of opportunity for exploring new markets.
While India has portions of their population that would be considered wealthy or middle class by
Western standards, a much greater percentage of India’s population is low income. As a result,
they spend money, live, and use products differently than the countries where most multinational
corporations originate (Prahalad Lieberthal, 2003). Rural areas, in particular, exemplify these
differences. Understanding the characteristics that make the people and the market in rural India
unique can help corporations to enter this market with success. The key characteristics define the
term rural, determine the amount and flow of income, and determine the types of products and
packages that are typically used in rural India.

Marketing opportunities in rural markets

Rural markets have become very attractive to corporate

Extent of rural sales by select companies/Industries

Company             Rural Sales (% share)              Industry      Rural Share (%share)
HLL                 50                                 Audio                40
Colgate             50                                 Refrigerators        24
Godrej              30                                 CTVs                 22
Cavinkare           33                                 Pharma               20
Marico              25                                 Cement               10-20
Cadbury             25                                 Paints               10-12
Smith Kline Beecham 25                                 Washing machines 9
Heinz               20
Glaxo-Wellcome      25
Cipla               18
Ranbaxy                17
Nicholas Piramal       19
Toyota                 50
Hero Honda             40
Kinetic                30

Hence FMCG industry has managed to bring about a revolution in rural market distribution with
small pack sizes, consumer durables and automobile companies are still grappling with the issue.

With the percentage of rural purchasing power increasing significantly, players believe that
innovation in distribution can largely solve the glitches in rural marketing.

“The aspiration of the rural consumer is the same as his urban counterpart. Therefore, when he
comes to buy a product in the rural market he wants to see the same models as he has seen in a
city outlet or popular mass media campaign. However, companies are unable to distribute all
their range in a rural market due to logistics and supply chain challenges.

The FMCG market grew at 14 per cent for the year ending November 2009 as compared to last
year. The rural market grew at a higher rate of 18 per cent than urban (12 per cent).

“Rural areas in States such as Rajasthan, Uttar Pradesh and Eastern states such as Assam, Bihar
and West Bengal posted high growth. Distribution increase, smaller packs of premium categories
combined with rural consumer moving up the value chain is the key reasons for a healthy growth
in rural FMCG sales,”

Rural India reflects a CAGR of 11.6 per cent (volume at 7.9 per cent and price at 6.3 per cent).
The growth in the last two years was fuelled by price increase in a large number of categories
with higher growth in rural than in urban areas. Functional, specific purpose categories such as
mosquito repellent, digestives and condoms, televisions and mobile were among products doing

26 per cent of durables growth came from rural areas. Interestingly, only five per cent of rural
population brought from a rural outlet.

Experts also believed that rural consumers upgrade in a fashion similar to their urban
counterparts as well as opt for premium products in smaller formats, and therefore
communication needs to define for such buyers. “Companies have to understand that rural buyers
have a sustainable advantage as they take to brands slowly and give them up slowly. Rural
branding and communication must be clear and cohesive for the market to grow. Therefore,
reorienting the market segment to ensure rural gets adequate focus.


A one of the ways could be using company delivery vans which can serve two purposes – it can
take the products to the customers in every corner of the market and it also enables the firm to
establish direct contact with them and thereby facilitates sales promotion. The mediocre
companies with size abler sources may chip in for syndicated distribution. Haats and Melas
could also be a great platform to display merchandise. Also, every region consisting of several
villages is generally served by one satellite town termed as Mandi where people prefer to go to
buy their durable commodities. If marketing companies use these feeder towns they can have a
vast coverage of rural arena.

Delivery Vans

Companies can use their own delivery vans to reach the rural consumers. There are certain
advantages of using delivery vans. They take the products to customers and retail outlets in every
corner of selected rural markets and enable the company to establish direct contact with the
consumers which helps in sales promotion.

We can take the example of HLLs distribution strategy in rural market.

In 1998, HLL landed "Operation Harvest" with an objective to increase penetration, increase
brand awareness, encouraging trials and identification of key distribution points and retail
points. Around 30,000 villages having high growth potential, having a population of at least
2000, and well connected by roads, were selected. The vans were retrofitted with a public
address system and their audio-visual equipment. These vans covered six villages a day for
six days in a week. The cycle was repeated couple of times in the same villages. On reaching
the villages, they would play audio-cassette and video-films. These cassettes and films had
songs and sequences from popular films with advertisement of HLL coming at some intervals.
Company representatives distributed free samples. Small shops of villages were provided
with HLL products like Lifebuoy and Wheel. This helped company to understand the potential
of the market.

Joint Distribution by Non-Competing Companies

Companies having lesser distribution reach in rural areas can collaborate with companies
already having wide network in rural market. This type of tie-up can prove to be beneficial as
one can reach to large number of retail outlets by utilizing the network and the other one can
earn better revenue. Also, this type of joint collaboration can help both companies to reduce
distribution costs and can convert operation which seems to be unviable into financially viable

Some examples of effective distribution tie-ups in rural market: -

Samsung has tied-up with the Indian Farmers Fertilizer Cooperative (IFFCO). Thus,
Samsung will use IFFCO's cooperative network for marketing the hand-sets to rural
consumers over a wide area.

Nokia has entered into a partnership with HCL for distribution of its hand-sets.

Motorola and Nokia have partnered with ITC e-Choupal which gave them wider reach in
rural market.

Procter & Gamble had tie-up with Godrej and Marico Industries, and now it is planning one
with Nirma as well for distribution of Camay Soaps.

Godrej has tie-up with Jyothi Labs to use its extensive distribution network for marketing
Godrej Tea across the country.

To top