Rural Marketing 920

INDIAN RETAIL INDUSTRY AND RURAL RETAILING :
BY :
GAURAV
NITHIN
10
15
Retailing
Retailing is the transaction between the seller and consumer for personal consumption .It does not include transaction between the manufacturer, corporate purchase, government purchase and other wholesale purchase. A retailer stocks the goods from the manufacturer and then sells the same to the end user for a marginal profit. In the supply chain that also consists of manufacturing and distribution, retailing is the last link before the product reaches the consumer.
Retail Sector in India

Post liberalization the Retail sector in India is heralded as one of the sunrise industries. It has never been better for the retail sector in India. Today within the booming service sector, retailing is the single biggest contributor in terms of GDP to the National Income. Retailing itself can be further divided into organized and unorganized sector.
ORGANISED RETAIL SECTOR
UNORGANIZED RETAIL SECTOR
ORGANISED VS UNORGANISED
FACTOR DEFINITION EXAMPLES MARKET SHARE MARKET GROWTH CHALLENGES ORGANIZED MODERN RETAILING HYPERMARKET, RETAIL CHAIN ETC 14% 42% POOR SUPPLY CHAIN MANAGEMENT, AGGRESSIVE EXPANSION ETC UNORGANIZED TRADITIONAL FORM OF RETAILING MOM N POP STORES, HSND CART, PVT ETC 85% 10% USE OF LABOUR INTENSIVE TECH, LACK OF GOV SUPPORT ETC
RURAL AREA
Census of India defines Rural Settlements as......
Population lower than 5,000 persons Population density lower than 400 persons/sq. km At least 75% of male population engaged in Agri. activities.
IMPORTANCE OF RURAL AREAS
. Urban markets are becoming increasingly

complex, competitive and saturated.
. Large size of rural markets

742 million people (73 % of the population) 200 million households (70% of total households)
Rural India consists of 720 Million consumers across 6,38,000 villages ---17% of these villages account for 50% of the rural population and 60% of the rural wealth
----Extensive reach is required as to cover 50% market 1,00,000 villages must be catered Immense opportunity amounting to US$ 125 billion
DATA
Rural Retail is growing @ 7% p.a. Rural consumption is also shifting from basic food grains to fruits, vegetables, dairy and poultry products, as well as beverages Demand for better quality food leading to huge demand for basic foods
THE INDIAN RURAL MARKET

The Rs 140,000 crore rural retail market is expected to cross Rs 180,000 crore mark by 2010, And up to Rs 240, 000 crore by 2015 (CII).
Product penetration in terms of % of rural households

PRODUCT
AUDIO SYSTEM MOTOR CYCLES REFRIGERATERS TELEPHONES TELEVISION WASHING MpACHINE
YEAR09 .10
35 12 10 46 34 4
Income distribution (Million population)

400
312 300 200 100 0 Low Rural Low er middle Middle high Urban 90 41 288
400
352
305
2004-05
130 153
300 200 100 0
2010-11
170 79 17
272
2001-02
Low Rural Low er middle Middle high Urban
Distribution of Monthly Per Capita expenditure
Urban
Rural
Food Consumer goods Fuel, clothing & foot wear Medical Education Rent & taxes
51.5 19.6 13.9 5.5 5.1 4.5
63.7 13.1 14.8 5.5 2.5 0.4

Source: Household Consumer Expenditure Survey, JanuaryJune 2004
CATEGORY
Brand with Category highest Penetration penetration
Toilet Soap Washing cakes/Bars Tea Washing powder / liquid Salt Biscuits
91% 88% 77% 70% 64% 61%
Lifebuoy Wheel Lipton Taaza Nirma Tata Salt Parle G
CONTRIBUTING FACTORS
1.
Agriculture revolution
Consistent good monsoons Better procurement prices fixed for various crops.
Better yields due to many research programs (HYV seeds provided by the government)
2. New improved tax structures 3. Spread of education 4. Improved infrastructure 5. Better banking facilities (financial assistance given by NABARD) 6. Government schemes like IRDP,JRY. 7. Increased expenditure in plan outlay (from 14000 cr.in 7th plan to 30,000 cr.in 8 th plan.
8.
Increased penetration of electronic media
9.
Life style changes

50 % of todays rural income is not coming from the agriculture sector.
Up gradation from local brands to branded ones and from low priced bands to premium ones. Increasing influence of the youth in the buying decisions.
HURDLES IN RURAL RETAILING

1. High distribution costs 2. Low per capita disposable income that is half the urban disposable income. 3. Large no. of daily wage earners 4. Acute dependence on the vagaries of the monsoons 5. Seasonal consumption linked to harvest and festivals
6. Inaccessibility to conventional advertising media 7. Poor roads,power problems
8. Banking and credit problems

9. High initial market development expenditure 10.Wholesaler and dealer network problems
11. Highly dispersed and thinly populated markets 12. Social and cultural backwardness of the rural masses. 13. Low level of exposure to different product categories and product brands. 14. Cultural gap between urban based marketers and rural consumers.
THE RURAL CONSUMERS

Is a value seeker Seeks comforts and amenities Does not wish to be seen as the deprived cousin. Does not experiment easily but this does not mean that he would not change. Values local relationships because of unfavourable past experiences
STRATEGIES FOR RURAL MARKETING
1. Being first on the shelf

It is very important because the brands rarely fight with each other as the retailers generally stock a single brand in a product category.
2. Different means of advertising

A. Haats and melas A survey by MART (marketing and research team revealed that 47000 haats and 25000 melas take place every year in India. B. Performance arts including theatres,songs,dance puppetry, magic shows etc.
Advantages
1. Large visitor turnaround.
2. These melas are held during post harvest season, when the purchasing power of the people is more. The companies provide touch and feel demonstrations and distributed free samples.
CAVIN CARE
This company first come out with the concept of sachets and it revolutionize the whole market, making the Chic shampoo the 2nd largest selling shampoo in India What followed was the flood of products in small packing ranging from toothpaste,facecreams,soaps,hairoil etc.
NIRMA
This company introduced the innovative technique of using video vans for marketing Nirma products .
Advantages
1. 2. Reach to interior parts Offer opportunity for personal interaction .
Similar strategies helped Ghadi to become the 3rd largest selling detergent.
L.G
The top brass closed down on 2 points
1. The company figured that it needed new cheaper products to lure the rural buyers . The company did this by introducing a cheaper range of TV's by the name of Sampoorna. 2. More offices in small town was the need of the hour. The company went on in a office opening spree and currently it has 178 branch offices.
COCA-COLA
1. Increase in number of outlets from 80,000 in 2001 to 190,000 in 2005 resulting in increased market penetration from 13 % to 28 %.
2. It also tapped the local form of entertainment like annual haats and fairs and made huge investment in infrastructure for distribution and marketing.
3. It brought down the average price of its products from rs.10 to rs.5,therby bridging the gap between soft drinks and other local options like tea, buttermilk or lemon water.
4. It doubled the spend on doordarshan
5. It concentrated its entire advertising towards the rural customer.
As a result the rural market accounts for 80 % of the new coke drinkers and 30% of its total volumes.
I.T.C e.CHAUPAL
The companys e-chaupal initiative is a novel idea which bypasses the brokers between the Company and the farmers.
It is helping Indian agriculture to enhance its competitiveness by empowering Indian farmers through the power of internet .
This unique transformational strategy has become the subject matter of a case study at Harvard b school ,has created for I.T.C a huge rural distribution infrastructure ,significantly enhancing the companys marketing reach.
Formed in 1946,it is a brand name managed by an apex cooperative organization ,Gujarat cooperative milk marketing federation limited which today is jointly owned by some 2.41 million milk producers in Gujarat. It has been a sterling example of right mix of rural marketing and has established itself as a uniquely appropriate model for rural development.
Amul has spurred the white revolution in India and it is today the worlds biggest cheese brand.
parle g.mpeg
ONIDA
The company introduced its igo range of t.vs priced cheaply at rs.5000 for 14 inches particularly to cater to the backward states like Bihar, Rajasthan and Uttar Pradesh.
CONCLUSION
Looking at the challenges and the opportunities which rural markets offer to the marketers ,it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage.

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INDIAN RETAIL INDUSTRY AND RURAL RETAILING :

Retail Sector in India

ORGANISED RETAIL SECTOR

UNORGANIZED RETAIL SECTOR

IMPORTANCE OF RURAL AREAS

. Urban markets are becoming increasingly

. Large size of rural markets

THE INDIAN RURAL MARKET

Product penetration in terms of % of rural households

Income distribution (Million population)

300 200 100 0

Distribution of Monthly Per Capita expenditure

51.5 19.6 13.9 5.5 5.1 4.5

63.7 13.1 14.8 5.5 2.5 0.4

Brand with Category highest Penetration penetration

91% 88% 77% 70% 64% 61%

Lifebuoy Wheel Lipton Taaza Nirma Tata Salt Parle G

Increased penetration of electronic media

Life style changes

HURDLES IN RURAL RETAILING

6. Inaccessibility to conventional advertising media 7. Poor roads,power problems

8. Banking and credit problems

THE RURAL CONSUMERS

STRATEGIES FOR RURAL MARKETING

1. Being first on the shelf

2. Different means of advertising

4. It doubled the spend on doordarshan

5. It concentrated its entire advertising towards the rural customer.

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