rm session 1

8/7/2019 RM session 1

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Introduction- RM


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What is Marketing?


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Marketing is ...

Business ability to respond to andexploit emerging trends in environmentthroughexchange process leading tocreate and retain the customers at a

profit


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Marketing as Concept

Consumers always buy productswhichhold value

Value = Benefits/ Cost


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Marketing as process

Industry

(a collection

of sellers)

Market

(a collection

of Buyers)

Goods/services

Money

Communication

Information


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Marketing as Function

Identifying Opportunities Marketing Information System

Buyer behavior

Develop Strategies STP (Segmentation, Targeting, Positioning)

Implementing

Implement strategies using Marketing Mix(4Ps) Controlling

Marketing administration (Sales analysis, MarketShare analysis, Stocking Analysis)


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Introduction to Rural marketing


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Persons Percent ofpopulation Males percent of males Females percent of females

Total 1,027,015,247 531,277,078 495,738,169

Rural 741,660,293 72 381,141,184 72 360,519,109 72.72369399

Urban 285,354,954 28 150,135,894 28 135,219,060 27.27630601

Source : Census 2001


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The Union Budget for 2009-10 hiked theallocation for the National Rur alEmployment Guarantee Act (NREGA) toUS$ 8.03 billion, giving a boost to therural economy. This is in addition to theambitious Bharat Nirman Progr amme

with an outlay of US$ 34.84 billion for improving rural infrastructure.


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The rur al India's share in the country'sgross domestic product has benefited,accounting for 51 per cent of GDP in2005-06 from 46 per cent of GDP in1993-94.


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Rural disposable income

Rent (0.94 per cent compared with 9.19per cent for urban households)

Consumer services excludingconveyance (6.48 per cent comparedwith 10.57 per cent)

Conveyance (6.63 per cent comparedwith 9.96 per cent)

Entertainment (1.11 per cent comparedwith 3.11 per cent).


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Urban households spends more than 5per cent of their incomes on fuel andlight, consumer services excludingconveyance, conveyance, rent, andcereals/cereal products and substitutes.

These account for 51.27 per cent of urban household expenditure.


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For the same five categories, the ruralhousehold spends 43.89 per cent of itstotal expenditure. It is the potential in thisdifference that corporate India seeks toexploit.


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Road ahead

According to international consultancyfirm Celent, rural markets in India willgrow to a potential of US$ 1.9 billion by2015 from the current US$ 487 million.Rural markets are growing at double thepace of urban markets and for many

product categories, rur al marketsaccount for well over 60 per cent of thenational demand.


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The dominant white goods and consumer electronicsmanufacturers all have dedicated rur al marketingcampaigns in place, which have become crucial totheir company bottom-lines.

LG Electronics expects rural revenues to grow fromRs.4180 crores (35 per cent of total revenue) in 2008to Rs.5490 crores (45 per cent) in 2009. Samsungexpects rural markets to contribute 30 per cent to its

consumer electronics turnover in 2009.

Philips is using its home lighting distribution network(1.8 million outlets strong) to strengthen its rur alfootprint and the company will use this network to sell

irons, mixer-grinders, DVD players and radios


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Similarly, Whirlpool expects 5-7 per cent growth in2009 from small towns. Hindustan Unilever hasrecorded over 16 per cent growth in gross revenue inrecent months, at least half of which comes through itsextensive rural network.

Goldplus is the Tata group's mass-market jewellerybrand, which hires unemployed youth as its rur alambassadors. The youth are tr ained; they theneducate rur al people by using educational films, flipcharts and booklets. Goldplus expects 50 per centgrowth this year to account for a tenth of the Tatagroup's jewellery business revenues


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Automobile use in rural India is measured by the autoindustry at 1-2 per thousand, compared with 10-11 perthousand in cities. By using panchayats, primaryhealthcare members and regional rural bank membersto reach potential buyers, Maruti's rur al revenuesincreased from 3.5 per cent of total sales to 8.5 per cent. Maruti is reported to have sold more than 60,000cars in rural markets between April 2008 and February

2009. The car company has even launched acampaign - "Ghar Ghar Mein Maruti (a Maruti in everyhousehold)" - specifically for these markets.


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Hero Honda's motorcycle sales grew 11 per cent in 2008-09 fiscal against an averagesales growth of 1.9 per cent for the industry.

For the two-wheeler company, the share of rural sales has gone up from 38 per cent in2007-08 to 40 per cent in 2008-09. HeroHonda in late 2007 had launched a rural

campaign called "Har Gaon, Har Aangan(every village, every home)"


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Bharti Airtel's rur al footprint has increasedfrom 6 per cent in 2007-08 to 12.6 per centuntil February 2009. Airtel's average revenue

per user (a telecom industry metric) in the ruralregions has increased from Rs.100 to Rs.150in the same period. The company sees this isindication of more cash available with the rural

consumer, and has even attributed thisincrease to an increase in minimum supportprices for wheat and rice over the last twoyears.


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IFFCO Tokio General Insur ance has tied-upInsurance with fertiliser. For its Sankat HaranPolicy (non-crop insurance), the companyoffers farmers a free insurance cover worthRs.4000 with every bag of fertiliser (the salereceipt is also the policy document).

"The fast moving consumer goods (FMCG)sector in rural areas is expected to grow by 40per cent as against 25 per cent in urbanareas," said Assocham president Sajjan Jindal


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Distinct discipline of Rural Marketing

A debate continued for a long timeamongst the Indian marketers, bothpractitioners and academicians on thejustification for existence of the distinctdisciple of rural marketing.


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Consequently, two schools of thoughtemerged.


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The first school believed that theproducts/ services, marketing tools andstrategies that are successful in urbanareas, could be tr ansplanted with littleare no modification in rural areas.

It perceived rur al India, as a poorextension of urban India.


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The second school saw a cleardistinction between urban and rur alIndia, and suggested a differentapproach, skills, tools and str ategies tobe successful in rural markets.


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The recent success and failures of thecorporate world in the rural markets haveclearly demonstrated that rur al marketscannot tapped successfully with anurban marketing mindset in other wordsour approach towards rural markets

needs to be distinct from the oneadopted for urban markets.


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What differentiates the two market is notmere income, but a host of otherinfrastructural and socio-cultural factors.

In a large rur al economy like India's,rural marketing has emerged as animportant and distinct internal sub-division within the marketing discipline.


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Meaning of RURAL

places f ar away from towns or cities by Collin'scobuild Dictionary (2001)

From sociology point of view rur al is definedas a group of people who are tr aditionalists inoutlook, rooted in the land, and who resistchange.

However, the census of India defines rural asthat what is not urban, is rural.


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Urban isAll locations within a municipality /

corporation, cantonment board ora notified

town area committee.All other locations satisfying all of the

following criteria:

Minimum population of 5,000.

At least 75% of male workforce engaged in non-agricultural activities and

A population density of over 400 persons per sqkm.


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Rural Marketing

The term rural marketing is a synthesisof two words Rural and Marketing.

The word marketing is derived from thelatin word Marcatus meaning goods ortrade ora place where business isconducted.


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If ten expert define the term rural, eachwould come up with different definition.What is rural to HUL may not necessarilybe rural to LG / philips or somebody elsein terms of marketing and marketingcommunication


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Most companies in the FMCG and agri-input sector would define rural as a placewitha population up to 20,000

Durable goods companies wouldconsiderany town witha population ofbelow 50,000 as a rural market.

Rural market mostly starts from wherethe organized distribution ends


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Rural Marketing Defined as

The process of developing, pricing,promoting, distributing rur al-specificgoods and services leading to exchangebetween urban and rural markets, whichsatisfies consumer demand and alsoachieves organizational objectives (Iyer)


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Rural marketing scope

From / To Rural Urban

Urban 1. Consumables anddurables agriculturalinputs.

2. Consumables

3. Consumer durables

Not concerned

Rural 1. Rur al marketing,

services and products

1. Agricultural and

allied production.

2. Rur al artisans andrural industryproducts

(Mithileshwar, 2003)


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Concept and Scope of RM

Rural Marketing was earlier used as anumbrella term to refer to all commercialtransactions of rural people, acquired a

separate meaning of great significance in1990s.

The evolution can be briefly seen in 3 phases.

Phase 1 (before mid-1960s)

Phase 2 (Mid 1960 Mid 1990s)

Phase 3 ( After Mid 1990s)


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Phase I (Before mid 1960s)

Rural marketing referred to marketing ofrural products in rural and urban areasand agricultural inputs in rural markets

The local marketing of products likebamboo baskets, ropes, products fromartisans sellers like black smiths,

carpenters, cobblers and pot makers


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Phase II (Mid 1960s Mid 1990s)

Success of Green Revolution transferred many of thepoor villages into prosperous busy centers.

The demand foragricultural inputs went up( eg soiltesting, highyield variety seeds, fertilizers, pesticides,

latest machine tools) have changed the rural scenario The formation ofagencies like Khadi and village

industries commission, Girijan Cooperative Societies,and APCO Fabrics.

Because of this efforts from govt. lot of villageindustries flourished and products like handicrafts,handloom textiles, soaps, safety matches, crackersetc, hit the urban market on a large scale.


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Phase III (After Mid 1990s)

Earlier, there was no rural market as such, theexisting were not sustainable and not largeenough to attract the attention of urbanmarketers.

They were inaccessible. Since 1980 India's industrial sectorhad gained

in strengthand maturity. With support from govt and private players

there was sustainable rural development.Whichas let to higher spending power in ruralareas.


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Attractiveness of Rural Market

Urban market become congested withtoo many competitors, theyhavereached near saturation point.

Rural markets has become the potentialfor consumption of variety of productsand services


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Factors forattractiveness in RM

Large population

Raising prosperity

Growth in consumption

Life-style changes

Life-cycle advantages

Market growth rates higher than urban

Rural marketing is not expensive

Remoteness is no longera problem

rm session 1

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