Final Sanjeev Sir PDF

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RURAL MARKETING - INDIAN PRESPECTIVE

What’s different about rural marketing?
Price plays a very important role. Companies have, in fact, launched lower-priced
products targeted at the rural market. Some time back, Escorts Yamaha had priced its
model YD 125 at Rs 30,000 to clear the stock and the scheme was a runaway hit.
Besides pricing, the second most important thing is repetition of communication to
increase recall value.
The repetition should not be too soon as it then tends to get monotonous, nor should it
be too long. The ideal time is after one month and before three months. This helps
establish the image of the companies and allows the target audience to differentiate
products. This is important because of the widespread prevalence of spurious products
in the rural market.
Innovative tools should focus on providing entertainment along with delivering the
message. In this regard, our concepts like rural mobile fairs, caravans, screens at the
Kumbh Mela etc have been well received by the consumers.
The Indian rural market with its vast size and demand base offers great opportunities to
marketers. Two-thirds of countries consumers live in rural areas and almost half of the
national income is generated here. It is only natural that rural markets form an important
part of the total market of India. Our nation is classified in around 450 districts, and
approximately 630000 villages which can be sorted in different parameters such as
literacy levels, accessibility, income levels, penetration, distances from nearest towns,
etc.
The success of a brand in the Indian rural market is as unpredictable as rain. It has
always been difficult to gauge the rural market. Many brands, which should have been
successful, have failed miserably. More often than not, people attribute rural market
success to luck. Therefore, marketers need to understand the social dynamics and
attitude variations within each village though nationally it follows a consistent pattern.
While the rural market certainly offers a big attraction to marketers, it would be naive to
think that any company can easily enter the market and walk away with sizable share.
Actually the market bristles with variety of problems. The main problems in rural
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marketing are:
 Physical Distribution
 Channel Management
 Promotion and marketing communication
The problems of physical distribution and channel management adversely affect the
service as well as the cost aspect. The existent market structure consists of primary
rural market and retail sales outlet. The structure involves stock points in feeder towns
to service these retail outlets at the village levels. But it becomes difficult maintaining
the required service level in the delivery of the product at retail level.
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 nook and corner of the market and it
also enables the firm to establish direct contact with them and thereby facilitate sales
promotion. However, only the bigwigs can adopt this channel. The companies with
relatively fewer resources can go in for syndicated distribution where a tie-up between
non-competitive marketers can be established to facilitate distribution.
As a general rule, rural marketing involves more intensive personal selling efforts
compared to urban marketing. Marketers need to understand the psyche of the rural
consumers and then act accordingly. To effectively tap the rural market a brand must
associate itself with the same things the rural folks do. This can be done by utilizing the
various rural folk media to reach them in their own language and in large numbers so
that the brand can be associated with the myriad rituals, celebrations, festivals, melas
and other activities where they assemble.
One very fine example can be quoted of Escorts where they focused on deeper
penetration .In September-98 they established rural marketing sales. They did not rely
on T.V or press advertisements rather concentrated on focused approach depending on
geographical and market parameters like fares, melas etc. Looking at the ‗kachha‘
roads of village they positioned their mobike as tough vehicle. Their advertisements
showed Dharmendra riding Escort with the punch line ‗Jandar Sawari, Shandar Sawari‘.
Thus, they achieved whopping sales of 95000 vehicles annually.
One more example, which can be quoted in this regard, is of HUL. A year back HUL
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started ‗Operation Bharat‘ to tap the rural markets. Under this operation it passed out
low–priced sample packets of its toothpaste, fairness cream, Clinic plus shampoo, and
Ponds cream to twenty million households.
Thus 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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EVOLUTION OF INDIAN RURAL MARKETING
EVOLUTION STAGES:
STAGE I: AGRICULTURAL MARKETING
STAGE II: RURAL INPUTS MARKETING
STAGE III: RURAL MARKETING
FLOW OF GOODS
RURAL TO URBAN
URBAN TO RURAL
URBAN /RURAL TO RURAL
TYPE OF PRODUCTS:
AGRICULTURAL PRODUCE
AGRI. INPUTS LIKE SEEDS, MACHINES,

FERTILISERS ETC
CONSUMER DURABLES, FMCG, CONSUMABLES FOR

CONSUMPTION AND PRODUCTION ETC
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RURAL CLASSIFICATION
CONSUMER MARKET: ALL KINDS OIF CONSUMMABLES, FOOD

PRODUCTS, TOILETRIES, COSMETICS, TEXTILES,
FOOT WEAR ETC WATCHES, BICYCLES,
RADIO, TV, KITCHEN APPLIANCES, FURNITURE,
SEWING MACHINE, TWO WHEELER ETC.
INDUSTRIAL MARKET: AGRICULTURAL AND ALLIED ACTIVITIES,
FARMING, COTTAGE INDUSTRIES, HEALTH
CENTRE, SCHOOL, COOPERATIVE, PANCHAYAT,
OFFICE ETC. SEEDS, FERTILISERS, PESTICIDES,
TRACTORS ANIMAL FEED, ETC
SERVICES MARKETS: REPAIRS, TRANSPORT, BANKING, CREDIT,
INSURANCE HEALTHCARE, EDUCATION,
COMMUNICATION, POWER ETC.
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ATTRACTIVENESS OF RURAL MARKET
1. LARGE POPULATION
2. RAISING PROSPERITY
3. GROWTH IN CONSUMPTION
4. LIFE-STYLE CHANGES
5. LIFE CYCLE ADVANTAGES
6. MARKET GROWTH RATES HIGHER THAN URBAN
7. RURAL MARKETING IS NOT EXPENSIVE
8. REMOTENESS IS NO LONGER A PROBLEM.
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DIFFERENCE BETWEEN RURAL AND URBAN
MARKETING
ASPECT URBAN RURAL
PHILOSOPHY MARKETING MARKETING AND

SOCIETAL AND SOCIETAL,
DEVELOPMENT,
GREEN, RELATIONSHIP RELATIONSHIP
MARKET
DEMAND HIGH LOW

COMPETITION ORG SECTOR UNORG.SECTOR
CONSUMERS
LOCATION CONCENTRATED WIDELY SPREAD

LITERACY HIGH LOW
INCOME HIGH LOW
EXPENDITURE PLANNED, EVEN SEASONAL
NEEDS HIGH LEVEL LOW LEVEL
INNOVATION ADOPTION FASTER SLOW
PRODUCTS
AWARENESS HIGH LOW

CONCEPT KNOWN LESS KNOWN
POSITIONING EASY DIFFICULT
USAGE METHOD EASILY GRASPED DIFFICULT TO
GRASP
QUALITY PREFERENCE GOOD MODERATE
FEATURES IMPORTANT LESS IMPORTANT
PRICE
SENSITIVE YES VERY MUCH

LEVEL DESIRED MEDIUM-HIGH LOW-MEDIUM
DISTRIBUTION
CHANNELS MULTI VILL SHOPS, SHANDIES,

HAATS, YATRAS
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TRANSPORT FACILITIES GOOD AVERAGE
PRODUCT AVAILABILITY HIGH LIMITED
PROMOTION
ADVERTISING ALL TV, RADIO, MULTI

LINGUAL
PERSONAL SELLING DOOR 2 DOOR OCCASSIONALLY
FREQUENTLY
SALES PROMOTION ALL GIFTS, DISCOUNTS
PUBLICITY GOOD LOW
OPPORTUNITIES
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OBJECTIVE OF THE STUDY
1. To study the preference of HUL product in rural market.
2. To know the market policy of HUL in rural market.
3. Rural consumer aware about the HUL product

4. To study the attributes of HUL products
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ANALYSIS OF THE RURAL MARKET IN INDIA
Rural market of India consists of about 80% of the population of the country. Apparently
in terms of the number of people, the Indian rural market is almost twice as large as the
entire market of USA or Russia. This market is not only large, but very much scattered
geographically. It is also as diverse as it is scattered. It exhibits linguistic, regional and
cultural diversities and economic disparities, and hence, it can easily be considered as
more complex than the market of a continent as a whole.
The rural market scene has undergone a steady and encouraging change over the last
three decades. Inspite of several barriers to faster growth, the growth has not only been
quantitative, but also qualitative. This change has been possible because of new
employment opportunities and new sources of income made available through rural
development programmes which have resulted in green and white revolutions and a
revolution in rising expectations of rural masses.
The rural buyers in India provide a tremendous range of .contradictions and paradoxes
which baffles the urban-based marketing people and, even more so, the foreign
observers. Rural consumers are far less homogeneous than their urban counterparts
and differ from region to region.
The rural market is made up of two broad components i.e., the market for consumption
goods and the market for agricultural inputs. The rural markets are by and large less
exploited. Another important features of the rural market is that at least in the present
context, it is largely agriculture oriented. Green revolution and the resultant prosperity is
confined to a few select areas in the country. As a result, the effective demand for
consumer items has not spread all over rural India. Income generated from the money
sent by the members of their families employed in towns and abroad also helped the
rural people to spend more on consumer goods.
In spite of the increasing rate of growth in urban population through mirgration and other
channels and the consequent increase in their purchasing power, the rural market still
offers opportunities which are vast and yet relatively untapped.
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It has been noted that the rural consumer is discerning and the rural market vibrant. At
the current rate of growth it will soon outstrip urban market. Surveys and audits for a
number of consumer products and services have, over the years, clearly highlighted the
emerging importance of this sector.
The rural market is not sleeping any longer. 'Go Rural' seems to be the latest slogan.
Rural consumption of all products is growing by leaps and bounds, since the urban
market has reached near saturation levels in a number of categories.
In short, the sheer size of the rural population will serve as a large potential demand
base for a variety of products:
The new agricultural strategy of applying science and technology to farming will
increasingly trigger off a chain reaction of increased generation of wealth, productivity
income and consumption, which provide the key for the emerging rural demand.
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PROBLEMS OF RURAL MARKETING
1. High distribution costs

2. High initial market development expenditure
3. Inability of the small retailer to carry stock without adequate credit facility
4. Generating effective demand for manufactured foods
5. Wholesale and dealer network problems
6. Mass communication and promotion problems
7. Banking and credit problems
8. Management and sales managing problems
9. Market research problems
10. Inadequate infrastructure facilities
11. Highly dispersed and thinly populated markets
12. Low per capita and poor standards of living, social, economic 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 development of the rural market will involve additional cost both in terms of
promotion and distribution. In rural marketing, often it is not promotion of a brand that is
crucial, but creating an awareness concerning a particular product field, for instance,
fertilizers and pesticides.
Urban and semi-urban based salesmen are not able to tap the full potential in the
villages. Here, it may be suggested that the marketers may select and employ the
educated unemployed from villages.
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THE 4A’s APPROACH
The rural market may be alluring but it is not without its problems: Low per capita
disposable incomes that is half the urban disposable income; large number of daily
wage earners, acute dependence on the vagaries of the monsoon; seasonal
consumption linked to harvests and festivals and special occasions; poor roads; power
problems; and inaccessibility to conventional advertising media.
However, the rural consumer is not unlike his urban counterpart in many ways.
The more daring MNCs are meeting the consequent challenges of availability,
affordability, acceptability and awareness (the so-called 4 A‘s)
Availability
The first challenge is to ensure availability of the product or service. India's 627,000
villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas,
finding them is not easy. However, given the poor state of roads, it is an even greater
challenge to regularly reach products to the far-flung villages. Any serious marketer
must strive to reach at least 13,113 villages with a population of more than 5,000.
Marketers must trade off the distribution cost with incremental market penetration. Over
the years, India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a
strong distribution system which helps its brands reach the interiors of the rural market.
To service remote village, stockists use auto rickshaws, bullock-carts and even boats in
the backwaters of Kerala. Coca-Cola, which considers rural India as a future growth
driver, 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 act
as hubs. These distributors appoint and supply, once a week, smaller distributors in
adjoining areas. LG Electronics defines all cities and towns other than the seven metros
cities as rural and semi-urban market. To tap these unexplored country markets, LG has
set up 45 area offices and 59 rural/remote area offices.
Affordability
The second challenge is to ensure affordability of the product or service. With low
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disposable incomes, products need to be affordable to the rural consumer, most of
whom are on daily wages. Some companies have addressed the affordability problem
by introducing small unit packs. Godrej recently introduced three brands of Cinthol, Fair
Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya
Pradesh, Bihar and Uttar Pradesh — the so-called `Bimaru' States.
Hindustan Lever, among the first MNCs to realise the potential of India's rural market,
has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The
move is mainly targeted at the rural market. Coca-Cola has addressed the affordability
issue by introducing the returnable 200-ml glass bottle priced at Rs 5. The initiative has
paid off: Eighty per cent of new drinkers now come from the rural markets. Coca-Cola
has also introduced Sunfill, a powdered soft-drink concentrate. The instant and
ready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and
mutiserve sachet of 200 gm priced at Rs 15.
Acceptability
The third challenge is to gain acceptability for the product or service. Therefore, there is
a need to offer products that suit the rural market. One company which has reaped rich
dividends by doing so is LG Electronics. In 1998, it developed a customised TV for the
rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets in
the very first year. Because of the lack of electricity and refrigerators in the rural areas,
Coca-Cola provides low-cost ice boxes — a tin box for new outlets and thermocol box
for seasonal outlets.
The insurance companies that have tailor-made products for the rural market have
performed well. HDFC Standard LIFE topped private insurers by selling policies worth
Rs 3.5 crore in total premia. The company tied up with non-governmental organisations
and offered reasonably-priced policies in the nature of group insurance covers.
Awareness
With large parts of rural India inaccessible to conventional advertising media — only 41
per cent rural households have access to TV — building awareness is another
challenge. Fortunately, however, the rural consumer has the same likes as the urban
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consumer — movies and music — and for both the urban and rural consumer, the
family is the key unit of identity. However, the rural consumer expressions differ from his
urban counterpart. Outing for the former is confined to local fairs and festivals and TV
viewing is confined to the state-owned Doordarshan. Consumption of branded products
is treated as a special treat or indulgence.
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RECOMMENDED STRATEGIES FOR RURAL
MARKETING
The past practices of treating rural markets as appendages of the urban market is not
correct, since rural markets have their own independent existence, and if cultivated well
could turn into a generator of profit for the marketers. But the rural markets can be
exploited by ruralising them, rather than treating them as convenient extensions of the
urban market. To expand the market by tapping the countryside, more and more MNCs
are foraying into India's rural markets. Among those that have made some headway are
Hindustan Lever, Coca-Cola, LG Electronics, Britannia, Standard Life, Philips, Colgate
Palmolive and the foreign-invested telecom companies.
The focus should be on infecting marketing culture into the villages. The educated
unemployed youth in the villages could be trained to carry out this mission.
Overcoming the income variability

Savvy firms create innovative opportunities for the rural segments that are lagging
behind in purchasing power. The local distribution for Akai in India, Baron International,
realized that the market for new television sets are primarily urban. However, there was
a considerable inertia when it came to replacing a working TV set of a previous
generation.But Baron also knew that there existed a market, primarily rural, for used
televisions. Rural retailers purchased traded-in sets from urban dealers. Urban
consumers got something for their old TV sets, urban retailers made their margins from
selling the traded-in sets, rural retailers made a profit on used TVs and rural consumers
were offered TV sets they could afford. Resultantly, Baron‘s sales increased by 1500%
Wider competition for a product

Many of the rural buyers tend to have little stock of money, only a flow. Consequently,
they tend to make purchases only to meet their daily needs and have little capacity to
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build inventory. The marketing implications of this are far-reaching. Not only are pack
sizes and price points affected, but in turns out that consumers have to make a
selection from a much wider array of product categories. Thus the nature of competition
for any given product is much broader. For instance, in a village haat, Coca Cola
competes not just with Pepsi, but with a broad set of purchases that the rural
consumers consider as ―treats‖.
Preference for Low Unit Packs (LUP)

Trial is often encouraged by Low Unit Packs (LUP) or sachets. The sachet packaging
strategy caught the popular FMCG imagination in the early 1990s and it
Basic strategies as per the above mentioned :-
1. Decentralizing Rural Market
Decentralizing the Rural Market by detaching them from the urban bases. A
give-and-take two-way approach should replace the present one-way exploitation
2. Selection of the salesman
The salesman in rural markets should be selected from the educated unemployed
villagers, trained well and appointed as salesmen. The town-to-villages shuttling
salesmen are to be replaced by stationary salesman in villages
3. Educate the villagers
Companies should also adequately concentrate on educating the villagers to save them
from spurious goods and services.
4. New product market
Rural markets are laggards in picking up new products. This will help the companies to
phase their marketing efforts. This will also help to sell inventories of products out dated
in urban markets.
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. ADVERTISING IN RURAL INDIA
LANGUAGE, MARKETING COMMUNICATION, AND

CONSUMERISM.
A dramatic change is in progress. Villagers who used to crack open peanut M & M
candies, eat the nut and throw away the shell are now demanding chocolate candies
that will melt in their mouths, not in their hands. Charcoal-cleaned teeth are a rare sight;
so is the case with twigs of niim (neem) and babul (babool) tree. Today, the ultra bright
shine of Colgate or some other international brand of toothpaste holds more appeal
than the traditional methods of cleaning teeth. Even the native expressions of cleaning
teeth, such as daatun karnaa and musaag lagaanaa, are endangered to being replaced
by new expressions such as paste karnaa, 'to brush teeth with paste'. Even a simple
query such as: Where are you from? is not free from the overtones of marketization and
globalization in rural discourse. Consumerism and globalization is invading parts of
India where, as some would venture to say, time seems to have ceased for centuries.
These villages and small towns, which were once inconsequential dots on maps, are
now getting the attention of global marketing giants and media planners. Thanks to
globalization, economic liberalization, IT revolution, Indian diaspora, female power, and
improving infrastructure, middle class rural India today has more disposable income
than urban India. Rural marketing is gaining new heights in addition to rural advertising.
Rural India represents the heart of India. Approximately 80% of India lives in over half
a million villages (627,000), generating more than half of the national income. Based on
the interviews with consumers, media giants, and analysis of case studies, following
insights can be derived:
Various facets of rural media (conventional and non-conventional) and integrated
marketing communication. In addition to rural market discourse, media forms such as
wall paintings, calendar advertising, outdoor advertising, print, radio and television
advertising.
Art of crafting messages to meet rural tastes and sensibilities. In particular,
uniquely Indian media forms such as video van technology, which has changed
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the face of not only marketing but also political campaigning. Rural markets
(haat) which are the mobile McDonald's or Walmarts of India.
Targeting women and religious groups in addition to rural population.
Marketing taboo products such as 'bidi', cigarettes, sanitary supplies, and other
such products.
Globalization and its effects on product naming, product monitoring, rural
discourse and media forms.
Creativity and deception, together with guidelines for advertisers and marketers.
Information structures and logic of rural ads.
Ads as a social barometer of changing relationships and value systems.
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BACKGROUND
The FMCG sector has been the cornerstone of the Indian economy. Though, the sector
has been in existence for quite a long time, it began to take shape only during the last
fifty-odd years. To date, the Indian FMCG industry continues to suffer from a definitional
dilemma. In fact, the industry is yet to crystallize in terms of definition and market size,
among others. Generally, FMCG refers to consumer non-durable goods required for
daily or frequent use. The sector touches every aspect of human life, from looks to
hygiene to palate. Perhaps, defining an industry whose scope is so vast is not easy.
Post-reforms, the industry's growth has been hinging around a burgeoning rural
population which has witnessed significant rise in disposable incomes. Consequently,
the rural markets have been witnessing intense competition in almost all the consumer
product classes. Another reason which has led to rise in this trend is the saturation in
urban markets in most of the consumer non-durable goods categories. This has led to
the industry players scrambling for greater rural penetration as a future growth vehicle,
the area which accounts for 70% of the total Indian households
The FMCG sector consists mainly of subsegments viz. personal care, oral care and
household products. This can be further sub-divided into oral care, soaps and
detergents, Health and Hygiene products, beauty cosmetics, hair care products, food
and dairy-based products, cigarettes, and tea and beverages. Of late, there seems to
be a liberal approach towards branding of the companies/products as FMCG;
companies in businesses like liquors (United Breweries), paints (Asian Paints),
adhesives (Fevicol) too are being labeled as FMCG stocks in the stock market parlance.
Quite interestingly media stock Zee Telefilms was labelled as FMCG stock by a mutual
fund, which had Zee as its top holdings in its FMCG sector scheme at one point of time!
So far, it has been a chequered graph for the MNCs operating in the Indian FMCG
industry. Domestic companies are only beginning to make their presence felt in the
industry. It has taken tremendous consumer insight and market
savyiness for the FMCG players to reach where they are today. But, the journey seems
to have just now begun for the players as the majority of the rural populace are yet to
get access to the items of daily usage like toothpastes, soaps and shampoos.
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REASONS TO GO RURAL
There are many reasons that have urged the FMCG companies to enter the uncharted
territory of rural India. Some of the attractions are discussed below;
1. Large Population
The rural Indian population is large and its growth rate is also high. Over 70% India‘s
one billion plus population lives in around 627,000 villages in rural areas. This simply
shows the great potentiality rural India has to bring the much needed volumes and help
the FMCG companies to bank upon the volume driven growth.
2. Rising Rural Prosperity

India is now seeing a dramatic shift towards prosperity in rural households. To drive
home the potential of rural India just consider some of these impressive facts about the
rural sector. As per the National Council for Applied Economic Research (NCAER)
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.
According to NCAER projections, by 2006 – 07, the lowest income class (i.e.Rs.2500
and below) will shrink by more than 60%. The higher income classes are likely to double
by 2006 – 07. This apparently is the result of development work, which happened under
the five years plans and other special programmes such as land reforms, rural
electrification rural communication, and rural credit facilities, etc. The absolute size of
the rural market is thus expected to double that of urban India. But despite the high rural
share in these categories, the rural penetration rates are low, thus offering tremendous
potential for growth. According to Mr. D. Shivakumar, Business Head (Hair), Personal
Products Division, Hindustan Lever Limited, the money available to spend on FMCG
(Fast Moving Consumer Goods) products by urban India is Rs. 49,500 crores as against
is Rs. 63,500 crores in rural India.
3. Growth in Market
The purchasing power in rural India is on steady rise and it has resulted in the growth of
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the rural market. The market has been growing at 3-4% per annum adding more than
one million new consumers every year and now accounts for close to 50% of volume
consumption of FMCG. The growth rates of lot of FMCG are higher in rural markets
than urban markets. In product categories like toilet soaps, talcum powder, cooking iol,
vanaspati ghee, tea, cigarettes and hair oil, the share of rural market is more than 505.
The table above indicates the projected market size of FMCG products in 2001 – 02
and 2006 – 07 based on the annual growth rates compounded for 1994 – 99 period.The
estimated annual business from rural markets was Rs 1,23,000 crore, comprising Rs
65,000 crore of FMCG, Rs 5,000 crore of durables, Rs 45,000 crore of agricultural
inputs including tractors and Rs 8,000 crore of two-wheelers and fourwheelers. Twenty
nine per cent of the rural people own cars, 27 per cent own colour televisions, 24 per
cent own refrigerators and 10 per cent own washing machines, which points to the
untapped potential in the rural areas. "We therefore have to look at the rural market very
seriously for future expansion," said Mr Nandakumar while inaugurating the Business
Line Club and delivering the keynote address on the topic, `Brand Building Beyond the
Urban' under the auspices of the Departments of Business Management and
Commerce of the Auxilium College here on Friday.
4. Effectiveness of Communication
An important tool to reach out to the rural audience is through effective
communication.``A rural consumer is brand loyal and understands symbols better. This
also makes it easy to sell look - alike", says Mr. R.V Rajan, CMD, Anugrah Madison
Advertising. The rural audience has matured enough to understand the communication
developed for the urban markets, especially with reference to FMCG products.
Television has been a major effective communication system for rural mass and, as a
result, companies should identify themselves with their advertisements. Advertisements
touching the emotions of the rural folks, it is argued, could drive a quantum jump in
sales.
5. IT Penetration in Rural India

Today there are over 15 million villagers in India who are aware of the Internet and over
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300,000 villagers have used it! Ten years back, history was created with Public Call
Office phone booths (essentially manually operated payphone facilities), opening in
every corner of the country. This experiment was an instant success and contributed to
hundreds of thousands of jobs. Over the next two years, WorldTel is expected to
provide 1000 centres in Tamil Nadu with 2 to 20 terminals in each centre. If successful,
this experiment can be replicated easily to all 27 states leading to over half a million
Internet users through this experiment alone! The existing 600,000 public call offices in
India will soon be transformed into public 'tele-info-centres' offering a variety of
multimedia information services. The rural consumers spend time and money to access
higher level information. Studies have indicated that if the content has direct relevance
and will result in commercial gains, people in rural areas are willing to pay for
information services. Consumerism has altered rural buying behavior in recent years.
Spending patterns of those who spend are now adapting to face the technology bug.
Today's rural children and youth will grow up in an environment where they have
'information access' to education opportunities, exam results, career counseling, job
opportunities, government schemes and services, health and legal advice and services,
worldwide news and information, land records, mandi prices, weather forecasts, bank
loans, livelihood options. If television could change the language of brand
communication in rural India, affordable Web connectivity through various types of
communication hubs will surely impact the currency of information exchange. As the
electronic ethos and IT culture moves into rural India, the possibilities of change are
becoming visible.
6. Impact of Globalization
The impact of globalization will be felt in rural India as much as in urban. But it will be
slow. It will have its impact on target groups like farmers, youth and women. Farmers,
today 'keep in touch' with the latest information and maximize both ends. Animal feed
producers no longer look at Andhra Pradesh or Karnataka. They keep their cell phones
constantly connected to global markets. Surely, price movements and products'
availability in the international market place seem to drive their local business
strategies. On youth its impact is on knowledge and information and while on women it
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still depends on the socio economic aspect. The marketers who understand the rural
consumer and fine tune their strategy are sure to reap benefits in the coming years. In
fact, the leadership in any product or service is linked to leadership in the rural India
except for few lifestyle-based products, which depend on urban India mainly.
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KEY ISSUES FACED BY FMCG COMPANIES IN
RURAL MARKET
It's a volume-value game. Most Indian FMCG majors know this well. That is why FMCG
companies such as Marico Industries are gearing up for bigger advertisement and sales
promotion campaigns aimed at the rural buyer. Marico‘s high-pitch rural marketing
exercise involves repositioning brands, repackaging products and re-pricing them, all
with an eye on the rural wallets. The company has been working constantly on
extending its parallel rural sales and distribution networks, which already finds a place
among the industry‘s top three. Concerns abound over the inability of rural markets to
meet the soaring rural ambitions of the Indian FMCG majors. Is the perception that
industry majors such as Hindustan Lever are on the verge of diluting their rural focus
true? Does the urban consumer featured on the cover of Hindustan Lever‘s 1998 annual
report reflect this shifting focus? It is a tactical shift, just a trade-off between value and
volume, between the urban market and the rural market". For, focusing all out on one of
these markets at the cost of the other could be suicidal. That is why a few FMCG
companies are not putting in concerted efforts to tap the rural market. Consider the case
of Cadbury. The company has clarified that the rural market is not for it, at least for now.
Meanwhile, Marico is trying hard to get into the premium-end hair-oil market. What do
all these portend? Rural marketing could open the doors of opportunities, but the path is
paved with thorns. One major limitation here is this: most FMCG players just do not
have the critical size for going all out for rural marketing. That is why most FMCG
players are expected to concentrate both on rural and urban marketing: focus on urban
markets for value and focus on rural markets for volumes. One result-oriented
marketing strategy here is this: offer value-additions to existing lines to lure the urban
consumer and alongside offer the rural consumer wide-ranging choices within a single
product category in a bid to generate high volumes.
There are more problems in rural marketing. Success in rural marketing calls for a
sound network and a thorough understanding of the rural psyche. Rural consumer‘s
price-sensitivity is something the FMCG players should be alive to. Rural income-levels
are largely determined by the vagaries of monsoon and thus rural demand is not a
28
steady horse to ride on. This makes rural marketing a gamble. It is more than a gamble
for FMCG minors who do not have a clutch of strong brands across product segments.
These FMCG minors are not able to cross-subsidize their products and go for product
experimentation. The result: FMCG minors have a limited reach, are not able to erect
entry barriers and have no ways to minimize the impact from loss of sale opportunities.
The vast and diverse rural market calls for multi-tiered distribution networks, efficient
logistics and friendly infrastructure.
Another issue is the stark difference in the characteristics of the consumers. The
consumers stand apart as two different markets as is evident from their current
consumption baskets, and their attitude towards essential and luxury items. In addition,
although the evolution is towards a better lifestyle therefore product and brand choice is
there in both these markets, the rate of evolution is highly different.
The real test still lies ahead. One major hurdle in rural marketing is: whether an FMCG
player will be able to offer the best price and aspirational values to the rural consumer
who has a peculiar tendency to mimic his urban counterpart. So, what should the FMCG
players do now? They should not only price their products competitively, but also offer
their rural prospects maximum value for money spent. Certainly, reaching out to 3.33
million retail outlets is an uphill task. The only way out for Indian FMCG players: put in
place an aggressive cost structure, which would enable them to offer low-price and
value-for-money products. But then, FMCG is a low-margin business with a high cost of
raw materials. Consider the case of Marico: its material cost works out to a high of 59
per cent on sales. Therein lies the rural marketing paradox. However, customer-centric
and market-savvy FMCG companies have always chased prospects when they
perceive there is a latent demand. For instance, Hindustan Lever‘s Rin, Surf and Lux
are available even in India‘s most obscure villages. Hindustan Lever had given shape to
its rural strategy a few years ago when it perceived that its urban market was shrinking
due to an industrial slowdown. Its Operation Bharat that focused on personal care
products made the most out of surging rural incomes. The result was there for all to see.
The company has been able to clock in double-digit profits every three years and log in
double-digit revenues every four years. Britannia with its Tiger brand of biscuits and
Colgate-Palmolive with its low-priced and conveniently packaged products designed for
29
the rural masses have been other pioneers in rural marketing. Thus, Britannia and
Colgate-Palmolive have been able to derive more than 30 percent of their revenues
from rural markets.
Sure, there is a lot of money in rural India. But, there are obstacles. The biggest
obstacle is that the rural consumer is still evolving. Only FMCGs with deeper pockets,
unflinching rural commitment and staying power can play this rural game. Cost of
setting up a huge retail network has saw many casulaties, the notable being the P&G
which abandoned its plan to fight the likes of Lever in the rural segment on its own.
Instead, it is aiming to piggyback on the Marico Industries which has got a strong
presence in these markets through its flagship brand "Parachute". The FMCG stalwart
Hindustan Lever has started its ambitious project "Project Shakti", a five-month old
marketing initiative involving women belonging to micro-credit self-help groups (SHGs)
in the Nalgonda district of Andhra Pradesh, similar to the highly successful experiment
Bangladesh's Grameen Bank used in rural areas of the country.
30
PRICING BY FMCG COMPANIES
It's a volume-value game. Most Indian FMCG majors know this well. That is why FMCG
companies are gearing up for bigger advertisement and sales promotion campaigns
aimed at the rural buyer. high-pitch rural marketing exercise involves repositioning
brands, repackaging products and re-pricing them, all with an eye on the rural wallets.
The companies has been working constantly on extending its parallel rural sales and
distribution networks, which already finds a place among the industry‘s top three.
Concerns abound over the inability of rural markets to meet the soaring rural ambitions
of the Indian FMCG majors. Is the perception that industry majors such as Hindustan
Lever are on the verge of diluting their rural focus true? Does the urban consumer
featured on the cover of Hindustan Lever‘s 1998 annual report reflect this shifting
focus? It is a tactical shift, just a trade-off between value and volume, between the
urban market and the rural market". For, focusing all out on one of these markets at the
cost of the other could be suicidal. That is why a few FMCG companies are not putting
in concerted efforts to tap the rural market. Consider the case of Cadbury. The company
has clarified that the rural market is not for it, at least for now. Meanwhile, Marico is
trying hard to get into the premium-end hair-oil market. What do all these portend?
Rural marketing could open the doors of opportunities, but the path is paved with
thorns. One major limitation here is this: most FMCG players just do not have the critical
size for going all out for rural marketing. That is why most FMCG players are expected
to concentrate both on rural and urban marketing: focus on urban markets for value and
focus on rural markets for volumes. One result-oriented marketing strategy here is this:
offer value-additions to existing lines to lure the urban consumer and alongside offer the
rural consumer wide-ranging choices within a single product category in a bid to
generate high volumes.
There are more problems in rural marketing. Success in rural marketing calls for a
sound network and a thorough understanding of the rural psyche. Rural consumer‘s
price-sensitivity is something the FMCG players should be alive to. Rural income-levels
are largely determined by the vagaries of monsoon and thus rural demand is not a
31
steady horse to ride on. This makes rural marketing a gamble. It is more than a gamble
for FMCG minors who do not have a clutch of strong brands across product segments.
These FMCG minors are not able to cross-subsidize their products and go for product
experimentation. The result: FMCG minors have a limited reach, are not able to erect
entry barriers and have no ways to minimize the impact from loss of sale opportunities.
The vast and diverse rural market calls for multi-tiered distribution networks, efficient
logistics and friendly infrastructure.
Another issue is the stark difference in the characteristics of the consumers. The
consumers stand apart as two different markets as is evident from their current
consumption baskets, and their attitude towards essential and luxury items. In addition,
although the evolution is towards a better lifestyle therefore product and brand choice is
there in both these markets, the rate of evolution is highly different.
The real test still lies ahead. One major hurdle in rural marketing is: whether an FMCG
player will be able to offer the best price and aspirational values to the rural consumer
who has a peculiar tendency to mimic his urban counterpart. So, what should the FMCG
players do now? They should not only price their products competitively, but also offer
their rural prospects maximum value for money spent. Certainly, reaching out to 3.33
million retail outlets is an uphill task. The only way out for Indian FMCG players: put in
place an aggressive cost structure, which would enable them to offer low-price and
value-for-money products. But then, FMCG is a low-margin business with a high cost of
raw materials. Consider the case of Marico: its material cost works out to a high of 59
per cent on sales. Therein lies the rural marketing paradox. However, customer-centric
and market-savvy FMCG companies have always chased prospects when they
perceive there is a latent demand.
For instance, Hindustan Unilever‘s Rin, Surf and Lux are available even in India‘s most
obscure villages. Hindustan Unilever had given shape to its rural strategy a few years
ago when it perceived that its urban market was shrinking due to an industrial
slowdown. Its Operation Bharat that focused on personal care products made the most
32
out of surging rural incomes. The result was there for all to see. The company has been
able to clock in double-digit profits every three years and log in double-digit revenues
every four years. Britannia with its Tiger brand of biscuits and Colgate-Palmolive with its
low-priced and conveniently packaged products designed for the rural masses have
been other pioneers in rural marketing. Thus, Britannia and Colgate-Palmolive have
been able to derive more than 30 percent of their revenues from rural markets.
Sure, there is a lot of money in rural India. But, there are obstacles. The biggest
obstacle is that the rural consumer is still evolving. Only FMCGs with deeper pockets,
unflinching rural commitment and staying power can play this rural game. Cost of
setting up a huge retail network has saw many casulaties, the notable being the P&G
which abandoned its plan to fight the likes of Lever in the rural segment on its own.
Instead, it is aiming to piggyback on the Marico Industries which has got a strong
presence in these markets through its flagship brand "Parachute". The FMCG stalwart
Hindustan Lever has started its ambitious project "Project Shakti", a five-month old
marketing initiative involving women belonging to micro-credit self-help groups (SHGs)
in the Nalgonda district of Andhra Pradesh, similar to the highly successful experiment
Bangladesh's Grameen Bank used in rural areas of the country.
The recent price cuts by fast-moving consumer goods giants, Hindustan Unilevers Ltd
(HUL) and Procter and Gamble (P&G) proves, once again, that the Indian market still,
by and large, supports volumes, not value propositions. No matter how hard one may
try and brand a product price sensitivity overrules brand preference — if its not priced
right, it's just not going to generate sufficient volumes.
Realisation has come to P&G — though a bit late and now it wants to become more
'affordable'. By slashing prices from nearly 25 to 50 per cent on its two detergent
brands, Tide and Ariel, P&G has not only restructured the balance of brand power in
India, but has also hurt HUL — and itself — where it hurts the most … its bottom line.
As the two traditional rivals in the global FMCG market carry out their slugfest in India,
33
their share values have tumbled; P&G which launched the price war has seen a 14 per
cent decline in its share price, the HUL stock fell 19 per cent on the same day. The
share of an uninvolved Nirma, too, was dragged down by eight per cent.
P&G's move from a premium niche to a mass base, is indeed a proactive marketing
effort. But, as industry watchers point out, HUL's reaction in slashing its prices is
merelyan attempt to protect its turf. If so, is 'marketing' really about how low you can
price your product?
Concepts like 'market research', 'value', 'branding' and 'loyalty' seem to have been
dumped with HUL's counter offensive of a price cut of its own. The rationale, in HUL's
words, is to face competition without blinking.
Till recently, the price war was restricted to HUL and P&G. Now, to square off the
probability that customer loyalties would shift with price cuts, even smaller players have
entered the fray. Henkel Spic has cut the prices on its detergent brand Henko
Stainchampion by 15 per cent to Rs.75 per kg.
With revenues already hard to generate and margins under tight pressure, this decision
is going to prove expensive for HUL. Analysts estimate that the price cuts will cost HUL
between Rs120 and 150 crore.
As a market leader in almost all the major product lines that it operates in, HUL did what
it had to do. But then, as a market leader with a 40 per cent share of the detergents
market, as opposed to P&G's 10 per cent, isn't the onus of growing the market on the
market leader?
The sachet was an innovative stroke of marketing genius that reduced product
differentiation and changed the dynamics of the detergents market. Today,
sachet sales constitute about 15-20 per cent of the detergents market. But innovation
34
seems to have deserted the soaps and detergents industry ever since.
With penetration at it's highest and the market saturated, the Rs4,000-crore detergents
market has been stagnating for almost five years. Compounding this problem are the
smaller players like Ghari detergents, who offer products of similar quality, at almost half
the price.
On the face of it, the price cuts seem logical. Lower prices should get new users into the
market and propel others to upgrade from the not-so-premium brands to Tide, Ariel or
Surf Excel. P&G saw the volumes of its sachet sales almost tripling when it halved the
prices on the 20-gram packs of Tide and Ariel, to Re 1 and Rs 1.50 respectively, in
September 2003.
But will price cuts on larger packs prove equally successful? And if not, then will there
be another round of price cuts? HUL, at least, has definitely ruled that out, saying there
was "no room for more price cuts on Surf Excel".
A further round of price cuts indeed seems unlikely for both manufacturers since raw
material costs have been rising. The Consumer Guidance Society of India has already
initiated a probe, to find out if there has been any degradation in the quality of products
to enable the current round of price cuts.
Everybody knows that India is a 'volumes' market, and as marketers, both HUL and
P&G understand that pricing and distribution are the key to success. But unless
marketers come up with something radical, cutting prices will only get them thus far and
no further. A sustained growth will be hard to come by, and players will just have to
make do with a shrinking pie.
http://www.domainb.com/marketing/scripts/recommend/recommend.aspWhat is needed
now from the rivals is something like a 'sachet', a conceptual breakthrough, to stimulate
fresh growth.
35
PILLARS OF FAST MOVING CONSUMER GOODS
The Fast Moving Consumer Goods (FMCG) business is built on two pillars - Brands
and Distribution. The under given is the comprehensive conceptual coverage of these
and other key marketing concepts
1. BRANDING
2. VALUATION OF BRANDS
3. DISTRIBUTION
4. MARKETING
5. MARKET RESEARCH
6. MARKET SEGMENTATION AND POSITIONING
7. ADVERTISING AND PROMOTIONS
36
FMCG CONSUMPTION IN RURAL INDIA
Here the rain gods still play havoc with one's dreams. The dusty village path winds past
a cluster of slumbering cottages and leads one to a weekly rural bazaar or haat,
brimming over with din, bustle and transaction. This is where the real India resides.
Telephone is a luxury here. Electricity, if at all, comes here only in fits and starts. And a
delivery by road may take any stretch of time.
http://203.199.70.225/cgi-bin/adceptclickthrough.cgi?random_key=24/1/200423:35:230.
9070803313771363&host_name=economictimes.indiatimes.com&url_name=www.econ
omictimes.com/articleshow/18469144.cmsHowever, things are changing fast now.
Thanks to the increasing literacy level and media explosion, people are becoming
conscious about their lifestyles and about their rights to live a better life. Brand
consciousness is on the rise. This, clubbed with increasing disposable income of rural
households, has made the rural consumer more demanding and choosier in his
purchase behaviour than ever before. And the dusky village damsel has now learned to
pine for a satin rose.
The rural India offers a tremendous market potential. A mere one percent increase in
India's rural income translates to a mind-boggling Rs 10,000 crore of buying power.
Nearly two-thirds of all middle-income households in the country are in rural India. And
close to half of India's buying potential lies in its villages. Thus for the country's
marketers, small and big, rural reach is on the rise and is fast becoming their most
important route to growth. Realizing this Corporate India is now investing a sizeable
chunk of its marketing budget to target the rural consumers.
Organizations like Hindustan Unilever Ltd., Nirma Chemical Works, Colgate Palmolive,
Parle foods and Malhotra Marketing have carved inroads into the heart of rural markets.
Various categories of products have been able to spread their tentacles deep into the
rural market and achieved significant recognition in the country households. And, in the
process, the regional brands, local brands and the other unbranded offerings got
displaced by the leading brands
Company Household penetration

HUL 88%
Nirma Chemical Works 56%
Colgate Palmolive 33%
Parle Foods 31%
Malhotra marketing 27%
37
% volume of local
Category
brands/unbranded
Washing cakes/bars 88%
Tea 56%
Salt 33%
Of the expenditure on consumer goods in rural household, approximately, 44% is on

food articles such as biscuits, tea, coffee and salt, 20% on toiletries, 13% on washing
material, 10% on cosmetics, 4% on OTC products and 9% on other consumables. A
number of category products have established themselves firmly in the rural
households.
It is evident that in the villages low-priced brands are well accepted and one might feel
that a larger proportion of the purchases made in rural market can be attributed to local/
unbranded players. Surprisingly, however, the unbranded/local component contributes
to a substantial portion of the volume of only a few of the highly penetrated categories.
Category Brand with highest

Category
Penetration penetration
Toilet Soap
Washing cakes/Bars 91% Lifebuoy
Edible oil 88% Wheel
Tea 84% Double Iran mustard
Washing powder / 77% Lipton Taaza
liquid 70% Nirma
Salt 64% Tata Salt
Biscuits 61% Parle G
INCREASING BRAND AWARENESS
In the rural families, studies indicate a slow but determined shift in the use of categories.
There is a remarkable improvement in the form of products used. For instance,
households are upgrading from indigenous teeth-cleaning ingredients to tooth powder
and tooth-pastes, from traditional mosquito repellant to coils and mats. There is also a
visible shift from local and unbranded products to national brands. From low-priced
brands to premium brands.
38
FMCG CONSUMPTION
Organizations like Hindustan Unilever Ltd., Nirma Chemical Works, Colgate Palmolive,
Parle foods and Malhotra Marketing have carved inroads into the heart of rural markets.
Various categories of products have been able to spread their tentacles deep into the
rural market and achieved significant recognition in the country households. And, in the
process, the regional brands, local brands and the other unbranded offerings got
displaced by the leading brands.
Company Household penetration

HUL 88%
Nirma Chemical Works 56%
Colgate Palmolive 33%
Parle Foods 31%
Malhotra marketing 27%
% volume of local brands
Category
/ unbranded
Washing cakes/bars 88%
Tea 56%
Salt 33%
Of the expenditure on consumer goods in rural household, approximately, 44% is on

food articles such as biscuits, tea, coffee and salt, 20% on toiletries, 13% on washing
material, 10% on cosmetics, 4% on OTC products and 9% on other consumables. A
number of category products have established themselves firmly in the rural
households. It is evident that in the villages low-priced brands are well accepted and
one might feel that a larger proportion of the purchases made in rural market can be
attributed to local/ unbranded players. Surprisingly, however, the unbranded/local
component contributes to a substantial portion of the volume of only a few of the highly
penetrated categories.
39
Category Brand with highest
Category
Penetration penetration
Toilet Soap
91% Lifebuoy
Washing cakes/Bars
88% Wheel
Edible oil
84% Double Iran mustard
Tea
77% Lipton Taaza
Washing powder / liquid
70% Nirma
Salt
64% Tata Salt
Biscuits
61% Parle G
40
RANKING IN FMCG SECTOR
Company Score Ranks
Hindustan Unilever Ltd 138.6 1
ITC Limited 136 2
Britannia Industries 134 3
Nestle India 132.6 4
Dabur India Ltd 131.1 5
Parle 129.3 6
Cadbury India Ltd 128.2 7
PepsiCo 126.2 8
P&G 124.6 9
Marico Industries 121.2 10
41
42
RURAL MARKETING – THE “HINDUSTAN
UNILEVER LIMITED PRESPECTIVE
THE CHALLENGE
Around 700 million people, or 70% of India's population, live in 6,27,000 villages in rural
areas. 90% of the rural population is concentrated in villages with a population of less
than 2000.
The statistics is daunting. Particularly for companies, such as HUL, which market
Packaged Mass Consumer Goods (PMCG) of everyday use, the size of the rural market
makes it essential to tap.
Indeed, we have traditionally focused on the rural market. Several of company's major
business categories, such as Fabric Wash, Personal Wash and Beverages, already get
over 50% of their sales from rural areas. Our distribution system is the best amongst
PMCG companies.
But the company also recognize that there is much more that needs to be done. To
service rural markets, the key issues that need to be addressed are availability,
awareness and overcoming prevalent attitudes and habits.
Extending Availability
Data on rural consumer buying behavior indicates that the rural retailer influences 35%
of purchase occasions. Therefore, sheer product availability can determine brand
choice, volumes and market share.
Project Streamline was conceptualised to significantly enhance HUL‘s control on the
rural supply chain through a network of rural sub-stockists, who are based in these very
villages. As part of the project, higher quality servicing, in terms of frequency, credit and
full-line availability, would be provided to rural trade. Thereby, giving the company a
substantial competitive edge over the next decade.
The principle of Project Streamline is to leverage HUL‘s scale and organisational
synergy to increase reach in rural markets. The pivot of Streamline is the Rural
Distributor (RD), who has15-20 rural sub-stockists attached to him. Each of these
43
sub-stockists is located in a rural market. The sub-stockist then performs the role of
driving distribution in neighbouring villages using unconventional means of transport
such as tractor, bullock cart, et al.
From 1998, the project has been rolled out in select states of the country where the
terrain or poor stage of market development typically makes any distribution system
unviable. The Streamline system has extended direct HUL reach in these markets to
about 37% of India's rural population from 25% in 1995. Most important, the number of
HUL brands and SKUs stocked by village retailers has gone up significantly. Having
done that, the project now aims to expand the company‘s coverage to 50% of rural
population by 2003.
Distribution will acquire a further edge with Project Shakti, HUL's partnership with Self
Help Groups of rural women. The project, started in 2001, already covers over 5000
villages in 52 districts of Andhra Pradesh, Karnataka Madhya Pradesh and Gujarat, and
is being progressively extended. The vision is to reach over 100,000 villages, thereby
touching about 100 million consumers. The SHGs have chosen to adopt distribution of
HUL's products as a business venture, armed with training from HUL and support from
government agencies concerned and NGOs. A typical Shakti entrepreneur conducts
business of around Rs.15000 per month, which gives her an income in excess of
Rs.1000 per month on a sustainable basis. As most of these women are from below the
poverty line, and live in extremely small villages (less than 2000 population), this
earning is very significant, and is almost double of their past household income. For
HUL, the project is bringing new villages under direct distribution coverage. Plans are
being drawn up to cover more states, and provide products/services in agriculture,
health, insurance and education. This will both catalyse holistic rural development and
also help the SHGs generate even more income. This model creates a symbiotic
partnership between HUL and its consumers, some of whom will also draw on the
company for their livelihood, and helps build a self-sustaining virtuous cycle of growth.
Influencing Affordability
Project Streamline focused on extending distribution, and Project Bharat's influence
was restricted to raising penetration and awareness levels. On the anvil, is a new rural
44
programme, which will reach villages with a population below 2000 and influence
income as well.
This path-breaking venture aims to facilitate the doubling of HUL‘s share of the rural
consumer's wallet in three years. The model is unique in that it influences all the
variables that influence growth. This model triples physical reach, doubles
communication reach, creates a platform for influencing attitude changes and raising
incomes.
The company‘s rural growth engine raises incomes of rural families by channel
intervention through rural Self-Help Groups (SHG), which operate like direct-to-home
distributors. The model consists of groups of (15-20) villagers below the poverty line
(Rs.750 per month) taking micro-credit from banks, and using that to buy HUL products,
which they will then directly sell to consumers. In the process, generating employment
and incomes for themselves, and increasing the reach of our products.
HUL is tying up with various Non-Governmental Organizations, United Nations'
Development Programme (UNDP), and voluntary organizations to propagate health and
hygiene messages. The goal is to reach 2,35,000 villages up from the current 85,000;
75% of the population up from 43% today; and a message reach of 65% up from the
current TV reach of 33%. In the process the company aim to increase access, influence
attitudes, create a channel to raise awareness of its brands and catalyse affluence in
rural India.
Enhancing Awareness
Mass media reaches only 57% of the rural population. Generating awareness, then,
means utilising targeted, unconventional media including ambient media. HUL has been
utilising events such as fairs and festivals, haats, et al, as occasions for brand
communication. Cinema vans, shop-fronts, walls and wells are other media vehicles
that the company has utilised to heighten brand and pack visibility.
Overcoming Attitude & Habits

Creating distributive reach is not sufficient to tap the rural markets. Market development
can be a difficult task because in rural India, both consumption and penetration is low.
For instance, only three out of 10 people in rural areas use toothpaste or talcum
45
powder, or shampoo and skin care products, and only six use washing powders.
Even in categories with high penetration, such as soaps, consumption is once per five
bathing occasions.
Project Bharat, the first and largest rural home-to-home operation to have ever been
mounted by any company, sought to address many of these issues. The operation was
conducted in high-potential districts of the country. The exercise was started by HUL‘s
Personal Products Division in 1998, and covered 13 million households by the end of
1999. In the course of the operation, company vans visited villages across the country
and distributed sample packs comprising a low-unit-price pack each of shampoo, talcum
powder, toothpaste and skin cream priced at Rs. 15. The distribution was supported by
explanation of product usage and a video show, which was interspersed with product
communication. Thus HUL generated awareness of its product categories and the
availability of affordable packs. Consumers were also made aware of the superior
benefits of using our products vis-à-vis their current habits, and the affordability of the
pack sizes on offer. The project, thus, successfully addressed issues of awareness,
attitudes and habits. Hopefully, as consumers in rural areas get exposed to such
value-added, value-for-money alternatives, they will continue to buy into the categories.
The project saw a 100% increase in penetration, user ship and top-of-mind awareness
in the districts targeted.
However, sampling once is not adequate to convert non-users. So Personal Products
rolled out a follow-up programme, the Integrated Rural Promotion Van (IRPV), to
once more target villages with a population of over 2,000.
46
HUL’S STRATEGIES FOR THE RURAL MARKET
BIG PIE
The fast-moving consumer goods (FMCG) segment in India is going rural with a
vengeance.javascript:call()The lead is being taken by the country‘s largest FMCG
company, Hindustan Uni Lever (HUL). The Rs 11,000-crore behemoth has indicated
that it is enhancing its rural penetration, despite the higher costs this would entail.
Incidentally, over 50 per cent of the sales of HUL‘s fabric wash, personal wash and
beverages are in rural areas. And we see a future in going rural in a major way.‖
The improved agricultural growth is expected to boost rural demand, though not at too
sizzling a rate. Moreover, the price drop in personal products, after the recent excise
duty reductions, is also expected to drive consumption. ―Better agricultural yields will
give farmers more spending power, making the rural markets bullish,‖ says an analyst.
As a result, HUL has planned a rural marketing programme that is expected to result in
a marked growth in the consumption of the company‘s products in the rural market. HUL
will adopt a three-pronged marketing strategy - new price points, sizes and awareness
campaigns - for its detergents and soaps segment to augment rural growth.
Deep Penetration
The goal is to reach 2,35,000 villages, up from the current 85,000; 75 per cent of the
population, up from 43 per cent today; and a message reach of 65 per cent, up from the
current television reach of 33 per cent. The company is expressly aiming at reaching
villages with populations less than 2,000. The rural penetration exercise is going to be
complemented by a 15-per cent hike in advertisement expenditure.
Say company sources: ―We have found ways and means to trigger growth in rural
areas. For instance, cutting across categories, we have conceived products that are
relevant to rural needs. A unique example is HUL‘s Lifebuoy soap. In rural India, health
is of paramount importance, because indisposition is very directly related to loss of
income. Lifebuoy, whose core equity has been health through vigorous cleansing, has,
for decades now, been synonymous with soap in rural India. At the same time, we are
47
making the products affordable.‖
In fact, HUL is now creating a market even for apparently premium products by offering
them in small-pack sizes, like sachets, whose unit prices are within the reach of rural
consumers. Initiated in the 1980s, sachets today constitute 70 per cent of HUL‘s
shampoo sales.
The sources add: ―We have managed to create a market for products like premium
stain-removing detergents (Surf Excel), beauty soaps (Lux), talcum powder (Pond‘s),
toothpaste (Pepsodent) and skin cream (Fair & Lovely) by offering them in low unit
pricepacks.‖
HUL is also going to non-conventional media to spread the word about its rural
presence. The sources add that media like wall paintings, cinema vans, weekly markets
48
(haats), fairs and festivals will be increasingly used. ―Communication through fairs and
festivals is going to be backed by direct consumer contact,‖ says Banga.
Rural Involvement
HUL has launched a direct contact programme called Lifebuoy Swasthya Chetana. This
project aims at covering about 5-crore people in 15,000 villages in 10 states. ―The
project intends to generate awareness about good health and hygienic practices, and
specifically, how the simple habit of washing hands with soap is essential to maintaining
good health. The initiative will involve interaction with students and senior citizens, who
are expected to act as change agents,‖ say HUL marketing personnel.
But generating awareness will pay dividends only when steps are taken to ensure
constant availability of products. Accordingly, HUL is focusing on its retail network as
well. ―We have progressively strengthened our distribution reach in rural India, which
today has about 33 lakh outlets,‖ HUL marketing officials say.
In 1998, they add, ―we launched Project Streamline to further extend our distribution
reach. With this project, we now directly cover about 46 per cent of the rural population.
In the coming years, we will further strengthen our distribution through mutually
beneficial alliances with rural self-help groups (SHGs).‖
Besides, HUL has also begun a pilot project called Project Shakti, whereby SHGs are
being offered the option of distributing relevant products of the company as a
sustainable income-generating activity.
http://www.domainb.com/scripts/recommend/recommend.aspHUL‘s decision to focus on

niche marketing also seems to be showing results. The company had recently decided
to focus on 30 power brands out of its portfolio of more than 110 brands. Explaining the
move, Banga says: ―Today, focus is crucial and niche marketing is the order of the day.
You cannot fight every battle - you have to identify the strengths and persist with them.‖
And that is precisely what HUL seems to be doing.
49
HINDUSTAN UNILEVER’S SHAKTI PROJECT
The objectives of Project Shakti are to create

income-generating capabilities for underprivileged rural women by providing a
small-scale enterprise opportunity, and to improve rural living standards through
health and hygiene awareness.
SHAKTI - Changing Lives in Rural India

Shakti is HUL'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.
In general, rural women in India are underprivileged and need a sustainable source of
income. NGOs, governmental bodies and other institutions have been working to
improve the status of rural women. 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
- Andhra Pradesh, Karnataka, Tamilnadu, Maharashtra, Gujarat, Madhya Pradesh,
Chattisgarh, Uttar Pradesh, Rajasthan, Punjab, Haryana, West Bengal, Orissa, Bihar &
Jharkhand. The respective state governments and several NGOs are actively involved
in the initiative.
50
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. In addition, it involves health and hygiene
programmes, which help to improve the standard of living of the rural community.
Shakti's ambit already covers about 15 million rural population. Plans are also being
drawn up to bring in partners involved in agriculture, health, insurance and education to
catalyze overall rural development.
HUL's vision for Shakti is to scale it up across the country, covering 100,000 villages
and touching the lives of 100 million rural consumers by 2005.
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.
51
52
RESEARCH METHODOLOGY
Research is a scientific and systematic search for pertinent information on a

specific topic. Research in common parlance refers to a search for knowledge.
D Slazenger and M. Stephenson defined research as the manipulation of
things, concepts, or symbols for the purpose of generalizing to extend, correct or verify
knowledge aids in construction of theory or in the practice of an art.
According to Clifford Woolly research comprises defining and redefining
problems, formulating hypothesis or suggested solutions: collecting, organizing and
evaluating data: marking deductions and reaching conclusions: and at last carefully
testing the conclusions to determine whether they fit the formulating hypothesis.
Methodology
Research methodology is a way to systematically solve the research problem. AS we
know that all business undertaking operate in the world of uncertainty, Research
methodology can minimize the degree of uncertainty. It may reduce the probability of
making a wrong choice amongst alternative course of action research in purposeful
investigation it provides a structure for decision making systematic approach is essential
in good research may involve the following step.
Problem definition i.e., we should be very clean about the problem.

 Research design i.e., analysis of different data in order to summaries the
result.
Interpretation, of result i.e. so what. Purpose of research is find out some important
knowledge of customer
The Methodology used in this project was data collection by Questionnaire method.
The survey and data collection was through a questionnaire by interviewing the
respondent.
53
Data Collection Method:
Primary data by questionnaire and secondary data through internet. Collection of the
data through Questionnaire which is attached with this report.
Sampling
Sampling may be defined as the selection of some part of an aggregate or totality on
the basis of which a judgment or inference about the aggregate or totality is made. In
other words, it is the process of obtaining information about an entire population by
examining only a part of it. In most of the research work and surveys, the usual
approach happens to be to make generalizations or to draw inferences based on
samples are taken. The researcher quit often selects only a few items from the universe
for his study purposes. All this is done on the assumption that the sample data will
enable him to estimate the population parameter. The items so selected constitute what
is technically called a sample, their selection process or technique is called sample
design and the survey conducted on the basis of sample is described as sample survey.
Sample should be truly representative of population characteristics without any bias so
that it may result in valid and reliable conclusions.
Type of Samples
There are two types of samples:
Probability Samples
Probability samples are those based on simple random sampling, systematic random
sampling, stratified sampling, cluster sampling.
Non-Probability samples:
Non-probability samples are those based on convenience sampling, judgment sampling
and quota sampling.
Need for sampling
Sampling is used in practice for a variety of reasons such as:
1. Sampling can save time and money. A sample study is usually less expensive
than a census study and produces results at a relatively faster speed.
54
2. Sampling may enable more accurate measurements for a sample study is
generally conducted by trained and experienced investigations.
3. Sampling remains the only way when population contains infinitely many
members.
4. Sampling remains the only choice when a test involves the destruction of the
item sunder study.
5. Sampling usually enables to estimate concerning some characteristic of the
population.
Elements Respondents : Rural consumers
SAMPLING DESIGN: Descriptive study

AGE GROUP: Above15 age of rural consumer.
SAMPLE UNIT: INDIVIDUAL.
SAMPLE SIZE: 50
SAMPLING USE: Non-Probability Convenience Sampling
EXTENT OF THE SAMPLE: I surveyed all the area near by MATHURA CITY.
55
56
FINDINGS & ANALYSIS OF DATA
Q.1 Are you aware of the HUL products?

Findings:
AWARENES FREQUENC ABSOLUTE

S Y FREQUENCY
%
YES 30 60
NO 20 40
Analysis:
YES
NO
Interpretation:
Half of the rural consumers are aware about HUL product and half of the rural
consumers are not aware about HUL product.
Q.2 Do you purchase HUL products?

Findings:
PURCHASE FREQUENCY ABSOLUTE

FREQUENCY %
YES 23 46
NO 27 54
57
Analysis:
YES
NO
Interpretation:
Half of the rural consumers purchases HUL product.
Q.3 Are HUL products easily available in the market?

Findings:
AVAILABILITY FREQUENCY ABSOLUTE

FREQUENCY %
YES 12 24
NO 38 76
Analysis:
YES
NO
58
Interpretation:
One third of the rural consumers say HUL products are not easily available in the
market.
Q.4 Where did you see or hear about HUL‘s products?

Findings:
SEE OR HEAR FREQUENCY ABSOLUTE

FREQUENCY %
T.V YES 16 32
NO 34 68
RADIO YES 20 40
NO 30 60
NEWSPAPER YES 10 20
NO 40 80
POSTERS YES 2 4
NO 48 96
OTHERS YES 2 4
NO 48 96
Analysis:
T.V
RADIO
NEWSPAPER
POSTERS
OTHERS
59
Interpretation:
Rural consumers mostly see or hear about HUL products on T.V. and RADIO.
Q.5 How often do you purchase any HUL product?

Findings:
PURCHASE FREQUENCY ABSOLUTE

FREQUENCY %
DAILY 7 14
WEEKLY 15 30
MONTHLY 20 40
YEARLY 8 16
Analysis:
DAILY
WEEKLY
MONTHLY
YEARLY
Interpretation:
One –third rural consumer purchases MONTHLY or WEEKLY.
60
Q.6 What attribute do you consider when you purchases a product?
Findings:
ATTRIBUTES FREQUENCY ABSOLUTE

FREQUENCY %
PRICE 18 36
PACKAGING 8 16
QUALITY 9 18
BRAND VALUE 3 6
QUANTITY 12 24
PRICE
PACKAGING
QUALITY
BRAND VALUE
QUANTITY
Analysis:
Interpretation:
Half of the rural consumers see PRICE and QUANTITY in product at the time of
purchasing.
61
Q.7 Which of the following products do you use?
Findings:
USE OF FREQUENCY ABSOLUTE

PRODUCT FREQUENCY %
SOAP 15 30
DETERGENT 15 30
COSMETIC 3 6
TOOTHPASTE 8 16
SHAMPOO 4 8
TEA 5 10
Analysis:
SOAP
DETERGENT
COSMETIC
TOOTHPASTE
SHAMPOO
TEA
Interpretation:
Rural consumer purchases SOAP and DETERGENT of HUL..Q.8 What is your opinion
about HUL‘s products related to the following features...
(a) About PRICE
62
Findings:
OPINION FREQUENCY ABSOLUTE

FREQUENCY %
VERY HIGH 30 60
AVERAGE 15 30
VERY LOW 5 10
Analysis:
VERY HIGH
AVERAGE
VERY LOW
Interpretation:
For rural consumers PRICES of HUL product is very HIGH.(b) About QUALITY
Findings:

FREQUENCY %
VERY HIGH 35 70
AVERAGE 10 20
VERY LOW 5 10
63
Analysis:
VERY HIGH
AVERAGE
VERY LOW
Interpretation:
According to rural consumers QUALITY OF HUL product is good.(C) About

AVAILABILITY
Findings:

FREQUENCY%
VERY GOOD 5 10
AVERAGE 10 20
VERY BAD 35 70
64
Analysis:
VERY GOOD
AVERAGE
VERY BAD
Interpretation:
HUL products are NOT easily AVAILABLE in the market.
(d) About PACKAGING
Findings:

FREQUENCY %
VERY GOOD 30 60
AVERAGE 15 30
VERY BAD 5 10
65
Analysis:
VERY GOOD
AVERAGE
VERY BAD
Interpretation:
PACKAGING of HUL product is GOOD.

Q.9 What do you think about HUL products?
Findings:
THINKING FREQUENCY ABSOLUTE

FREQUENCY %
BEST 25 50
AVERAGE 18 36
WORST 7 14
66
Analysis:
BEST
AVERAGE
WORST
Interpretation:
Half of the rural consumers say HUL products are BEST in MARKET.Q.10 How would
you rate HUL products?
Findings:
RATING FREQUENCY ABSOLUTE

FREQUENCY %
EXCELLENT 15 30
GOOD 20 40
FAIR 8 16
POOR 7 14
67
Analysis:
EXCELLENT
GOOD
FAIR
POOR
Interpretation:
One – third rural consumers say HUL products are GOOD and EXCELLENT.
68
69
CONCLUSION
1. Mostly rural consumers are aware about HUL product.

2. They willingly purchase HUL product.
3. HUL products are easily available in rural market.
4. Rural consumers mostly see or hear about HUL product on television or
radio.
5. Mostly rural consumers purchase product weekly or monthly.
6. At the time of purchasing a product rural consumers give main emphasis on
price and quantity.
7. Mostly rural consumer purchases soap and detergent of HUL.
8. HUL products are best on the market.
9. For rural consumer HUL product are good.
HUL brand will have to really gain inroads in
the rural markets in order to achieve double digit growth targets in future. There is huge
potential and definitely there is lot of money in rural India but the smart thing would be to
weigh in the roadblocks as carefully as possible. The companies entering rural market
must do so for strategic reasons and not for tactical gains as rural consumer is still a
closed book and it is only through unwavering commitment that the companies can
make a dent in the market. Ultimately the winner would be the one with the required
resources like time and money and also with the much needed innovative ideas to tap
the rural markets.
70
71
RECOMMENDATION & SUGGESTIONS
1. Urban and Semi-urban based salesmen are not able to tap the full potential in
the villages. Here, it may be suggested that the marketers may select and
employ the educated unemployed from villages.
2. Increased awareness with information explosion, expanding T.V. network,

liberalized government policies for rural development on rural market by
companies.
3. Creating an awareness concerning a particular product fields, for instance,

fertilizers and pesticides.
4. Success in rural marketing calls for a sound network and a thorough

understanding of a rural psyche.
5. New cadre of entrepreneurship, competitive and creative sales promotion,

Packaging revolution and changing lifestyle in rural areas.
6. For the development of rural market will involve additional cost both in
terms of promotion and distribution.
72
73
LIMITATIONS
1. The no. of respondents was 50 that may not truly represent the opinion of
entire population.
2. While filling the questionnaire the respondents might have been influenced
by others who were with them.
3. Respondents might may not have been serious while filling the
questionnaire.
4. Inherent limitation of the design used have to be their.
74
75
QUESTIONNAIRE
NAME:
GENDER:
AGE:
OCCUPATION:
INCOME BRACKET:
MARITAL STATUS:
Q.1 Are you aware of the HUL products?

(1) YES (2) NO
Q.2 Do you purchase HUL products?
(1) YES (2) NO
Q.3 Are HUL products easily available in the market?
(1) YES (2) NO
Q.4 Where did you see or hear about HUL products?
YES NO
T.V
RADIO
NEWSPAPER
POSTERS
OTHERS
Q.5 How often do you purchase any HUL product?

(1) DAILY (2) WEEKLY
(3) MONTHLY (4) YEARLY
Q.6 What attribute do you consider when you purchases a product?
(1) PRICE (2) PACKAGING
(3) QUALITY (4) BRAND VALUE
(5) QUANTITY
76
Q.7 Which of the following product do you use?
(1) SOAP (2) DETERGENT
(3) COSMETIC (4) TOOTH PASTE
(5) SHAMPOO (6) TEA
Q.8 What is your opinion about HUL products related to the following features...
(1) PRICE Very High
Average
Very Low
(2) QUALITY Very High

Average
Very Low
(3)AVAILABILITY Very Good

Average
Very Bad
(4) PACKAGING Very Good

Average
Very Bad
Q.9 What do you think about HUL products?

(1) It‘s best on the market
(2) It‘s about average
(3) Its worst on the market
Q.10 How would you rate HUL products?

(1) EXCELLENT
(2) GOOD
(3) FAIR
(4) POOR
77
BIBLIOGRAPHY
Marketing Management - Philip Kotler
Research Methodology- C. R. Kothari
News papers- Hindustan Times

Financial Times
Business Week
Internet- Websites (Google Search Engine)

HUL. Com
(i)
78

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1

RURAL MARKETING - INDIAN PRESPECTIVE

STAGE I: AGRICULTURAL MARKETING

STAGE II: RURAL INPUTS MARKETING

STAGE III: RURAL MARKETING

STAGE I: AGRICULTURAL MARKETING

STAGE II: RURAL INPUTS MARKETING

STAGE III: RURAL MARKETING

URBAN /RURAL TO RURAL

STAGE I: AGRICULTURAL MARKETING

STAGE II: RURAL INPUTS MARKETING

AGRI. INPUTS LIKE SEEDS, MACHINES,

STAGE III: RURAL MARKETING

CONSUMER DURABLES, FMCG, CONSUMABLES FOR

CONSUMER MARKET: ALL KINDS OIF CONSUMMABLES, FOOD

FOOT WEAR ETC WATCHES, BICYCLES,

RADIO, TV, KITCHEN APPLIANCES, FURNITURE,

SEWING MACHINE, TWO WHEELER ETC.

INDUSTRIAL MARKET: AGRICULTURAL AND ALLIED ACTIVITIES,

FARMING, COTTAGE INDUSTRIES, HEALTH

CENTRE, SCHOOL, COOPERATIVE, PANCHAYAT,

OFFICE ETC. SEEDS, FERTILISERS, PESTICIDES,

TRACTORS ANIMAL FEED, ETC

SERVICES MARKETS: REPAIRS, TRANSPORT, BANKING, CREDIT,

INSURANCE HEALTHCARE, EDUCATION,

COMMUNICATION, POWER ETC.

5. LIFE CYCLE ADVANTAGES

6. MARKET GROWTH RATES HIGHER THAN URBAN

7. RURAL MARKETING IS NOT EXPENSIVE

8. REMOTENESS IS NO LONGER A PROBLEM.

ASPECT URBAN RURAL

PHILOSOPHY MARKETING MARKETING AND

DEMAND HIGH LOW

LOCATION CONCENTRATED WIDELY SPREAD

AWARENESS HIGH LOW

SENSITIVE YES VERY MUCH

CHANNELS MULTI VILL SHOPS, SHANDIES,

ADVERTISING ALL TV, RADIO, MULTI

1. To study the preference of HUL product in rural market.

2. To know the market policy of HUL in rural market.

3. Rural consumer aware about the HUL product

1. High distribution costs

Overcoming the income variability

Wider competition for a product

Preference for Low Unit Packs (LUP)

LANGUAGE, MARKETING COMMUNICATION, AND

2. Rising Rural Prosperity

5. IT Penetration in Rural India

Company Household penetration

Of the expenditure on consumer goods in rural household, approximately, 44% is on

Category Brand with highest

INCREASING BRAND AWARENESS

Company Household penetration

Of the expenditure on consumer goods in rural household, approximately, 44% is on

Company Score Ranks

Hindustan Unilever Ltd 138.6 1

ITC Limited 136 2

Britannia Industries 134 3

Nestle India 132.6 4