PROFIT FROM THE RURAL PATTERN-DR. T.P GOPALASWAMY Gayatri Iyer

Demographics  Rural : 650 millions spread across villages  Urban: 250 millions spread across 3000 locations  More scattered, less infrastructure hence difficult to reach

Distinguishing characteristics of rural and urban markets FeaturesRuralUrban Demand PatternSeasonalUniform SpreadWidely SpreadConcentrated Literacy LevelsLowHigh Physical Communication Levels PoorGood Awareness of needsNot KnownKnown Sources of InformationWord of MouthAny media Product conceptNot KnownMostly Known Timeliness of SupplyUntimelyTimely After sales ServiceInadequateAdequate Expenditure PatternsMostly unproductiveProductive Guidance for usageMostly neededNormally not needed Product as a status symbolMostly noNormally yes

Different Industries in Rural India  Firms have to understand these distinguishing characteristics and approach each market according to its needs  Agricultural Input firms have developed their independent strategies (though improvement is possible)  Consumer durables and Consumer marketing have to take lessons  HUL,ITC and Lipton have lead the way

Case of HLL and Lipton Many of the 230,000 catering points are serviced each and every day and others serviced every week by a large sales force comprising 1,260 salesmen. The stocks reach the remotest rural markets going through the semi-wholesalers; some stocks move directly to village shops. The products are sold at a uniform price in 3,500 towns and 70,000 rural locations Lipton's network alone is composed of 660,000 selling outlets consisting of 430,000dealers and 230,000 catering points serviced through a network of 3,000 redistribution stockists. Goods are produced in factories From the factories, the products move to about 40 C & F agents. From there, the products reach 3,500 stockists located in towns with population of up to 20,000.

HLL and Lipton (contd)  Special methods are used to suit specific regions, climatic zones and villages with specific conditions of accessibility.  Lipton India, now Brooke Bond-Lipton India Ltd, also has an extensive rural marketing outfit.  In fact, today, their distribution network is the largest rural market The network is indeed mammoth in width and depth of distribution and market coverage.  And this mammoth distribution outfit endows Lipton with a unique 'bazaar power' in the rural market.  While the major part of sales turnover of most big business firms comes from 12 big towns in the Country  With a population of more than one million, more than 70% of Lipton’s sales comes from semi- urban and rural areas and only 11% of it sales comes from the 12 big towns

Hierarchy of markets

Village Shops  Lowest in the hierarchy  Tea, beedies, cigarettes, salt,kerosene,matches, edible oils  Basically items of daily used purchased in small quantities

Shandies and Haats  Cloth,cheap cosmetics,soaps,kitchen utensils,  Assemble at a particular place on a fixed day in a week  Attract people from a radius of Km  Selling of commodities is also facilitated

Mandi  Wholesale assembling markets  Regular shops :- Fertilizers, pesticides, seeds and consumer durables like watches, radios,clocks,dry battery cells,jewellery,clothing etc State District HQs  Uppermost level  Casual Visits  Legal matters etc

The Rural Consumer..  Has definite markets for all his requirements  The hierarchy model:  Has important implication in the distribution of companies  Can determine which items can be placed where can be easily determined  Consumable items: large shops/shandies, consumer durable items : towns or district headquarters(price verifications)

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