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A

DESSERTATION REPORT
ON

A study on the ruler marketing


Boom in India

Submitted in Partial fulfillment of Award of the Degree of


Post Graduation diploma in management (2004- 2006)

UNDER THE GUIDANCE OF SUBMITTED BY

Mr. A.R. MISHRA Mirza Mohd Haider


Faculty/ Mentor PGDM (05-07)
I.T.S. Ghaziabad

Institute of Technology & Science


Mohan Nagar, Ghaziabad. – 201007
(Affiliated to U.P. Technical University, Lucknow)

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Acknowledgement

The feeling of acknowledging something and expressing it in words are two


different things altogether. It is my weakness, but I honestly admit that when
we truly wish to express our warm gratitude and indebtness towards
somebody Concerned, I am always at a loss of words.

I gratefully take this opportunity to express my gratitude and indebtness to


my most able guide Mr.A.R.Mishra (Faculty) for his active interest, timely
encouragement, valuable suggestions and unceasing assistance and creative
criticism at every stage of this project.

Mirza Mohd Haider

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EXECUTIVE SUMMARY

Marketing today has completely transformed the nature and dynamics of business.
Marketing of products has taken precedence over the process of production itself.The

rural market is a significant part of our marketing strategy which enables us to help the

consumer link with our product. The main objective of the Dissertation is to through

light on scope of Rural Marketing in India. The Future growth potential in Indian Rural

marketing and Different strategies for competing in rural India was the area of study. It

will help in understanding the whole marketing strategy about Indian rural market.

It will also help in understanding, why Indian rural market is booming. Analyze the

opportunities & threads in Indian Rural marketing and work out different strategies for

competing in rural India.

The information is collected from secondary sources- Internet, books, magazines,

newspapers, and journals. The Rural markets have been a vital source of growth for most

companies. For a number of FMCG companies in the country, more than half their annual

sales come from the rural market. My research has attempted to explore the key

opportunities and challenges of marketing in rural India. In the hunt for fresh pastures,

the vast and hitherto vastly unexplored terrains of rural India consistently beckon the

moolah seeking marketer.

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To be successful, multinational consumer goods companies need to be innovative,

dogged and culturally sensitive in developing rural marketing strategies. It is a testament

to both multinational and local consumer goods companies that they have been able to

innovate and address the challenges offered by India’s rural market to bring goods, to and

improve the lives so many people

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INTRODUCTION

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INTRODUCTION

"The rural market is a significant part of our marketing strategy which enables us to

help the consumer link with our product."

While we all accept that the heart of India lives in its villages and the Indian rural market

with its vast size and demand base offers great opportunities to marketers, we tend to

conclude that the purse does not stay with them. Nothing can be far from truth. Rural

marketing involves addressing around 700 million potential consumers, over 40 per cent

of the Indian middle-class, and about half the country's disposable income. According to

a NCAER study the consuming class households in rural equals the number in urban. and

awareness The recent NCAER publication "The Great Indian Middle Class" further

reveals that the Indian middle class consisted on 10.7 million households or 57 million

individuals of which 36 per cent lived in rural areas. No wonder, the Rural markets have

been a vital source of growth for most companies. For a number of FMCG companies in

the country, more than half their annual sales come from the rural market.

Although with the substantial improvement in purchasing power, increasing brand

consciousness, changing consumption pattern and rapid spread of communication

network rural India offers a plethora of opportunities all waiting to be harnessed, the

marketers lack the in-depth knowledge of the village psyche, strong distribution channels

and awareness that are indeed the prerequisites for making a dent into the rural market.

Moreover, vast cultural diversity and vastly varying rural demographics, poor

infrastructure - be it inadequate roads and highways or the availability of telephones and

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electricity, low income levels, low levels of literacy often tend to lower the presence of

the corporates in the rural markets.

Thus, although the rural markets must be alluring, tapping the vast potential calls for a

systematic psychographic analyses and an appropriate marketing mix to meet the

consequent challenges of availability, affordability, acceptability.

To achieve success, in rural India, companies will need to establish rural market

development programmes. There is a need to innovate and adapt products that suit rural

operating conditions. The rural consumers need to be educated of new concepts, relevant

to the environment and usage habits that will improve their quality of life.

In addition to focusing on targeted promotions and advertising there is an urgent need to

work on economical packaging, dual pricing and special sizes of FMCG and household

products. IT can be considered as an important marketing tool.

Moreover, the corporates need to place emphasis on retailers directly rather than

depending on the wholesalers for distribution in the rural market as this has not proved to

be very effective and a proactive marketing medium.

There is a need to generate superior data on rural marketing system, the haats, melas, and

mandis and on village and small town income levels and consumption patterns. They

need to learn how to use existing market places - haats, melas, and mandis - to arrange

live demonstrations of products. The ingredients for successful penetration into the hearts

and

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Wallets of village consumers include long-term commitment, cost re-engineering and

sustained innovation and specialized strategies.

I would like to mention that despite the hurdles that rural economy presents; corporate-

rural partnership can overcome these and bring about positive results for both the entities.

Partnership needs to extend beyond agribusiness. It is not only the FMCGs but also the

financial and insurance sector that needs to come forward. We are glad that today we

have senior representatives from the Banking and Insurance sector to discuss their

success stories and tailor-made financial products that have been introduced by them to

address the specific needs of the rural markets.

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RURAL MARKET ENVIRONMENT

The rural market environment need a separate examination as it varies significantly from

that of the urban market. We shall deal with the subject under the three headings :-

1. The rural consumer.

2. The rural demand.

3. Other aspects of the rural market environment.

(A)-THE RURAL CONSUMER: A Detailed Profile :-

Size of Rural Consumer Group

In numerical terms, India’s rural market is indeed a large one; it consists of more

than 740 million consumers. 73% of India’s total population is rural. The rural

market consists of more than 12 crore households, forming over 70%of the total

households in the country.

Characteristics of Rural Consumer Group

• LOCATION PATTERN :-

Rural Market of India is a geographically scattered market. The rural

population is scattered across 5,70,000 villages. And, of them, only 6300

villages have a population of more than 5,000 each. More than 3 lakh villages

are in the category of 500 people or less.

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• SOCIO-ECONOMIC POSITION :-

Rural Consumers continue to be marked by low per capita income/ low

purchasing power. Similarly, they continue to be a traditional -bound

community, with religion, culture and tradition strongly influencing their

consumption habits. Nearly 60% of rural income comes from agriculture.

Rural Prosperity and discretionary income with rural consumers are thus linked

to a sizeable extent with agricultural prosperity.

• LITERACY LEVEL :-

Rural India has a literacy rate of 28% compared with 55% for the whole

country. The adult literacy programmes launched in the rural areas are bound to

enhance the rural literacy rates in the years to come . The rate is certainly on the

low side.

• LIFESTYLE :-

The rural consumers are marked by a conservative and tradition-bound lifestyles.

But this lifestyle of a sizeable segment of rural consumers has already changed

significantly in recent years .The changes can be attributed to several factors

such as:

 Growth in income and change in income distribution .

 Growth in education.

 Enlarged media reach (particularly television).

 Growing interaction with urban communities.

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 Marketer’s effort to reach out the rural market.

• BUYING BEHAVIOUR :-

Buying behaviour of rural consumers has been effected by the following

factors:-

INFLUENCE OF CULTURE:-

Rural consumers perception of products are strongly influenced by cultural

Factors .For example-the preference in respect of colour, size and shape is

the result of cultural factors.

GEOGRAPHIC LOCATION:-

Rural consumer behaviour is also influenced by the geographical location of the

consumers. For example, nearness to feeder towns and industrial projects influenced

the buying behaviour of the consumers in respective cluster of villages.

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WAY THE CONSUMER USES THE PRODUCT

The situation in which the consumers utilize their the product also their buying

behaviour. For example – Lack of electricity automatically increase the purchase of

batteries by rural consumers: since the rural consumers cannot use washing powders

/detergents powders that much, as they wash their clothes in streams .

Amazing innovator

With a queer psychology of purchase and usage, Indian rural market is still a puzzle to

marketers. In many a case, it stretches its imagination to find surprisingly different uses

of some of the products. And the red-faced marketers admit that they actually sell their

products in areas they would otherwise find difficult, simply because there are other uses

for them. For instance, in parts of Northern India, condoms are used by weavers as gloves

on their fingers to weave fine threads. Lubrication on condoms allows them fine control

on threads and protects their sensitive fingers. Buffaloes displayed at the haats for sale

are dyed an immaculate black with Godrej hair dye. Horlicks is used as a health beverage

to fatten up cattle in Bihar. In villages of Punjab, washing machines are being used to

make frothy lassi in bulk. Paints meant for colouring up the rich-smooth walls are used to

paint the horns of cattle to make identification easier and to achieve a long-term

protection from theft. Iodex is rubbed into the skins of animals after a hard

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day’s work to relieve muscular pain. The organizations in question might not be pleased

with such usage. However, their moneybags keep on jingling.

Quality consciousness

It will be unjustified to think that rural consumers are less bothered about product quality.

Even the village buyers desire to buy a quality product and upgrade their quality of life.

Marico, an Indian edible oil company, has found the rural consumers in the interior of

India willingly pay a reasonable price premium for branded cooking oil, over community

oil, because they are certain of its consistent quality. Unbranded products are often

considered by some of them to be adulterated.

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OBJECTIVE
OF
RESEARCH

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OBJECTIVE

The over all objective of the Dissertation is light on scope of Rural Marketing in India

To know the scope of rural marketing in India

 Future growth potential in Indian Rural marketing

 Different strategies for competing in rural India

 opportunities & threads in Indian Rural marketing

Scope:

It will help in understanding the whole marketing strategy about Indian rural

market.

It will also help in understanding, why Indian rural market is booming.

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METHODOLOGY USED

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METHODOLOGY USED

In order to carry out any research investigation there is a need of a Systematic method

and to adopt a well defined procedure for each and every research there is also a need of

methodology . Methodology of any research constitutes the selection of representative

sample of the universe or the general population ,application of the appropriate

research tools and the techniques.

The research involves the following steps:-

1. DEFINE THE PROBLEM AND RESEARCH OBJECTIVE:-

If the problem is clearly defined ,it is half solved .The problem

Objective here to assess the scope of rural marketing

2 - COLLECT THE INFORMATION :-

The information is collected from secondary sources- Internet, books,

magazines , newspapers , and journals

3- ANLAYZE THE INFORMATION :-

The next step in the marketing research process is to exact

findings from the collected data .

4-PRESENT THE FINDINGS AND CONCLUSIONS :-

As the last step ,the findings and conclusion of whole

research are presented . .

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INTERPRETATION

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CREATIVE RURAL MARKETING FOR RURAL INDIA

INTRODUCTION
Marketing today has completely transformed the nature and dynamics of business.
Marketing of products has taken precedence over the process of production itself. This
can be attributed to the fact that the new age consumer equipped with the potent tool of
information seeks more knowledge about the product, its features and its uses. And when
this information is presented in a creative and effective manner, it creates an everlasting
impression on the consumer’s mind and may even alter his perception of what he needs.
Marketers are forever seeking fresh challenges and scouting for more and more clientele
to be drawn into their sphere of influence. The urban consumer has always been
pampered with the most dazzling array of goods and services from every industry. But
the urban market is fast shrinking due to saturation caused by the competition and the
growth rate over the past few years has consistently shown a declining trend. In the hunt
for fresh pastures, the vast and hitherto vastly unexplored terrains of rural India
consistently beckon the moolah seeking marketer.
Why go Rural?
There are various reasons why every industry is taking a very serious look at rural
markets
 A bout 285 million live in urban India whereas 742 million reside in rural areas,
constituting 72% of India’s population resides in its 6, 00,000 villages.
The number of middle income and high income households in rural India is
expected to grow from 80 million to 111 million by 2007 while urban India is
expected to grow from 46 million to 59 million.
Size of rural market is estimated to be 42 million households and rural market
has been growing at five times the pace of the urban market
More government rural development initiatives.
Increasing agricultural productivity leading to growth of rural disposable income.
Lowering of difference between taste of urban and rural customers.
Many companies like Colgate-Palmolive, HLL, Godrej etc have already made forays
into rural households but still capturing the markets is a distant dream. Most

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marketers still lack in depth knowledge to analyze the complex rural market.
Characteristics of Rural markets
There are certain characteristics of rural India, which every prospective marketer
needs to be aware of before unleashing his product:
Low income influenced by seasonal fluctuations
Low literacy
Diverse customs, languages and social structures
Resistant to change
Price sensitive
High brand loyalty
Influenced by traditions
Moderate aspirational levels
Quality Conscious
Low to moderate risk taking ability
These typical characteristics of the rural market make it evident that there are huge
challenges, which a marketer will face. These challenges need to be tackled using
appropriate strategies and proper planning. The major obstacles can be classified as
follows:
Poor infrastructure facilities, which hamper the effective distribution of
products and make the task of reaching the target consumer difficult.
Traditional media is ineffective due to illiteracy and non availability.
There is insufficient past research to provide some insight about consumer
behaviour.
Disposable income is highly dependent on good monsoons and a rich
harvest.
Varying linguistic and socio-cultural norms compel the marketer to vary
his marketing message for different parts of the same country.
Role of women in buying process is still not independent of family constraints.
Inadequate credit availability hampers the ability of rural retailers to carry
stocks.
Understanding the psyche of the rural consumer and gauging the complexity of the

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rural market has to be given utmost priority by marketer. Creative marketing
solutions need to be devised to combat these barriers.
Methods followed traditionally
Traditional methods of rural marketing make an interesting study and they ought to
be analyzed carefully to draw relevant conclusions. Conventionally marketers have
used the following tools to make rural inroads:
Use of few select rural distributors and retailers to stock their goods
but no direct interaction with prospective consumer.
Use of print media or radio but no alternate form of advertising for
promoting their brands
More focus on price of product but less attention devoted to quality or
durability
Same product features for urban and rural setting with no
customization for rural areas despite differences in the market
environment.
Low frequency of marketing campaigns.
Little uses of village congregations like haats and melas to sell the
products.
More focus on men as decision makers and buyers.
Marketing in focus groups
To explain how the dynamics of branding works in different settings, let us take
example of four villages from various parts of the country. For our purpose we will
refer to these villages as our focus groups. We have taken a village each from Punjab,
Bihar, Kerala and West Bengal. As we have stressed earlier, for any product to be
successful in the rural parts of the country, a customized approach is necessary. So we
will start our analysis by describing the features of each village, define a product that
we wish to market in that village and then describe the marketing strategy for that
product.

FOR A VILLAGE IN PUNJAB

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There are various factors that need to be kept in mind so as to influence the buying
behaviour of the people of this village. Punjab has a rich culture and Punjabis are per
se very lively people. They believe in strong community relationships. Caste system
is not very strong and overall farmers are prosperous. Land is fertile and there is
abundant food and water. Literacy rates are almost equivalent to the country’s rate
and people are highly aware of the current trends and like to own goods that enhance
their status in the community. People are fond of eating and frequent celebrations are
part of their lives.
To understand how marketers need to approach this market, we have chosen an
electronic grill as the product. Traditionally a clay tandoor is used to cook chapattis,
non-vegetarian items etc in this region. We are offering electronic grill as a substitute
to this. Characteristics that a marketer needs to highlight in this product are:
_ Modern way of cooking
_ A premium product, uses some imported technology
_ Control panel in Punjabi language
_ Smart looks, international styling
_ Faster cooking, heat controls and offers variety in terms of dishes that can be
cooked
_ Payment in easy installments
_ Convenient to handle and portable
_ Available in different sizes viz. 22 liters, 19 liters, 16 liters
In addition to using these promotional parameters, it has to be kept in mind that
disposable income is maximized during harvesting season so it’s the perfect time to
launch this product. Television and radio can be used to effectively promote the
product. In addition to this, demonstrations can be used to carry home the message.
As women are highly regarded in this region, so they can be roped in to educate the
local women about the benefits of using this product instead of traditional tandoor.
Also another way to promote this product can be to position it as a gift item during
marriages etc.
FOR A VILLAGE IN BIHAR

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Factors that need to be analyzed while entering this market are low level of literacy,
division of society based on economic background and caste system. There is no
dearth of water in this region and soil is also fertile. But there is lack of infrastructure
and modern industries. Rainfall levels are high. The law and order situation has
worsened in the recent past and the frequency of extremist violence has risen. The
people of Bihar are very religious and God-fearing. For recreational purposes, they
engage in folk theatre and enjoy music and dance.
To understand how marketers need to approach this market, we have chosen
multipurpose oil as the product. Characteristics that a marketer needs to highlight in
this product are:
_ Non- sticky quality of the oil
_ Contains herbal qualities
_ Can be used for many purposes like hair massage, body massage and for
relieving stress
_ Special characteristics like cooling attributes
_ Available in variety of fragrances
As the income level in this part of the country is very low, so small and convenient
packaging is very important. Moreover to help them to relate to this product,
impression of their local Madhubani painting can be used on sachets or bottles. Also
the product name has to be traditional to which villagers can relate to for example
madhusudan or sanjivini. For promoting the product, some movie star should be used
as villagers aspire to be like them and thus emulate them.

FOR A VILLAGE IN KERALA

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Kerala can perhaps be one of the easiest places for the marketer to sell their product,
as it is very similar to the urban markets. This can be attributed to the high level of
education coupled with a rich socio cultural heritage. Various recreational activities
are largely promoted by number of clubs like sports clubs, youth clubs etc. Kerala has
high sex ratio and is most literate of all the states in India. Administration is very
efficient and there is high level of awareness among people. There is high regard for
women in the society. Certain parts of Kerala are industrially backward and tourism,
rubber, Beedi manufacturing etc form the major source of income for the people. One
of the most important characteristics of these villages is the presence of large number
of co-operative societies.
To understand how marketers need to approach this market, we have chosen a
mouthwash as the product. Characteristics that a marketer needs to highlight in this
product are:
_ Usefulness of dental hygiene
_ Anti plaque properties
_ Promises fresh breath
Any media i.e. television, radio or print media can be used to promote the product.
Again, as the income levels are moderate so small or medium packs have to be
introduced. Most important point that has to be taken care of is that co-operatives
have to be roped in for effective distribution of the product. These co-operatives are
very well aware of the buying habits of the people and the trends of the market. So
they can provide large amount of useful information. Some kind of incentive or profit
sharing model has to be devised so that co-operatives have the reason to push this
product.

FOR A VILLAGE IN WEST BENGAL

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A typical village of West Bengal has characteristics like low amount of agriculture,
coastal areas with fishing being the major source of income for the locals, generally
people are poor and land holdings are very small, literacy rates are very low. Staple
diet is rice and fish. People are very proud of their language and culture. We have chosen
dairy whitener as the product to demonstrate the approach that a marketer needs to take to
make inroads in this type of market. The main brand promise that is offered to the
consumer is low pricing and economy of the product Cost of milk in a cup of tea is
around Re 1. But a 50 gm sachet, which is priced at nearly Rs 6.50, can be used to make
nearly 25 cups of tea. So cost of milk used comes down drastically to nearly 26 paise per
cup. Moreover sachet offers convenience of use and can be used anywhere. As there is
high degree of humidity in that region and people cannot afford refrigerators, so this
product helps to eliminate the problem of proper storage.

Analysis & Opportunities

As it is clear from the examples taken, for the product to be successful in rural
market, it has to be customized for that particular market. Each product needs
individual attention and success in one market cannot be emulated in other markets.
Most important factors that work for a product are right brand promise that is relevant
for the local population and discreet brand visualization. Brand visualization would
include factors like name of the product in local language, color combination
according to local settings and a tag line, which delivers the message that is easily
understood by the people. Companies need to identify the opinion leader in each area
and target him as the first point of contact for villagers. One potential area that
companies need to tap is advertising the local events like bullock races, melas or
festivals. Another way is to advertise in places where people commune like hand
pumps, ponds or haats.

Innovative uses of products

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Time and again it has been proved that whatever may be the level of research
involved in the market study, rural consumers behave in the manner that is totally
unpredictable. They devise such innovative uses of a product that even surprises the
companies. Some of the following examples will support this are:
_ In a village of northern India, weavers used condoms to cover their fingers
while weaving. This not only helped to avoid cuts on the fingers but also the
lubricant helped in easy movement of the thread between the fingers.
_ Godrej hair dyes are used in some villages to dye the buffaloes. This made
them look younger and thus fetched better price at the cattle fairs.
_ Horlicks was added to the feed of the cattle to fatten them and thus improve
the milk producing capacity.
_ Asian paints found that in some villages’ paints were used to color the horns
of the cattle for easy recognition.
_ In the villages of Bihar, Iodex was used on the tired limbs of the cattle,
returning from the fields in the evening so that they are fresh the next day.
All these examples show the there is tremendous potential for the existing products in
the rural areas, and companies need to look beyond the obvious and critically analyse
every indication that rural markets give, be it poor sales or high sales volumes.
Future Outlook
Considering the magnitude of the task at hand with the companies, it makes sense for
non-competitive companies like HLL and LG to make a joint effort to penetrate the
market. They can use each other’s distribution channels to leverage their brands. Also
considering the poor awareness levels of the people, competitors like HLL and P&G
should join hands to avoid the product proliferation, which results in confusing the
consumer. Rural consumers have a very high level of ethos so all the care should be
taken not to hurt them in any form of advertising. Moreover every effort should be
made by the companies to promote the “my brand” feel in the minds of consumers.
This can be achieved by connecting the local industries of that place and if possible,

Cracking the Rural Market in India

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To a marketer, India's rural market presents a challenge like no other. While marketers
salivate at the prospect of making their marketing millions in rural India, none has yet
been able to understand what makes rural India tick. Harish Bijoor says that so far
marketers have sought to thrust cornflakes and dog biscuits alike at rural Indians. He
makes a plea to preserve the sanctity of Rural India and discover commerce and sense in
it all - by creating brands that keep in mind rural imperatives. The rural market for brands
is a powder keg of an opportunity waiting to be explored - not exploited!

I spent the first four years of my career entirely in rural markets. I used every mode of

travel to enter into the gut and gore of the slice of market I had the privilege to look after.

The bullock-cart, the camel-driven cart and the boat were all means to penetrate a terrain

no MBA in his right mind wanted to. Dirty rat-infested lodges, police-raids that had me

ashamed of my neighbours in the rooms around and food that had me running to the

nearby field even in broad daylight are tales my early life in the rough and tumble of

Indian marketing is made of. These four years taught me one thing clearly! There are two

Indias! Real India and Virtual India!Real India was this piece of terrain I sold tea, coffee,

spices and condoms to. It was a big chunk of the land mass. It occupies bulk of the

landmass and houses 742 million people as of now! It is populous, multi-cultural and

multi-faceted. India started here. This is the residence of the arts, the culture, the food, the

ethnic fashion, the agricultural practice, the nuance of language and diction and

everything else that we in Urban India have morphed to our needs as of today.

Remember, in the very beginning there was no urban at all! It was all rural! All real!

Virtual India was where I came from. Virtual India was where I was shaped into a being

capable of commercial, social and cultural existence. The size of pie of land I came from

was an urban island of sorts. An aberration even! The populace that lives here

compriseda fourth of the size of the population of India on the whole.

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There sure was a Matrix at play! While politics of the nation was governed largely by

what Real India had to say, government policy did not necessarily tread the very same

path. There was this huge gap in understanding what was right for the masses and what

was politically expedient. In the bargain, policy was hijacked by the politician. While

politics was the domain of the politician and the bureaucrat that ran the nation in many

ways, commerce was largely played in the very same way. Till the wave of liberalization

set in. And when this happened, Indian businesses actually steered Virtual India. What’s

more, Virtual India took charge of the way Real India was to be run as well.

And in Virtual India, the businesses that dictate the soap that needs to be placed in your

toilet and the detergent in your bathroom and the cooking gas in your kitchen, actually

ran Real India. Real India is today run by Virtual India. The largest part of land-mass and

the larger part of the population base is controlled in many-many ways by the way the

urban man in urban India wants it run. A true blue hegemony of the Urban Indian!

Remember again that all marketing men and their kin in advertising, market research and

branding are mostly urban souls. Many in disguise as well! Real India (read as: rural

India henceforth) is fast morphing to the needs, wants, desires and aspirations discovered

by the urban man. Television as a medium has created awareness, a raging interest in

brands, a latent desire to consume and possess what is shown on the not-such-an-idiot-

after all-box! Television has spurred on consumptive action and has acted as a brand

consumption catalyst in many ways. And television has continually shown us images that

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make everything Urban desirable and everything Rural as something that is basic….too

basic!

Look keenly at the statistics that tell us the growth of urbanisation. In 1951 we had 2,843

Urban Agglomerations(UA) and towns. Today, the number is close to 4000! The Urban

population in 1951 stood at 17.3 per cent of total. Today, the number is a proud and

unidimensional 27.8 per cent! In the last fifty years, we have had what I would call

creeping urbanisation. In the next fifty, it is time to expect a galloping rate! Thanks to

television…and thanks fundamentally to the Brand movement, which is poised to make a

big movement in the heart and hearth of the rural dweller! The two Indias mean two sets

of peoples. The rural man, woman, child, dog and cat for a start! Remember, dog-food

and cat-food companies will definitely

want to invade the vast rural hinterland

sometime in the future for sure!

How then does one go about creating

brands for the rural person in the rural

dwelling? There are two ways really.

The first is the insensitive way most

marketers

have adopted to date. The second is a more sensitive rendering of what marketers and

brand-evangelists in the future could adopt. The first is really the easy way. Pioneer

marketers in rural areas used it to good advantage. Take the urban brand,

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1) Tweak the product a wee bit (read: make it rustic, rugged and even lower-quality if

necessary),

2) Lower the price (read: offer inferior grade teas to the rural market and superior

grades to the urban one in the same brand),

3) Extend the brand to Low Unit Packs (read: lower unit packs will be cheaper in price

and inferior in quality as well. Higher unit packs will take in superior quality. Urban

markets use High unit packs and rural markets use LUPs)

4) Modify the packaging marginally (read: add the brand name in Hindi and four other

prominent vernaculars)

5) Advertise (read: Take the English rendering of the standard urban storyboard and

make a film in Hindi. Take this film and dub it in the vernacular. Never mind the lip sync

even….in the early days!)

6) Promote (Read: Use Cinema widely. Use wall-site paintings. Sponsor the local boat

race and the temple festival alike! Use rural publicity vans to percolate the brand message

through television sets that would carry a VCR and a large-format screen as well)

7) Market Research (Read as: find out more about the rural dweller. Use the intrusive

and alien questionnaire format to find out more. Use probes of every kind. Use the focus

group at times if you are feeling particularly qualitative in your yearnings for data.)

The easy way is the insensitive way to create and build brands in the rural markets that

still remain on the landscape. My clarion call: Forget the easy way you have used all

these years. Take the tough route of branding in the rural market. Preserve rural India and

what it represents. Bring back pride to rural India in terms of what it has to offer in its

31
multi-variable format. But why? Is this a return to socialism? A form of retro-appeal? Of

retro-fashion? No, the logic is strong enough for us to pursue the new rules of branding

for rural India.

For one, take the case of the fertilizer and pesticide situation. In the very beginning, all of

India was organic. We grew everything we did to cater to a population size that was

manageable without the use of pesticides and fertilizers. Natural organic manure and very

innovative natural practices that used plant and animal waste distinguished the

agricultural practices of India. And then came the revolution everyone wanted. The men

in the Gandhi caps (except Gandhiji of course) wanted a bigger yield from the land and

the cow and the factory alike. Practices morphed and India became yet another dumping

ground for the pesticide and fertiliser that came from far and near. The countryside

morphed. Yields doubled.

The year is 2003! The world is discovering health and the joy of consuming the organic

produce. It’s back to nature…the pure way! And India has lost it! Imagine a situation

where India could emerge as a 100 per cent producer of the organic product! And

remember still that the organic produce today commands a premium in the key

consumption markets of the world! We lost it! The rural terrain we still boast of can be

preserved. I seek a sensitivity among the marketing man. A sensitivity that promises not

to harm commercial intent, which is the salient driving force of all business intent.

Sensitivity that could well carve out for the marketing man a commercial space one can

be truly proud of.

32
The case I present in this piece therefore, is a case that seeks to preserve the sanctity of

Rural India and discover commerce and sense in it all! A plea to really stop this one-sided

movement that seeks to make the rural man a consumptive animal of cornflake and dog

biscuit alike! Create brands keeping in mind rural imperatives then. Here goes the ideal

E - MARKETING IN RURAL INDIA

33
Abstract

Modern information and communications technologies (ICTs) and web based marketing
of agricultural produce hold great promise for the socio-economic development of rural
hinterlands in India. However, if they are to serve the `unserved’ and spawn innovation
at grass root level their implementation must be carefully localised. This paper explores
several models of ICT deployment and information design issues which have been tried
in various parts of the developing world in the context of agricultural marketing over the
web and uses that learning with field experience from a live project. The flexible systems
framework is found appropriate and useful to design the next action agenda.

The ‘anytime-anywhere’ advantage of e marketing leads to efficient price discovery and


offers economy of transaction for agricultural trading. This attracts many rural
developmental agencies to deploy websites for marketing agricultural produce. But in
spite of a core value proposition and significant investment by the Indian
government/NGOs and commercial agencies in developing such portals, many have
failed. Internet traffic on these websites is either very limited or none at all. Yet there is a
lack of empirical studies on the modes of their failures.

This study using the SAP-LAP methodology examines the experiences of a number of
internet portals from India and other countries engaged in rural marketing or
disseminating rural development information, with usability measures derived from
farmers and traders and those suggested by researchers. The findings are used in
developing a conceptual framework for e-marketing info design for agricultural market in
rural northern India for the portal (DM).
Situation
Common wisdom has it that the advent of modern information and communication
technologies (ICTs) such as telephony or the internet hold unprecedented opportunities
for rural development. Researchers, policymakers and entrepreneurs alike frequently
claim that ICTs represent one of the most powerful tools in the struggle against poverty.

34
The significance of the Web in disseminating information and communicating this
effectively to the targeted user has been sufficiently debated. Most experts agree to it that
the Web will have a great impact on the way rural marketing would be conducted in the
future, yet there has been little research towards exploring the effectiveness of the
provision of agriculture-related and rural marketing information in the electronic form.
This study set out to assess the current performance of agricultural websites in some key
areas of information provision through such websites maintained by government
departments and agencies, private profit-motivated as well as non-governmental
organizations (NGOs), and to identify the barriers to communication. The results offer
significant implications for researchers and practitioners interested in development of
portal information structure for Web development, multi-dimensional communication,
electronic commerce networks and e-commerce trading platforms for rural marketing.

There are a number of ways – some obvious and some not-so-obvious ones – in which
ICTs may serve the development process. For instance rural entrepreneurs can benefit
because ICTs help to improve access to markets or supply chains and provide a broader
base for decision-making, thus making risk more calculable. Moreover, many local
communities have experienced that ICTs have increased bottom-up participation in the
governance processes and may expand the reach and accessibility of government services
and public infrastructure. In Andhra Pradesh, Internet-based Integrated Citizen Service
Centres allow for electronic bill payment, issuing of certificates, permits and licenses; or
access to public information. The electronic village project of M.S.Swaminathan
Research Foundation (MSSRF) in Pondicherry received the Stockholm award for its
promise.

However, there is as yet little systematic empirical evidence of the supposed enormous
‘developmental’ impacts of ICTs. Moreover, in many – especially rural – areas, the
private sector is yet to invest significantly in ICT experiments (except for a few like ITC
or Tata Chemicals) because of lack of experience with rural markets or low purchasing
power of the local population. This means that, if ICT access is to be expanded, public
money will have to be spent – which in turn means that there are important trade-offs to
be considered. In many areas, there are serious questions about how much money

35
policymakers should spare for the build-up of ICTs instead of investing further in potable
water supply, roads, electricity or other physical infrastructure projects.

Given such trade-offs, there is a need to identify which kinds of ICT access deliver the
best value for money, and how the limited resources that can be spent on it can be made
to best suit the particular needs of rural India. A number of `models’ have so far been
tried.

One of the most famous projects of successful ICT application for development is the
Grameen Village Phone system, undertaken by Grameen Telecom (a member of the
Grameen Group). The project aims at ultimately spreading phone access to the over 100
million inhabitants of Bangladesh who are so far ‘unwired’, made possible by combining
the Grameen Bank’s expertise in village-based micro-enterprise and micro-credit with the
latest digital wireless technology. The aim is to have selected member borrowers of
Grameen Bank purchase the phones under a lease programme and make the phones
available to all users in the village on a fee-paying basis.

Another model of ICT provision in rural areas of developing countries, and one which
attempts to combine phone access with access to the Internet is that of the so-called
Telecentres or Information Kiosks or the recently introduced Infothela of MLAKLH. An
Infothela is a common point of access for multiple users (often an entire community),
providing a range of ICT services including Internet, fax, phone, e-mail, word processing,
and even specialised information retrieval or applications (e.g. distance education or
matrimonial matchmaking).

Telecentres have been established widely in the developing world, and vary in their
service provision and means of funding. In Peru, the establishment of numerous `Cabañas
Públicas’ created one of the highest concentrations of public internet access and a
significant reduction in prices. Nevertheless, the experience with telecentres has so far
been a mixed one. In numerous cases, usage, particularly of PCs, has been lower than
expected or commercial viability was not attained. Of the over 70 Community
Telecentres established since 1997 by the South African Universal Services Agency, only

36
40 per cent remain open today, with only 3 per cent making enough money to cover
costs.

Buried at the end of the World Bank policy paper on the ‘Networking revolution:
opportunities and challenges for developing countries’ ( June, 2000) is an account of
multipurpose community telecentres (MCTs) in rural Mexico. It turns out that of twenty-
three MCTs built in rural Mexico, only five were working two years later. This is a
failure rate of 80 percent.

The policy paper comments, “Problems encountered included insufficient maintenance


funding, inadequate political interest and will, and cultural constraints which hamper
community interest in the projects.” The paper gives no hint why “political interest and
will” might have been inadequate and why community interest might have been
constrained by that holdall excuse for failure, “culture.”

The paper concludes that the Mexican case “underscores the importance of participatory
design and attention to sustainability issues in the development of such programs.”

Actor

Internet and Information Kiosks exist in various kinds, each with their respective merits.
First, one might distinguish between the small private sector cyber cafes on the one hand
and bigger, donor-funded telecentres like e-Seva in Andhra Pradesh or e-Village in
Pondicherry on the other hand. Smaller, privately run cyber cafes are often financially
self-sustaining – but are thus usually restricted to areas where they expect to be viable
(usually urban centers) and are usually neither within physical nor financial reach of the
poor. They are also unlikely to be able to provide local content. – By contrast, larger,
often externally funded telecentres are rarely financially sustainable but can focus more
on specific ‘development’ – aspects, including access specifically targeted at rural
communities and the poorest in general, as well as a focus on training.

A second distinction is according to the institutional context they are embedded in. This
often has a significant influence on the ‘developmental impact’ of telecentres.
Commercial telecentres and commercial franchises (like e-choupals of ITC) are usually

37
closest to commercial viability but, as mentioned, are unlikely to have an impact on the
poor outside the economic circle of the e-Choupals. Telecentres run by or with the
involvement of developmental NGOs are more likely to target poor and marginalised
communities and focus on much-needed additional services like training, content
creation, provision of public goods without which ICT access would be of limited
developmental use. Telecentres in village schools for example as another alternative have
the significant advantage that for their establishment an existing physical infrastructure
only has to be extended and some of the ICT-relevant training can be cost-effectively
integrated into the mainstream curriculum of the educational institution. This partnership
has successfully worked in the DM project.

One further idea for the Digital Mandi that evolved was Virtual Telephones or village
voice mail systems, as have been set up in Brazil. These can provide individuals with
their own telephone number and access to a voice mailbox. In other words, the individual
need not possess a telephone but can receive calls to a voice mailbox using his/her
personal PIN. Extending this idea to text e-mail access, a South African company assigns
e-mail addresses to every Post Office box address in the country, thereby providing
electronic mail indirectly to around eight million South African households through
public internet terminals located in post offices which users can access with a personal
identification number. The Postal Department in India has now taken up a similar
programme. .

38
Thus there are a number of alternatives and apparently mutually exclusive business
models for ICT implementation in Rural India.

On one hand it appears that kiosks run by local entrepreneurs with localized and targeted
applications (like e choupals in Northern India or voicemail service in Brazil or
matrimonial matchmaking service in Tamil Nadu) will succeed on the other hand
following the success model of the world wide web itself one may suggest that if an
infrastructure is created and user friendly appropriate interfaces are continuously
accessible then local rural folks will develop their own applications and Information
Kiosks or Infothela will survive.

The Digital Mandi Project conceived as an electronic trading platform for agro-
commodities of Northern India and meant to run as a core application on the mobile
Infothela faced additional problems.

Barriers to information access may be physical, economic, intellectual or technological,


that impede a user’s participation in the activities on a website. The barriers may be
actively imposed by the architects and website designers or they may be allowed to
continue simply through their lack of action or lack of understanding of the critical user
conditions. Such critical user conditions may arise due to particular demographic,
geographic, cultural, social, psychological, economic or other factors. Issues related to
usability such as ease of use, usefulness (Davis, 1989), decision effectiveness (Mason et
al, 1973), user response, user satisfaction (Doll et al, 1988) and many other aspect of
usability have been studied in great detail by researchers. But interactions with focus
groups at various agricultural market places around Lucknow-Kanpur showed the need of
a more detailed study on Information communication barriers on a more localised set of
priorities.

Learning

A general framework for web design keeping in mind the human-computer interaction
theories (Pirolli, 2001), web site usability principles (Huang, 2003), information intensity
paradigm (Palmer and Griffith, 1998), e-customization models (Ansari and Mela, 2003)

39
and heuristic evaluation models (Agarwal and Venkatesh, 2003) is already in place and is
assumed to sufficiently address the question of defining broad guidelines for designing
any successful website. It is therefore, assumed that a website with relatively high-level
of accurate, up-to-date and pertinent content, deployed in a user-friendly way, customized
to particular user groups, and tailored to specific geographical needs should be
universally successful and hence, accepted in India too. However many such efforts have
apparently failed to achieve their targets.

The challenges to agricultural website usability for rural marketing in India arise mainly
because of the highly specific local needs and the great diversity in local conditions. The
major challenges are

• Poor literacy rate – low use of textual information


• Remote village locations - physical distances compounding problems of
lack of proper price information and habitual dependence on middlemen.
• Absence of alternate media for dissemination of info.
• Absence of info in vernacular languages and multiplicity of languages.
• Cash crunch of farmers, immediate cash transaction system and reluctance
of banks to provide soft loans to farmers.
• Economic, low-cost solutions - any technology solution aimed at
benefiting the masses in rural India must be affordable and low-cost so
that the perceived economic benefits of such an endeavor are much more
than the cost of switching over to a different technological solution.

In the absence of timely and correct information about prices, arrivals and market trends,
compounded with the problems of low cash-at-hand and proper advice, farmers are
forced to sell their produce at lower-than-expected rates. The result is that the benefits of
the ‘green revolution’ have not really percolated down to the farmers.

40
Action

The Digital Mandi project demonstrates that there are a number of features pertaining to
the ICT access projects that are particularly successful from a ‘developmental’ viewpoint
This means, for instance, to somehow convey the relevant (local) content provided
through internet access to the largely illiterate rural populations of developing countries
in local language may have far- reaching spin-offs.
A model that inspired the Mandi team was The Kothmale Community Radio in Sri
Lanka. This project has combined community radio and Internet access. It has a leased
line connection to the Internet, and in the so-called process of ‘radio browsing’
programme presenters browse the Web in the studio on behalf of listeners (who provide
requests/input through phone or post). Relevant ‘experts’ from the community then
interpret the information for listeners. Another good example of the creation of relevant
local content are the ‘Infoshops’ in Pondicherry, India. After information requirements
are identified during a trial period, volunteers from the village create a local database
comprising government programs for low income rural families; cost and availability of
farming inputs such as seeds and fertilisers, grain prices in different local markets; a
directory of insurance plans for crops and families; pest managements plans for rice and
sugar cane; a directory of local hospitals, medical practitioners and their specialties; a
regional timetable for buses and trains; a directory of local veterinarians, cattle and
animal husbandry programs. All these preceding experiments contributed to the Digital
Mandi design.

Web site success depends on a number of factors the most important of which is the
‘website design’, which encompasses both the content creation and information design.
All website design issues aim at providing certain requisite features in the website.
Jonathan Palmer (see references) has contented that website success depends on such
factors as website download delays, navigation, content, interactivity and responsiveness.
The inclusion of these features into a good website can be addressed as (a) content-
related issues, (b) information design issues and (c) communication design issues.

41
Traditionally, the basic work of a good website design has been considered as addressing
the content-creation and context-appropriateness issues only. While website designing
objectives for other purposes may be fulfilled by creating a good fusion of relatively
high-level content with fine design features taking care of the issues mentioned above,
they would certainly fall behind their objectives when considering agricultural websites
for rural marketing. The reasons as has been listed earlier, can be found in the inherent
characteristics of rural markets in India. These websites are therefore bound to fail unless
delivery services for agricultural information can be effectively integrated with good
information design models and grass root innovators/ social activists’ agenda.

Performance

The basic findings from our initial research at Digital Mandi has shown that the presence
of a number of desired features in a website leads to higher user satisfaction. Such
features are broadly aimed at satisfying one or the other of the following immediate user
objectives:

a) Ease of access.
b) Up-to-date content.
c) Layout, design, consistent themes.
d) Easy navigation.
e) Higher interactivity.
f) Access through multiple media.
g) Higher use of non-textual information.
h) Multiple languages.
i) Lower cost of transaction.
It was assumed that each of these factors contributed to higher user satisfaction.

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The Digital Mandi project now wants to integrate an ethnographic approach with flexible
systems methodology to focus on the communication design issues for web-portals
specifically devoted to rural marketing in India. The specific research questions are:

1. What are the major information design features for rural marketing in India?
Hypotheses (a), (b), (c), (d) and (e) are tested to find answer to this question.
2. What are the major communication media tools to be used for agricultural
websites in India? Hypothesis (f) is tested against this question.
3. What are the modes employed to transcend communication and cost barriers for
specific user groups?

• What local language solutions are to be provided through which


media?
• What non-textual solutions can be provided for the under-
educated, untrained user?
• What makes ICT relevant for the unserved rural communities?

Hypotheses (g), (h) and (i) are being tested against this group of questions.

Conclusion

The general results of this study are presented in a tabular form. The list is not
exhaustive but can be assumed to be a representative sample of the most-widely used or
known (by search engines) for rural marketing and the general responses of researchers.

The basic website layout varies from the single-page, no partition, no frames approach

to the four-partitions (a top main menu, a left/right lower-level menu, a bottom links bar

and a central space) approach which is also the most-widely accepted layout in the

43
corporate websites (Huang, 2003). More than 50% of the websites provide up-to-date

content. A website worth mentioning is www.agmarknet.nic.in, a government-promoted

STRATEGIC ISSUES: A PEEK INTO THE RURAL MARKET

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.

However, 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.

Increasing brand awareness


In the rural families, studies indicate a slow but determined shift in the use of categories.
There is a r Increasing brand awareness
In the rural families, studies indicate a slow but determined shift in the use of categories.

44
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.

FMCG CONSUMPTION
Organizations like Hindustan Lever 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


HLL
Nirma Chemical
Company Household penetration
HLL 88%
Nirma Chemical Works 56%
Colgate Palmolive 33%
Parle Foods 31%
Malhotra marketing 27%
% 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

45
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.

Focus on urban categories

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
Washin powder / liquid 70% Nirma
Salt 64% Tata Salt
Biscuits 61% Parle G

Though the commodity products have greater penetration, traditionally urban categories
such as skin creams and talcum powder have also made a mark. While the urban talcum
powder market suffered a de-growth, the rural talcum powder market darted ahead.
Similarly, growth of rural skin cream market was at par with that of urban skin cream
market. This clearly indicated that after being considered urban for a long time, some
categories are now wearing a rural face. And, in many a case, it is the rural market that is
actually driving the growth of category.

Premium brands

Pond’s is the leader in the talcum powder category with a penetration of 65% and volume
contribution of 56%. Its rivals viz. Nycil and Liril are trailing far behind. Moreover, 60%
of the Pond’s users have purchased no other brand i.e. they are 100% brand loyal. This
reflects the strength of the brand in rural bazaar.

Category Household Penetration

46
Skin creams 18%
Talcum Powders 15%
In the skin care category, Fair & Lovely fairness cream, with a penetration of 75%,
accounts for 60% of the skin care market in rural India. It also enjoys the undistinguished
patronage of 58% of its user households. Both Pond’s and Fair & Lovely are enjoying a
monopoly in the rural markets in their respective categories.
Rural India is not averse to trying out the premium brands at high prices. A study
indicated that a majority of the premium brand users are using the brand for the first time.
Similarly 0.9% of the talcum powder-using families have started using Denim talc and
0.7% of the shampoo using households started using Pantene. Surveys also reveal that
trials are not restricted to the more affluent echelon of the villages. The experimenting
households are more-or-less evenly spread across the various socio-economic clusters of
the rural market. This should further encourage the marketers to focus their attention on
rural buyers.

Brand Penetration of category users


Surf 6.2%
Ariel 4.5%
Pantene 1.8%
Denim 1.8%

47
The rural youths are more open to fresh concepts as against their elderly family members.
Their difference in choice of products/brands with the seniors of the households often
leads to a “dual-usage” of product categories. As an instance, 20% of the households
using tooth powder also use tooth paste. Similarly, many of the households using
premium brands also use mass market brands. For example, while 15% of Surf and 12%
of Ariel using families also use Nirma detergent, 3% of Denim users use Pond’s
Dreamflower talc and 18% of Pantene using households use Clinic shampoo as well.

AMAZING INNOVATOR

With a queer psychology of purchase and usage, Indian rural market is still a puzzle to
marketers. In many a case, it stretches its imagination to find surprisingly different uses
of some of the products. And the red-faced marketers admit that they actually sell their
products in areas they would otherwise find difficult, simply because there are other uses
for them. For instance, in parts of Northern India, condoms are used by weavers as gloves
on their fingers to weave fine threads. Lubrication on condoms allows them fine control
on threads and protects their sensitive fingers. Buffaloes displayed at the haats for sale
are dyed an immaculate black with Godrej hair dye. Horlicks is used as a health beverage
to fatten up cattle in Bihar. In villages of Punjab, washing machines are being used to
make frothy lassi in bulk. Paints meant for colouring up the rich-smooth walls are used to
paint the horns of cattle to make identification easier and to achieve a long-term
protection from theft. Iodex is rubbed into the skins of animals after a hard day’s work to
relieve muscular pain. The organizations in question might not be pleased with such usag

48
POWER BRANDS, THE NEW FMCG MANTRA

"The power brands strategy has worked very well for us." Adi Godrej, chairman, Godrej
group.
"With the implementation of the power brands strategy almost complete, we have shown
both topline and bottomline growth in this quarter." D Sundaram, finance director,
Hindustan Lever Limited, after announcing Q3 2005 results.
"We benefited by dropping brands with low profit margins or moving out of categories
that were not growing." Harsh Mariwala, chairman and managing director, Marico
Industries.
Three men, one voice. Indian fast moving consumer goods companies like HLL, Godrej
Consumer Products Limited and Marico Industries are completely sold on the concept of
"power brands". But in their rush to put their best brands forward, are these big
companies in danger of overlooking the potential offered by some of the also-ran brands?
It's been almost five years since these three FMCG giants opted to manage their brand
portfolios on the basis of the power brand strategy. How have they fared? And what does
the future hold?
Why power brands?
In 2001, HLL decided to put its marketing resources behind 30 power brands out of a
bouquet of 110. Of these select brands, the top five brands of the company contributed
more than Rs 3,000 crore (Rs 30 billion) to the company's turnover (close to 30 per cent
of sales). So what did it take to be a power brand? In a nutshell - size, brand strength,
uniqueness and growth potential. The thinking in HLL? Helping brands grow under the
prevailing market conditions required scale.
Even in 2001, the Indian FMCG market was crowded. More than 3,000 advertisements
were beamed on television every month, while stock-keeping units at retail outlets had

49
increased by over 40 per cent, in just three years. Unfortunately, for the most part, shop
sizes remained the same. Which meant in-store displays - critical for impulse purchases -
suffered. Even the plethora of television commercials wasn't helping the FMCG cause: it
was difficult for brands to stand out amidst the clutter.
For others like Marico, GCPL or Dabur, too, "getting more from fewer brands" became
the magic mantra. In 2002, GCPL decided to focus on five brands in a bid to sustain
growth; since these five contributed more than 90 per cent of the company's total sales,
that strategy made eminent sense. Around the same time, Marico decided to exit from
slow-growth, low margin sectors such as Sweekar edible oil and Sil jams. Instead, it
chose to stick with brands like Parachute, Saffola and Hair & Care. Was the approach
correct? Arindam Banerjee, professor and chairman, marketing area, Indian Institute of
Management, Ahmedabad, agrees cautiously. "Power branding counters brand dilution
by allocating organisation resources on lesser but more secured marketing investments,"
he explains. Adi Godrej is more emphatic. "[Power branding] is not to prevent dilution of
brand, but to prevent dilution of the company's focus. If a company has 10 brands and
tries to support all of them, focus on the important brands would be diluted."
Top to bottom
Has it worked out quite the way these companies anticipated? Global marketing experts
aren't too bullish about a power brands strategy's impact on the balance sheet.
"Power brands will have an impact on the bottomline of companies, but not necessarily
on the topline growth," says Nirmalya Kumar, director, centre for marketing, and co-
director, Aditya V Birla India Centre, at London Business School.
Jagdish Sheth, Charles H Kellstadt Professor of Marketing, Goizueta Business School,
has a slightly different viewpoint. "You may have problems in the short run, but these can
be ironed out in the long run. Introducing brand variants will help."
Consider some numbers. Between 2001-02 and 2004-05, profits at GCPL increased 19.66
per cent, from Rs 41.98 crore (Rs 419.8 million) to Rs 86.07 crore (Rs 860.7 million).
Over the same period, turnover went up less than 4 per cent, from Rs 520.47 crore (Rs
5.2 billion) to Rs 603.46 crore (Rs 6.03 billion).
"This is clearly unsustainable," says an analyst. In sharp contrast, Marico has shown
significant hikes in both turnover and profit from 2002 to 2005. While sales climbed from

50
Rs 671.08 crore (Rs 6.71 billion) to Rs 953 crore (Rs 9.53 billion), profits increased from
Rs 49.32 crore (Rs 493.2 million) to Rs 73.79 crore (Rs 737.9 million).
For its part, HLL has been plagued by flat or declining growth for some time now.
Between 2001 and 2004, profits plunged more than 22 per cent {Rs 341 crore (Rs 3.41
billion)}, while turnover dropped by Rs 892 crore (Rs 8.92 billion).
The troubles magnify when specific categories are considered. Toilet soaps, for instance,
contributed 24 per cent of HLL's sales in 2004, with sales value increasing marginally
from Rs 2,089 crore (Rs 20.89 billion) to Rs 2,380 crore (Rs 23.8 billion). But sales
volumes had actually declined, from 384,000 tonnes in 2001 to 368,000 tonnes,
indicating that the growth was mainly on the back of price hikes.
The story was repeated in reverse in the detergents sector, where HLL had three power
brands (Surf, Rin and Wheel). Sales volumes increased from 892,000 tonnes to 930,000
tonnes, but sales value crashed from Rs 1,975 crore (Rs 19.75 billion) to Rs 1,872 crore
(Rs 18.72 billion), thanks to the price wars with Procter & Gamble.
The lesson? Power brands may be "powerful" to the company or the retailer, not
necessarily to the consumer. Not everyone agrees. Counters a senior HLL executive,
"The impact was because of the migration phase to power brands - sales of non-power
brands declined." He adds that the company's power brands strategy will boost both
topline and bottomline growth in the future.

It doesn't help that India isn't just one, big market: it's several hundred. Brooke Bond tea
may be a power brand for HLL, but it doesn't face the same enemy in every market in the
country: if Wagh Bakri rules in Gujarat, Girnar and Sapat vie for the top honours in
Maharashtra.
Making matters worse is the fact that rural India is an entirely different nation when it
comes to preferences. That's a problem GCPL, too, faces; at present, rural sales account
for just 30 per cent of the Rs 603.46 crore (Rs 6.03 billion) company's sales, but the
company expects that figure to go up substantially in the coming years.
Marico's Mariwala agrees that penetration is difficult to achieve with a power brands
strategy. Consequently, segmentation takes a hit, because you don't have 20 brands for 20
different people.

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"As a brand grows larger, it simply cannot mean everything to everybody," agrees
London Business School's Kumar. There is a way out, though. Kumar points out that a
power brand strategy allows a company the luxury of targeting fewer segments, but the
more profitable segments.
HLL found another way. In addition to its 30 national superpowers, it also has 10
regional jewels. HLL executives point out that with fewer brands on which to focus, the
company will be able to manage its marketing spends better.
Godrej is attempting to beat regional diversity at its own game. For instance, when toilet
soap Godrej No.1 entered the sub-popular category in 1998-99, it had only one offering:
rose.
It soon also introduced its first variant, sandal, which has proved popular in the southern
markets. The rose variant finds takers in northern states such as Uttar Pradesh, Bihar,
Punjab, Madhya Pradesh and Rajasthan.
One, two, three, you go free
If the rural-urban divide cuts into the aspirations of power brands, the changes in the
urban shopping landscape renew hopes. Most analysts expect shoppers to throng to malls
and hypermarkets, for everything from electronics and clothing to groceries.
As the shopping landscape changes in India and malls look down upon hole-in-the-wall
outlets, power brands could be an answer. According to HLL, at present just 3 per cent of
Indian customers shop through organised retail outlets. The average in Asia -- 30 to 35
per cent.
How will organised retail help power brands? In developed markets, all brands, leaving
aside the top three sellers, have to buy space on retailer shelves. Since private labels get a
free ticket to the shelves as the third brand, it is important to be a No. 1 or No. 2 in a
category.
Marketing experts claim that large-format retailers have changed the destiny of
companies in foreign countries. Sheth refers to P&G's experience in Canada. In that
market, rival Unilever was a market leader with loyal customers, while P&G wasn't doing
all that well.
When Wal-Mart entered Canada, it changed the complexion of the market. Wal-Mart
provided P&G a much-needed distribution channel. In five years, P&G gained significant

52
market shares in Canada. "When a Wal-Mart happens to India, the power branding
companies will reap better benefits," says Sheth.
That's because organised retail formats will provide more display space to power brands,
their extensions and variants: and marketers believe that whatever gets seen, gets sold.
That's not happening at present. Remember, more than 90 per cent of grocer shops in
India are cubby-hole outlets.
So, what's the final take-away? Will a power brands strategy work in the future in India?
The answer: it depends on the category, the market and the consumer. Now, where have
we heard that before?
Power brands in perspective
Power brands as a concept came into existence by seeing the retailer as an economic
partner. When a P&G executive paid a visit to Japan, he saw the respect and importance
given to retailers -- something that was not happening in the US where there were several
layers in the distribution channel.
Later, when Wal-Mart emphasised that it was the largest customer for P&G and the
company could work closely with the retail chain and reduce costs in its supply chain,
P&G started power brand projects with Wal-Mart, K Mart and others.
The principle was simple. Brands were rationalised to support the super retailer. In 1999,
P&G's arch-rival Unilever decided to focus on 400 out of its 1,600 strong brand portfolio.
Two years later, Unilever's Indian arm, too, adopted the same strategy. Hindustan Lever
decided to spend on only 30 brands and 10 regional brands from its original basket of 110
brands.
Other Indian companies, too, decided to follow the power brands strategy, including
Godrej, Britannia, Dabur and Marico.
Recently, Vijay Mallya's United Spirits also joined this group by naming Director's
Special, Antiquity, Bagpiper, McDowell No 1, Signature and 10 other brands as power
brands.

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MARKETING MIX FOR RURAL MARKETING

Product

The strategy revolves around what attracts the rural customer to a product. For example -

Packaging. Now the rural customers are usually daily wage earners and they don’t have

monthly incomes like the ones in the urban areas have. So the packaging is in smaller

units and lesser-priced packs that they can afford given their kind of income streams.

Then a thing like the colour that attracts him is also important.

Another important factor is Convenience. An example is what Colgate did to its tooth

powder packaging. Firstly - it made sachets as was required by their income streams.

Secondly - since many households don’t have proper bathrooms and only have a window

or things like that to keep such things -- it was wise to cap this sachet for convenience of

storage while use. So this is what they did.

There is also a difference in the kind of media mix that is used to convey the messages to

the rural customers. We need to use different models and means to reach them as what

appeals to the urban customer may not appeal to him due to varying lifestyles. The

communication and the design of it are also different as what attracts one need not attract

the other as well. So again, even if the media reaches him, there might not be an impact

as it may fail to attract him as fails to connect to it due to the lifestyles being different.

Then there is the case of product availability that again has different strategies. The

concept of supermarkets coming up in urban areas is not the same as in rural areas. There

the concept of Haats is more prevalent.

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FOR all the management jargon associated with it, CRM has had grassroots beginnings.

Here's a classic example which illustrates this perfectly: CavinKare's Chik shampoo in

50-paise sachets - a huge success which redefined shampoo usage and forced giants such

as HLL and P&G to follow suit - saw the idea germinate from the grassroots. Literally.

Several years ago, CavinKare found that many rural consumers were using bathing soap

for washing their hair. The company field force found the reasons - the rural consumer

had not heard of soaps damaging hair, and in any case, hair was being washed by soaps

for generations by their predecessors. Interestingly, the rural consumer were aware that

shampoos cleansed hair better, but was expensive at Rs 2 per sachet. That's when

CavinKare began working on a shampoo for the rural consumer. The 50-paise Chik

shampoo was conceptualised then, and has since been a runaway success in rural markets

Keep Products Simple and Functional

Driving consumption of goods in rural areas is not just about lowering prices and

increasing volume sales. It is also about product innovation: developing indigenous

products that cater to the needs of rural consumers who demand quality products at an

affordable cost. This requires substantial R&D to better understand consumer behavior

and preferences.

A case in point is the rural market for shampoo. Hair products were introduced to rural

India in an attempt to capitalize on a culture where hair grooming is taken extremely

seriously by women.While rural women may wear faded saris and little jewelry, few step

out without ensuring that

55
their hair is in place. Consumer goods companies introduced a transplanted product from

developed markets, the 2-in-1 shampoo/conditioner. Companies thought that women

would be attracted to this product because it was cost-effective, however, initial sales

were dismal. What companies failed to recognize is that most rural consumers had

previously never used shampoo and did not value or understand the full benefits of

conditioner. Several years back, Hindustan Lever focused on product development

strategies for rural consumers who still did not use shampoo in India. Their research

indicated that a prevailing consumer habit in rural India was to use soap for hair and body

care. Rather than try to change instilled consumer behavior, product developers focused

on creating an opportunity. Consumers wanted a product that was convenient and low-

cost. The result was a new 2-in-1 soap, a product that cleans the hair and body, and is

targeted towards consumers in rural areas.

MODEL VARIANT:-

Models developed specifically for the rural market have found more takers in the market .

For instance, Motorcycles that are designed to take on the rig ours of rural roads have

succeeded more in the rural market.

COLOUR VARIANT :-

The rural consumer differ from their urban cousins in colour preference . in case of some

products , colour may matter vary much . firms can exploit this fact to their advantage .

For example , ASIAN PAINTS understood the substantial difference between the rural

buyer in the colour preference .

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Different products/ models , Different brands, packing, pricing and

different positioning

By and large, the rural market can be tapped better through different products / models ,

different brands, different packaging and different positioning.

PACKAGE DESIGN AND PACK SIZE

In some case , the product can be the same , but the package and pack size may have to

be different for the rural target group. Package design and colour help identification of

brands by rural buyers . Many rural consumers are not quite conversant with various

brands .All the same, they manage to pick the brand that they want . They recognize the

brands by its packaging . This the reason why a number of local brands in rural areas

imitate the packaging of big national brands.

As regard pack size , as a general , it can be stated that smaller packs are more suited

to the rural areas . Low purchasing power and limited availability of cash for shopping

force the rural consumer to go in for smaller packs with low unit price. In some cases

,they also prefer small packs so that they can make a beginning on small scale and after

trial and satisfaction go in for regular purchases.

In recent years , sale of shampoo brands were priced at Re 1 or below per sachet

helped the trail and adoption. The 5-gram Vicks Vapourb tin and the small –size

Lifebuoy soap are other such examples.

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HLL, has deepened coverage of many of its products in the rural market through such

combination. It has come up with a series of small pack sizes/saches that specially cater

to low –end consumers.

Logo , Symbols and Mnemonics :-

Image is far more potent the rural market , which in many cases is an uninitiated market.

Symbols, therefore , add value to brand recall and brand personality in the rural market.

Asian Paints’ Gattu:

Asian Paints Gattu though equally well known in urban and rural market , has greater

effectiveness as an identity tool in the rural market .Actually in many rural parts of India ,

Asian Paints is referred to as the bahahawala or chokrawala company.

The Nirma Girl:

The Nirma Girl in Frock on the packs of Nirma washing powder has become the

mnemonic for effective and good value in washing powders.

The Dettol Sword and the Mortein Genie:

For the same reason , Reckitt& Colman has been focusing on the Dettol Sword and the

Mortein genie in its rural communication.

Brand Decisions :-

Branding too needs skillful handling in the rural market. The rural consumers have

already graduated from generic products to branded products. Today, the brand name is

the surest means of conveying quality to rural consumers. In other words, brand is the

key to confidence building among the rural consumers. Besides quality, it conveys that

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the manufacturer is going to show sustained interest in those products ands markets.

Whether the same brand is used in both urban and rural market, or appropriate variants of

the brand must be adopted for the rural market , is a matter for conscious decisions by

the individual firms depending on the context.

In quite afew cases , the ‘same brand’ is providing right and cost effective . In some

cases, however, the brand name that is suited to the urban market may not be quite

suitable to the rural market. Low priced variants seem to work better in majority of cases

in the rural market. It will, however , be incorrect to assume that rural consumers prefer

local brands to national brands.

Sell Value Brands, Not Cheap Brands;-

While brands specifically developed for the rural market and low – priced variants may

work better in many cases , the strategy should be one of selling value brands . HLL’s

Lifebuoy, for example, is a low –priced carbolic soap that is often the first choice of bath

soap by a rural consumer .HLL, however , does not sell it as a cheap soap. Instead, sell it

as a hygiene brand. It communicates the value of the brand to the target market. It also

tries to enhances the value of the offer by giving suitable ‘add-ons’ .for example, while

targeting rural students for the soap , it distributed height charts along with the soap and

conveyed its concern for their health and well being . Rural marketers would do well to

add some value to their products in this fashion if they are keen to secure the loyalty of

the consumers.

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Promotion

There is an example in innovative media. It was used to push products in personal wash

like Lux and Lifebuoy and fabric wash items like Rin and Wheel.

For both, washing and for taking bath - one requires water. Now for rural markets there

are three sources of water - wells, handpumps and ponds. For the first in the history of

advertising - these were branded. Special stickers were put on the handpumps, the walls

of the wells were lined with advertising tiles and tinplates were put on all the trees

surrounding the ponds. The idea was to advertise not only at the point of purchase but

also at the time of consumption.

So the customer could also see the advertising when he was bathing or washing. Now, the

customers who bought these brands got a sense of satisfaction by seeing their choice

being advertised in these places while a question was put in the minds of the customers

who had bought other brands. So this was an innovative strategy that worked quite well.

Therefore to understand the way the rural markets work -- we need to go to these markets

and spend time there in understanding them. We live in surroundings where the things are

completely different from what the rural customer experiences. And we can't understand

him unless we go and spend time there. Things like what time does he get up, etc need to

be studied and customer needs to be understood. Also these studies need to be passed on

so others can also benefit from the ground works done and enhance them further.

We need in depth studies of the market, the medium, the message and the rural customer

in center of all these to understand the rural markets completely.

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RURAL MEDIA

Urban consumers shop daily and have 365 opportunities a year to switch brands while the

rural purchasers who buy their goods in weekly haats have only 54. Attempts to reach

rural consumers, even once during the purchase cycle to ensure repeat purchase, make

point of purchase advertising and trade push indispensable. This requires a significant

reorientation in the allocation of funds across media. For example, outdoor advertising

accounts for over 7% of all media expenditures in India, while it only accounts for 0.8%

in USA.

Rural buyers living in small isolated groups distributed across vast distances have limited

access to the broadcast media. The existence of a multiplicity of languages and varying

level of illiteracy complicates the task of communication further. To overcome some of

these challenges, Unilever pioneered the concept of video vans that travel from village to

village screening films in the local language, interspersed with advertisements for

Unilever’s products. The company also provides product usage demonstrations to the

captive audience because written instructions on the

pack may be illegible to the consumers who are either illiterate or do not understand the

dialect.

Where mass media is used, variability can, at times, back fire. On re-entering India in the

1990s, Coca Cola decided to reinvest massively on a TV advertising campaign. It opted

for slick commercials, rich in colour, with high production values, but the effect was

somewhere lost on a market where 60% of all TVs are still black and white.

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However, in the recent past, the improved technology has allowed the cable and satellite

networks to increase their reach across the countryside thus exposing a rural consumer to

a lifestyle that was beyond his dreams. And this increasing awareness has led to a

significant change in his buying behaviour and consumption patterns.

While the urban market is getting increasingly competitive and saturated, the rural market

is blooming with increase in the disposable incomes of the households, thus promising a

far better scope for growth for marketers. Hence, with the shifting dynamics of the

present-day market situation, now it is the turn of the rural consumers to dictate the

terms. And this reinforces the need for marketers to formulate a well-designed strategy to

feel the pulse and to tackle the mystic rural m

Selecting The Media Mix :-

TV :-

With he increase in coverage and increase in TV ownership in rural areas , TV is

gradually becoming the prime media for rural communication .

Cinema :-

The cinema is a useful medium in rural context . most large and medium villages have

one or more cinema house. Also, more than one-third of all rural people do see cinema as

a matter of regular lifestyle. Advertisement films , short feature films, with disguised

advertisement message, and documentaries that combine knowledge and advertisements,

can be employed for rural communication.

It has been estimated that 33 per cent of the total cinema earnings in the country

come from rural India.

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Radio:-

The radio is well -established medium in rural areas. A big expansion in broadcasting

facilities has taken place in the country over the years. The availability of radio sets has

also expanded. While radio as a medium cannot match TV in potency and effectiveness,

in the existing context ,it can certainly play a significant role in rural communication.

Print media too has some scope :-

The role of print media is certainly limited in the rural context. Even the remotest rural

parts have a small group, which is literate. Moreover, while the group may be

numerically small , its member usually happen to be the opinion leaders , influencing the

purchasing behaviour of the large segment of the rural consumers. so, it would be unwise

to assume that the print media has no scope at all in the rural areas . Moreover, the

younger generation in the rural areas is comparatively more literate. With the new trend

of increasing rural literacy , the scope for using print media in rural communication will

increase further.

Outdoor:-

The outdoors , which include hoardings, wall paintings, illumination and other displays,

also lend well for rural communication . In fact , many companies are using the outdoors

in the rural communication mix.

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POPs ( point of purchase) :-

The POPs – Point of purchase promotional tools- are also quite useful in the rural

markets. The POPs meant for the rural market should be specially designed to suit the

rural requirements. Symbols, Pictures, and colours must be liberally in POPs meant for

the rural market. Colour is of particular significance . As a general rule ,the rural people

love bright colours. The effective Communicator utilize such cues.

RURAL SMALL SCALE INDUSTRIES

In India, the Small Scale Industries Sector has been growing faster than the whole of the
manufacturing sector, at rates of 7% to 10% during the past decade. Hence, the targeted
growth rate of 12% envisaged in the 10th Five-year Plan appears imminently attainable.
SME sector’s contribution to GDP has been increasing and is about 40% now. Today,
11.4 million SSI units provide employment to over 27.1 million people contribute 40% of
the country’s industrial production and 34% of the exports from the country and also
produce more than 8000 products. Setting up of National Commission on enterprises,
Revamping of Khadi and Village Industries, Small Industries Development Bill, Golden
Jubilee of SIDO and Third All India Census of Industries are some of the highlights
during the year.

Setting up of National Commission on Enterprises


To address the concerns of the unorganised / informal sector enterprises, a four member
National Commission on enterprises in the unorganised /informal sector under the
Chairmanship of Dr. Arjun Sengupta in the rank of Cabinet Minister has been set up on
21.9. 2004. The mandate of the Commission is to examine the problems being faced by
the enterprises in the unorganised / informal sector and to provide appropriate
recommendations for technical, marketing and credit support to these enterprises. The
Commission will function both as an advisory body and a watchdog for the informal
sector.

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Revamping of Khadi and Village Industries

For revamping the Khadi and Village Industries (KVI), the Government dissolved KVIC
on 14.10.2004. The Chairman and all members of the Commission ceased to hold their
offices since that day. The Ministry set up a ten member Expert Committee (a) to review
the existing structure, functioning and performance of the KVI since its inception (b) to
review the KVIC Act, 1956, KVIC Rules, 1957 and the Regulation made thereunder and
(c) to recommend other measure(s) considered necessary by the Committee to revamp the
KVI and to launch new appropriate programmes/schemes.

Small Enterprises Development Bill

The Small Enterprises Development (SED) Bill has been drafted. Enactment of this Bill
will remove the barriers to SSI growth by inculcating a hassle-free, user friendly
environment enabling SMEs to diversify from the conventional product range. It will,
thus, encourage exports and global integration and propel SSI towards the projected 12%
growth target. This can help India achieve its ambition of transforming into a global
manufacturing hub, a centre of excellence for small enterprise activities.
In addition to SED Bill, a major promotion package for development and promotion of
SSI sector is under formulation.

Credit Rating Scheme

A Credit Rating Scheme has been introduced to encourage the SSI Units to get their
credit rating done by the reputed credit rating agencies, with a view to facilitating credit
flow to them and enhancing the comfort-level of the lending banks. 75% of the cost of
the credit rating exercise, with a maximum limit of Rs.40, 000 per SSI unit, is now
reimbursed to the SSI units availing of this one-time facility. The scheme is being
implemented by the NSIC.
SME Fund

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Looking to the credit needs of the SMEs in 1990, the Small Industries Development Bank
of India, (SIDBI) was launched to aid and finance for small enterprises with a corpus of
Rs. 2500 crores. To further improve credit availability, a SME Fund of Rs. 10,000 crores
has been operationalised under SIDBI from April 2004. Credit to SSI
In order to facilitate smooth flow of credit to SSIs, the composite loan limit for SSI
entrepreneurs has been increased from Rs. 50 lakh to Rs. 1 crore. Credit Cards
Laghu Udyami Credit Card (LUCC) Scheme has been liberalized by enhancing the credit
limit from Rs. 2 lakh to Rs. 10 lakh, for borrowers who have a satisfactory track record.
SSI Clusters 16 new industrial clusters were identified and taken up under Small
Industries Development Programme during this year. These are:
1. Food Processing, Muzaffarpur, Bihar
2. Steel Re-rolling Mills, Raipur, Chhatisgarh
3. Agricultural Implements, Karnal, Haryana
4. General & Light Engineering, Parwanoo, Himachal Pradesh
5. Readymade Garments, Bangalore, Karnataka
6. Gold Ornaments, Thrissur, Kerala
7. Readymade garments, Indore, Madhya Pradesh
8. Brass & Bell metal, Khurda, Orissa
9. Agricultural Implements, Moga, Punjab
10. Ball Bearings, Jaipur, Rajasthan
11. Leather Footwear, Agra, Uttar Rpadesh
12. Leather goods, Shaniniketan, Uttar Pradesh
13. Installation of Common Facility Centre in Brass/Bronze, Utensils, Manufacturing
Cluster at Pareb, Bihar
14. Development of Whiteware Cluster at Khurja, U.P.
15. Development of Auto Parts Clusters at Phagwara, Jallandhar and Ludhiana
16. Development of Cane & Bamboo Cluster at Dimapur, Nagaland.
The development of these clusters is at various stages of implementation.

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National Presentation on Rural Business Hubs
A National presentation on Rural Business Hubs was organised by the Ministry in
collaboration with the Confederation of Indian Industries at Vigyan Bhavan on 5
November, 2004. The Prime Minister Dr. Manmohan Singh delivered the valedictory
address. The presentation focussed on the number of issues including the participation of
the private sector in such programmes. Conference of States/Uts’ Ministers
A conference of Ministers (SSI, KVIC & COIR) was organised on 25 June 2004 at
Vigyan Bhavan, New Delhi under the chairmanship of Shri Mahabir Prasad , Minister of
SSI & ARI. Progress of implementation of various programmes of SSI/KVIC and coir
industry was reviewed in the context of implementation of NCMP. The Minister stressed
upon the need for a comprehensive promotional package for the SSI sector.
Golden Jubilee Year of SIDO This year was celebrated as Golden Jubilee year of the
Small Industrial Development Organisation (SIDO) along with the SSI convention on 30
August at Vigyan Bhavan , New Delhi . SIDO was set up in 1954 as an apex body for
formulating and overseeing the implementation of policies for the promotion and
development of small-scale industries in the country On this occasion, the Prime Minister
gave away National awards for outstanding achievements in the fields of
enterpreneurship, research and development, and quality product in the SSI sector. The
inaugural session of function was followed by an open-house by way of an interactive
session on SSI lending in which the representatives of major banks participated along
with the representatives of industry and other officials. Global Summit on SMEs
The Ministry in association with the Confederation of Indian Industry ( CII) organised
`India Global Summit on SMEs –Emerging Challenges and Opportunities’ on 23-24
November, 2004 in New Delhi. Dr R. Chidambaram, Principal Scientific Advisor to the
Government of India made a special presentation. The global summit facilitated
networking and sharing of best international practices, in the SMEs sector, to provide a
sustainable focus on the future development and the growth of the SMEs. During the
summit discussions, deliberations took place on the themes of enabling policies, role of
finance/ innovative finance and measures for risk sharing. Value addition through
information and communication technology, global outsourcing opportunities and global
small enterprises. 137 foreign delegates from 27 countries across the globe attended the

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summit. Conference on `Small Business Competitiveness Development’ National Small
Industries Corporation (NSIC) in collaboration with the Commonwealth Secretariat
London organised a pan-commonwealth programme on `Small Business Competitiveness
Development’ in New Delhi. On 15-19 November, 2004. Dr. V.Krishnamurthy,
chairman, National Manufactruing Competitiveness Council delivered the key note
address Techmart India 2004 National Small Industries Corporation (NSIC) organised
`Techmart India 2004’ , the 12th Internatioinal Technology Fair, during the Indian
International Trade Fair 2004 at Pragati Maidan, New Delhi. More than 236 SSI units
participated in it. NSIC was awarded a silver medal for `Excellence in special Display’
by the India Trade Promotion Organisation.

WTO and SMEs

Under the World Trade Organisatioin (WTO ) regime, new opportunities are being
created for linkages between SMEs across the globe. The dismantling of the textile
quotas is being anticipated in India with great enthusiasm. Garment export is a dominant
characteristic of Indian SMEs. Other sectors, such as Biotech, IT and IT enabled services,
footwear to name a few, have shown promising potential. Closer connectivity of India’s
large agricultural resources affords growing opportunities for new ventures. India’s vast
pool of talented and educated persons, and low-cost labour can translate into possibilities
for foreign collaborations. SMEs grew by 19% last year, faster than the overall growth of
the IT sector, and has expected SMEs to deliver better results in the coming years. SMEs
are also engaged in cutting edge research and development activities, logistics services,
back-office operations and other services.
Reservation Policy
On the recommendations of the Advisory Committee, the Government has deserved on
20.10.04, 85 items from the list of items reserved for manufacture by the small scale
industries. This was done to enable the SSI sector to grow and adapt to the fast changing
economic scenario.

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Third All India Census
The Ministry brought out the final results of the third All India Census of small scale
industries 2001-2002. The census was launched in November 2002 . The main objectives
of the census were: (I) to update the frame (list) of registered SSI units.(ii) to identify sick
and incipiently sick units with the reasons thereof, and (iii) to collect other useful
information for policy formulation.
The State Directorate of Industries have been requested to de-register 8,87,427 SSI units
found closed during the survey of the Third All India Census.
Tool Room
Tool Room & Training Centre at Guwahati was inaugurated by Minister of SSI & ARI
on June 26, 2004.
Action Plan for Employment in Agro & Rural Industries
To generate more employment in the agro and rural industries sector, the Government has
fixed a target of creation of 25 lakh additional job opportunities in rural areas during the
10th Plan under the Rural Employment Generation Programme (REGP) being
implemented through the Khadi and Village Industries Commission (KVIC). In the first
two years of the 10th Plan 8.32 lakh job opportunities have already been created under
the REGP and a target of creation of 5.25 lakh jobs have been fixed for the current
financial year 2004-05.
Further, a target of creation of 16.5 lakh employment has been fixed under the Pradhan
Mantri Rozgar Yojana (PMRY) for the 10th Plan period. In the first two years of the 10th
Plan 5.44 lakh job opportunities have already been created. A target of creation of 3.75
lakh employment opportunities has been fixed for 2004-05
Coir Industry
The 10th Plan outlay is Rs. 11500 lakhs envisaging 12% growth in production and
export. The 10th programme of coir industry is aimed at overall sustainable development
of coir industry trough research and development, modernisation, quality improvement,
human resource development, better marketing of products and welfare of all those who
are engaged in this industry.

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RURAL INDIA GETTING RICHER YOU BET

Anugraha Madison has widely been credited with introducing the concept of rural
marketing in India. The company was one of the first marketing firms to realise the
potential of rural India and decided to focus on rural marketing.
R V Rajan, chief managing director, Anugraha Madison, shares his views with Shobha
Warrier on how rural India has changed over the last two decades.
When marketing agencies concentrated only on urban India, why did you decide to focus
on the rural market?
My foray into the rural market was not deliberate. It so happened that when I came to
Chennai from Mumbai in 1974, I found that most of the clients belonged to the
agriculture and fertiliser sectors. So I had to deal with farmers.
When Sam Balsara of Madison came down to Chennai looking for an associate, we
decided to have a joint venture and position ourselves as rural specialists mainly because
of my experience in the field.
Although I have been involved with rural communication and marketing for the last two
and a half decades, the positioning of Anugraha took off only after the joint venture.
Anugraha Madison is now the rural division of Madison Communications.
In the last two and a half decades, how much has rural India changed in its aspirations,
attitude and consumption?
Rural India has changed tremendously. The data published by the National Council of
Applied Economic Research shows that in the last ten years, the income of rural India has
grown several-fold. There is a definite shift from middle to upper middle class and from
lower to middle class segments.
Is the shift due to the growth in Indian agriculture?
For the last 10 consecutive years, we have had good monsoons. So, agriculture is
prospering. Of course, there have been setbacks in the last couple of years.
Another interesting aspect is, today rural India is not 100 per cent dependent on an
agrarian economy. Unlike in the past where the ratio between those who involved in
agriculture and in other business was 75-25, today the estimated ratio is 50:50, if not

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60:40. So today, 50-60 per cent of the rural population is involved in other businesses. A
lot of people belonging to the second generation are getting white-collar jobs in nearby
towns. So, there is a growing middle class with a monthly income in rural India and it is a
drastic change from the past where their income was totally dependent on the monsoon,
cropping season, etc. This has resulted in a definite growth in the prosperity level in rural
India. Of course, there are still a lot of poor people, especially the agricultural labourers.
But there is a growing middle class with regular income and the rural rich are becoming
richer.
Is the urban-rural divide in India thinning now?

The urban-rural divide is still there, but the divide between urban and rural India is
thinning among the top segment of rural India. The rural rich are almost like urban India.
Rural India is like a pyramid. The top of the pyramid is occupied by the rich farmers and
businessmen. They may constitute around 5 per cent of the population. The next level
belongs to those with a regular income and the base of the pyramid is occupied by the
vast majority of the people who are daily wage labourers.
So we cannot say that the urban-rural divide has melted. It is still there. But there is hope
with the growing emphasis on education.
How would you categorise different parts of rural India?
In India, we have the developed rural India and undeveloped rural India. Punjab,
Haryana, Tamil Nadu, Andhra Pradesh, Kerala and parts of Maharashtra come under the
developed rural India but the rest of the states are undeveloped where power,
infrastructure, etc are big problems. The prosperity of Kerala has come from the NRI
income and not from agriculture. Today, there is hardly any village in Kerala.
Tamil Nadu is prosperous as power and good roads are available. All the villages with
proper infrastructure have developed. In such villages, people also have better access to
towns and cities. What are the major reasons for the change in the lifestyle of the
developed rural India?
Television has done wonders to rural India. Today, especially in the south, the
penetration of satellite television is very high, which is around 50 per cent unlike 25-30
per cent in the rest of the country.

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These people may not be literate in the true sense but they know what is happening
around the world because of television. They know how the rest of the country live.
Do you television is driving the aspirations of rural India?
Definitely, the rural youth today is an important trigger in changing the profile of rural
India. About 40 per cent of the graduates coming out of Indian universities today are
from mofussil areas. And, they are all doing very well.
Their aspirations are similar to the urban youth, and it gets reflected in their eagerness to
earn more and live better. So, if there is a problem in agriculture, they do something else.
They ensure that they have steady flow of income.
It has been reported that by 2009-10, the number of urban households is projected to
grow by 4 per cent, while rural households are expected to grow by 11 per cent. Does this
mean developmental initiatives are reaching rural India?
The total expenditure of urban India is almost equal to what has been spent by rural India.
But what is being spent by urban India is being done by only a small percentage of the
population.
About 25 per cent of the urban India is spending as much as 75 per cent of what rural
India is spending. This shows the potential exists in rural India. There is a huge market
waiting to be tapped in rural India.
So the corporate world cannot ignore rural India?
Yes, they cannot afford to ignore rural India. Unfortunately, they are only talking about
it, they are not investing enough to get the maximum mileage out of it.
For them, rural India is an unknown entity even today, and it calls for a lot of investment.
Initially, the ratio between investment and returns will not be the same as you see in
urban India. For urban India, one television spot is enough but it's not so in rural India.
You have to slog it out there.
But eventually, you will get the returns. In today's corporate world, all the managers,
especially those working in the MNCs depend on their quarterly results. They only look
at what gives them immediate success. Freebies have no meaning in rural India. You
have to give value for money for the brand you are selling.

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How long can the corporate world ignore rural India?

You will not be able to survive without rural India in future. One company that
conquered the rural market 50 years ago and has consistently ruled is Hindustan Lever.
About 50-55 per cent of their sales come from the rural market. Even today, they are
constantly innovating and improvising. And Hindustan Lever is marketing directly in the
rural markets.
The success of Cavin Kare has become a very notable case study. It is a company that
began in a small way. It started the Chic shampoo sachet for 50 paise when shampoo was
available at Re 1, and it revolutionised the market.
The sachet pack itself was a novel way of attracting the rural market. Now, it has
conquered the rural market all over India. They are giving a run for Hindustan Lever's
investments, as they have understood the local market very well and communicate in
their language. Now, Maruti is also seriously looking at rural India.
According to a report, between June 2002 and December 2003, rural per capita
consumption expenditure grew by 11.5 per cent while the urban expenditure grew by 9.6
per cent.

What are your comments on this?

Yes, there is a tremendous potential for consumer durables like television sets,
refrigerators, air-conditioners and household appliances in rural India.
After the basic needs of food, cloth and shelter, they are looking at how to live better.
Television is the most sought after consumer item in rural India followed by two
wheelers. Gradually, they are moving to small cars like Maruti and that's what Maruti is
trying to exploit.
 ‘Creating Rural Business Hub
 ‘Creating Rural Business Hubs’
To strengthen, stched are often well below the fair market price

73
 The creation of a global trading network proposed by representatives of
grassroots producer groups, governments and development agencies
 Accenture Development Partnerships (ADP), UK commissioned to conduct
feasibility study. Recommendation: ‘The business case is strong and
establishment of the company should commence as soon as possible’
 Grassroots Trading Network (GTN) will be piloted in India in 2004-05. GTN will
then be expanded across Asia, moving into Latin America in year 3 and Africa in
year 6
 Connect poor producers globally to wider markets
 Provide support for the development, marketing and distribution of products by
mentoring + capacity building
 Facilitate collaborations between producer groups, businesses, research and
policy think tanks, advocacy groups, international organizations, and governments
 Campaign to improve international trade policies and tariffs that hinder the poor
 Aggregate best practice from the commercial sector and apply it to grassroots
producer organizations
My Definition

‘Vibrant Centres of Commerce in rural areas with the right conditions to accelerate
grassroots entrepreneurship as well as to encourage the expansion of businesses that have
traditionally operated in urban markets into rural markets’
 Small rural entrepreneurs exist – need to expand for economies of scale
 Their strength lies in production, not in marketing and distribution
 With access to marketing and distribution, their volumes will grow
 Distribution Houses is one solution
 Distribution Networks should allow flow of products and services
 out Small rural entrepreneurs exist – need to expand for economies of scale
 Their strength lies in production, not in marketing an

74
DISRIBUTION

 With access to marketing and distribution, their volumes will grow


 Distribution Houses is one solution
 Distribution Networks should allow flow of products and services of rural
markets as well as into rural markets
 Out Small rural entrepreneurs exist – need to expand for economies of scale
 Their strength lies in production, not in marketing and distribution
 With access to marketing and distribution, their volumes will grow
 Distribution Houses is one solution
 Distribution Networks should allow flow of products and services of rural
markets as well as into rural markets
 Over 95% of urban India does not know rural India
 Corporate India realises the need for expansion into rural markets given saturation
of urban mkts + eroding margins. Over 70% of country’s population–untapped
consumer market + human capital
 How? Presently, lack of knowledge, data and experience inhibit success
 Result: Products and Marketing Strategies are not being adapted or created with
rural consumers in mind
 Learn from 1. FMCG industries 2. NGOs 3. Others (e.g. IRMA) with knowledge
and experience of how things work at the grassroots
 GTN’s Role: Demonstrate the poor are viable consumers+producers
 The GTN Consolidator Model
 Identify needs / benefits for involved partners to ensure a win-win situation for
all
 With Globalisation, economies of scale is critical
 If we can tap the production strength of this large rural population with its small
scale enterprises, consolidate it and provide larger players with their
requirements - we have an answer
 GTN projects in agriculture demonstrate the model. Also
being extended to handicrafts/handlooms/textiles

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 Sewa Graam Mahila Haat (SGMH), agricultural marketing arm of SEWA,
provides small and marginal farmers with technical, financial and marketing
assistance
 Pilot between ITC & SGMH – for procuring sesame seeds, where SGMH was
positioned as the Consolidator
 In 2003, ITC purchased 250 tonnes of sesame seed from SGMH who procured
this from 1450 poor farmers
 Price realisation went up from Rs 18/kg in ’02 to an avg of Rs 29/kg in ’03. Avg
realisation/farmer: up by Rs 2,000
 ITC now plans to procure amla, cumin, groundnut in ’04 + equip SGMH to
produce organic sesame
 Creating a Rural Distribution Network -The Objectives | SGMH & HLL

A. Procure agricultural and cottage industry goods from SEWA rural producer
members
B. Employ SEWA women members to:

 Process and pack the goods


 Sell finished goods in a direct-to-home model, most effective communication
channel, given low literacy
 Implement promotional campaign e.g., skits
 SGMH, GTN & HLL established the business and implementation plan:
 Piloting in 84 Gujarat villages between Oct ’04 - Feb ’05
 Brand name RUDI (Rural and Urban Development Initiative). Also, means
beautiful, pure + SEWA’s first woman member

Creating a Rural Distribution Network

 Creating employment + entrepreneurship at grassroots


 Tremendous scope to upscale operations:
 SGMH’s base = 530,000 women in 14 districts in Gujarat

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 @ avg sale of Rs 120/member/pm = 76 crores pa (from
existing members alone)
 Employment to over 10,000 poor women in 14 districts
 Tremendous scope to extend reach to non-members
 Widening product basket – will add to turnover
 Capacity-building + mentoring to SGMH’s RUDI team in
business and production processes
 Individual RUDI team members given functional responsibilities to ensure
accountability vs. ‘everyone responsible’ approach
 Unique project, enhances credibility. Attracts new poor producers keen on taking
advantage of the benefits to existing members
 Unique initiative boosts morale internally
 Initial focus – rural Gujarat; plans to upscale across Gujarat and nationally.
Vision – to expand reach
 Some Recommendations

Bridging the Knowledge Gap

 Partner with NGOs and others to leverage their


grassroots experience + knowledge
 Executive Training Programs to understand rural India
 Expose small enterprises + NGOs to business practices

Financial Capital
 Expand Micro Finance Schemes nationally
 Micro Finance Schemes largely debt-based. Also need Equity Finance
 Industry Chambers + Banks work with Government to devise new ways to lend
to the rural sector, safeguarding banks’ interests

Marketing and Distribution


 Government Policy, incentivizing Distribution Houses

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Reduce Entry Barriers
 The Government and Industry Chambers need to work out the modalities to make
the process less cumbersome and more transparent. This will also reduce rent
seeking behaviour

COMMUNICATION
 Dealing with two very different worlds
 Initiatives breakdown because of lack of
understanding of the other world
 Organizations aren’t on the same page

Market Linkages Sales & Distribution of GPO’s Branded Goods:


 Promote ears-to-ground approach
 Analyze sales data for understanding and directing production to the market
 Identify domestic and international markets for expansion
 Identify products for markets based on GPO’s capability
 Create responsibility/accountability for sales targets

Large Retailers:
 Identify buyers based on GPO’s capability
 Facilitate understanding of buyers’ requirements
 Enhance GPO’s skills to supply to large buyers through domain experts

Vendor Development:
 Identify buyer interested in vendor development exercise
 Map GPO products to buyer needs
 Define “gaps” where buyer and domain experts will work with GPO to upgrade
skills

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Capacity-Building Support
 Conduct “As Is” Analysis to determine gap between GPO’s status and vision
 Map business processes to identify bottlenecks in supply chain
 Engage domain experts to work with GPOs to address critical problem areas,
develop or refine systems, and upgrade skills

Knowledge and Information Management


 Host workshops bringing together experts from GPOs, businesses, government,
development and multilateral agencies for sharing knowledge and best practices
 Document and disseminate case studies based on hands on experience with GPOs

Policy Analysis and Advocacy


 Partner with international bodies/lobbies to promote interests of GPOs
 Host multi-stakeholder consultations for GPOs to voice thei

OPPORTUNITY OF RURAL MARKETING

Urban consumers shop daily and have 365 opportunities a year to switch brands while the
rural purchasers who buy their goods in weekly haats have only 54. Attempts to reach
rural consumers, even once during the purchase cycle to ensure repeat purchase, make

79
point of purchase advertising and trade push indispensable. This requires a significant
reorientation in the allocation of funds across media. For example, outdoor advertising
accounts for over 7% of all media expenditures in India, while it only accounts for 0.8%
in USA.
Rural buyers living in small isolated groups distributed across vast distances have limited
access to the broadcast media. The existence of a multiplicity of languages and varying
level of illiteracy complicates the task of communication further. To overcome some of
these challenges, Unilever pioneered the concept of video vans that travel from village to
village screening films in the local language, interspersed with advertisements for
Unilever’s products. The company also provides product usage demonstrations to the
captive audience because written instructions on the pack may be illegible to the
consumers who are either illiterate or do not understand the dialect.
Where mass media is used, variability can, at times, back fire. On re-entering India in the
1990s, Coca Cola decided to reinvest massively on a TV advertising campaign. It opted
for slick commercials, rich in colour, with high production values, but the effect was
somewhere lost on a market where 60% of all TVs are still black and white.
However, in the recent past, the improved technology has allowed the cable and satellite
networks to increase their reach across the countryside thus exposing a rural consumer to
a lifestyle that was beyond his dreams. And this increasing awareness has led to a
significant change in his buying behaviour and consumption patterns.
While the urban market is getting increasingly competitive and saturated, the rural market
is blooming with increase in the disposable incomes of the households, thus promising a
far better scope for growth for marketers. Hence, with the shifting dynamics of the
present-day market situation, now it is the turn of the rural consumers to dictate the
terms. And this reinforces the need for marketers to formulate a well-designed strategy to
feel the pulse and to tackle the mystic rural market.
The above article has been condensed/abstracted from the
following articles with all their rights are reserved.

1. Rethinking marketing programs for emerging markets,

80
2. Growing brand awareness,

Concept:

In recent years, rural markets have acquired significance, as the overall growth of the
economy has resulted ie companies who see the poor as their customers.
-CK Prahalad to Indian CEO'snto
substantial increase in the purchasing power of the rural communities. On account of
green revolution, the rural
areas are consuming a large quantity of industrial and urban manufactured products. In
this context, a special
marketing strategy, namely, rural marketing has emerged. But often, rural marketing is
confused with
agricultural marketing – the latter denotes marketing of produce of the rural areas to the
urban consumers or
industrial consumers, whereas rural marketing involves delivering manufactured or
processed inputs or services to
rural producers or consumers.
What makes Rural Markets Attractive?
Rural market has following arrived and the following facts substantiate this.
 7 42 million people
Estimated annual size of the rural market
•FMCG Rs 65,000 Crore
•Durables Rs 5,000 Crore
•Agri-inputs (incl. tractors) Rs 45,000 Crore
•2 / 4 wheelers Rs 8,000 Crore
In 2001-02, LIC sold 55 % of its policies in rural India.
Of two million BSNL mobile connections, 50% in small towns/villages.
Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT)
41 million Kisan Credit Cards issued (against 22 million credit-plus-debit cards in
urban) with

81
cumulative credit of Rs 977 billion resulting in tremendous liquidity.
Of 20 million Rediffmail signups, 60 % are from small towns. 50% transactions from
these towns on
Rediff online shopping site
42 million rural HHs availing banking services in comparison to 27 million urban HHs.
Investment in formal savings instruments: 6.6 million HHs in rural and 6.7 million in
urban
Opportunities:
Infrastructure is improving rapidly.
•In 50 years only 40% villages connected by road, in next 10 years another 30%.
•More than 90 % villages electrified, though only 44% rural homes have electric
connections.
•Rural telephone density has gone up by 300% in the last 10 years; every 1000+ pop is
connected by STD.
Social Indicators have improved a lot between 1981 and 2001
•Number of “pucca” houses doubled from 22% to 41% and “kuccha” houses halved (41%
to 23%)
•Percentage of BPL families declined from 46% to 27%
•Rural Literacy level improved from 36% to 59%
Low penetration rates in rural so there are many marketing opportunities.
Durables Urban Rural Total (% of rural HH)
CTV 30.4 4.8 12.1
Refrigerator 33.5 3.5 12.0
FMCGs Urban Rural Total (% of rural HH)
Shampoo 66.3 35.2 44.2
Toothpaste 82.2 44.9 55.6
Marketers can make effective use of the large available infrastructure
•Post offices 1,38,000
•Haats (periodic markets) 42,000
•Melas (exhibitions) 25,000
•Mandis (agri markets) 7,000

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•Public distribution shops 3,80,000
•Bank branches 32,000
Proliferation of large format rural retail stores which have been successful also.
•DSCL Haryali stores
•M & M Shubh Labh stores
•TATA/Rallis Kisan Kendras
•Escorts rural stores
•Warnabazaar, Maharashtra (annual sale Rs 40 crore)
Rural Consumer Insights:
Rural India buys.
•Products more often (mostly weekly).
•Buys small packs, low unit price more important than economy.
In rural India, brands rarely fight with each other; they just have to be present at the
right place.
Many brands are building strong rural base without much advertising support.
•Chik shampoo, second largest shampoo brand.
•Ghadi detergent, third largest brand.
Fewer brand choices in rural: number of FMCG brand in rural is half that of urban.
Buy value for money, not cheap products
Some Myths:
1. Myth-1: Rural Market Is a Homogeneous Mass
Reality: It’s a heterogeneous population. Various Tiers are present depending on the
incomes like Big
Landlords; Traders, small farmers; Marginal farmers: Labors, artisans. State wise
variations in rural
demographics are present viz. Literacy (Kerala 90%, Bihar 44%) and Population below
poverty line
(Orissa 48%, Punjab 6%)
2. Myth-2: Disposable Income Is Low
Reality: Number of middle class HHs (annual income Rs 45,000- 2, 15,000) for rural
sector is 27.4

83
million as compared to the figure of 29.5 million for urban sector. Rural incomes CAGR
was 10.95%
compared to 10.74% in urban between 1970-71 and 1993-94.
3. Myth-3: Individuals Decide About Purchases
Reality: Decision making process is collective. Purchase process- influencer, decider,
buyer, one who pays can all be different. So marketers must address brand message at
several levels.Rural youth brings brand knowledge to Households (HH).
Why Different Strategies?
Rural markets, as part of any economy, have untapped potential. There are several
difficulties confronting the effort to fully explore rural markets. The concept of rural
markets in India is still in evolving shape, and the sector poses a variety of challenges.
Distribution costs and non availability of retail outlets are major problems faced by
the marketers. The success of a brand in the Indian rural market is as unpredictable as
rain. Many brands, which should have been successful, have failed miserably. This is
because, most firms try to extend marketing plans that they use in urban areas to the rural
markets. The unique consumption patterns, tastes, and needs of the rural consumers
should be analyzed at the product planning stage so that they match the needs of the rural
people. Therefore, marketers need to understand the social dynamics and attitude
variations within each village though nationally it follows a consistent pattern. The main
problems in rural marketing are:
• Understanding the rural consumer
• Poor infrastructure
• Physical Distribution
• Channel Management
• Promotion and Marketing Communication
Dynamics of rural markets differ from other market types, and similarly rural marketing
strategies are also significantly different from the marketing strategies aimed at an urban
or industrial consumer.

Strategies to be followed:

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Marketing Strategy: Marketers need to understand the psyche of the rural consumers
and then act accordingly. Rural marketing involves more intensive personal selling
efforts compared to urban marketing. Firms should refrain from designing goods for the
urban markets and subsequently pushing them in the rural areas. To effectively tap the
rural market a brand must associate it 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.

Distribution Strategy:
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. Annual “melas”
organized are quite popular and provide a very good platform for distribution because
people visit them to make several purchases. According to the India n Market
Research Bureau, around 8000 such melas are held in rural India every year. Rural
markets have the practice of fixing specific days in a week as Market Days (often called
“Haats’) when exchange of goods and services are carried out. This is another potential
low cost distribution channel available to the marketers. Also, every region consisting of
several villages is generally served by one satellite town (termed as “Mandis” or Agri-
markets) where people prefer to go to buy their durable commodities. If marketing
managers use these feeder towns they will easily be able to cover a large
section of the rural population.

Promotional Strategy:
Firms must be very careful in choosing the vehicle to be used for communication. Only
16% of the rural population has access to a vernacular newspaper. So, the audio visuals
must be planned to convey a right message to the rural folk. The rich, traditional media

85
forms like folk dances, puppet shows, etc with which the rural consumers are familiar and
comfortable, can be used for high impact product campaigns.

Some Live Examples:


One very fine example can be quoted of Escorts where they focused on deeper
penetration. 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 ‘kuchha’ roads of village they positioned their bike 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.
HLL 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.
ITC is setting up e-Choupals which offers the farmers all the information, products and
services they need to enhance farm productivity, improve farm-gate price realization and
cut transaction costs. Farmers can access latest local and global information on weather,
scientific farming practices as well as market prices at the village itself through this web
portal - all in Hindi. It also facilitates supply of high quality farm inputs as well as
purchase of commodities at their doorstep.
BPCL Introduced Rural Marketing Vehicle (RMV) as their strategy for rural
marketing. It moves from
village to village and fills cylinders on the spot for the rural customers. BPCL considered
low-income of rural population and therefore introduced a smaller size cylinder to reduce
both the initial deposit cost as well as the recurring refill cost.

Conclusion:
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. A radical change
in attitudes of marketers towards the vibrant and burgeoning rural markets is called for,

86
so they can successfully impress on the 230 million rural consumers spread over
approximately six hundred thousand villages in rural India.

3. Backcountry Business, Business Today, November 11, 2001


4. The Consumer, Business Today, January 20, 2002
5. Alternative Nation, Baxi, Sachin, Brand Equity, The Economic
Times, 15 May, 2002
6. I’ll play the game my way.

RURAL MARKETING LESSONS FOR THE FUTURE

♦ Between nineteen sixties and eighties the divide between rural and
urban india was white and black. With the turn of the century the difference has
become black and grey and offwhite depending on which territory you operate.
♦ Expanding infrastructure, widespread education, easy communication, mass
media penetration, it revolution, second generation distribution diversification, the
desire to improve quality of life, family pressures to acquire new products and

87
services – have unlocked a market potential of very large proportions to be
exploited by the learned few.
♦ Many companies have entered rural markets with good products, but failed to use
the opportunity or sustain their effort and growth.
♦ We examine the reasons why? And some lessons that can be learnt keeping the
old kotler marketing principles in mind.
♦ Moving beyond 4 p’s….
♦ The rural households in village clusters are the focal point: the
user, person buying, the person spending, and the member deciding may not be
the same individual. We need very focussed customer profile for different
product/service categories. And treat each family member differentially. Rural
youth are the emerging force.
♦ Market surveys, research forums, and audits provide the answer.
♦Organisations enter rural markets to diversify, sometimes on a national basis,
allocating scarce resources for distribution development, communication,
corporate image building and marketing. They invariably fail! - corporate
commitment to rural must be from the stakeholders and the board who must
expressly spell out their commitment and long term rural mktg.
Strategy/objectives.
♦Companies must establish specific rural marketing divisions manned by rural
competent managers who are assured resources and an understanding of the
corporate and marketing objectives.
♦Products must be specifically designed/modified for rural costomers through
industrial engineering excercises for transportation, storage, performance,
operation, packaging and servicing requirements. Thrusting urban technology
down rural markets is not desirable. Relate technology to market development
indexes.
♦Check primary, secondary, and transport packaging for rural oreintation.
♦Audit manufacturing competence

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♦Products must be specifically designed/modified for rural costomers through
industrial engineering excercises for transportation, storage, performance,
operation, packaging and servicing requirements. Thrusting urban technology
down rural markets is not desirable. Relate technology to market development
indexes.
♦Check primary, secondary, and transport packaging for rural oreintation.
♦Audit manufacturing competence
♦Sales forecasting, positioning, inventory management, inter territory transfers,
pricing and credit management are functions of how the agriculture in the area is
faring. Managers must learn to corelate and respond to drought, floods,
irrigation,good and bad monsoons, harvesting and sowing seasons and impact of
these on disposable incomes of rural households.
♦For agri inputs, position inventory that can be liquidated,monitor product
movement. Handle complaints. Develop knowledge.
♦Location, shop profile, dealer network, financial position, cash to credit outlook,
reputation, track record, allied lines, accounting, ability to implement company
policy, competitive products position, attitude and partnership status – are some
useful criteria.
♦Do not change network often. Appoint carefully and develop. Change with
caution and transparency. Settle disputes.
♦Understand rural buying is not a function of prices or discounts only but of
building relationships and value chains.
♦Do not overstate roles of c&f agents, stockists,wholesellers, dealers and
retailers.
♦Use govt channels, ngo’s, sfg’s, selectively.
♦Employ manualised trade management practices with cod and sales staff. Do
not deviate. Do not give verbal commitments. Put every deal in writing, advise all
concerned, act on the commitment. He who sells collects.
♦Do not allow juniors to tackle a problem. Catch the bull by the horn, resolve
yourself. Make it a win -win position.

89
♦Know who to deal with – managing partner.
♦Legalise appointments with agreements and validate them each year. Check
collateral support.
♦Meet and travel with your cod. Do not eat or drink with them. Why
compromise. Do not accept gifts.
♦Involve cod in promotions, events, roadshows, complaint handling, field days,
demos, customer meets at haats and melas. Innovate and talk to consumers.
♦Do not expand distribution without consolidation. Get more out of your
network, putting processes in place to track outlet coverage, margin control and
rate stability.
♦Sales should be on the basis of what is liquidated from the dealers shelf
especially for agri inputs. Sales people must be rewarded for liquidation not for
raising invoices. - expired stocks, old inventory, market returns are a function of
this.
♦Demand generation programs should be carried out through teams with daily
review by team leaders. Dgp must result in brand awareness and movement from
dealer shelves.
♦Inter dealer transfer of stocks should not be permitted as a rule without
accounting processes.
♦Brands must have visual identity, be regularly available, and promoted with few
price changes.
♦Collect money when available seasonally through schemes.
♦Work out c:c ratios with cod by evaluating creditworthiness and defining
peak/normal limits.
♦Recognise tell tale signs of sickness of your distributor well in time.
♦Believe in action not in promises.
♦Go into details and anticipate events.
♦Take back stock, cash, use influence, sell collateral, position manpower, check
accounts, go to linked dealers.

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♦Take legal action on check bouncing, charge penalties, do not negotiate on bad
performance.
♦Settle disputes and keep ego aside.
♦Reward timely payments, punish erring staff
♦Cod wiil be as loose or firm as per their perception of company iamge.
♦Loose a little for long term gains.
♦Select rural advertising, sales promotion and publicity media with care and cost
effectiveness
♦Have a central message without conflicts
♦Use loud visuals, straight forward message giving product values, no subtle
slogans, or religion, or unrelated celebrities do not over claim.
♦Budget asp spend. Control thru mid term audit.
♦Structure asp campaign differently keeping asp objectives in mind by advising
ad agencies
♦Sales promotion measures must follow asp blitz.
♦Make territorial distinctions in promotion campaigns
♦Test market. Use haats and melas. Word of mouth.
♦Examine the tangible impact of communication strategy by mid term audits and
take corrective steps.
♦Can you sustain your promos? In off season?
♦Build reminder campaigns on a smaller scale. Talk to your consumer and build
confidence.
♦Make an it enabled system for reporting, informatiom, data collection, and
periodicity area wise, mandiwise.
♦Staff must report, officer must respond using fax or email or phone or sap.
♦Design formats
♦Frequent training is necessary
♦Act on reports through decision taking.
♦Review mis effectiveness yearly.

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♦Marketing audit for corrective action.
♦Make market research an ongoing activity
♦Hire and train staff with aptitude for rural marketing
♦Transfer managers from one territory to another
♦Carry out cross territory audits
♦Make indpendendent market assessment
♦Senior managers must tour during marketing campaigns and monitor activity in
the field and not in the hotel
♦Learn from competition, your staff, your mistakes.
♦Minimize expenses and settle cod claims
♦Managers must be capable of getting along with cod, staff, display leadership
roles, and above all be honest.
♦Companies must build corporate image through a planned approach
♦Introduce good supply chain practices - deliver 24 hrs.
♦Settle accounts twice a year – once in october(kharif) and then in march, (rabi)
in writing.
♦Territory wise rural development plus rural marketing.
♦Sustainable development through plans .
♦Take appropriate technology/product/service to rural markets and keep
updating.
♦Build credibility, confidence and corporate image.
♦Viable distribution mechanisim .
♦Excel in customer services and product quality.
♦Establish responsive marketing organisation.
♦Add 2 p`s to 4 p`s - people and profitability.
♦Remember rural customer needs are changing fast , faster than we think.
♦Consider business process transformation for rural markets.
♦Continue to build relationships and deliver value.
♦Anticiapte future key drivers and outputs.

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PROBLEMS IN RURAL MARKETING

Where the rural market does offer a vast untapped potential , it should also be

recognized that it is not that easy to operate in the rural market because of several

attendant problems . rural marketing is thus time consuming affair and requires

considerable investment in terms of evolving appropriate strategies with a view to tackle

the problems . The major problems faced by manufacturing and marketing men in rural

areas are described below

1. Underdeveloped people and underdeveloped market;

The agriculture technology has tried to develop the people and market in rural areas .

unfortunately ,the impact of the tectology is not felt uniformly through out the country

.while there are pockets- some districts in punjab .haryana or western utter Pradesh –

where a rural consumer is some what comparable to his urban counterpart , there are lage

areas and groups of people who have remained beyond the technogial break throgh .

Even today about 75 districts in country are drought prone and no new technology worth

the name has percolated to in crease in the standard of living of these people in addition,

the small agricultural land holdings have enable to take advantage of new technological

breakthrough . the number of people below poverty line has not decreased in any

appreciable manner. Thus the rural markets, by large number, by and large are

characterized by underdeveloped market.. a vast of the rural people image old customs

tradition habits , taboos and practices

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2. Lack of proper physical communication facilities;

Nearly 50% of the villages is the country does not have villages in the country do not

have all weather roads. Physical communication to these villages is highly expensive .

even today ,most villages is in eastern part today inaccessible during monsoon

season. hence, distribution put in by manufacturer prove expensive and some times of no

consequences .to be effective the products have to be physically moved to places of

consumption or places to purchase.

3. Media for rural communication;

Among the mass media, at some point of time, say in late 50s or early 60s ,radio was

considered to be a potential ,medium for communication to the rural families . Now the

advent and expansion of telecast network appears for easy communication with rural

masses. The question is how many peole access viewing television? There is a need to

examine the ownership pattern of television sets in rural areas to judge the potential reach

of this medium. Another mass medias cinema. it has been observed that cinema viewing

is fairly satisfactory ,where available . Mobile theaters are also good medium but very

expansive companies like HLL using these vans found 10 to12 times higher in rural areas

than urban areas due to bad roads in areas

4. Hierarchy of markets.

Rural consumer has identified market places for different items of their requirements. So

there can not be uniform distribution pattern for all products. It has been seen that 90% of

farmers visited the nearest town , where an agricultural produces assembling market is

situated at least once a quatter for either selling the produce or for purchase of there

94
requirements . so town/ mandi centers with large hinterland villages become the focal

point thus depending upon the purchase habit of rural people. The distribution netwpork

for different commodities has to be different.

5. Low level of literacy:

the literacy rate is low in rural areas as compare to urban areas. This again leads to the

problem of communication for promotion purposes. Print medium becomes in effective

and to an extent irrelevant in rural areas since ita reach is poor and so is the level of

literacy. The dependent should be more on electronic media cinema, radio and television.

While the excess to cinema and radio appears to be fairly easy and common. in not so in

case of television. Television advertising is very expensive. Probably it will be prudent to

take advantage of such professional rural advertising agencies. The promotion of product

along with distribution is also being resorted to by many.

6, Seasonal demand:

the distribution of any product in rural areas either agricultural inputs , consumables or

durable should necessarily follow a seasonal pattern. Since 75% of the rural income is

generated through agricultural operation which is seasonal so the demand pattern is also

seasonal. A typical example is that of fertilisers.the demand of fertilizers is always high

during the start of kharif and rabi system the fertilizers manufacturers have evolved a

distribution pattern so that the seasonal demand can be met. Like wise the demand for

consumables and durable will be high during the pek crop harvesting and marketing

season. . this is the time at which the rural people have substantial cash inflows. Hence

the distribution should be fairly intensive. During harvesting season this arrangement

95
would result in adequate sales realisation vise versa in summer months the demand will

be very low festivals seasons like sankranti, poangal, vaisakhi or depawali are also

demand seasons. So the distribution of rural areas should be more and frequent during the

harvest and festival seasons as opposed to a fairly uniform demand pattern in urban areas.

7.Many languages and dialects:

even assuming that media are available for communication or the company commotions

its own media vans the large number of languages and dialects very wildly from state to

state and reason to reason. The messages have to be delivered in local; languages and

dialects. Even though the number of recognized languages are only 16, the number of

dialects are estimated to be around 850.

8. Low per capita income:

Even though about 33 to 35 percent of gross domestic product is generated by rural areas.

It is shared 75% of population hence the per capita income is low compared to urban

areas. This apart the distribution of income is highly is qued. Since the land holding

patterned itself is esqued thus the rural population present a highly heterogeneous seen.

given the low percapita incomes and population spared in the villages, what wiill be the

off take of any product by rural consumer, say from avillage shop? What should be the

inventory levels to be maintained by the rural shopkeeper and how long will it take for

the rural areas shopkeeper to liquidate his stock? if the n company

96
CONCLUSION

97
Conclusion

My research has attempted to explore the key opportunities and challenges of marketing

in rural India. To be successful, multinational consumer goods companies need to be

innovative, dogged and culturally sensitive in developing rural marketing strategies. A

direct transportation of traditional marketing strategies that have worked in core “first

world” markets will likely need to be localized to cater to the substantially lower per

capita incomes, a lack of formal retail and distribution networks and the relatively low

cost of labor. It is a testament to both multinational and local consumer goods companies

that they have been able to innovate and address the challenges offered by India’s rural

market to bring goods, to and improve the lives so many people. These successful

marketing techniques may even be introduced to other large emerging markets.

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SUGGESTION

99
SUGGESTION

♦ Products must be specifically designed/modified for rural costomers through

industrial engineering excercises for transportation, storage, performance, operation,

packaging and servicing requirements. thrusting urban technology down rural

markets is not desirable. relate technology to market development indexes.

♦ Check primary, secondary, and transport packaging for rural oreintation.

♦Sales forecasting, positioning, inventory management, inter territory transfers,

pricing and credit management are functions of how the agriculture in the area is

faring. managers must learn to corelate and respond to drought, floods,

irrigation,good and bad monsoons, harvesting and sowing seasons and impact of

these on disposable incomes of rural households.

♦Location, shop profile, dealer network, financial position, cash to credit outlook,

reputation, track record, allied lines, accounting, ability to implement company

policy, competitive products position, attitude and partnership status – are some

useful criteria.

♦Demand generation programs should be carried out through teams with daily

review by team leaders. dgp must result in brand awareness and movement from

dealer shelves.

100
♦Brands must have visual identity, be regularly available, and promoted with few

price changes.

♦Make an it enabled system for reporting, informatiom, data collection, and

periodicity area wise, mandiwise.

♦Make market research an ongoing activity

♦ territory wise rural development plus rural marketing should be done

♦ companies should introduce good supply chain practices - deliver 24 hrs

101
BIBLIOGRAPHY

102
BIBLIOGRAPHY

• www.google.com

• www.ciionline.org

• www.msnsearch.com

rural marketing -s.l.gupta

103

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