m Rural India is potentially the largest segment of the

Indian market.
m Executives have long recognized that to build real
sales volumes they will have to reach outside the big
cities.
m Case highlights the emerging trends in rural market
m Case is also about the initiatives taken by companies
Like HUL and ITC to target Rural segment
© Àroject Shakti and E-Choupal have been making inroads
into rural India for years
m !ccording to M!RT
© Rural India buys 46% of all soft drinks sold, 49%
of motorcycles, 59% of cigarettes and 11% of rural
women use lipstick.
m !ccording to NC!ER
© Rural households form 71.7% of the total
households in the country.
© Spending in this segment is growing rapidly and
consumption patterns are closing in on those of
urban India.
m Companies such as Unilever, Àhillips and Nestle have long
been known to India's rustic Ê
Ê
 
m Rural marketing involves persuading people to try and adopt
products they may not have used before
© Colgate has to build toothpaste by convincing
© Coca-Cola is growing at 37% in rural markets, compared
with 24% in urban areas.
m In rural India low penetration rates can be attributed to three
major factors
© Low income levels
© inadequate infrastructure facilities
© different lifestyles.
m The objectives of Àroject Shakti
© To create income-generating capabilities for under
privileged rural women by providing a small-scale
enterprise opportunity, and to improve rural living
standards with greater awareness of health and hygiene
m In 2001, with rural self-help groups (SHGs) started to
educate rural women, while also making them part of the
company's marketing network
m This micro-enterprise offers low risks and high returns
m Direct-to-home distributors
m ! typical Shakti distributor sells products worth Rs 10,000-
15,000 a month & earn Rs 700-1,000
m The Shakti model was piloted in 50 villages of the Nalgonda
district in !ndhra Àradesh.
© Now it has created 26,000 women distributors covering
80,000 villages.
© By 2010, the goal is to recruit 100,000 Shakti distributors
covering 500,000 of India's more than 600,000 villages
© Shakti project includes Shakti Vani (or voice), a social
awareness program, and iShakti, a community portal
m Increase in income
m Education to children
m Social Recognition to rural women
m Knowledge about health and Hygiene
m Knowledge of urban areas
m Enhancement of purchasing power
m ICICI partnership gave micro credit
m ITC's enhanced distribution network came from the
recognition that the existing agri-produce distribution
channels
© The company exports various agricultural products --
soybean, rice and wheat
© In 2000, ITC embarked on an initiative to deploy
technology to reengineer the procurement of soybeans
from rural India
m E Choupal¶s connectivity - both physical and informational --
between the farmer and the market that it facilitated has
allowed ITC to use it for distribution of goods and services
from the market to the farmer
m The E Choupal infrastructure consists of:
© ! kiosk with Internet access in the house of a trained farmer, called a
î

© ! warehousing hub managed by the former middleman, called a
î 

© ! collaborative network of companies orchestrated by ITC with a pan-
India presence
m In 2004, ITC introduced the Choupal Sagar
© ! rural retail outlet at the hub.
© First was set up at Sehore in Madhya Àradesh.
© This is 7,000 sq. ft. mall sells consumer goods as well as agri-products
m Better content of information
m Transport Cost
m Knowledge to access technology
m Weighing !ccuracy
m Transaction Durations
m Indian rural market is huge just to strengthen the
distribution
m Reliance Infocomm, a mobile services provider. Its
network now encompasses 240,000 towns and
villages, accounting for 42% of the rural population
m Godrej !adhaar -- plans to set up 1,000 stores across
India in the next five years.
m Success of HUL & ITC depicts many other MNC
widen their base in rural markets.
m From the Goenkas to the Gulabchands, from the
Tatas to the Thapars, every major Indian business
group has plans to move into the hinterland
m The battle for rural wallets will include not just
European and U.S. multinationals but also fast-
growing Indian companies.
m According to Raju, marketing to rural
customers often
m involves building categories by persuading
them to try and adopt products they may not
have
m used before. "A company like Colgate has to
build toothpaste as a category, which means
m convincing people to change to toothpaste
instead of using neem twigs to clean their
teeth, which
m was the traditional practice," he says. "This is
difficult to do and requires patience and
investment
m Companies that have figured this out are
doing better in the villages than in the cities.
Soft drinks
m giant Coca-Cola is growing at 37% in rural
markets, compared with 24% in urban
areas.
m According to Hansa Research, a market
research firm that has published a Πide to
Indian
m Markets 2006, the penetration of cons mer
d rables has risen sharply in India's villages
between