Rural Marketing

Features
Large and Scattered market - over 63 crore consumers from 5,70,000 villages Major income from agriculture Low standard of living - low literacy, low per capita income, social backwardness, low savings, etc. Traditional Outlook-Do not prefer changes Diverse socio-economic backwardness Infrastructure Facilities - physical distribution becomes costly

Challenges
Underdeveloped People and Underdeveloped Markets
Lack of Proper Physical Communication Facilities Nearly fifty percent of the villages in the country do not have all weather roads Media for Rural Communication - rural areas account for hardly 2000 to 3500 mobile theatres

Many Languages and Dialects - number of recognized languages are only 16, the dialects are estimated to be around 850.

Challenges
Dispersed Market - impossible to ensure the availability of a brand all over the country
Low Per Capita Income - about 33-35% of gross domestic product is generated in the rural areas but it is shared by 74% of the population Prevalence of spurious brands and seasonal demand Different way of thinking - has a fairly simple thinking as compared to the urban counterpart

4 A Approach

Availability:
Indias 627,000 villages are spread over 3.2 million sq km Target- Reach atleast 13,113 villages with a population of more than 5,000 Study on buying behaviour of rural consumer indicates that the rural retailers influences 35% of purchase occasions Projects taken to Enhance and Control Supply Chain

Affordability:
With low disposable incomes, products need to be affordable to the rural consumer Companies have addressed the affordability problem by introducing small unit packs Eg. Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5

Most of the villagers are paid on the basis of daily wages

Acceptability: There is a need to offer products that suit the rural market In 1998, LG developed a customised TV for the rural market and christened it Sampoorna The insurance companies that have tailor-made products for the rural market have performed well Company tied up with non-governmental organisations and offered reasonably priced policies

Awareness:
Mass media is able to reach only to 57% of the rural population For generating awareness, events like fairs and festivals, Haats, etc., are used as occasions for brand communication Only 41 per cent rural households have access to TV LG Electronics uses vans, local language advertising and road shows to reach rural customers

Opportunities
Due to large size and demand base, rural markets offer tremendous opportunity
Rural India, accounts for more than 70% of Indias total population, 2.5 times that of US Today it accounts for more than 70% of the toilet soap users and 40% of the two wheelers purchased In 2008, rural consumer market grew by more than 25%

Opportunities
It is expected to reach US$425 billion in 2011 with 720790million consumers
The rural market in India is showing a growth of 15%

FMCG sales are up 23% and telecom is growing at 13%

2009-10 union budget hiked the allocation for NREGA to US$8.03 billion Outlay of US$ 34.84 billion for improving rural infrastructure

Constraints
With an average income of less than $42 per month, rural Indians have a very low disposable income Incomes vary greatly depending on the monsoons as a result difficult to predict demand Minimal storage space and no refrigeration

627,000 villages spread over 3.2 million sq. Km, with poor infrastructure distribution costs are very high

Constraints
Low literacy rate of 36% as compared to the national average of 52%
Facilities such as telephone, fax and telegram are poor in rural villages Life in rural India still governed by a lot of customs and traditions and people dont adapt new practices

Reach of formal media is low in rural markets

It offers a very challenging career and requires specialized talent

Agenda
Products of AMUL History Birth and Development Three Tier Model

Achievements
Rural IT

Amul - Products
Butter Spreads

Milk Drinks
Amul Kool, Amul Kool Caf, Flavored Bottle Milk, Lassee, Thandai, Spiced Buttermilk, Chocolate Milk, etc

Amul Products
Powdered Milk Skimmed Milk Powder, Spray Infant Milk Food, Tea Coffee Whitener, Amulya Dairy Whitener
Milk, Cream, Cheese, Ghee, Ice-cream, Desserts, Chocolates, Health Drink

Amul History
AMUL Anand Milk Union Limited
Formed in 1946 as a Dairy Co-operative

AMUL a brand name managed by GCMMF

Spurred the White Revolution in India Dr. Verghese Kurien Key person behind the success of Amul

Amul Birth and Development

Monopoly of the Polson Dairy in Anand

Exploitation of the milk producers

Unfair and manipulative trade practices Formation of Kaira District Co-operative Milk Producers Union Limited Milk collection de-centralised First modern dairy of Kaira Union established at Anand- called AMUL Many such unions came up in Gujarat- Combining to form GCMMF

Three Tier Amul Model

Village Dairy Co-operative Society
Milk Union at the District level Milk Federation at the State level.

Village Dairy Co-operative Society(VDCS)

Main Objective- Collection of Milk

Weighing the milk

Determining the fat content

Calculation of the Purchase price

Functions of VDCS
Collection of surplus milk

Providing support services to the members

Selling liquid milk for local consumers of the village Supplying milk to the District Milk Union

Milk Union at the District Level

Formed by Headed by Managed by

Village Societies of a District

9 to 18 Elected Representatives of the Village Societies Member Secretary of the Board Paid Employee

Functions of Milk Union at District Level

Procurement of milk Arranging transportation of raw milk from the VDCS to the Milk Union Providing input services to the producers

Conduct training
Establish Chilling Centers & Dairy Plants Selling at the District Level Processing

Decide on prices of Milk to be paid and also the services offered

Functions of State Cooperative Milk Federation

Marketing of milk & milk products Distribution network for marketing of milk & milk products. Arranging transportation Creating & maintaining the Brand Providing support services Determine the product mix and capacity for the same

Pricing

Achievements of Amul Movement

Production-20 million MT to 100 million MT in a span of 40 years Cattle population reached 500 million 13 million member families included Covers more than 125,000 villages of 180 Districts in 22 States 8.5 million liters of milk procured per day 48 Sales offices, 3000 Wholesale Distributors, 5 lakh retail outlets

Amul The Poster Boy of Rural IT

Roadmap
Automated milk collection system units for collection of milk Customised ERP system used in conjunction with GIS Data analysis software for forecasting milk production and productivity All zonal, regional and member dairies connected through VSAT Made IT education compulsory for all its employees Opted for the .coop domain to position its brand in a distinct way

THANK YOU!!!