Rural Market in India

“Innovations as Cutting Edge Solutions in

Rural Marketing “

Presented By

Girish V Rao
V . President – Sales
& Marketing

LG Electronics India Ltd.

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RURAL
RURAL INDIA
INDIA –– ENVISION
ENVISION of
of LGEIL
LGEIL

RURAL INDIA – The LG Vision

• Re-defining the position of Indian Rural

Poor by extending the boundaries for their
activities (products and services) through
“Cutting Edge” initiatives.

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 Rural Population Distribution

Distribution of villages in India 1. Bottom Heavy Cluster among Villages

68 % of the villages in India are below the 1000 Popln

Population Number of Villages % of Total  - Marketers overlooking the same

Less than 200 114267 18%  - Reaching out to these villages critical to exponential growth

200-499 155123 24.30%  - Bottom Cluster with greater than 2000 Popl slowly saturating.

500-999 159400 25.00%

2. Logistics – The 3rd Generation Challenge
1000-1999 125758 19.70%
2000-4999 69135 10.80%
The Top tier villagers walk , talk & Think like any other man.

 - Servicing him is an absolute mandate

5000-9999 11618 1.80%
 - Beefing up the supply chain critical to reaching out to these masses.
10000 and above 3064 0.50%
 - Rural centric pdt and sound communication essential.
Total 638365 100%
Source : NCAER

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 Rural BPL Trend Over the Years

1. Rural BPL Decreasing

10 % improvement in 10 Yrs.

 - Rural Fast Catching up with Urban

- Has a rippling effect on the overall BPL of India

 - Rural overall fairing better than Urban India

Source : NCAER

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 Rural Vs Urban Penetration – ‘05

Rural Urban Ttl

% PEN % PEN % PEN
Criteria HH'000 HH'000 HH'000
Car / jeep / van 1603 1% 7241 12% 8844 4%
Two-wheelers 16195 11% 25813 42% 42008 20% 1. Life style
1. Very Poor
Rural
definers
Colour television sets 18152 12% 38572 63% 56724 27% Penetration
Refrigerators 11014 8% 29515 48% 40529 20%
Washing machines 1870 1% 14447 24% 16317 8%
Room air-conditioners 76 0% 2936 5% 3012 1%
Fans 63025 43% 47302 77% 110327 53%
Bicycles 80533 55% 36835 60% 117368 57% 2. Higher Rural
Penetration when
TV (B/W or colour) 48573 33% 46400 76% 94973 46% 2. Necessity compared to Life
style
Gas stoves 27390 19% 40964 67% 68354 33%
Pressure cookers 37883 26% 45192 74% 83075 40%
Has electricity connection 59928 41% 46981 77% 106909 52% 4. Basic Infra
Drinking water in the household 39549 27% 35073 57% 74622 36% 4. Basic Infra fast improving
Fuel used is LPG / electricity / biogas 8544 6% 26090 43% 34634 17% in Rural HH

TOTAL HOUSEHOLDS'000 146192 100% 61196 100% 207388 100% Source : FK Urban
TOTAL Population base 877152 183588 1060740 Rural Index 2005

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Rural Vs Urban Penetration – ’06 – PC & Mobile

2006 2006

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 Untapped Rural Potential

• 600,000 villages with 700 mn people

• >50% of total GDP from rural India

• Nearly 50% of Very rich + Well off

households in rural India

No. of Households (mn) Hardly any Gap

Demographic Classification Urban Rural Total between Rural &
Very Rich ( Greater than 10 L P.Annum) 4.84 1.32 6.16 Urban India in
Well off ( Greater than 5 L P Annum ) 29.45 27.36 56.81 terms of the Rich
Total 34.29 28.68 62.97

% of Total 54% 46% 100%

© Ministry of Communications & Information Technology , India

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 Rural India

The Challenge
• Electricity Shortage – Sporadic Power Supply
• Acute Water Shortage.
• Poor Transportation availability.
• Consumer Finance Options

 Can we make energy saving products??

 Can we give him a washing machine which
consumes less water??
 Can we give him access to buying products near
by his location??
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 The Solution

• Set up of a Life style Research Team which would

analyze the needs & preferences of the consumer , In-
depth..

• Understand at length his comfort levels in terms of

what he wants and what he would spend for what he
wants..

• Make products and service available for him to suit his

needs & Preferences..

• Have a deep pocket network to make products

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available for him at a close proximity from where he
Rural
Rural Market
Market is
is the
the key
key to
to survival
survival in
in India
India

The Road Map – 4 Point Mantra

Regional Marketing Approach

Deep Channel Penetration

Sophisticated & Deep After sales Service

Rural Centric Marketing Promotions

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 1. Market Demand
▷ Regional approach in marketing is required.
Purchasing power by Region

1. Market is different

Consumer Behavior
- S/W : Shift to Mid-High Segment
NORTH
U$ 731 Traditional Split A/C, FTV, F/L W/M
Market 37% Agriculture base
LG 39% Extreme Temp. - N/E : Conservative, Low End
Win.A/C, 2Tub W/M, 1Dr Ref

EAST 2. Different culture, life style

U$ 655
Market 9%
LG 9%
Diversity in lifestyle
WEST
U$ 784 - Food Habits / Clothing
Market 25% Conservative - Language :18 official
LG 24% Poor Region
- Customs/Religion
Humid
Cosmopolitan
Commercial 3. Distribution Channel
Modern Trade
SOUTH High Literacy
U$ 759

S/W : Modern Trade 25%
Market 29%
Industrial Zone
N/E : Distributor 61%
LG 28% Modern Trade
Source : ORG GFK
Indian Readership survey

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Network/Channel
Network/Channel Development
Development –– The
The key
key to
to improving
improving Rural
Rural reach
reach

Increased Channel Networking which Resulted in an increased

Rural Market Reach
Before
2007 NETWORK Before
GROWTH
Distributor/AWD1300
(No.) 1100
BM-18
B.M-40 64% 900
Area
700
Distribu Manager
Distribu.
tor-200 146
tor-1100

Dealer 2004 2005 2006 2007

1200
1400 Dealer 2700
2000
SSD 10% 1400
650
900
AWD
200
Customer
2004 2005 2006 2007

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BEST
BEST PRACTICE
PRACTICE –– DISTRICT
DISTRICT NETWORKING(Example)
NETWORKING(Example)

B.O (Branch Office)

– Small CEO
– Profit Centre
RAO –Heading & supporting AO’s.
Population - 21 Mil. –Equipped with Stock point, ERP.
72 % Rural –Equipped with Functional Manpower.

RAO (Remote Area Office)

– Sales & A/R Collection
RAO – Enhance mkt penetration & ctr share.
BO – Enhance Relationship with TP
–CS & Accounting Solutions
–Equipped with Infrastructure &
–Manpower
BO
RSO (Remote Sales Officer)
–Covers Sub-Dealer Network.
–PR & Motivation of SD.
– Enhance penetration & extraction

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Sales & Service Infrastructure

Rural focus through excellent reach Co.s

Co.s Reach
Reach
N

 Branch Off : 40
TA

Jammu
S

 RAO : 63
KI

Chandigarh NE
PA

Jalandhar
Dehradun PA
Ludhiana L
Kundli Ghaziabad
Gurgaon Delhi(2) Guwahati Rural
Rural Sales
Sales Channel
Channel
Patna
Lucknow
Varanasi  Dealers/SD : 9000
Jodhpur
Jaipur Asansol BANGLA
Ranchi DESH  Distributors : 1100
Ahemedabad Kolkata
Bhopal
Surat Bhubaneshwer
Thane
Indore
SVC
SVC Channel
Channel
Mumbai
Raipur  ASC : 1080
Pune Nagpur
Hyderabad  SSD : 600
Goa
Hubli  ASP : 590
Bangalore
Chennai Logistics
Logistics
Kozikode
Coimbatore
• ASC – Authorised Svc Centers  MW : 5
• ASP -- Authorized Svc Provider Cochin  Stock Point : 46
• SSD – Sales and Svc Dealers
 Br Warehouse : 36
• MW - Motherware House
SRI LANKA

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Service
Service Network
Network Development
Development –– The
The key
key to
to improving
improving Rural
Rural reach
reach

ASC/SSD SVC/Engineers Rural ( ASC/Resident Engineers

Before Before Before
SVC PTs. ASC
ASC (No.)
(No.)
(No.) 340
570590 1040108 330
37% 557 13% 1027 0 31% 322
432 957 260
Rural SVC
Deployment

Engineers
04 05 06 07 04 05 3200
06 07 04 05 06 07

SSD 590 Engineers 4200 30% 300

31% 530 3800 Res. 260
100%
470 3200 Engineers 250
450 2100 230

04 05 06 07 04 05 06 07 04 05 06 07

Increased service Network which Resulted in an increased Rural Market

Service Reach

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Rural Marketing - Promotion Support initiatives of LG

Mobile Van at
Kasargod

Exhibition
Exhibition at
Rajamundry

Cookery Classes at
different locations for
Rural Housewives

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Rural Marketing - Promotion Support initiatives of LG

1000 In Store
Demonstrators
at Dealer counters in Rural
Cities
Road show
Road Show at Satna

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Consumer
Consumer Goods
Goods companies
companies must
must go
go the
the Rural
Rural Way
Way -- A
A case
case Study
Study of
of LG
LG India
India

LG’s Rural Foray

LG India- tripled the number of its retail & distributor

outlets in rural areas from 2004 to 2006

The avg. price of its Sampoorna range of CTVs came

down to about the price so competitive that, thereby
bridging the gap between CTVs and other local B/W TVs.

It also tapped local forms of entertainment like annual

haats and fairs and made huge investments in
infrastructure for distribution and marketing.

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Consumer
Consumer Goods
Goods companies
companies must
must go
go the
the Rural
Rural Way
Way -- A
A case
case Study
Study of
of LG
LG India
India

Result
• The rural market accounts for 60 per cent of new CTV
buyers for LG

• The rural market for LG grew at 25 per cent over the last
year, against a 15 per cent growth in urban areas.

• Sampoorna TVs sold in the Indian heartland and the semi-

urban belts ,enforced a strong connection with India for
LG.

• It connected very well with down the pop strata.

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 “Improving the lives of the billions of people at the
bottom of the economic pyramid is a noble endeavour.
It can also be a lucrative one”
C.K Prahlad

Thank You

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