Conference on Rural Telecom Markets by Tele.net

1. 15 Sept 2009
Mohan Krishnan
IMRB International

2. Is this how you imagine rural
India?

3. Here is the emerging image of
rural India!

4. Flow
A. Demographics
B. Social structures A B C
C. Retail dynamics

5. A B C
1. Rural population is large and
untapped but no. will saturate
Urban-Rural Split
748 779 772
800 742
700 671
Nos in (millions)
600
499
500
383
400 329
285
300 245
200
100
0
1995 2001 2005 2010 2020
Urban Rural
Source: Census 2001 projections

6. A B C
2. Two-fifth of villages account
for 4/5th of population
Population range No. of villages Population
Less than 100 8% 0.3%
100-199 8% 1%
200-499 21% 6%
500-999 24% 14%
1,000-1,999 22% 25%
2,000-4,999 14% 32%
5,000-9,999 2% 13%
10,000 & above 1% 9%
Total 593,615 742,490,639
Source: Census 2001

7. A B C
3. Heterogeneous in size &
affluence
Rural Market size (Rs. Crores) Rural per capita market size (in Rs.)
<Rs. 30,000 >Rs. 30-60,000 >Rs. 60, 000 <Rs. 20,000 >Rs. 20-25,000 >Rs. 25,000
Uttar Pradesh, West Uttar Pradesh
Bihar West Bengal
Bengal, Maharashtra, Bihar
>40 mill Madhya Maharashtra
Andhra Pradesh Madhya Pradesh
Pradesh Andhra Pradesh
Rajasthan Rajasthan
Rural population size
Orissa, Assam Tamil Nadu
Jharkhand, Karnataka Gujarat
>15-40 Tamil Nadu, Karnataka Orissa
Chhattisgarh Chhattisgarh Kerala
mill Gujarat, Kerala Assam
Punjab, Punjab Haryana
Jharkhand
Haryana
J&K, Uttarakhand
HP, J&K, Uttarakhand, Tripura,
Tripura, Delhi, Goa Himachal Pradesh
Meghalaya
Meghalaya, Nagaland Delhi
<15 mill Mizoram Nagaland
Manipur, Arunachal Goa
Manipur
Pradesh, Sikkim Sikkim
Arunachal
Mizoram Pradesh
 Some markets are big but not as affluent (Example: UP, Bihar) while some are
affluent but not very large (HP, J&K)
Source: Indicus Analytics, Economic Survey 2008, IMRB Analysis

8. A B C
4. Heterogeneous in social
development too!
Rural Market size (Rs. Crores) Rural per capita market size (in Rs.)
<Rs. 30,000 >Rs. 30-60,000 >Rs. 60, 000 <Rs. 20,000 >Rs. 20-25,000 >Rs. 25,000
Goa
Tripura
Himachal Pradesh, Delhi
Maharashtra Tamil Nadu Manipur
Uttarakhand, Tripura, HP
>65% Tamil Nadu Mizoram Uttarakhand
Delhi, Goa, Manipur,
Rural Literacy levels
Kerala Sikkim
Sikkim, Mizoram Maharashtra
Kerala
Punjab
Haryana, Punjab, West Bengal Nagaland Haryana
60-65% Chhattisgarh,
Gujarat West Bengal Gujarat
Nagaland
Chhattisgarh
Orissa, Jharkhand Andhra Pradesh
Orissa, Bihar Uttar Pradesh,
Assam, Rajasthan Meghalaya
J&K, Meghalaya MP Andhra Pradesh
<60% Karnataka Madhya Pradesh Arunachal Pradesh
Arunachal Pradesh Jharkhand
Assam Rajasthan Uttar Pradesh Karnataka
Bihar J&K
 Some markets are big and developed but not as affluent (E.g. TN), while some are
affluent but not as large or developed socially (E.g. Haryana) and some are large but
neither developed nor affluent (E.g. UP)
Source: Indicus Analytics, Economic Survey 2008, IMRB Analysis

9. A B C
5. Rural Household Income is on
the rise
Income @ 1999 prices
100% 1.5
3 2 3.5 6
3 4
8 8 6 H (>Rs.140,000)
12
80% 18
22
29 HM (Rs.105-
35 140,000)
60%
M (Rs.70-105,000)
46
40%
65 LM (Rs.35-70,000)
57
20% 44
24 L (<Rs.35,000)
0%
1993 1996 2000 2007
Source: Rural income survey by NCAER

10. A B C
6. Education levels are
growing rapidly
Annual
Population studying 1993 2001 Growth
Total rural population (Mill) 628 742
Primary school 72 93 2.8%
Junior school 21 31 4.0%
Secondary school 11 17 5.6%
Graduate college (2005) NA 5 NA
Total (In Millions) 104 146 3.8%
% Population enrolled 16.6% 19.7% +3%
 3% of rural household has one graduate & 16% has
at least one Member who has passed SSC & HSC
Source: Census 2001

11. A B C
5. Media coverage is growing rapidly
250 2004
2005
200 2006
2007
Population reached
150 2008
(‘000s)
100
50
0
Press TV Satellite Radio Cinema
 In 2008, Press reached 29.9%, TV - 43.9%, Satellite – 21%, Radio
- 20.1% and Cinema - 6.7% of rural population
Source: IRS survey

12. A B C
6. Aggressive efforts by marketers
to woo rural consumers
Between 2004-06, LG India
tripled the number of its
retail & distributor outlets
in rural areas to 2700
and 1300 respectively
HUL’s Shakti Program reached
~ 42000 women entrepreneurs
in 1,23,000 villages & Lifebuoy
Swastya Chetna reached 140
million people in 40,000 villages
between 2002-06
Source: Company reports

13. A B C
Result 1: Expenses converging
towards urban spend levels
Routine expenditure in 2008 Rural Urban
Food 55.4% 45.4%
Housing 3.8% 5.9%
Health 4.7% 4.6%
Transport 10.0% 11.1%
Education 6.4% 8.7%
Clothing 7.1% 6.8%
Durables 4.9% 5.0%
Others 7.7% 12.5%
Total Rs./annum/Household) 33,239 59,131
 Routine expenditure of average rural household has been
increasing rapidly, % spends converging towards Urban
Source: Expenditure Survey by Max-NCAER, 2008

14. A B C
Result 2: Growing share of rural
markets
Products Rural
Cigarettes 59%
Motorcycles 49%
Softdrinks 46%
Companies share of rural Rural
HUL 50%
Colgate 50%
LG (for TVs) 60%
Source: Company & other website info

15. A B C
The rural society… 3 rules of
the game
1
Strong social norms
2
Caste barriers, gender barriers
still very prevalent… though
people are looking at ways to
step around them
3 Strongly influenced by opinion leaders &
“influencers” - school teachers, medical
practitioner (PHC), priests, religious
leaders, urbanized relatives, local
politicians, the village head

16. A B C
The rural family… 3 trends
1
Traditional gender roles in the
family still rule… though some
gender benders are being
2
IJF – Individualized joint families are
sprouting across landscapes –
combines the best of both worlds
3 IJF impacting nature of parenting… a
carefree parent/ mother. This may be
impacting #1 to some extent

17. A B C
The rural earning… 3 new
trends we see
1
Parallel income… farming
not a very reliable option
2
Women contributing to the
family income… in parallel
work/ farm/ etc.,
3 A third earning coming from teenage/
young son or daughter… start
earning as soon as they are able to

18. A B C
The rural exposure…3 new
trends we see
1
NRVs… windows to the world…
become instant success stories in
the village
2
Cinema/ Bollywood… Shahrukh (no
surprises), action heroes like
Akshay, Salman, Chiranjeevi… ‘larger than
life’ holds cool, not much shades of grey
3
Gadgets entering homes in great
numbers…motorcycles, TV, Refrigerators
, mixie, mobile “everything will be done
with touch of button”

19. A B C
The 3 levels of aspirations
SENSE OF REFLECTED GLORY
“I want my son to join some government Child driven aspirations
service”
“My son will become someone big”
MORE GADGETISED - MORE COMFORT
Comfort driven aspirations
“Now we have a scooter then will have a
Maruti”
“Everything will be electronic”
RIGHT OF PASSAGE
Lifestyle driven aspirations
Then children will be married and our
daughter-in –law would be running the
house”

20. A B C
Rural retail outlets
Retail outlet growth in Rural India
(in 000s)
1993 1996 2001
9800
6633
5364

21. How does retail look…? A B C
Shanty Stall – ‘khokas’
Small outlet with 4-5 categories
Usually stocks cigarettes/beedi, paan/
tambakho, churan
Smaller sachets of washing powder, shampoo,
soap, etc.
Lot os loose stuff – biscuits, namkeens etc
Price point of Rs. 1 or 2
No credit
No fixed margin
Consumer profile
Mostly daily wage
laborers, purchases
made for the day
Mostly men , at times
kids

22. How does retail look…?
Local kirana store
Small to medium size outlet
Display -
Shop front-view crowded with sachets of
different products- shampoos, tea , oil
On the shop-floor – dals, masalas, rice,
loose oils, atta, biscuits
Jars – churans, pan masalas
Branded items – are displayed on shelves,
for increased visibility
(higher shelf – bottles, stand out value;
lower shelf - soaps)
Consumer profile
Credit possibility exists
Mix across occupations –
At times barter - exchange system everyone
Kids and men
Rare cases – women

23. How does retail look…?
Local Super Store – feeder taluk/town
Medium to big size outlet
Multiple categories – cereals, dry
groceries, vegetables, daily use items
Usually stock all items of daily use,
vegetables , cereals, pulses, groceries,
also a part of the parcel
Gives credit but selectively Consumer profile
Only men – they travel
out/go walking from the
village
Chemist (both in village/ nearby taluk)
Specialized outlet definitely stocking
medicines, tonics, Ghunti’s
Consumer profile
At times- baby oils, Chywanprash
Men and children
Women - in emergencies

25. Parallel jobs…
Harshdeep in Punjab is thinking of
studying further
He sits in his family shop and is
married
Ramesh Babu in AP cannot think
of going out of the house without
his mobile. He doesn’t want his
child to work hard like him.

26. Some homes…

27. Youth lifestyle
Likes changing
colour of hair often
Nokia franchise
Computer education

28. Women…

29. mohan.krishnan@imrbint.com
IMRB International