Methods of empirical research

The last page discussed general design issues; now we look at systematic ways of
approaching data collection before describing some procedures for collecting data.

Quantitative vs. qualitative

Main methods used in empirical research

Quantitative vs. qualitative

First, however, it is important to distinguish quantitative and qualitative approaches

to data collection:

Quantitative methods: Qualitative methods:

typically use numbers typically use words

are deductive are inductive

involve the researcher as require

ideally an objective, more participation and involvement on the
impartial observer part of the researcher.

focuses on understanding of phenomena in

may focus on cause and
their social, institutional, political and economic
effect
context

require a hypothesis do not require a hypothesis

have the drawback that they

may force people into have the drawback that they focus on a few
categories, also it cannot go individuals, and may therefore be difficult to
into much depth about generalize.
subjects and issues.

Main methods used in empirical research

Experiment - an experiment involves deliberately testing a hypothesis and reaching a
conclusion, by creating a situation where one of the variables is manipulated: what
happens to one variable (usually called the independent variable) when another
variable (usually called dependent) is removed or altered. It starts with a hypothesis,
then tests it, analysing the resultant data and reporting the findings.

Pike et al. describe a student experiment in recycling in 'Science education and

sustainability initiatives', International Journal of Sustainability in Higher
Education, Volume 4 Number 3 2003 pp. 218-229.

Survey - this method involves collecting a large amount of data from a large
population, most usually by questionnaires or structured interviews. Most usually it is
a quantitative method, involving 'closed' questions with a predetermined number of
answers. These are in fact much easier to fill in, and therefore more likely to get a
high response rate, as does keeping the questionnaire short. It's a good idea to trial
the survey to ensure ease of completion and lack of ambiguity.

Case study - these are much used in business research, and involve looking at a
particular set of issues in a particular context in a particular organization or part of an
organization. There are many case studies published in Emerald journals, and to
access some examples and read more about this method, go to 'How to write a case
study'.

Ethnographic and observational methods - as the term suggests, this has its roots
in anthropology and requires involvement in the setting of the research. Various forms
of observation are much used in management research, although they can be time
consuming. It is most usually a qualitative method, although it can be used
quantitatively if highly structured. Often done at exploratory stages of research. It is
particularly useful when watching people interacting with something, for example
students interacting with learning material, people interacting with their environment
in a shopping precinct or leisure centre.

Mathews and Boote, in '"Saying is one thing; doing is another": the role of
observation in marketing research' provide an excellent description of
observation techniques as applied to marketing research, with
a classification and a case study involving the siting of a restaurant.

Slack and Rowland provide a useful professional perspective on the use of

observation, in 'Observation: Perspectives on Research Methodologies for Leisure
Managers' in Management Research News, Vol 24, No. 1/2.

Vinten describes use of participant observation (when the researcher is directly

involved) in 'Participant Observation: A Model for Organizational
Investigation?' Journal of Managerial Psychology, 1994 Volume: 9 Number: 2
Pages 30-38
Grounded theory - this is a research approach where there is an initial observation
with minimal preconceptions followed by the generation of a hypothesis, theory or
prediction, which is then further tested. Its use of data is therefore iterative, with
theory being grounded and refined as further data is sought. As a method it is
initially inductive, but can become deductive at a later stage.

Leonard and McAdam explore grounded theory in 'Grounded theory methodology

and practitioner reflexivity in TQM research' in International Journal of Quality &
Reliability Management, Volume 18 Number 2 2001 pp. 180-194.

Action research - This occurs in situations where people are ostensibly reflecting on
their own work and self consciously trying to improve practice and performance. There
will here be close collaboration between the practitioner and the researcher, and a
strong focus on change.

Vinten provides a definition of action research in 'Participant Observation: A

Model for Organizational Investigation?'

Techniques of data collection and analysis

Empirical research: Definition

Empirical research is defined as any research where conclusions of the study
is strictly drawn from concretely empirical evidence, and therefore “verifiable”
evidence.

This empirical evidence can be gathered using quantitative market

research and qualitative market research methods.

For example: A research is being conducted to find out if listening to happy

music while working may promote creativity? An experiment is conducted by
using a music website survey on a set of audience who are exposed to happy
music and another set who are not listening to music at all, and the subjects
 are then observed. The results derived from such a research will give
empirical evidence if it does promote creativity or not.

Empirical research: Origin

You must have heard the quote” I will not believe it unless I see it”. This came
from the ancient empiricists, a fundamental understanding that powered the
emergence of medieval science during the renaissance period and laid the
foundation of modern science, as we know it today. The word itself has its
roots in greek. It is derived from the greek word empeirikos which means
“experienced”.

In today’s world, the word empirical refers to collection of data using evidence
that is collected through observation or experience or by using calibrated
scientific instruments. All of the above origins have one thing in common
which is dependence of observation and experiments to collect data and test
them to come up with conclusions.

Types and methodologies of empirical research

Empirical research can be conducted and analysed using qualitative or
quantitative methods.

 Quantitative research: Quantitative research methods are used to gather

information through numerical data. It is used to quantify opinions,
behaviors or other defined variables. These are predetermined and are in a
more structured format. Some of the commonly used methods are survey,
longitudinal studies, polls, etc
 Qualitative research: Qualitative research methods are used to gather non
numerical data. It is used to find meanings, opinions, or the underlying
reasons from its subjects. These methods are unstructured or semi
structured. The sample size for such a research is usually small and it is a
conversational type of method to provide more insight or in-depth
information about the problem Some of the most popular forms of methods
are focus groups, experiments, interviews, etc.
Data collected from these will need to be analysed. Empirical evidence can
also be analysed either quantitatively and qualitatively. Using this, the
researcher can answer empirical questions which have to be clearly defined
and answerable with the findings he has got. The type of research
design used will vary depending on the field in which it is going to be used.
Many of them might choose to do a collective research involving quantitative
 and qualitative method to better answer questions which cannot be studied in
a laboratory setting.

Quantitative research methods

Quantitative research methods aid in analyzing the empirical evidence
gathered. By using these a researcher can find out if his hypothesis is
supported or not.

 Survey research: Survey research generally involves a large audience to

collect a large amount of data. This is a quantitative method having a
predetermined set of closed questions which are pretty easy to answer.
Because of the simplicity of such a method, high responses are achieved. It
is one of the most commonly used methods for all kinds of research in
today’s world.
Previously, surveys were taken face to face only with maybe a recorder.
However, with advancement in technology and for ease, new mediums such
as emails, or social media have emerged.

For example: Depletion of energy resources is a growing concern and hence

there is a need for awareness about renewable energy. According to recent
studies, fossil fuels still account for around 80% of energy consumption in the
United States. Even though there is a rise in the use of green energy every
year, there are certain parameters because of which the general population is
still not opting for green energy. In order to understand why, a survey can be
conducted to gather opinions of the general population about green energy
and the factors that influence their choice of switching to renewable energy.
Such a survey can help institutions or governing bodies to promote
appropriate awareness and incentive schemes to push the use of greener
energy.

Learn more: Renewable Energy Survey Template

 Experimental research: In experimental research, an experiment is set up

and a hypothesis is tested by creating a situation in which one of
the variable is manipulated. This is also used to check cause and effect. It is
tested to see what happens to the independent variable if the other one is
removed or altered. The process for such a method is usually proposing a
hypothesis, experimenting on it, analyzing the findings and reporting the
findings to understand if it supports the theory or not.
 For example: A particular product company is trying to find what is the reason
for them to not be able to capture the market. So the organisation makes
changes in each one of the processes like manufacturing, marketing, sales
and operations. Through the experiment they understand that sales training
directly impacts the market coverage for their product. If the person is trained
well, then the product will have better coverage.

 Correlational research: Correlational research is used to find relation

between two set of variables. Regression is generally used to predict
outcomes of such a method. It can be positive, negative or neutral
correlation.
For example: Higher educated individuals will get higher paying jobs. This
means higher education enables the individual to high paying job and less
education will lead to lower paying jobs.

 Longitudinal study: Longitudinal study is used to understand the traits or

behavior of a subject under observation after repeatedly testing the subject
over a period of time. Data collected from such a method can be qualitative
or quantitative in nature.
For example: A research to find out benefits of exercise. The target is asked
to exercise everyday for a particular period of time and the results show
higher endurance, stamina, and muscle growth. This supports the fact that
exercise benefits an individual body.

 Cross sectional: Cross sectional study is an observational type of method,

in which a set of audience is observed at a given point in time. In this type,
the set of people are chosen in a fashion which depicts similarity in all the
variables except the one which is being researched. This type does not
enable the researcher to establish a cause and effect relationship as it is not
observed for a continuous time period. It is majorly used by healthcare
sector or the retail industry.
For example: A medical study to find the prevalence of under-nutrition
disorders in kids of a given population. This will involve looking at a wide
range of parameters like age, ethnicity, location, incomes and social
backgrounds. If a significant number of kids coming from poor families show
under-nutrition disorders, the researcher can further investigate into it. Usually
a cross sectional study is followed by a longitudinal study to find out the exact
reason.
 Causal-Comparative research: This method is based on comparison. It is
mainly used to find out cause-effect relationship between two variables or
even multiple variables.
For example: A researcher measured the productivity of employees in a
company which gave breaks to the employees during work and compared that
to the employees of the company which did not give breaks at all.

Qualitative research methods

Some research questions need to be analysed qualitatively, as quantitative
methods are not applicable there. In many cases, in-depth information is
needed or a researcher may need to observe a target audience behavior,
hence the results needed are in a descriptive form. Qualitative research
results will be descriptive rather than predictive. It enables the researcher to
build or support theories for future potential quantitative research. In such a
situation qualitative research methods are used to derive a conclusion to
support the theory or hypothesis being studied.

 Case study: Case study method is used to find more information through
carefully analyzing existing cases. It is very often used for business
research or to gather empirical evidence for investigation purpose. It is a
method to investigate a problem within its real life context through existing
cases. The researcher has to carefully analyse making sure the parameter
and variables in the existing case are the same as to the case that is being
investigated. Using the findings from the case study, conclusions can be
drawn regarding the topic that is being studied.
For example: A report mentioning the solution provided by a company to its
client. The challenges they faced during initiation and deployment, the findings
of the case and solutions they offered for the problems. Such case studies are
used by most companies as it forms an empirical evidence for the company to
promote in order to get more business.

 Observational method: Observational method is a process to observe and

gather data from its target. Since it is a qualitative method it is time
consuming and very personal. It can be said that observational method is a
part of ethnographic research which is also used to gather empirical
evidence. This is usually a qualitative form of research, however in some
cases it can be quantitative as well depending on what is being studied.
For example: setting up a research to observe a particular animal in the rain-
forests of amazon. Such a research usually take a lot of time as observation
has to be done for a set amount of time to study patterns or behavior of the
 subject. Another example used widely nowadays is to observe people
shopping in a mall to figure out buying behavior of consumers.

 One-on-one interview: Such a method is purely qualitative and one of the

most widely used. The reason being it enables a researcher get precise
meaningful data if the right questions are asked. It is a conversational
method where in-depth data can be gathered depending on where the
conversation leads.
For example: A one-on-one interview with the finance minister to gather data
on financial policies of the country and its implications on the public.

 Focus groups: Focus groups are used when a researcher wants to find
answers to why, what and how questions. A small group is generally chosen
for such a method and it is not necessary to interact with the group in
person. A moderator is generally needed in case the group is being
addressed in person. This is widely used by product companies to collect
data about their brands and the product.
For example: A mobile phone manufacturer wanting to have a feedback on
the dimensions of one of their models which is yet to be launched. Such
studies help the company meet the demand of the customer and position their
model appropriately in the market.

 Text analysis: Text analysis method is a little new compared to the other
types. Such a method is used to analyse social life by going through images
or words used by the individual. In today’s world, with social media playing a
major part of everyone’s life, such a method enables the research to follow
the pattern that relates to his study.
For example: A lot of companies ask for feedback from the customer in detail
mentioning how satisfied are they with their customer support team. Such
data enables the researcher to take appropriate decisions to make their
support team better.

Sometimes a combination of the methods is also needed for some questions

that cannot be answered using only one type of method especially when a
researcher needs to gain a complete understanding of complex subject
matter.

Steps for conducting empirical research

Since empirical research is based on observation and capturing experiences,
it is important to plan the steps to conduct the experiment and how to analyse
it. This will enable the researcher to resolve problems or obstacles which can
occur during the experiment.

Step #1: Define the purpose of the research

This is the step where the researcher has to answer questions like what
exactly do I want to find out? What is the problem statement? Are there any
issues in terms of the availability of knowledge, data, time or resources. Will
this research be more beneficial than what it will cost.

Before going ahead, a researcher has to clearly define his purpose for the
research and set up a plan to carry out further tasks.

Step #2 : Supporting theories and relevant literature

The researcher needs to find out if there are theories which can be linked to
his research problem. He has to figure out if any theory can help him support
his findings. All kind of relevant literature will help the researcher to find if
there are others who have researched this before, or what are the problems
faced during this research. The researcher will also have to set up
assumptions and also find out if there is any history regarding his research
problem

Step #3: Creation of Hypothesis and measurement

Before beginning the actual research he needs to provide himself a working

hypothesis or guess what will be the probable result. Researcher has to set up
variables, decide the environment for the research and find out how can he
relate between the variables.

Researcher will also need to define the units of measurements, tolerable

degree for errors, and find out if the measurement chosen will be acceptable
by others.

Step #4: Methodology, research design and data collection

In this step, the researcher has to define a strategy for conducting his
research. He has to set up experiments to collect data which will enable him
to propose the hypothesis. The researcher will decide whether he will need
experimental or non experimental method for conducting the research. The
type of research design will vary depending on the field in which the research
is being conducted. Last but not the least, the researcher will have to find out
parameters that will affect the validity of the research design. Data collection
will need to be done by choosing appropriate samples depending on the
research question. To carry out the research, he can use one of the
many sampling techniques. Once data collection is complete, researcher will
have empirical data which needs to be analysed.

Step #5: Data Analysis and result

Data analysis can be done in two ways, qualitatively and quantitatively.

Researcher will need to find out what qualitative method or quantitative
method will be needed or will he need a combination of both. Depending on
the analysis of his data, he will know if his hypothesis is supported or rejected.
Analyzing this data is the most important part to support his hypothesis.

Step #6: Conclusion

A report will need to be made with the findings of the research. The
researcher can give the theories and literature that support his research. He
can make suggestions or recommendations for further research on his topic.
 Empirical research methodology cycle

A.D. de Groot, a famous dutch psychologist and a chess expert conducted

some of the most notable experiments using chess in the 1940’s. During his
study, he came up with a cycle which is consistent and now widely used to
conduct empirical research. It consists of 5 phases with each phase being as
important as the next one. The empirical cycle captures the process of coming
up with hypothesis about how certain subjects work or behave and then
testing these hypothesis against empirical data in a systematic and rigorous
approach. It can be said that it characterizes the deductive approach to
science. Following is the empirical cycle.

 Observation: At this phase an idea is sparked for proposing a hypothesis.

During this phase empirical data is gathered using observation. For
example: a particular species of flower bloom in a different color only during
a specific season.
 Induction: Inductive reasoning is then carried out to form a general
conclusion from the data gathered through observation. For example: As
stated above it is observed that the species of flower blooms in a different
 color during a specific season. A researcher may ask a question “does the
temperature in the season cause the color change in the flower?” He can
assume that is the case, however it is a mere conjecture and hence an
experiment needs to be set up to support this hypothesis. So he tags a few
set of flowers kept at a different temperature and observes if they still
change the color?
 Deduction: This phase helps the researcher to deduce a conclusion out of
his experiment. This has to be based on logic and rationality to come up
with specific unbiased results.For example: In the experiment, if the tagged
flowers in a different temperature environment do not change the color then
it can be concluded that temperature plays a role in changing the color of
the bloom.
 Testing: This phase involves the researcher to return to empirical methods
to put his hypothesis to the test. The researcher now needs to make sense
of his data and hence needs to use statistical methods to determine the
temperature and bloom color relationship. If the researcher finds out that
most flowers bloom a different color when exposed to the certain
temperature and the others do not when the temperature is different, he has
found support to his hypothesis. Please note this not proof but just a support
to his hypothesis.
 Evaluation: This phase is generally forgotten by most but is an important
one to keep gaining knowledge. During this phase the researcher puts forth
the data he has collected, the support argument and his conclusion. The
researcher also states the limitations for the experiment and his hypothesis
and suggests tips for others to pick it up and continue a more in-depth
research for others in the future.

Advantages of Empirical research

There is a reason why empirical research is one of the most widely used
method. There are a few advantages associated with it. Following are a few of
them.

 It is used to authenticate traditional research through various experiments

and observations.
 This research methodology makes the research being conducted more
competent and authentic.
 It enables a researcher understand the dynamic changes that can happen
and change his strategy accordingly.
 The level of control in such a research is high so the researcher can control
multiple variables.
 It plays a vital role in increasing internal validity.

Disadvantages of Empirical research

Even though empirical research makes the research more competent and
authentic, it does have a few disadvantages. Following are a few of them.

 Such a research needs patience as it can be very time consuming. The

researcher has to collect data from multiple sources and the parameters
involved are quite a few, which will lead to a time consuming research.
 Most of the time, a researcher will need to conduct research at different
locations or in different environments, this can lead to an expensive affair.
 There are a few rules in which experiments can be performed and hence
permissions are needed. Many a times, it is very difficult to get certain
permissions to carry out different methods of this research.
 Collection of data can be a problem sometimes, as it has to be collected
from a variety of sources through different methods.

Why is there a need for empirical research?

Empirical research is important in today’s world because most people believe
in something only that they can see, hear or experience. It is used to validate
multiple hypothesis and increase human knowledge and continue doing it to
keep advancing in various fields.

For example: Pharmaceutical companies use empirical research to try out a

specific drug on controlled groups or random groups to study the effect and
cause. This way they prove certain theories they had proposed for the specific
drug. Such research is very important as sometimes it can lead to finding a
cure for a disease that has existed for many years. Such research is not just
useful in science but in many other fields like history, social sciences,
business, etc.

With the advancement in today’s world, empirical research has become

critical as well as a norm in many fields so as to support their hypothesis and
gain more knowledge. The methods mentioned above are very useful for
carrying out such research however, a number of new methods will keep
coming up as the nature of new investigative questions keeps getting unique
or changes.
 RURAL MARKETING
Rural market oppurtunities & challenges
1. 1. Rural Marketing – Issues ,Opportunities & Challenges Presentation by Peshwa Acharya
2. 2. Indian RuralThe Macro Scenario
3. 3. Rural Market Has Finally Arrived•  742 million people•  Rural is bigger than urban • 
FMCGs 53%•  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 •  Total Rs 1,23,000 Crore Source: Francis Kanoi, 2002
4. 4. Rural Market Has Finally Arrived•  Some impressive facts about the Rural market •  In
2001-02, LIC sold 55 % of its policies in rural India. •  50% of BSNL mobile connections in
small towns/ villages. •  482 crorepatis in rural Haryana, only 137 in Bangalore, similar
number in Kolkata or Hyderabad. •  55.6 million Kisan Credit Cards (KCC) issued (against 60
million credit-plus-debit cards in urban) resulting in tremendous liquidity.
5. 5. Rural Market Has Finally Arrived•  Some impressive facts about the Rural market •  Of 20
million Rediffmail signups, 60 % are from small towns. 50% transactions from these towns on
Rediff online shopping site. •  No of HHs saving in formal financial instruments (banks,
mutual funds, shares etc) same in rural and urban at 6.2 million in 2002-03 •  Electricity
consumption Sector 1980 2000 Agriculture 17.6% 29.2% Industry 58.0% 34.8%
6. 6. Rural Income Dispersion Consumer Annual Income 1995-96 2006-07 Class Very Rich
Above Rs 215,000 1.6 5.6Consuming Class Rs 45,001- 215,000 2.7 5.8 Climbers Rs
22,001- 45,000 8.3 22.4 Aspirants Rs 16,001 - 22,000 26.0 44.6 Destitutes Rs 16,000 &
Below 61.4 20.2 Total 100.0 100.0 NCAER Projections Based on 7.2% GDP Growth
7. 7. Rural Housing Pattern (percentage)House Type 1981 1991 2001 Pucca 22 31 41Semi-
Pucca 37 36 36 Kuccha 41 33 23 Source: Census of India
8. 8. Distribution of Villages Population No of villages % of total villagesLess than 200 96,855
15.7 Hardly any shops in these 2.3 lac200-500 1,36,454 21.4 villages501-1000 1,56,737
24.61001-2000 1,40,751 22.02001-5000 87,206 13.75001-1000 20,363 3.2 17% of villages
account for 50%Total no of villages 6,38,365 100.0 of rural population & 60% rural wealth
Source: Census 2001
9. 9. Distribution of Towns Towns 80 35 72 70 30 30 61 60 25 25 50 Percentage 20 Millions 40
34 15 30 14 27 26 23 11 11 10 20 9 10 5 0 0 Top 8 Other 1 Mn+ 0.5-1 Mn 0.2-0.5 Mn 0.1-0.2
Mn < 0.1 Mn Mn Town With Pop %Source: NRS 2005
10. 10. Distribution Of Towns Continued…Town Class Population No. Of Towns % of Total
Class I 1 Lac above 423* 8.2 Class II 50,000 – 99,999 498 9.6 90 % of durables purchased
by Class III 20,000 – 49,999 1386 26.9 rural people are from these 1900 Class IV 10,000 –
19, 999 1560 30.2 towns Class V 5000 – 9,999 1057 20.5 Class VI Less than 5000 237 4.6
Total 5161 100.0* 10 Lac +: 27, 5 – 10 Lac: 42, 1 – 5 Lac: 354 Source: Census 2001
11. 11. Issues In Rural Distribution Poor road connectivity Large number ofLarge number of
small intermediaries leading markets to higher costs Low density of shopsDispersed
population Issues In per village and high and trade Distribution variation in their
concentration Highly credit-driven Inadequate banking and market and low credit facilities
forinvestment capacity of Poor storage system, retailers, poor viability retailers leading to
inadequate of outlets stocking of products
12. 12. InsightsThe Rural Consumer
13. 13. Rural Consumer Insights•  Rural India buys •  FMCGs more often (mostly weekly). •  Buys
small packs, low unit price more important than economy. •  Distribution and pricing are the
mantras to success in rural India. Even expensive brands like Close up, Marie biscuits, Clinic
shampoo are doing well because of deep distribution
14. 14. Rural Consumer Insights•  In rural India, brands rarely fight with each other•  They just
have to be present at the right place Average Number of Brands Per Retailer Category11
Rural Urban Toothbrush 3 7 Toothpaste 3 6 Biscuits 3 9 Hair Oil 3 7 Source: ORG 2002
15. 15. Rural Consumer Insights Details Rural UrbanAverage monthly sale / outlet Rs 3,000 Rs
12,500 No. of product categories 19 27 stocked per outlet No. of brands / outlet 42
92Average Stock Keeping Units / 62 154 outlet Source: ORG 2002
16. 16. Rural Consumer Insights•  Many brands are building strong rural base without much
advertising support. •  Chik shampoo, the second largest shampoo brand. •  Ghadi detergent,
fourth largest brand.•  Brand recognition not through name but. •  Color (Lal Dant Manjan,
Red battery) •  Numeric (555 detergent bar) •  Visual (Ghari detergent, Katchua Chaap)•  Buy
value for money not cheap products.
17. 17. Rural MythsPerception vs. Reality
18. 18. Myth 1 : Rural a Homogeneous Mass •  The reality •  Heterogeneous population •  16
languages •  State wise variations in rural demographics •  Literacy (Kerala 90%, Bihar 44%)
•  Population below poverty line (Orissa 48%, Punjab 6%) Big Land Lords Rural Pyramid
Traders & Small Farmers Marginal Farmers Laborer’s & ArtisansSource: Planning
Commission, GOI
19. 19. Myth 2 : Disposable Income is Low•  The Reality •  Number of middle class HHs (annual
income Rs 45,000- 2,15,000) Rural 15.6 Million Urban 16.4 Million •  Per Capita Annual
Income Rural Rs 9,481 (Punjab- Rs 16.5 K, Haryana- Rs 14.8 K) Urban Rs 19,407 Source:
NCAER, 2002
20. 20. Myth 3 : Individual Decide About Purchases•  The Reality •  Decision making process is
often collective •  Purchase process- influencer, decider, buyer, one who pays can all be
different. •  Marketers must address brand message at several levels •  Rural youth brings
brand knowledge to House Hold
21. 21. India’s RuralWhat’s Changing
22. 22. Infrastructure Improving Rapidly•  In 50 years only 40% villages connected by road, in
next 10 years another 30%.•  > 90 % villages electrified, though only 44% rural homes have
electric connections.
23. 23. Infrastructure Improving Rapidly•  Rural telephone density has gone up by 148% in the
last 5 years, every 500+ pop is connected by STD.•  18.8 million individual phone
connections.•  Levels of literacy are up. Rural Tele-density (phones per 100) Division 2000
2005 % increase Rural 0.7 1.74 148% Urban 8.2 26.2 220% All 2.9 9.08 213% Source:
TRAI, 2005 & Census 2001
24. 24. Infrastructure Improving Rapidly•  70% of R1,R2, R3 can be reached through mass
media. 70 53 41 SEC wise Rural HH R1 - 4% 26 R2 - 11% 21 R3 - 39% 14 R4 - 46%
Satellite Radio Press Cinema TV All Media TV Source: IRS 2001 & 2005
25. 25. Rural MarketOpportunities & Challenges
26. 26. Marketing Opportunities•  Low penetration in rural Per 1000 HH FMCG’s Urban Rural
Total Toothpaste 749 376 486 Soft Drinks 370 122 198 Mosquito Repellent 541 152 267
Coffee 232 79 125 Skin Cream 315 178 220 Health Beverage 188 47 88 Source: IRS 2005
27. 27. Marketing Opportunities•  Low penetration among lower pop strata villages and SEC
R3/R4 Penetration of Durables and FMCG (% of HH) Product Category Pop Strata (Villages)
SEC 5K+ 1K-5K <1K R1/R2 R3/R4 Radio 14.1 14.5 14.4 24.4 12.7 CTV 18.5 9.7 7.1 30.1
7.8 Telephone 12.7 5.3 3.7 23.6 3.6 Toilet Soap 92.4 88.2 87.2 96.0 87.7 Shampoo 35.3
33.1 24.6 47.5 29.2 Toothpaste 49.5 36.0 29.1 69.1 32.1 Soft Drinks 16.0 12.3 7.8 22.7
10.4Mosquito Repellents 22.4 14.8 8.4 31.2 12.4 Source: IRS 2005
28. 28. Marketing Opportunities •  Rapidly growing product categories and largest rural brands in
rural markets Rural Growth of FMCG and Durables (% of HH) Largest Rural Brands Product
Category 2000 2005 Growth (%) Brand Category Growth (%) CTV 3.7 11.1 217.6 Parle-G
Biscuits 8.2 Motorcycle 3.0 5.3 76.7 Lifebuoy Toilet Soap 6.4 Refrigerator 3.2 4.2 31.3 Active
Tractor 1.8 2.3 27.8 Lux Toilet Soap 5.6 Shampoo 13.3 31.9 213.7 Ghari W. Powder
21.5Packaged Edible Oil 8.7 13.7 57.5 Nirma W. Powder -13.1Packaged Biscuits 39.1 54.2
 38.6 Figures are year-on-year growth for Soft Drinks 9.8 12.2 24.5 MAT July 2004 by Value
Source: AC Nielsen Retail Store AuditBase: All Rural Households Source: IRS,2005
29. 29. Marketing Opportunities•  SEC wise rural households •  R1 - 4% •  R2 - 11% •  R3 - 39%
•  R4 - 46%•  Rich HHs FMCGs Annual Consumption Urban Rural Rs 13,000 Rs 9,400• 
Rural consumption volumes (R1+R2+R3) •  Toothpaste 88% •  Toothpowder 79% So this half
of the population consumes •  Shampoo 88% over 75% of FMCG volumes
30. 30. Challenges In future
31. 31. Challenge•  Reaching the product to remote rural locations and entering more rural
homes (penetration)•  Increasing rural incomes (market growth)
32. 32. Challenges•  Making effective use of the large available infrastructure •  Post offices
1,38,000 •  PCOs 2,00,000 •  Haats (periodic markets) 42,000 •  Melas (exhibitions) 25,000 • 
Mandis (agri markets) 7,000 •  Public distribution shops 3,80,000 •  Bank branches 32,000
33. 33. New Wave•  There are some large format rural retail stores •  DSCL Haryali stores •  M &
M Shubh Labh stores •  TATA/Rallis Kisan Kendras •  Escorts rural stores •  Warna bazaar,
Maharashtra (annual sale Rs 50 crore) •  ITC Choupal Sagar
34. 34. Some Possible directions….•  Long term commitment to rural. Create a dedicated rural
vertical•  Grow size of rural pie: Public-Private partnerships•  Create rural specific Products
and communication•  Explore new Distribution models – mobile traders, NYKS volunteers
etc•  Understand & profile Rural Consumers: Do not go by our urban bias..•  Organize rural
sensitization training for managers•  Rural Marketing is not “unglamorous” … message for
potential employees.
35. 35. Quote - Unquote•  The future lies with those companies who see the poor as their
customers. C K Prahalad•  To get rich, sell to the poor. Pradeep Kashyap
36. 36. Connecting To Bharat Innovative Solutions
37. 37. Project “Shakti”HLL – Rural Distribution Model
38. 38. Rural Coverage Strategic Situation High Combined IDC Indirect CoverageMarket Access
2-5k 5k+ Shakti Streamline Low <2k 2-5k Low High Turnover / market
39. 39. Women Self Help Groups•  Group of 10-15 women who come together to form a mutual
thrift society, supported by Government or NGOs•  Micro credit from the rural banks to set up
enterprises.•  Rapid snowballing of the SHG movement in India•  Over 1 million groups in
existence today
40. 40. Project “Shakti”•  Rural Distribution Model: HLL - Self Help Groups •  Existing coverage of
brands in 2,000+ pop villages. Need to penetrate deeper •  Women appointed as dealers,
sell to members of SHG, also retailers in 3-4 villages. 20 dealers per district.
41. 41. Project “Shakti”•  Project •  Conceptualization, Pilot, national rollout •  Identification &
selection of potential Shakti dealers •  Capacity Building of Shakti dealer to become
entrepreneurs •  Assisting in getting finance from banks •  Link up to HLL distribution
network•  Roll out completed in 12 states, 15000 Shakti dealers appointed
42. 42. Shakti Vision•  Shakti now •  15000 Shakti Entrepreneurs •  50000 villages •  10 Million
Consumer •  Turnover 128 Crore•  Shakti Vision 2006 •  25,000 Shakti Entrepreneurs • 
100,000 villages •  100 million consumer •  Turnover 1000 Crores
43. 43. Reaching The Last Mile The Volunteer Model
44. 44. Rural Youth•  Educated rural youth work with voluntary organizations (NYKS, NGO,
Youth clubs) in rural areas.•  They learn communicating and mobilization skills while working
on various development projects.•  Development projects are time bound and these skilled
rural youth are available for corporate assignments.
45. 45. Successful Models….•  Study of the Volunteer model ….to reach the last mile •  Recruit
class 10+, rural youth (18-30 age) with skills in communication and community mobilization • 
Build their skills in product and brand communication (customized to company) •  Build their
skills in salesmanship •  Deploy them to take corporate brands into the hinterland and rural
households.
46. 46. Model - Operationalized•  Trained volunteer is provided a branded bicycle, umbrella and
a box to carry ready stocks.•  He wears a branded T- shirt and a cap•  Route Plans, PJPs
 and JCs are developed for him to cover uncovered markets•  He is attached to the rural
distributor from where he picks up stock on cash-n-carry
47. 47. The Model•  Market coverage •  Daily visit to uncovered areas (>2000 pop strata) • 
Retailers in 4 villages or •  1 Haat and 2 villages in a day•  Covers villages within 10km radius
from own village•  Retailer sale at trade margins and Haat sale at price close to MRP• 
Communication •  Focuses on Brand Recognition to fight menace of spurious • 
Communicates Brand benefits •  Puts banners, posters etc
48. 48. Pilot Results•  Coverage of •  At least 4 Haats every week •  30 villages•  Average daily
sale generated Rs 700 / Youth•  Cost to company Rs 3000 / youth / month (against Rs 3000 /
day van cost)•  250 youth placed in state of Uttar Pradesh.