PRICING IN TERMS OF RURAL CONSUMERS

[abhishreshthaa]

Prudent in pricing – rural consumers:

The Indian consumer is very price sensitive. In the personal care sector, branding allows companies to partially pass on the cost increases to the customers. Most players have introduced products with mass-market pricing, so as to build volumes. The increased promotional activity that is taking place amongst players has relegated brand loyalty to the backseat.


Moreover, the increased competition has restricted not only growth rates, but also the ability to absorb frequent price increases, thus benefiting the consumer. With the rise in disposable incomes of consumers, players in the premium-product categories will be able to increase volumes.


The players in the personal care industry derive their strength from high capital turnover, strong brand equity and effective management of distribution logistics. The strength of the distribution reach is a key element in building a successful brand and helping it garner volumes through increased penetration levels. Nowadays, companies with strong distribution networks are using them successfully to distribute other companies' products as, for instance,


Marico's distribution agreement with P&G, to distribute its brands (Ariel bar, Camay Soap, Pampers diapers, Old Spice) for a fee. Such arrangements will enable newer players to penetrate the markets without having to set up their own distribution networks.


However, a strong distribution network can only succeed when used in tandem with the right packaging and pricing. In the price-sensitive rural economy, companies have to constantly launch value-for-money products that satisfy the needs of the rural consumer.


This has brought about the mini-pack revolution, which has become common across all product categories. Brands like Ariel, Surf, Colgate, Sunsilk, Pantene, etc. are now available in sachets and pouches at very low unit prices that can induce trials and push consumption levels.


Breaking the price barrier has become the key to drive volumes, especially for companies like HLL and C-P, which derive almost 35-50 per cent of their revenues from the rural market.

 

[jitendra05]

Prudent in pricing – rural consumers:

The Indian consumer is very price sensitive. In the personal care sector, branding allows companies to partially pass on the cost increases to the customers. Most players have introduced products with mass-market pricing, so as to build volumes. The increased promotional activity that is taking place amongst players has relegated brand loyalty to the backseat.


Moreover, the increased competition has restricted not only growth rates, but also the ability to absorb frequent price increases, thus benefiting the consumer. With the rise in disposable incomes of consumers, players in the premium-product categories will be able to increase volumes.


The players in the personal care industry derive their strength from high capital turnover, strong brand equity and effective management of distribution logistics. The strength of the distribution reach is a key element in building a successful brand and helping it garner volumes through increased penetration levels. Nowadays, companies with strong distribution networks are using them successfully to distribute other companies' products as, for instance,


Marico's distribution agreement with P&G, to distribute its brands (Ariel bar, Camay Soap, Pampers diapers, Old Spice) for a fee. Such arrangements will enable newer players to penetrate the markets without having to set up their own distribution networks.


However, a strong distribution network can only succeed when used in tandem with the right packaging and pricing. In the price-sensitive rural economy, companies have to constantly launch value-for-money products that satisfy the needs of the rural consumer.


This has brought about the mini-pack revolution, which has become common across all product categories. Brands like Ariel, Surf, Colgate, Sunsilk, Pantene, etc. are now available in sachets and pouches at very low unit prices that can induce trials and push consumption levels.


Breaking the price barrier has become the key to drive volumes, especially for companies like HLL and C-P, which derive almost 35-50 per cent of their revenues from the rural market.

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