Rural Marketing: Opportunities, Challenges & Strategies

Description
Product life cycle in rural market, marketing strategy in rural market, Different Product strategies adopted by companies Mahindra & Mahindra, Sampoorna TV, hero cycles, titan watches, marketing strategy for spurious products, packaging strategies, pricing strategy in rural area, examples of organized retailing in rural marketing like Mahindra Subhlabh Services Ltd., ITC’s Choupal Sager, Mahamaza: A Success Story, E-­choupal the V21 SCM Model, distribution strategy in rural india, HLL's Project Shakti, promotional strategies in rural India, Success Stories in Rural Marketing using above promotional strategies, prospects for rural india.


 
 
 


 
 
 
 

MARKETING
 STRATEGY
 
Rural
 Marketing:
 Opportunities,
  Challenges
 &
 Strategies
 to
 Win
 the
 War
 

 

 
 
 
 
 
 
  GROUP
 MEMBERS
  Evellyn
 Goes
 114
  Rahul
 Nair
 134
  Anuja
 Shah
 141
 
  Mahesh
 Soni
 157
 
 


 
Table
 of
 Contents
 
Rural
 Environment ..........................................................................................................................3
  Product
 Strategy ...............................................................................................................................6
  Pricing
 Strategy .............................................................................................................................. 15
  Innovations
 in
 Rura
 Marketing................................................................................................. 20
  Distribution
 Strategy.................................................................................................................... 26
  Consumer
 Behavior ...................................................................................................................... 31
  Promotional
 Strategies................................................................................................................ 34
  Future
 of
 Rural
 Marketing.......................................................................................................... 39
 


 
 
 
 

 


 
 
 
 


 
 
 
 
 
 
 
 
2
 

Rural
 Environment
 
 
For
  quite
  some
  time
  now,
  the
  lure
  of
  rural
  India
  has
  been
  the
  subject
  of
  animated
  discussion
 in
 corporate
 suites.
 And
 there
 is
 a
 good
 reason
 too.
 With
 urban
 markets
 getting
  saturated
  for
  several
  categories
  of
  consumer
  goods
  and
  with
  rising
  rural
  incomes,
  marketing
  executives
  are
  fanning
  out
  and
  discovering
  the
  strengths
  of
  the
  large
  rural
  markets
 as
 they
 try
 to
 enlarge
 their
 markets.
 Today,
 the
 idea
 has
 grown
 out
 of
 its
 infancy
  and
 dominates
 discussions
 in
 any
 corporate
 boardroom
 strategy
 session.
 
 
  Adi
 Godrej,
 chairman
 of
 the
 Godrej
 group
 that
 is
 in
 a
 range
 of
 businesses
 from
 real
 estate
  and
  personal
  care
  to
  agri-­?foods,
  has
  no
  hesitation
  proclaiming,
  It
  is
  a
  myth
  that
  rural
  consumers
  are
  not
  brand
  and
  quality
  conscious.
  A
  survey
  by
  the
  National
  Council
  for
  Applied
  Economic
  Research(NCAER),
  India’s
  premier
  economic
  research
  entity,
  recently
  confirmed
 that
 rise
 in
 rural
 incomes
 is
 keeping
 pace
 with
 urban
 incomes.
 From
 55
 to
 58
  per
 cent
 of
 the
 average
 urban
 income
 in
 1994-­?95,
 the
 average
 rural
 income
 has
 gone
 up
 to
  63
 to
 64
 per
 cent
 by
 2001-­?02
 and
 touched
 almost
 66
 per
 cent
 in
 2004-­?05.
 The
 rural
 middle
  class
 is
 growing
 at
 12
 per
 cent
 against
 the
 13
 per
 cent
 growth
 of
 its
 urban
 counter-­?
 part.
  Even
 better,
 the
 upper
 income
 class
 those
 with
 household
 incomes
 of
 over
 Rs
 one
 million
  [$22,700]
 per
 annum
 is
 projected
 to
 go
 up
 to
 21
 million
 by
 2009-­?10
 from
 four
 million
 in
  2001-­?02.
  It
  will
  have
  a
  22
  to
  23
  per
  cent
  rural
  component.
  Higher
  rural
  incomes
  have
  meant
 larger
 markets.
 Already,
 the
 rural
 tilt
 is
 beginning
 to
 show.
 
 
  A
  study
  by
  the
  Chennai-­?based
  Francis
  Kanoi
  Marketing
  Planning
  Services
  says
  that
  the
  rural
 market
 for
 FMCG
 is
 worth
 $14.4
 billion,
 far
 ahead
 of
 the
 market
 for
 tractors
 and
 agri-­? inputs
 which
 is
 estimated
 at
 $10
 billion.
 Rural
 India
 also
 accounts
 for
 sales
 of
 $1.7
 billion
  for
  cars,
  scooters
  and
  bikes
  and
  over
  one
  billion
  dollars
  of
  durables.
  In
  total,
  that
  represents
 a
 market
 worth
 a
 whopping
 $27
 billion.
 It
 is
 no
 wonder
 that
 even
 MNCs
 have
  cottoned
  on
  to
  the
  idea
  of
  a
  resurgent
  rural
  India
  waiting
  to
  happen.
  Four
  years
  ago,
  Coke
  ventured
  into
  the
  hinterland.
  Now
  Coke’s
  rural
  growth
  of
  37
  per
  cent
  far
  outstrips
  its
  urban
  growth
  of
  24
  per
  cent.
  Coke
  is
  not
  the
  first
  MNC
  to
  have
  cottoned
  on
  to
  the
  rural
  lure.
  Its
  global
  rival
  Pepsico
  took
  a
  wider
  approach
  to
  the
  business
  when
  it
  was
  given
  permission
 to
 set
 up
 shop
 in
 India
 in
 the
 late
 1980s
 and
 investment
 in
 food
 processing
 and
  farming
  was
  a
  pre-­?condition
  for
  entry.
  The
  company
  imported
  a
  state-­?of-­?the
  art
  tomato
  processing
 plant
 from
 Italy
 to
 Punjab.
 In
 five
 years,
 productivity
 improved
 from
 16
 tonnes
  3
 

to
  52
  tonnes
  per
  hectare
  and
  there
  was
  a
  tomato
  glut
  in
  the
  state.
  Farmers
  weren’t
  complaining
 be-­?
 cause
 even
 though
 prices
 fell,
 their
 incomes
 increased
 because
 of
 the
 huge
  jump
 in
 productivity.
 Pepsi
 is
 now
 heralding
 a
 citrus
 plantation
 drive
 in
 the
 state
 and
 other
  parts
 of
 the
 country
 for
 its
 brand
 of
 Tropicana
 fruit
 juices,
 to
 replace
 imported
 fruit.
 
 
  Hindustan
 Lever
 Ltd,
 the
 $2.3
 billion
 Indian
 sub-­?
 sidiary
 of
 Unilever,
 the
 country’s
 largest
  FMCG
  company,
  has
  also
  got
  on
  the
  bandwagon.
  It’s
  Project
  Shakti
  uses
  self-­?help
  groups
  across
  the
  country
  to
  push
  Lever
  products
  deeper
  into
  the
  hinterland.
  Its
  four-­?pronged
  programme
 creates
 income-­?generating
 capabilities
 for
 underprivileged
 rural
 women;
 im-­?
  proves
 rural
 quality
 of
 life
 by
 spreading
 awareness
 of
 best
 practices
 in
 health
 and
 hygiene;
  empowers
  the
  rural
  community
  by
  creating
  access
  to
  relevant
  information
  through
  community
  portals
  and
  it
  also
  works
  with
  NGOs
  to
  spread
  literacy.
  There
  are
  currently
  over
  15,000
  Shakti
  entrepreneurs,
  most
  of
  them
  women,
  in
  61,400
  villages
  across
  12
  states.
  By
  the
  end
  of
  2010,
  Shakti
  aims
  to
  have
  100,000
  Shakti
  entrepreneurs
  covering
  500,000
  of
  India
  s
  640,000
  villages,
  touching
  the
  lives
  of
  over
  600
  million
  people.
  With
  such
 an
 emphasis
 on
 rural
 marketing,
 consumption
 patterns
 are
 changing
 and
 it
 signals
 a
  change
 in
 the
 regulatory
 environment.
 Vertical
 integration
 of
 the
 food
 market
 from
 farm
 to
  firm
  to
  fork
  becomes
  the
  best
  way
  to
  achieve
  efficiency
  and
  serve
  the
  interest
  of
  every
  stakeholder
  in
  the
  chain
  the
  farmer,
  the
  processor,
  the
  retailer
  and
  the
  consumer.
  As
  Ashok
  Gulati
  of
  the
  US-­?based
  International
  Food
  Policy
  Research
  Institute
  put
  its,
  The
  future
  of
  Indian
  agriculture
  in
  general
  and
  the
  farmer
  in
  particular
  depends
  on
  the
  how
  soon
 they
 can
 become
 globally
 competitive.
 Indian
 economic
 policy
 realises
 this.
 Between
  the
 8th
 (1992-­?97)
 and
 the
 10th
 (2002-­?07)
 Five
 Year
 Plans,
 successive
 governments
 have
  tripled
 the
 spending
 on
 rural
 development
 from
 $6.82
 billion
 to
 $20.2
 billion.
 
  All
  this
  potential
  has
  got
  India’s
  big
  business
  houses
  rushing
  to
  enter
  and
  expand
  rural
  businesses.
 Telecom
 giant
 Sunil
 Mittal,
 chairman
 of
 the
 $2
 billion
 mobile
 telephony
 major
  Bharti
  Tele-­?
  Ventures,
  is
  another
  unabashed
  flag-­?bearer
  of
  the
  ’go
  rural’
  strategy.
  He
  is
  confident
  that
  the
  next
  ’explosive’
  phase
  of
  demand
  for
  cellular
  connections
  is
  going
  to
  come
 from
 the
 villages.
 In
 an
 interesting
 business
 diversification,
 he
 has
 tied
 up
 with
 the
  legendary
 Rothschilds
 of
 Europe
 for
 a
 $51
 million
 food
 processing
 venture
 and
 export
 of
  fruits
 and
 vegetables.
 We
 can
 replicate
 our
 pre-­?eminence
 in
 IT
 agriculture
 and
 transform
  the
 country
 into
 a
 global
 food
 basket,
 he
 points
 out.
 Mittal’s
 initial
 investments
 include
 an
  agriculture
  research
  centre
  and
  model
  farm
  in
  Punjab.
  If
  the
  hinterland
  has
  caught
  the
 

4
 

attention
  of
  Mittal,
  among
  the
  country’s
  most
  recent
  entrants
  to
  the
  ranks
  of
  big
  business,
  it
 has
 also
 not
 escaped
 the
 radar
 of
 the
 oldest
 business
 house,
 the
 $17
 billion
 Tata
 group,
  which
  has
  consolidated
  its
  rural
  operations.
  The
  group’s
  two
  companies,
  Tata
  Chemicals
  and
 Rallis
 India,
 ran
 separate
 rural
 initiatives
 till
 2003.
 Tata
 Chemicals
 ran
 a
 chain
 called
  Tata
  Kisan
  Kendra,
  which
  offered
  farmers
  a
  host
  of
  products
  and
  services
  ranging
  from
  agri
 inputs
 to
 financing
 to
 advisory
 services.
 Rallis,
 on
 the
 other
 hand,
 was
 partnering
 ICICI
  Bank
 and
 Hindustan
 Lever
 in
 offering
 deals
 to
 farmers
 that
 covered
 operations
 from
 the
  pre-­?harvest
  to
  post-­?harvest
  stage.
  In
  2004,
  the
  two
  operations
  were
  merged
  and
  Tata
  Kisan
  Sansar,
  a
  network
  of
  one
  stop
  shops
  providing
  everything
  from
  inputs
  to
  know-­?how
  to
  loans,
  was
  launched.
  Today,
  the
  Tata
  Kisan
  Sansar
  has
  421
  franchisee-­?run
  centres
  in
  three
 states
 and
 reaches
 out
 to
 over
 3.6
 mil-­?
 lion
 farmers.
 Like
 the
 Tatas,
 the
 $2.6
 billion
  Mahindra
 group
 has
 successfully
 established
 a
 synergy
 between
 its
 current
 businesses
 and
  the
  planned
  rural
  forays.
  Its
  flagship,
  Mahindra
  &
  Mahindra
  Ltd
  is
  India’s
  largest
  farm
  equipment
  company.
  Its
  subsidiary,
  Mahindra
  Shubhlabh
  Services,
  has
  operations
  in
  11
  states,
  and
  leverages
  the
  strong
  Mahindra
  brand,
  the
  700,000-­?strong
  Mahindra
  tractor
  customer
 base
 and
 the
 400-­?plus
 dealer
 network,
 to
 provide
 a
 complete
 range
 of
 products
  and
 services
 to
 improve
 farm
 productivity
 and
 establish
 market
 linkages
 to
 the
 commodity
  market
 chain.
 Its
 retailing
 arm,
 Mahindra
 Krishi
 Vihar,
 has
 been
 instrumental
 in
 increasing
  the
  groundnut
  yield
  in
  Rajasthan
  through
  a
  new
  seed
  sourced
  from
  the
  state
  of
  Maharash-­?
  tra,
 and
 it
 has
 also
 introduced
 a
 new
 variety
 of
 grapes
 in
 Maharashtra.
 Says
 Vikram
 Puri,
  head
 of
 Mahindra
 Shubhlabh
 Services,
 Almost
 80
 per
 cent
 of
 the
 farmers
 registered
 with
  us
 have
 less
 than
 five
 acres
 land.
 We
 are
 making
 farming
 an
 attractive
 proposition
 through
  three
  basic
  guiding
  steps
  growing
  what
  the
  market
  requires,
  improving
  the
  crop
  yield
  and
  decreasing
  the
  cost
  of
  crop
  production.
  The
  activities
  of
  Mahindra
  Shubhlabh
  Services
  have
 at-­?
 tracted
 the
 attention
 of
 the
 International
 Finance
 Corporation,
 the
 financial
 arm
 of
  the
  World
  Bank,
  which
  recently
  picked
  up
  a
  27
  per
  cent
  stake
  in
  the
  company.
  Rural
  India
  accounts
 for
 a
 market
 worth
 $27
 billion.
 No
 wonder
 even
 MNCs
 have
 cottoned
 on
 to
 the
  idea
 of
 a
 resurgent
 rural
 India.
 
 
 
 


 
 
 
5
 

PRODUCT
 STRATEGY
 
 
Every
 product
 meant
 for
 rural
 markets
 also
 goes
 through
 the
 Product
 Life
 Cycle
 stage.
  The
 4
 stages
 are
  1. Seeding
 Stage
  2. Sapling
 Stage
  3. Harvest
 Stage
  4. Withering
 Stage
 
  5. Seeding
  Stage:
  It
  is
  that
  stage
  where
  the
  product
  has
  just
  entered
  the
  market.
  It
  is
  synonymous
  to
  a
  new
  born
  baby.
  It
  is
  in
  this
  stage
  where
  the
  product
  encounters
  a
  certain
 amount
 of
 vulnerability
 in
 terms
 of
 low
 sales,
 lack
 of
 demand
 and
 low
 profits.
  Consumers
 have
 to
 be
 induced
 to
 try
 the
 product.
 For
 example
 with
 a
 largely
 illiterate
  and
  rural
  population
  computer
  has
  to
  usable
  and
  affordable
  by
  people
  who
  have
  never
  been
 to
 school.
 Simputer
 is
 a
 computer
 designed
 by
 Indian
 Institute
 of
 Science
 for
 rural
  markets.
  6. Sampling
  Stage:
  Here
  the
  product
  has
  gained
  substantial
  visibility
  and
  its
  sales
  is
  shooting
  up.
  With
  the
  emergence
  of
  new
  competitors
  the
  market
  is
  also
  growing.
  Pricing
  here
  is
  more
  important
  and
  companies
  cannot
  dictate
  to
  the
  consumer.
  Coke
  and
 Pepsi
 have
 also
 targeted
 the
 rural
 market
 by
 launching
 200
 ml
 bottles
 and
 priced
 it
  at
 Rs
 5.
  7. Harvest
  Stage:
  this
  stage
  signifies
  a
  saturation
  point
  in
  terms
  of
  demand
  with
  heightening
 supply
 from
 several
 competing
 sources.
 Even
 sales
 volume
 do
 not
 shrink
  the
  price
  competition
  is
  at
  its
  peak
  and
  the
  company
  has
  to
  stand
  out
  of
  the
  competitors
 clutter
 by
 applying
 a
 little
 bit
 of
 product
 differentiation
 or
 milking
 brand
  equity
 to
 the
 fullest
  8. Withering
 Stage:
 this
 stage
 is
 the
 waning
 of
 the
 product
 which
 shows
 an
 evident
 sales
  drop.
  Demand
  diminishes
  leaving
  the
  marketer
  to
  gradually
  phase
  out
  his
  shrinking
  ship
 from
 the
 market.
 Some
 companies
 try
 and
 link
 it
 up
 with
 other
 product
 so
 as
 to
  extend
 its
 life.
 
 
 

6
 

STRATEGY
  1.
 Small
 unit
 and
 low
 priced
 packing
  Larger
 pack
 sizes
 are
 out
 of
 reach
 for
 rural
 consumers
 because
 of
 their
 price
 and
 usage
  habits.
 This
 method
 has
 been
 tested
 by
 other
 products
 like
 shampoos,
 biscuits,
 pickles,
  vicks
 five
 gram
 tins,
 etc.
 
  In
 the
 strategy
 of
 keeping
 the
 low
 priced
 packed
 the
 objective
 is
 to
 keep
 the
 price
 low
  so
 that
 the
 entire
 rural
 community
 can
 try.
 This
 may
 not
 be
 possible
 in
 all
 types
 of
  products,
 but
 wherever
 this
 can
 be
 resorted
 to,
 the
 market
 is
 bound
 to
 expand.
 
  2.
 New
 product
 designs
  A
 close
 observation
 of
 rural
 household
 items
 indicates
 the
 importance
 of
 redesigning
 or
  modifying
 the
 products.
 The
 manufacturing
 and
 marketing
 men
 can
 think
 in
 terms
 of
 new
  product
 designs
 specially
 meant
 for
 rural
 areas
 keeping
 their
 lifestyles
 in
 view.
 
  3.
 Sturdy
 products
  Sturdiness
 of
 a
 product
 either
 in
 terms
 of
 weight
 or
 appearance
 is
 an
 important
 fact
 for
  rural
 consumers.
 The
 product
 meant
 for
 rural
 areas
 should
 be
 sturdy
 enough
 to
 stand
  rough
 handling
 and
 storage.
 People
 in
 rural
 areas
 like
 bright
 flashy
 colours
 such
 as
 red,
  blue,
 green
 etc.,
 and
 feel
 that
 products
 with
 such
 colours
 are
 sturdy
 but
 they
 are
 more
  concerned
 with
 the
 utility
 of
 the
 item
 also.
 
  4.
 Brand
 name
  The
 rural
 consumers
 are
 more
 concerned
 with
 the
 utility
 of
 the
 products.
 The
 brand
 name
  awareness
 in
 the
 rural
 areas
 is
 fairly
 high.
 A
 brand
 name
 and/or
 logo
 is
 very
 essential
 for
  rural
 consumers
 for
 it
 can
 be
 easily
 remembered.
 


 
  Different
 Product
 strategies
 adopted
 by
 various
 companies
 
1. Rajdoot
 223
  Escorts
  launched:
  Rajdoot
  223
  priced
  at
  Rs.
  33300
  to
  meet
  the
  needs
  and
  expectations
  of
 the
 rural
 market.
 It
 is
 cheaper
 than
 most
 motorbikes
 and
 is
 preferred
 over
 mopeds
 

7
 

and
  scooters
  because
  of
  its
  sturdiness
  and
  its
  weight
  carrying
  capability
  Moreover
  rural
  folks
  know
  that
  it
  is
  easy
  to
  maintain
  (spares
  are
  easily
  available).
  Today
  Escorts
  has
  about
  2000
  authorised
  service
  points
  To
  tackle
  the
  young
  village
  .
  Escorts
  launched:
 ‘Ace”
 with
 175
 cc
 engine.
 It
 is
 much
 sleeker
 and
 priced
 just
 marginally
 high
  at
 As.
 37560.
 Though
 not
 many
 models
 are
 seen
 in
 the
 urban
 areas,
 it
 has
 done
 quits
  well
 in
 the
 rural
 market
 demanding
 15
 per
 cent
 of
 the
 production
 capacity
 of
 Rajdoot.
  2. Mahindra
 and
 Mahindra
 
  Mahindra
  &
  Mahindra
  is
  busy
  developing
  the
  prototype
  of
  what
  it
  calls
  a
  ‘Rural
  Transporter’—basically
 a
 hybrid
 between
 a
 tractor
 and
 a
 rural
 transport
 vehicle.
 The
  product
 at
 20-­?25HP
 will
 be
 targeted
 at
 those
 who
 cannot
 afford
 a
 normal
 tractor
 and
  would
  also
  fulfill
  the
  need
  of
  a
  family
  transporter
  that
  could
  take
  in
  the
  rural
  roughs
  but
 would
 be
 much
 more
 comfortable
 and
 safer
 than
 the
 conventional
 tractor-­?trolley.
 


  3. Sampoorna
 TV
  LG
  Electronics,
  the
  Japanese
  firm
  has
  re-­?jigged
  the
  TV
  to
  appeal
  to
  local
  needs.
  It
  spent
  $50,000
  (Rs.
  21
  lakhs)
  to
  develop
  a
  set
  that
  would
  have
  on-­?screen
  displays
  in
  the
  vernacular
  languages
  of
  Hindi,
  Tamil
  and
  Bengali.
  The
  logic,
  rural
  consumers
  unfamiliar
 with
 English
 would
 still
 be
 able
 to
 use
 the
 TV
 without
 being
 intimidated.
  4. Hero
 Cycles
 
 It
 is
 modifying
 its
 cycles
 to
 meet
 different
 needs
 in
 different
 regions.
 It
 has.
 as
 such,
 a
  special
 orientation
 towards
 rural
 needs.
  5. Titan
 Watches
  A
  recent
  NCAER
  study
  revealed
  that
  there
  is
  a
  great
  potential
  for
  watches
  in
  rural
  areas.
 In
 fact,
 it
 is
 considered
 to
 be
 a
 high
 priority
 item.
 Impressed
 by
 this
 the
 company
  is
 launching
 a
 pilot
 project
 for
 low—priced
 models.
  6. Green
 Cards
 

8
 

Andhra
 Bank
 and
 Allahabad
 Bank
 issued
 credit
 cards
 known
 as
 ‘Green
  Cards’
 to
 the
 farmers.
 The
 cards
 issued
 by
 Allahabad
 banks
 are:
  Damond
 Card
 (for
 farmers
 having
 more
 than
 9
 acre
 land)
  Gold
 Card
 (for
 farmers
 having
 7-­?9
 acre
 land)
  Silver
 Card
 (for
 farmers
 having
 5-­?7
 acre
 land)
 


 
 Spurious
 goods
 strategy
 
Corporate
  marketer,
  often
  finds
  the
  competition
  from
  copy
  cats
  as
  a
  big
  menace
  and
  debates
  on
  the
  ways
  of
  mitigating
  it.
  Spurious
  products,
  generally
  marketed
  by
  the
  unorganized,low—end
 entrepreneurs,
 somehow,
 make
 their
 way
 into
 the
 market
 and
  eat
  away
  the
  large
  chunk
  of
  corporate
  marketer’s
  profits.
  The
  imitations
  will
  have
  resemblances
 that
 dupe
 the
 gullible
 consumer.
 Look
 at
 these
 examples:
  Lifebuoy
 :
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Loveboy,
 New
 Lime
 Buoy,
 Nimba
 buoy
  Tata:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Teta
 
  Colgate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 College
  Nirma
 Wheel
 :
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Neerbha,
 Nima,
 Narima
  Fair
 &
 lovely
 :
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Fairever,
 Friends
 &
 Lovely
  They
  use
  similar
  pack
  designs
  and
  pack
  sizes.
  In
  case
  of
  bottled
  products,
  the
  company
 

logo
 is
 embossed.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  SPURIOUS
  PRODUCT
 
  -­?
 
  Loosely
  defined,
  spurious
  products
  are
  look-­?alike
  products
  with
 similarity
 in
 packaging
 and
 minor
 alterations
 in
 the
 name.
 The
 primary
 motive
 is
  to
  capitalize
  on
  the
  trust
  built
  by
  established
  brands.
  The
  marketer
  of
  spurious
  products
 has
 less
 experience
 and
 limited
 resources.
 As
 such,
 he
 seeks
 to
 benefit
 from
  the
 images
 of
 the
 popular
 brands
 and
 low
 prices
 of
 his
 brands.
 

9
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Marketing
 strategy
 of
 spurious
 product
 
The
 four
 Ps
 of
 the
 marketers
 are:
  (1)
 Product
 resemblances:
 The
 copy
 cats
 resemble
 the
 original
 in
 many
 Ways.
  Brand:
  Phonetics:
  To
  woo
  the
  largely
  illiterate
  customer,
  the
  names
  usually
  have
  a
  close
  phonetic
  resemblance
  to
  the
  original—Loveboy
  for
  Lifebuoy,
  Nirbha
  for
  Nirma,
  Teta
 for
 Tata.
  Package:
 Visuals:
 Similar
 pack
 designs
 and
 pack
 sizes
 are
 adopted.Colours
 bear
 close
  resemblance
  to
  the
  original.
  Bottled
  products
  have
  the
  company
  logo
  embossed.Generally
  empties
  of
  the
  original
  are
  collected
  and
  retailed
  by
  these
  entrepreneurs.
  Quality.
 Intangible:
 Generally
 inferior
 in
 quality.
 However,
 consumer
 can
 not
 gauge
 it
  before
 using
 it.
 As
 such,
 consumer
 relies
 on
 retailer
 opinion
 largely
 to
 decide
 the
 buy.
  (2)
  Low
  prices:
 
  Lower
  end
  consumer
  prices
  are
  fixed
  attracting
  price
  sensitive,
  value
  for-­?money
 
 consumers.
  (3)
  Silent
  Promotion:
  As
  higher
  margins
  are
  given
  to
  retailers,
  they
  advocate
  consumers
  to
  buy
  these
  products.
  Retailer
  push
  goes
  a
  long
  way
  to
  induce
  fist
  time
  trials.
  (4)
  Limited
  and
  anonymous
  distribution:
  The
  copycat
  seller
  keeps
  his
  identity
  unknown.
  He
  prefers
  distribution
  in
  the
  local
  areas
  where
  he
  can
  establish
  secret
  links
  with
 retailers.
 This
 is
 necessary
 to
 avoid
 future
 litigations.
 

10
 

Consequences:
  As
  a
  consequence
  of
  operations
  of
  the
  spurious
  product
  marketers,
  corporates
 loose
 in
 two
 ways.
  ·
 Loss
 in
 sales,
 and
  ·
  Spoiled
  image
  of
  the
  brand
  as
  well
  as
  the
  company.The
  most
  affected
  products
  are
  personal
  care
  products.
  A
  rural
  marketer
  believes
  in
  value—for-­?
  money
  and
  would
  not
  compromise
 on
 quality
 say,
 in
 the
 case
 of
 a
 tractor
 or
 a
 torch
  The
 Encounter
 Strategy
  Corporate
 marketers
 may
 analyse
 the
 situation
 and
 embark
 on
 an
 offensive
 strategy
 to
  push
  out
  the
  imitators.
  The
  formulation
  of
  encounter
  strategy
  requires
  an
  intelligent
  understanding
 of
 consumer
 needs
 and
 wants,
 their
 perceptions
 of
 products
 and
 weak
  points.
 The
 strategy
 components
 are:
  (a)
  Complicated
  packaging:
  Packaging
  could
  be
  made
  more
  difficult
  to
  replicate.
  Liquid
 soaps
 in
 tetra
 packs
 with
 design
 patterns
 as
 complicated
 as
 currency
 notes
 with
  a
 hologram
 thrown
 in
 for
 a
 measure—expensive
 but
 unique—could
 settle
 for
 a
 test
 for
  differentiation.
  (b)
 Products
 at
 low
 end:
 A
 range
 of
 products
 targeted
 for
 the
 rural
 consumer
 could
 be
  launched
 with
 low
 price
 and
 low
 quality
 to
 counter
 the
 spurious
 products.
 This
 can
 be
  done
  by
  developing
  franchisee
  units
  to
  manufacture
  low-­?end
  products
  with
  a
  highly
  localized
  (c)
 Rural
 pull
 promotion:
 Rural
 sales
 schemes
 to
 reach
 consumers
 and
 enlist
 support
  of
 retailers
 should
 be
 envisaged.
  (d)
 Promoting
 quality
 consciousness:
 Local
 promotion
 in
 individual
 village
 markets
  could
  be
  an
  effective
  route
  to
  educate
  them.
  Area
  specific
  examples,
  of
  the
  harm
  spurious
 products
 can
 have,
 could
 be
 communicated.
  Example:
 Bindis,
 which
 have
 an
 adhesive
 coating,
 are
 hawked
 by
 many
 tiny
 units
 in
 the
  north.
  On
  sustained
  usage,
  the
  spurious
  ones
  discolour
  skin,
  at
  times
  triggering
  allergies
 

Packaging
 Strategies
 

11
 

Packaging
  is
  defining
  new
  paradigms
  in
  rural
  marketing,
  making
  it
  perhaps
  the
  most
  vital
 component
 in
 the
 marketing
 mix.
 According
 to
 the
 survey
 of
 National
 Council
 for
  Applied
 Economics
 and
 Research
 (NCAER)
 in
 1998,
 it
 is
 the
 low-­?income
 group
 which
  now
  comprises
  an
  overwhelming
  majority
  of
  consumers
  for
  mass
  consumption
  products.
  The
  study
  indicated
  that
  almost
  90
  per
  cent
  of
  goods
  surveyed
  were
  purchased
  by
  people
  earning
  less
  than
  Rs.
  18,000
  per
  annum.
  Marketers
  have
  realised,
  “To
 enter
 the
 rural
 market,
 it
 is
 necessary
 to
 offer
 products
 at
 the
 lowest
 unit
 price”.
 At
  the
  same
  time,
  innovative
  packages
  are
  necessary
  to
  add
  value
  to
  the
  premium
  products.
  Particularly,
  innovations,
  which
  help
  lower
  the
  price,
  are
  desirable.
  Small
  packs
 and
 combi-­?packs
 have
 become
 a
 major
 attraction
 in
 rural
 India.
 
  (a)
 Small
 packs:
 The
 reasons
 for
 high
 preference
 to
 small
 pack
 low
 unit
 prices
 are:
  1. Affordability:
 The
 income
 of
 rural
 consumers
 is
 unsteady.
 The
 sources
 of
 income
  as
  well
  as
  the
  size
  of
  income
  earned
  per
  day
  vary.
  They
  cannot
  hence
  make
  planned
 purchases
 and
 large
 purchases.
 Small
 pack
 sizes
 help
 the
 rural
 consumer
  pick
 the
 product
 at
 a
 price
 that
 he
 can
 afford.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  2. Usage:
 Certain
 products
 like
 detergent
 and
 paste
 are
 bought
 in
 larger
 quantities,
  whereas
  shampoos,
  toilet
  soaps,
  eatables
  are
  bought
  in
  small
  pack
  sizes.
  The
  reason
 for
 this
 is:
 ‘The
 products
 that
 are
 common
 to
 family
 members
 are
 bought
  in
  large
  pack
  sizes
  whereas
  individual—use
  products
  are
  preferred
  in
  small
  packs’.
 
 

12
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 

3. Storability:
  The
  storage
  life
  of
  a
  product
  also
  has
  a
  bearing
  on
  this
  decision.
  Edibles,
  for
  example,
  cannot
  last
  long
  unless
  preserved
  and
  kept
  under
  ideal
  conditions.
 Further,
 the
 shelf
 space
 of
 rural
 consumers
 is
 also
 limited
 as
 they
 live
 in
  small
 huts
 or
 semi-­?pucca
 houses.
  4. Benefits
 to
 Retailer:
 The
 small
 pack
 sizes
 are
 convenient
 to
 the
 retailer
 to
 do
 his
  business
 and
 promote
 the
 national
 brands.
 The
 shelf
 space
 of
 rural
 retailers
 is
 less.
  He
 cannot
 afford
 big
 premises.
 Small
 pack
 sizes
 do
 not
 demand
 shelf
 space.
  5. Display:
  Smaller
  sizes
  are
  easy
  to
  display.
  They
  increase
  the
  visual
  appeal
  they
  carry
 compared
 to
 large
 ones,
 the
 colours
 on
 the
 smaller
 packs
 are
 looked
 at
 with
  more
 interest.
  Examples:
  Many
  companies
  have
  become
  participants
  in
  the
  package
  revolution
  that
  is
  sweeping
 the
 rural
 side
 and
 the
 economy
 strata
 in
 the
 urban
 area.
  ·
 JK
 Dairy
 came
 up
 with
 a
 50
 gm
 sachet
 of
 Dairy
 Whitener
 at
 Rs.6.50.
  ·
 P
 &
 C
 introduced
 Vicks
 VapoRub
 in
 a
 tiny
 5
 gm
 tin
 and
 Tide
 detergent
 in
 30
 gm
  sachets
 priced
 at
 Rs.3.
  ·
 Marico
 Industries
 launched
 low
 prices
 sachets
 of
 hair
 oil..
  (b)
  Combi-­packs:
  Another
  packaging
  innovation
  is
  ‘combi-­?packs’.
  When
  related
  products
  are
  racked
  together
  and
  sold
  at
  economy
  prices,
  the
  consumer
  finds
  it
  a
  better
  option
  to
  buy.
  The
  Combi-­?Pack
  may
  become
  an
  ‘assortment’
  when
  more
  than
  two
 products
 are
 packed
 together.
 Johnson
 &
 Johnson’s
 baby
 care
 assortment
 package
  priced
 around
 Rs.
 175
 consists
 of
 a
 powder,
 soap,
 shampoo,
 hair
 oil
 and
 cream.
 

13
 


 
 
 
 
  (c)
 See-­through
 packs:
 Many
 companies
 are
 coming
 up
 with
 new
 packages
  that
  are
  attractive
  as
  all
  as
  economical.The
  transparent
  packing
  of
  new
  Palmolive
  Naturals
 is
 not
 lust
 a
 matter
 of
 aesthetics
 The
 see
 through
 wrappers,
 which
 are
 a
 first
  of
  its
  kind
  in
  India
  enable
  Colgate
  Palmolive
  to
  offer
  a
  remium
  product
  at
  a
  competitive
 price
 of
 rRs
 17
 for
 100gm
 pack.
 
 


 
 
 
 
 
 

 
 
 
 
 
 
 
 

14
 

PRICING
 STRATEGY
 

  I. Introduction:
  One
  of
  the
  important
  constituent
  of
  rural
  marketing
  mix
  is
  pricing.
  In
  the
  rural
  market
  value-­?for-­?money
  brands
  give
  the
  fastest
  sales
  for
  the
  FMCG
  sector.
  FMCG
  majors
  are
  trying
  to
  increase
  sales
  through
  low
  unit
  perks
  and
  VFM
  products.
  In
  segments
  like
  bathing
  soaps,
  washing
  soaps,
  and
  detergents,
  toothpastes,
  etc.
  the
  consumers
  are
  increasingly
  opting
  for
  more
  VFM
  launcher.
  VFM
  brands
  like
  Nirma’s
  Soap,
  Britannia’s
  Tiger
 are
 doing
 better
 than
 the
 other
 premier
 brands
 from
 their
 own
 companies.
  According
  to
  ORG
  many
  estimates,
  in
  the
  year
  2001,
  Breeze
  recorded
  a
  growth
  of
  12
  %
  while
 Lux
 a
 premium
 brand
 recorded
 a
 negative
 growth
  of
  12.3%.
  Britannia’s
  Tiger
  grew
  by
 12.6%
 in
 2001.
  In
  a
  slowdown
  mass
  brands
  register
  better
  growth
  than
  premium
  brands.
  In
  the
  home
  appliances
 category,
 Videocon
 was
 one
 of
 the
 first
 companies
 to
 enter
 the
 rural
 markets
  in
 home
 appliances.
 Phillips
 who
 was
 the
 market
 leader
 for
 radio
 sets
 (cost
 Rs.
 250)
 were
  attacked
 by
 Videocon
 by
 launching
 a
 radio
 set
 for
 Rs.
 180.
 They
 grab
 a
 major
 chunk
 of
 the
  market,
  at
  present
  they
  are
  marketing
  ‘walky’
  range
  of
  personal
  cassette
  players
  at
  low
  prices
  to
  rural
  customers.
  Only
  charging
  a
  lower
  price
  is
  not
  enough,
  they
  have
  to
  offer
  value-­?for-­?money.
  Pricing
 strategy
 requires
 a
 holistic
 approach.
 Pricing
 is
 a
 part
 of
 the
 marketing
 strategy.
 It
  should
  be
  designed
  in
  such
  a
  way
  that
  it
  contributes
  to
  the
  objectives
  of
  the
  marketers
  and
 needs
 and
 wants
 of
 the
 customer
 groups.
  II. Consumer
 Categories
  Rural
 customers
 like
 urban
 ones
 can
 be
 divided
 into
 three
 categories:
  1. Quality
 Conscious
 Customers:
 who
 are
 very
 rich
 and
 whose
 annual
 income
 is
 over
  1.5
 lakhs.
 
  2. Value
 Conscious
 Customers:
 who
 is
 the
 consuming
 class
 and
 whose
 annual
 income
  is
 between
 Rs.
 45,000
 –
 Rs.
 1,
 50,000.
 
 

15
 

3. Price
 Conscious
 Customers:
 who
 are
 climbers,
 aspirants
 and
 destitute.
 The
 annual
  income
 of
 climbers
 is
 Rs.
 22,000
 –
 Rs.
 45,000.
 The
 annual
 income
 of
 aspirants
 is
 Rs.
  16,000
 –
 Rs.
 22,000
 and
 the
 destitute
 whose
 annual
 income
 is
 below
 Rs.
 16,000.
 
  III.
 Price
 in
 Marketing
 Mix
 for
 Rural
 Marketing
  1. PRICING
 FOR
 QUALITY
 CONSCIOUS
 CUSTOMERS:
  These
  customers
  are
  basically
  concerned
  with
  functional
  benefits
  and
  value-­?for-­? money.
  If
  a
  marketer
  wants
  to
  develop
  an
  effective
  pricing
  strategy
  for
  these
  customers
  he
  must
  know
  whether
  the
  price
  quality
  relationship
  holds
  good
  for
  the
  market.
  Six
  propositions
  emerge
  which
  are
  applicable
  to
  rural
  market
  as
  well
  as
  urban
  market.
  a. Quality
  Differences:
  Larger
  the
  perceived
  difference
  quality
  of
  brands
  in
  a
  category,
 the
 price
 quality
 relationship
 is
 stronger.
 E.g.
 home
 appliances.
 
  b. Quality
  Uncertainty:
  Greater
  the
  uncertainty
  involved
  in
  judging
  the
  quality
  of
  product,
 stronger
 the
 price
 quality
 relationship.
 
  c. Price
  Consciousness:
  Higher
  the
  price
  consciousness
  of
  the
  consumer
  and
  more
  price
  variations
  within
  a
  particular
  category
  of
  product,
  the
  price
  quality
  relationship
  is
  stronger.
  Therefore
  companies
  create
  a
  hierarchy
  of
  products
  establishing
 price
 quality
 relationship.
 
 
  d. Need
 Compulsion:
 Certain
 products
 that
 fulfill
 certain
 needs
 will
 have
 a
 strong
  price
  quality
  relationship.
  For
  e.g.
  a
  reputed
  doctor
  or
  lawyer
  would
  charge
  premium
 rates
 for
 their
 services
 because
 their
 services
 are
 viewed
 essential.
 
  e. Place
  Availability:
  Price
  quality
  relationship
  is
  stronger
  for
  the
  brands
  sold
  to
  the
 premium
 market
 within
 the
 same
 product
 category.
 
 

16
 

f. Social
 Consciousness:
 Shoes
 and
 shirts
 that
 are
 publicly
 consumed
 products
 have
  a
  strong
  price
  quality
  relationship
  than
  privately
  consumed
  products
  like
  tooth
  powder
 and
 underwear.
 


  IV.
 Pricing
 Methods
 
Marketer
  can
  employ
  the
  following
  methods
  when
  price-­?quality
  relationships
  are
  associated.
  ? Discriminatory
  Pricing:
  This
  is
  employed
  to
  charge
  different
  customer
  groups
  differently
  projecting
  differences
  of
  quality
  of
  offer.
  The
  differences
  discriminatory
  pricing
 are:
  i. Product
  Form
  Pricing:
  Different
  versions
  of
  the
  product
  are
  priced
  differently.
  E.g.
 Chota
 Pepsi
 –
 Rs.
 5
  ii. Location
  Pricing:
  Same
  product
  is
  priced
  differently
  at
  different
  locations.
  E.g.
  Residential
 places
 in
 city
 are
 costly.
  iii. Time
  Pricing:
  Prices
  varies
  by
  days
  or
  seasons.
  E.g.
  During
  summer,
  hill
  resorts
  charge
 higher
 rates.
 
  ? Perceived
  Value
  Pricing:
  In
  order
  to
  enhance
  the
  customers
  perceived
  value
  companies
  add
  features
  to
  their
  products.
  For
  each
  feature
  which
  enhances
  attractiveness,
  reliability,
  durability
  convenience,
  etc.,
  the
  marketer
  charges
  an
  extra
  price.
 
  ? Psychological
 Pricing:
 Psychological
 pricing
 may
 be
 in
 the
 form
 of
 reference
 pricing
  or
  image
  pricing.
  In
  reference
  pricing
  the
  marketers
  position
  and
  sell
  products
  at
  higher
  prices
  by
  endorsement
  of
  products
  by
  celebrities
  or
  placing
  products
  with
  classy
 products.
 Another
 form
 of
 psychological
 pricing
 is
 image
 pricing.
 This
 pricing
 is
  effective
 in
 case
 of
 ego
 sensitive
 products
 like
 cameras,
 sunglasses,
 cars,
 etc.
 Since
 price
  acts
 as
 a
 signal
 of
 quality
 people
 prefer
 to
 buy
 expensive
 ones.
 
 
  2. PRICING
 FOR
 VALUE
 CONSCIOUS
 CUSTOMERS:
  Some
 customers
 are
 willing
 to
 pay
 for
 the
 product
 of
 their
 choice
 a
 long
 as
 they
 get
 ‘Value
  for
 Money’.
 When
 consumers
 are
 value-­?conscious,
 price
 hiking
 need
 not
 lower
 sales.
 E.g.
 -­?
 

17
 

Eveready
  Industries
  increased
  the
  price
  of
  the
  white
  1.5
  volt
  cells
  it
  sold
  in
  rural
  India
  by
  6%
 from
 Rs.
 7.50
 to
 Rs.
 8.
 But
 still
 the
 sales
 did
 not
 decline.
  Rural
  consumers
  cannot
  afford
  to
  buy
  large
  volumes,
  but
  they
  prefer
  t
  buy
  quality
  products.
  With
  the
  introduction
  of
  small
  unit
  packaging,
  there
  is
  increased
  penetration
  of
  shampoos,
 soaps
 etc.
  a) Skimming
 Pricing:
  In
 this
 type
 of
 pricing
 companies
 as
 the
 time
 of
 introduction
 favor
 setting
 high
 prices
 to
  skim
  the
  cream
  off
  or
  low
  prices
  to
  sweep
  the
  entire
  ground.
  Skimming
  price
  is
  preferred
  when
 high
 price
 is
 aimed
 to
 communicate
 the
 image
 of
 a
 superior.
 E.g.
 -­?
 P&G
 introduced
  Ariel
 and
 Tide
 detergents
 at
 high
 prices.
 Recently
 it
 cut
 the
 prices
 of
 most
 of
 its
 laundry
  and
 hair
 wash
 brands.
  b) Penetration
 Pricing:
  Penetration
  is
  chosen
  when
  market
  is
  highly
  price
  sensitive,
  and
  a
  low
  price
  stimulates
  market
  growth.
  Products
  like
  Maggi
  Noodles,
  Rin
  detergent
  penetrated
  the
  market
  with
  lower
 prices
 in
 the
 initial
 stages
 and
 later
 went
 up
 the
 price
 ladder.
  c) Value
 Pricing:
  It
  involves
  setting
  prices
  reasonably
  at
  a
  lower
  level
  compared
  to
  competitors
  through
  careful
 streamlining
 of
 operations
 to
 become
 a
 low-­?cost
 firm
 without
 sacrificing
 quality.
 It
  involves
  human
  development,
  quality
  management,
  supply
  chain
  management,
  etc.
  In
  India
  many
  companies
  are
  adopting
  this
  approach
  as
  the
  markets
  are
  saturated
  and
  competition
 has
 intensified.
  d) Psychological
 Pricing:
  Some
  smart
  sellers
  quote
  their
  prices
  that
  end
  in
  an
  odd
  number
  e.g.
  Rs.
  99.95
  paise.
  It
  conveys
 two
 notions.
  i. There
 is
 a
 discount
 or
 bargain
  ii. It
 belongs
 to
 a
 lower
 price
 range.
 
  Bata
 Shoe
 Company
 has
 been
 using
 this
 price
 tactics
 since
 long.
 
 
 

18
 

3. PRICING
 FOR
 PRICE
 CONSCIOUS
 CUSTOMERS:
  These
  consumers
  belong
  to
  the
  destitute,
  aspirants
  &
  climber
  groups.
  They
  can
  afford
  less.
 The
 climbers
 watch
 for
 promotional
 offers
 to
 whet
 appetite
 for
 quality
 products.
  Since
  branded
  products
  are
  costlier
  than
  unbranded
  and
  ungraded
  local
  ones,
  also
  not
  available
  in
  small
  quantities,
  the
  rural
  consumers
  purchase
  local
  brands
  or
  fake
  brands
  which
 are
 relatively
 cheap.
  Many
  companies
  have
  revolutionized
  the
  buying
  in
  rural
  areas
  by
  introducing
  sachets.
  Promotional
 pricing
 measures
 include
 price-­?offs,
 discounts
 or
 rebates,
 credit
 facilities
 and
  no
 interest
 or
 low
 interest
 long
 term
 finance
 schemes.
 Another
 way
 of
 inducing
 them
 to
  buy
  can
  be
  the
  low-­?priced
  mini-­?pack
  strategy.
  E.g.
  -­?
  HLL
  sells
  a
  mini
  pack
  of
  shampoo,
  toothpaste,
 face
 cream
 and
 talcum
 powder
 for
 Rs.15,
 if
 sold
 separately
 it
 would
 cost
 Rs.
  27.
 
 

V.
 General
 Pricing
 in
 Rural
 Markets
 
a) Low
  Cost/Cheap
  Products:
  The
  price
  can
  be
  kept
  low
  by
  low
  unit
  packing
  like
  paisa
  packs
  of
  shampoo
  sachets
  etc.
  This
  is
  a
  very
  common
  strategy
  which
  is
  being
  widely
  adopted
 by
 many
 marketers.
  b) Refills/Reusable
  Packaging:
  The
  refill
  packs
  benefits
  the
  consumers
  in
  terms
  of
  price.
  Such
  measures
  can
  have
  significant
  impact
  too,
  since
  the
  price
  can
  be
  reduced
  to
  the
  advantage
 of
 rural
 consumers.
 In
 addition
 the
 packaging
 material
 used
 should
 be
 reusable
  in
  rural
  areas.
  Most
  fertilizers
  companies
  pack
  fertilizers
  in
  LDPE
  or
  HDPE
  sacks
  which
  can
 be
 washed
 &
 reused,
 which
 are
 in
 demand
 by
 the
 farmers.
  c) Application
 of
 Value
 Engineering:
 The
 application
 of
 value
 engineering
 evolves
 cheaper
  products
  by
  substituting
  costly
  raw
  material
  with
  a
  cheaper
  one.
  We
  now
  find
  costly
  materials
 being
 replaced
 by
 cheaper
 reinforced
 plastic.
 This
 technique
 does
 not
 sacrifice
  the
 technical
 efficiency
 of
 a
 product
 but
 lowers
 the
 product
 price.
 
 


 
 
 
19
 

INNOVATIONS
 IN
 RURAL
 MARKETING:
 
Examples
 of
 Organized
 Retailing
 in
 Rural
 India
  1. Mahindra
 Subhlabh
 Services
 Ltd.
 (MSSL)
  MSSL
 is
 a
 subsidiary
 company
 of
 Mahindra
 &
 Mahindra
 Ltd.,
 the
 largest
 farm
 equipment
  company
  in
  India.
  MSSL
 
  as
  revolunized
  argi-­?busines
  s
  by
  aggregating
  the
  factors
  of
  production
  under
  the
  brand
  Mahindra
  KrishiVihar
  through
  farming
  solution
  specific
  to
  crop,
 region
 and
 market.
 It
 provides
 a
 complete
 range
 of
 products
 and
 services
 to
 improve
  farm
  productivity
  and
  also
  establishes
  market
  linkages
  to
  optimiInce
  to
  farmers
  in
  the
  selection
  and
  usage
  to
  products
  in
  terms
  of
  crop
  health
  and
  environmental
  and
  human
  safety.
 Mahindra
 Krishi
 Vihar
 offers
 a
 platform
 for
 banking
 it
 institutions
 to
 provide
 loans
  to
  farmers
  with
  minimum
  documentation,
  quick
  sanctions
  and
  attractive
  interest
  rates,
  while
  the
  participating
  financial
  institutions
  develop
  a
  lower
  risk
  portfolio
  and
  reduce
  their
 overhead
 costs
 through
 the
 channel.
  2. ITC’s
 Choupal
 Sager
  ITC’s
 Choupal
 Sager
 was
 the
 first
 rural
 mall
 in
 India,
 with
 an
 impressive
 7,000
 square
 feet
  area.
 It
 offers
 a
 self-­?service
 facility,
 with
 attractive
 merchandise
 dis.
 For
 played
 on
 open
  shelves(lining
  the
  neat
  aisles).
  It
  stocks
  almost
  everything,
  from
  toothpastes
  to
  televisions,
 hair
 oils
 to
 motorcycles,
 mixed-­?grinders
 to
 water
 pumps,
 shirts
 to
 fertilizers.
  Most
  of
  the
  brands
  that
  Chou
  pal
  Sager
  sells
  are
  national
  brands,
  such
  as
  Marico,
  LG,
  Philips
 and
 Eveready
 and
 shirts
 from
 ITC’s
 apparel
 
 business,
 bikes
 from
 TVS
 and
 tractors
  from
  Either.
  The
  mall
  located
  near
  the
  stock
  points
  of
  ITC’s
  e-­?Chou
  pals,
  making
  it
  an
  integrated
  model.
  To
  offset
  the
  huge
  investments
  made
  in
  the
  distribution
  network,
  ITC
  has
 partnered
 with
 other
 companies
 interested
 in
 serving
 the
 rural
 market.
 This
 has
 
 not
  only
 widened
 their
 product
 offerings,
 but
 has
 also
 spread
 out
 the
 overhead
 costs.
  3. Mahamaza:
 A
 Success
 Story
  Mahamaza.
  Introduced
  in
  2000,
  is
  a
  network
  of
  virtual
 
  dealers
  scattered
  around
  the
  country.
 Today
 it
 has
 an
 amazing
 network
 of
 275,000
 Web
 store
 dealers
 in
 small
 towns.
  They
 deal
 in
 an
 extraordinary
 range
 of
 products,
 from
 motorcycles
 to
 cycles
 (Atlas)
 and
  cell
 phones
 (Nokia).
 In
 total,
 they
 sell
 28
 brands
 across
 15
 industries.
 This
 website
 uses
 an
  offline
 network
 of
 ‘Web
 Store
 owners’
 (WSO),
 who
 are
 registered
 after
 paying
 about
 Rs.
  5,1000
  each.
  WSOs
  interact
  with
  customers
  face
  and
  report
  transactions
  to
  the
  nearest
  of
  the
  four
  offices
  located
  in
  Dehli,Lucknow,
  Dehradun
  and
  Pune.Payments
  are
  made
 

20
 

through
 pay
 orders
 or
 demand
 drafts
 and
 goods
 are
 delivered
 within
 a
 week.
 Mahamaza
  can
 avail
 of
 attractive
 discounts
 from
 the
 participating
 companies
 because
 it
 buys
 in
 bulk.
  It
  achieved
  a
  turnover
  of
  Rs.90
  crore
  in
  2004.Durable
  goods
  companies
  have
  acknowledged
  the
  participating
  villages
  and
  small
  towns.
  For
  instance,
  Mahamaza
  sold
  Rs.1.5
 crore
 (Rs.15
 million)
 worth
 of
 Nokia
 Phones
 in
 the
 very
 first
 month
 after
 striking
  the
 deal
 with
 the
 company.
 
 

E-­choupal,
 the
 V21
 SCM
 Model
 
The
  e-­?choupal
  idea
  cuts
  through
  the
  basic
  and
  historic
  problems
  crippling
  Indian
  agriculture:
  fragmentation
  of
  agricultural
  land
  holdings,
  the
  difficulty
  of
  access
  to
  those
  holdings
  and
  high
  levels
  of
  illiteracy,
  all
  of
  which
  make
  agricultural
  extension
  work
  unviable,
  making
  it
  difficult
  and
  daunting
  to
  adapt
  and
  apply
  the
  findings
  of
  laboratory
  research
 to
 agricultural
 cultivation.
  E-­?choupal
  makes
  use
  of
  the
  physical
  transmission
  strengths
  of
  the
  current
  intermediaries
  –
 the
 only
 efficient
 option
 in
 the
 context
 of
 India’s
 weak
 infrastructure,
 making
 them
 an
  integral
  part
  of
  the
  value
  chain.
  Yet,
  by
  using
  the
  real-­?time
  multicasting
  ability
  of
  the
  Internet,
  these
  intermediaries
  are
  bypassed
  to
  deliver
  information
  and
  market
  signals
  directly
 to
 the
 farmers
 to
 enhance
 the
 long-­?term
 competitiveness
 of
 Indian
 agriculture.
  Under
 e-­?choupal,
 ITC
 has
 set
 up
 Internet
 kiosks
 in
 villages.
 These
 kiosks
 are
 managed
 by
  the
 farmers,
 selected
 from
 within
 the
 community
 and
 trained,
 known
 as
 ‘Sanchalaks’.
 At
  the
  kiosks,
  the
  ‘Sanchalaks’
  help
  the
  farmers
  to
  readily
  access
  the
  different
  agricultural
  crop-­?specific
  Web
  sites
  that
  ITC
  has
  created
  in
  the
  relevant
  local
  language.
  The
  farmers
  can
  learn
  online
  the
  best
  farm
  practices
  for
  their
  crop,
  the
  prevailing
  prices
  and
  price
  trends
 for
 the
 crop
 in
 the
 Indian
 and
 world
 markets,
 the
 intricacies
 of
 risk
 management,
  and
  the
  local
  weather
  forecast.
  The
  smallest
  individual
  farmers
  thus
  get
  the
  benefit
  of
  expert
  knowledge
  on
  the
  cultivation
  of
  their
  crop.
  E-­?choupal
  leverages
  the
  seamless
  workflow
 capabilities
 of
 IT
 to
 virtually
 integrate
 several
 best-­?in-­?class
 players
 along
 chain
  and
 offer
 the
 services
 on
 a
 single
 platform
 to
 every
 farmer.
  The
  farmers
  can
  order
  quality
  agricultural
  inputs
  online.
  Virtual
  aggregation
  of
  such
  demand
 effectively
 reduces
 the
 cost
 of
 these
 inputs,
 again
 bringing
 the
 power
 of
 scale
 to
  even
 the
 smallest
 of
 farmers.
 

21
 


  E-­?choupal
  links
  the
  Indian
  farmer
  to
  the
  consumers
  in
  local
  and
  global
  markets,
  by
  leveraging
  ITC’s
  time-­?tested
  and
  proven
  competencies
  in
  branding,
  marketing
  and
  distribution.
  Unlike
  in
  the
  alternative
  mandi
  channel
  (where
  the
  farmer
  discovers
  the
  price
  for
  his
  produce
  after
  he
  has
  incurred
  costs
  of
  transportation,
  therefore
  ending
  up
  selling
  even
  if
  he
  is
  not
  satisfied
  with
  the
  price),
  e-­?choupal
  helps
  the
  farmer
  take
  an
  informed
 and
 empowered
 decision
 (because
 the
 price
 is
 known
 in
 the
 village
 itself).
 In
 the
  process,
  many
  non-­?value-­?adding
  activities
  like
  multiple
  transportation,
  handling
  and
  bagging,
  otherwise
  inevitable
  in
  the
  traditional
  supply
  chain,
  are
  eliminated,
  ploughing
  back
 a
 larger
 share
 of
 the
 consumer’s
 pie
 to
 the
 farmer.
  Thus,
  through
  the
  virtual
  vertical
  integration
  (V21)
  model
  of
  supply
  chain
  management
  (SCM),
  e-­?choupal
  secures
  the
  scale
  benefits
  for
  India’s
  agricultural
  economy
  without
  displacing
 the
 small
 farmer.
 
  E-­choupal,
 the
 Unique
 3-­D
 Marketing
 Channel:
  On
  the
  ground,
  e-­?choupal
  is
  proving
  to
  be
  a
  unique
  3-­?D
  marketing
  channel
  for
  many
  products
 and
 services
 consumed
 by
 rural
 India.
  The
  changes
  sweeping
  the
  marketing
  discipline
  in
  the
  backdrop
  of
  the
  increasing
  consumer-­?centricity
  of
  today’s
  world
  are
  well
  known.
  For
  example,
  while
  superior
  products
 and
 distinctive
 functional
 benefits
 form
 the
 necessary
 starting
 point
 for
 success
  in
  the
  marketplace,
  the
  experiential
  dimension
  is
  becoming
  a
  critical
  differentiator.
  Process
 benefits
 –
 which
 make
 transactions
 between
 buyer
 and
 seller
 easier,
 quicker,
 less
  expensive
  and
  more
  pleasant
  –
  support
  this
  dimension.
  A
  third
  dimension,
  personalization,
  now
  successfully
  employed
  by
  a
  few
  marketing
  companies,
  will
  be
  the
  only
 sustainable
 differentiator
 in
 tomorrow’s
 world.
 Relationship
 benefits
 –
 which
 reward
  the
  willingness
  of
  consumers
  to
  identify
  themselves
  and
  to
  reveal
  their
  purchasing
  behaviour
 -­?
 lay
 the
 foundation
 for
 this
 dimension.
  The
  organic
  blending
  of
  relevant
  knowledge
  (for
  example,
  application)
  and
  customized
  information
  (local
  weather),
  with
  farmer’s
  purchase
  transactions,
  is
  creating
  a
  unique
  value
 for
 him,
 especially
 in
 farm
 inputs.
 The
 ‘Sanchalaks’
 connected
 to
 the
 market,
 leading
  farm
  input
  companies
  and
  experienced
  agricultural
  scientists
  through
  the
  e-­?choupal
 

22
 

infrastructure,
  are
  able
  to
  deliver
  this
  benefit
  to
  the
  farmer
  by
  leveraging
  the
  power
  of
  collaborative
 networks,
 previously
 unthinkable
 in
 rural
 India.
 
  A
  couple
  of
  other
  important
  process
  benefits
  that
  e-­choupal
  is
  delivering
  to
  the
  marketer
 are:
  ? Superior
  demand
  forecasting
  and
  real-­?time
  communication
  with
  the
  help
  of
  ‘Sanchalaks’
 and
 the
 IT
 infrastructure,
 especially
 valuable
 in
 FMCG
 as
 well
 as
 short-­? window-­?demand
 products,
  ?
 The
  ability
  to
  assemble
  groups
  of
  highly
  involved
  customers
  for
  credible
  and
  focused
 research
 as
 well
 as
 to
 demonstrate
 product
 features.
 This
 is
 proving
 to
 be
  a
 boon
 in
 consumer
 durables.
  ? By
  virtue
  of
  its
  wealth-­?enhancing
  capability,
  e-­?choupal
  has
  been
  able
  to
  build
  valuable
 and
 sustainable
 relationships
 with
 farmers
 who
 constitute
 the
 majority
 of
  rural
  consumers.
  As
  the
  relationships
  transcend
  short-­?term
  expedient
  considerations,
  these
  people
  share
  a
  wealth
  of
  information
  about
  themselves,
  which
 is
 then
 converted
 into
 valuable
 knowledge
 to
 market
 tailor-­?made
 credit
 and
  insurance
 products.
  ? Emerging
 areas
 like
 telemedicine,
 eGovernance,
 education
 and
 entertainment
 will
  soon
 ride
 on
 the
 Internet,
 Web-­?casting
 and
 video
 conferencing
 infrastructure
 of
 e-­? choupal.
 
  The
 Road
 Map
 notwithstanding
 the
 Speed
 Breakers:
  ? The
  e-­?choupal
  project,
  launched
  in
  June
  2000,
  has
  today
  become
  the
  largest
  Internet-­?based
  corporate
  intervention
  in
  rural
  India.
  E-­?choupal’s
  network
  today
  reaches
 out
 to
 more
 than
 a
 million
 farmers
 in
 over
 11,000
 villages
 through
 2,100
  e-­?choupal
  kiosks
  that
  ITC
  has
  set-­?up
  across
  four
  states
  –
  Madhya
  Pradesh,
  Karnataka,
 Andhra
 Pradesh
 and
 Uttar
 Pradesh.
  ? The
  hurdles
  that
  ITC
  encountered
  while
  setting
  up
  and
  managing
  the
  e-­?choupals
  relate
 primarily
 to
 the
 inadequacies
 in
 infrastructure
 in
 rural
 India:
 lack
 of
 power
  supply,
 telecom
 selectivity
 and
 bandwidth.
 Imparting
 computer
 usage
 skills
 to
 first
  time
  Internet-­?users
  in
  the
  remote
  areas
  of
  rural
  India
  is
  providing
  to
  be
  another
  daunting
 proposition.
 

23
 

?

ITC
  has
  been
  evolving
  several
  alternative
  and
  innovative
  solutions
  to
  overcome
  these
  challenges:
  for
  instance,
  arranging
  back-­?up
  power
  through
  batteries
  charged
  by
  solar-­?panels,
  upgrading
  telephone
  exchanges
  with
  RNS
  (RAX
  Network
  Synchronization)
 kits,
 installing
 VSAT
 (very
 small
 aperture
 terminals)
 equipment
  introducing
 mobile
 choupals,
 local
 caching
 of
 static
 content,
 enhancing
 efficiency
 in
  streaming-­?in
  dynamic
  content,
  and
  setting
  up
  a
  distributed
  24x7
  helpdesk
  infrastructure.
 


  ITC
  has
  worked
  closely
  with
  farmers
  in
  designing
  and
  managing
  the
  entire
  e-­?choupal
  initiative.
  The
  active
  participation
  of
  farmers
  in
  e-­?choupal
  has
  created
  a
  sense
  of
  ownership
 in
 the
 project
 among
 the
 entire
 farming
 community.
 Farmers
 view
 e-­?choupal
  as
 the
 ‘new
 age
 cooperative’.
 
  Encouraged
 by
 this
 enthusiastic
 response
 from
 farmers,
 ITC
 has
 planned
 to
 extend
 the
 e-­? choupal
  initiative
  to
  11
  other
  states
  across
  India
  over
  the
  next
  seven
  years.
  ITC’s
  vision
  is
  to
  extend
  this
  interactive
  transaction
  and
  fulfillment
  channel
  to
  cover
  one-­?lakh
  villages,
  and
 reach
 out
 to
 10
 million
 farmers
 growing
 a
 range
 of
 agricultural
 products.
  Conclusion:
 
 “Growing
  competitiveness
  of
  Indian
  agriculture
  induced
  through
  such
  a
  market-­?led
  business
  model,
  can
  trigger
  a
  virtuous
  cycle
  of
  higher
  productivity,
  higher
  productivity,
  higher
  incomes,
  enlarged
  capacity
  for
  farmer
  risk
  management,
  higher
  order
  of
  investments,
 feeding
 even
 higher
 quality
 and
 productivity.
 On
 the
 other
 hand,
 growth
 in
  rural
  incomes
  would
  unleash
  the
  latent
  demand
  potential
  for
  industrial
  goods
  so
  necessary
  for
  the
  continued
  growth
  of
  Indian
  economy.
  This
  creates
  another
  virtuous
  cycle
 snowballing
 the
 economy
 into
 higher
 growth
 trajectory.”
 
  ITC
  is
  planning
  to
  extend
  its
  integrated
  watershed
  development
  program
  and
  holistic
  community
 development
 programs
 to
 all
 the
 villages
 covered
 by
 the
 e-­?choupal
 network.
  The
 consequently
 cascading
 economic
 multiplier
 effect
 will
 be
 extraordinary.
 Thus,
 ITC’s
  pioneering
  e-­?choupal
  movement
  exemplifies
  the
  economic
  power
  of
  the
  synergy
  between
 

24
 

the
  corporate
  sector’s
  creations
  of
  shareholder
  value
  with
  the
  development
  of
  India’s
  agricultural
 economy
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

25
 

DISTRIBUTION
 STRATEGY
 

  Proper
  distribution
  is
  a
  major
  area
  of
  concern
  for
  companies.
  Distribution
  can
  make
  or
  break
  a
  company.
  A
  good
  distribution
  system
  means
  that
  the
  company
  has
  a
  greater
  chance
  of
  selling
  its
  products
  as
  compared
  to
  competitors.
  Company
  that
  can
  make
  its
  product
  available
  over
  wide
  area
  and
  at
  lower
  cost
  compared
  to
  competitors
  will
  capture
  larger
  market
  share.
  The
  importance
  of
  distribution
  for
  a
  company
  can
  be
  explained
  with
  an
 example
 of
 pharma
 marketing.
 For
 example,
 a
 Doctor
 prescribes
 a
 particular
 brand
 to
 a
  patient.
  But
  the
  company
  representative
  has
  failed
  to
  make
  the
  product
  available
  to
  a
  number
 of
 medical
 shop
 of
 the
 market
 prior
 to
 promoting
 the
 brand.
 The
 patient
 will
 try
  to
 purchase
 the
 product
 but
 due
 to
 non
 availability
 of
 the
 product
 will
 face
 problem.
 The
  effect
 of
 this
 will
 be
 on
 the
 sale
 of
 the
 brand
 in
 the
 market
 as
 either
 the
 patient
 will
 give
  feedback
  to
  the
  doctor
  regarding
  non
  availability
  to
  the
  product
  which
  will
  lead
  to
  the
  doctor
 prescribing
 competitors
 brand
 or
 otherwise
 if
 the
 patient
 is
 not
 very
 literate,
 the
  chemist
  will
  try
  to
  push
  the
  competitors
  brand.
  In
  both
  way
  company
  will
  have
  to
  face
  negative
 impact
 on
 sale.
 
 
  In
 rural
 India,
 the
 major
 road
 block
 related
 to
 distribution
 and
 channel
 management
 are
  identified
 as:
 
 
 
? ? ? ?

Lack
 of
 retail
 infrastructure
  Lack
 of
 proper
 warehousing
 facility
  Transportation
 problem
  Large
 and
 scattered
 market
 


 Lack
 of
 Retail
 Infrastructure:
 

  Availability
 of
 retail
 infrastructure
 is
 directly
 related
 to
 the
 size
 of
 the
 village.
 Thus
 many
  small
 villages
 may
 not
 even
 have
 a
 shop
 from
 which
 products
 can
 be
 made
 available.
  According
 to
 an
 Indian
 market
 research
 bureau
 (IMPB)
 study,
 60,000
 villages
 in
 India
 did
  not
 have
 a
 retail
 outlet
 of
 any
 kind.
 Thus
 it
 is
 very
 difficult
 for
 marketers
 to
 make
 their
  product
  available
  to
  rural
  consumers.
  Also
  rural
  India
  is
  having
  3
  million
  retail
  outlets
  which
 are
 located
 in
 6.3
 lakh
 villages.
 Thus
 marketers
 find
 it
 very
 difficult
 to
 make
 their
  products
 available
 in
 those
 retail
 outlets
 spread
 over
 a
 vast
 area.
  26
 


 
  Again,
 the
 average
 sale
 in
 these
 outlets
 is
 only
 Rs
 5000
 and
 that
 to
 mostly
 on
 credit.
  Rural
  people
  prefer
  to
  buy
  from
  haat
  or
  melas
  as
  compared
  to
  retail
  shops
  where
  there
 is
 less
 chance
 of
 bargaining.
 
 
 

Lack
 of
 Proper
 Warehousing
 Facility
 
Another
  problem
  related
  to
  distribution
  is
  inadequate
  storage
  facility.
  Warehousing
  facility
 is
 very
 limited
 in
 rural
 markets.
 There
 is
 hardly
 any
 organised
 agency
 to
 look
 after
  the
  storage
  facility.
  Without
  proper
  storage
  facility,
  distribution
  of
  product
  to
  remote
  areas
 becomes
 a
 challenge
 for
 marketers.
 

Transportation
 Problem
 
Lack
  of
  proper
  transportation
  facility
  is
  another
  road-­?block
  in
  rural
  market.
  Only
  about
  50%
  of
  Indian
  villages
  are
  connected
  by
  road.
  Rest
  of
  the
  rural
  markets
  do
  not
  have
  proper
 road-­?linkages
 due
 to
 which
 physical
 distribution
 becomes
 a
 tough
 job.
 

Large
 &
 Scattered
 Market
 
India's
 rural
 market
 is
 large
 and
 scattered.
 Approximately
 75
 crore
 rural
 consumers
 live
  on
  approximately
  6,38,365
  villages
  spread
  over
  32
  lakh
  square
  kilometers
  area.
  About
  1,45,098
 villages
 or
 23%
 of
 the
 total
 number
 of
 villages
 in
 India
 have
 population
 less
 than
  200
 and
 another
 21%
 have
 population
 between
 200
 and
 500.
 Covering
 such
 a
 large
 and
  scattered
 market
 raises
 the
 inventory
 and
 transportation
 cost
 for
 the
 company.
 
  Some
 problems
 that
 are
 faced
 by
 rural
 retailer:
 
  He
 has
 to
 deal
 in
 a
 large
 number
 of
 products
 which
 results
 in
 large
 inventory
 and
 high
  inventory
 cost.
 
?

He
  cannot
  charge
  higher
  markup
  as
  the
  consumers
  can
  not
  afford
  to
  pay
  higher
  price.
  Major
 purchase
 done
 by
 rural
 consumers
 is
 on
 credit
 basis.
 

?

27
 

?

Retailers
 have
 to
 travel
 frequently
 to
 feeder
 town/
 mandis
 to
 collect
 products.
 Due
  to
  this
  additional
  cost
  of
  traveling,
  their
  total
  expenditure
  towards
  collecting
  product
 increases.
 

In
 rural
 market
 wholesalers
 plays
 an
 important
 role
 in
 distribution
 structure.
 Wholesalers
  are
  based
  in
  feeder
  town/
  mandis.
  They
  pick
  up
  their
  stocks
  from
  nearest
  company
  stock
  point.
  Rural
  people
  and
  retailers
  purchase
  products
  from
  these
  wholesalers
  when
  they
  visit
 the
 mandis.
 The
 wholesalers
 usually
 operate
 on
 a
 cash
 and
 carry
 basis
 and
 at
 a
 very
  thin
  margin
  and
  manage
  a
  return
  on
  investment
  only
  by
  achieving
  a
  high
  inventory
  turnover.
  Though
  the
  wholesale
  channel
  is
  a
  low
  cost
  channel,
  there
  are
  certain
  problems
  with
 this
 model.
 Marketers
 have
 lack
 of
 control
 over
 their
 operation.
 When
 it
 is
 a
 question
  of
  pushing
  one
  product
  between
  two
  substitutable
  product,
  the
  wholesaler
  generally
  pushes
  the
  one
  which
  will
  earn
  him
  higher
  margin.
  There
  is
  high
  chance
  that
  they
  will
  push
  fake
  or
  duplicate
  products
  as
  they
  attract
  high
  incentive
  compared
  to
  reputed
  brands.
 Also,
 wholesalers
 are
 reluctant
 in
 pushing
 new
 products
 due
 to
 risk
 associated.
  The
  concept
  of
  rural
  malls
  which
  was
  first
  introduced
  by
  ITC
  is
  proving
  to
  be
  an
  effective
  distribution
 strategy
 in
 rural
 market.
 
 

Effective
 Distribution
 Strategies
 for
 Rural
 Market:
 
1. Delivery
 Vans
  Companies
  can
  use
  their
  own
  delivery
  vans
  to
  reach
  the
  rural
  consumers.
  There
  are
  certain
  advantages
  of
  using
  delivery
  vans.
  They
  take
  the
  products
  to
  customers
  and
  retail
  outlets
  in
  every
  corner
  of
  selected
  rural
  markets
  and
  enable
  the
  company
  to
  establish
  direct
 contact
 with
 the
 consumers
 which
 helps
 in
 sales
 promotion.
  We
 can
 take
 the
 example
 of
 HLLs
 distribution
 strategy
 in
 rural
 market.
  In
  1998,
  HLL
  landed
  "Operation
  Harvest"
  with
  an
  objective
  to
  increase
  penetration,
  increase
  brand
  awareness,
  encouraging
  trials
  and
  identification
  of
  key
  distribution
  points
  and
  retail
  points.
  Around
  30,000
  villages
  having
  high
  growth
  potential,
  having
  a
  population
 of
 at
 least
 2000,
 and
 well
 connected
 by
 roads,
 were
 selected.
 
 
 

28
 

2. Joint
 Distribution
 by
 Non-­Competing
 Companies
  Companies
 having
 lesser
 distribution
 reach
 in
 rural
 areas
 can
 collaborate
 with
 companies
  already
  having
  wide
  network
  in
  rural
  market.
  This
  type
  of
  tie-­?up
  can
  prove
  to
  be
  beneficial
 as
 one
 can
 reach
 to
 large
 number
 of
 retail
 outlets
 by
 utilising
 the
 network
 and
  the
 other
 one
 can
 earn
 better
 revenue.
 Also,
 this
 type
 of
 joint
 collaboration
 can
 help
 both
  companies
  to
  reduce
  distribution
  costs
  and
  can
  convert
  operation
  which
  seems
  to
  be
  unviable
 into
 financially
 viable
 operation.
  Some
 examples
 of
 effective
 distribution
 tie-­?ups
 in
 rural
 market:
 -­?
  ? Samsung
 has
 tied-­?up
 with
 the
 Indian
 Farmers
 Fertilizer
 Cooperative
 (IFFCO).
 Thus,
  Samsung
  will
  use
  IFFCO's
  cooperative
  network
  for
  marketing
  the
  hand-­?sets
  to
  rural
 consumers
 over
 a
 wide
 area.
 
  ? Nokia
 has
 entered
 into
 a
 partnership
 with
 HCL
 for
 distribution
 of
 its
 hand-­?sets.
  3. Haats
 

Along
  with
  permanent
  retail
  outlets,
  haats
  can
  also
  be
  utilised
  to
  make
  the
  products
  available
 to
 rural
 consumers.
 Haats
 are
 held
 on
 a
 particular
 day
 of
 every
 week.
 Typically,
  an
 average
 haat
 has
 300
 stalls.
  4. Distribution
 up
 to
 Feeder
 Towns
 /
 Mandis
  Companies
 can
 cater
 to
 the
 needs
 of
 rural
 consumers
 by
 making
 their
 products
 available
  upto
  feeder
  towns
  or
  mandis.
  Feeder
  markets
  or
  mandis
  provide
  excellent
  scope
  for
  distribution
  of
  products
  like
  consumer
  durables,
  clothes,
  kitchen
  equipment,
  agri-­?inputs
  and
 tools.
 The
 rural
 consumers
 visit
 these
 towns
 at
 regular
 intervals
 not
 only
 for
 selling
  their
  agricultural
  produce
  but
  also
  to
  purchase
  clothes,
  jewelry,
  hardware,
  radio,
  and
  other
 consumer
 durable
 products.
  5. Ulilisation
 of
 Women's
 Self-­Help
 Groups
  Women's
  Self
  Help
  Group
  (SHG)
  in
  rural
  India
  can
  be
  effectively
  used
  by
  marketers
  for
  making
  their
  products
  available
  to
  villagers.
  Usefulness
  of
  women's
  SHG
  in
  rural
  distribution
 can
 be
 better
 explained
 with
 the
 help
 of
 following
 example:
 -­?
 

29
 

HLL's
 Project
 Shakti:
 
Project
 Shakti
 is
 HLL's
 smart
 way
 of
 reaching
 10
 lakh
 homes
 directly
 in
 the
 villages
 where
  traditional
 distribution
 system
 cannot
 hope
 to
 enter
 through
 the
 use
 of
 Self
 Help
 Groups.
  The
 project
 was
 started
 in
 2001
 in
 50
 villages
 involving
 women
 belonging
 to
 micro-­?credit
  SHG
 in
 the
 Nalgoda
 District
 of
 Andhra
 Pradesh.
 50
 SHG
 were
 selected.
 
  HLL
  along
  with
  a
  social
  service
  organisation,
  Marketing
  &
  Research
  Team
  (MART),
  assisted
  the
  women
  in
  getting
  micro-­?credit
  to
  set-­?up
  an
  enterprise
  to
  distribute
  HLLs
  range
  of
  products.
  HLL
  selected
  a
  woman
  from
  an
  SHG
  as
  Shakti
  entrepreneur
  to
  start
  an
  enterprise
  with
  an
  initial
  loan
  from
  her
  SHG.
  After
  three
  month
  training,
  each
  woman
  began
 serving
 6
 to
 10
 villages
 having
 population
 of
 1000
 to
 2000.
 HLL
 delivered
 stocks
 at
  her
 door-­?step.
 From
 there
 on,
 she
 had
 to
 supply
 to
 village
 retailer
 as
 well
 as
 sell
 directly
 to
  consumers.
 She
 would
 pocket
 different
 profit
 margin
 for
 each
 different
 sale.
 
 


 
 
 
 
 
 
 
 
 
 
 

30
 

CONSUMER
 BEHAVIOUR
 
Rural
  population
  accounts
  for
  70%
  of
  the
  total
  indian
  population
  and
  it
  is
  increasing
  in
  comparison
  to
  urban
  population.
  The
  buyers
  of
  rural
  and
  urban
  areas
  differ
  in
  their
  characrteristics
 while
 buying
 a
 product.
 The
 reasons
 of
 differentiation
 are:
  • • • • • • Age
 and
 life
 cycle
 stage
  Occupation
  Economic
 situation
  Personality
 and
 self
 concept
  Life
 Style
  Psycological
 factors
 like
 perception,
 cognition
 and
 motivation.
  The
  major
  difference
  in
  urban
  and
  rural
  market
  is
  that,
  the
  rural
  market
  is
  under
  developed
  and
  consumers
  are
  also
  less
  aware
  of
  the
  new
  trends
  and
  brands
  as
  compared
  to
 urban
 market.
  Word
 of
 mouth,
 print,
 radio,
 puppetry,
 melas
 and
 folk
 theatres
 are
 few
 of
 the
 medium
 of
  promotion
  in
  rural
  market
  whereas
  in
  urban
  market
  mainly
  television
  and
  print
  media
  works.
  The
 Differences
 in
 Buyer
 behaviour:
  Rural
  Conservative
  Values,
 
  Factors
 influencing
 buying
 behaviour:
 
  The
 various
 factors
 that
 effect
 buying
 behaviour
 of
 in
 rural
 India
 are:
 
 
  1.Environmental
  of
  the
  consumer
  -­?
  The
  environment
  or
  the
  surroundings,
  within
  which
  the
  consumer
  lives,
  has
  a
  very
  strong
  influence
  on
  the
  buyer
  behaviour,
  egs.
  Electrification,
 water
 supply
 affects
 demand
 for
 durables.
 
 
  aspirations,needs
  Urban
  Innovative
  based
  Follow
 trends
 (including
 internationally)
  on
 

traditionalculture,social
 customs
 and
 beliefs
 

31
 

2.Geographic
 influences
 -­?
 The
 geographic
 location
 in
 which
 the
 rural
 consumer
 is
 located
  also
  speaks
  about
  the
  thought
  process
  of
  the
  consumer.
  For
  instance,
  villages
  in
  South
  India
  accept
  technology
  quicker
  than
  in
  other
  parts
  of
  India.
  Thus,
  HMT
  sells
  more
  winding
 watches
 in
 the
 north
 while
 they
 sell
 more
 quartz
 watches
 down
 south.
 
 
  3.Influence
 of
 occupation
 –
 The
 land
 owners
 and
 service
 clan
 buy
 more
 of
 Category
 II
 and
  Category
 III
 durables
 than
 agricultural
 laborers/farmers.
 
 
  4.Place
  of
  purchase
  (60%
  prefer
  HAATS
  due
  to
  better
  quality,
  variety
  &
  price)
  Companies
  need
 to
 assess
 the
 influence
 of
 retailers
 on
 both
 consumers
 at
 village
 shops
 and
 at
 haats.
 
 
  5.Creative
  use
  of
  product
  ex.:
  Godrej
  hair
  dye
  being
  used
  as
  a
  paint
  to
  colour
  horns
  of
  oxen,
 Washing
 machine
 being
 used
 for
 churning
 lassi.
 The
 study
 of
 product
 end
 provides
  indicators
 to
 the
 company
 on
 the
 need
 for
 education
 and
 also
 for
 new
 product
 ideas.
 
 
  6.Brand
 preference
 and
 loyalty
 
  Cultural
 factors
 influencing
 consumer
 behaviour:-­
  Culture
  is
  the
  most
  basic
  element
  that
  shapes
  a
  person’s
  wants
  and
  behaviour.
  In
  India,
  there
  are
  so
  many
  different
  cultures,
  which
  only
  goes
  on
  to
  make
  the
  marketer's
  job
  tougher.
 
 
  Some
 of
 the
 few
 cultural
 factors
 that
 influence
 buyer
 behaviour
 are:
 
 
  1. Product
 (colour,
 size,
 design,
 shape):
 There
 are
 many
 examples
 that
 support
 this
 point.
  For
  example,
  the
  Tata
  Sumo,
  which
  was
  launched
  in
  rural
  India
  in
  a
  white
  colour,
  was
  not
  well
 accepted.
 But
 however,
 when
 the
 same
 Sumo
 was
 re-­?launched
 as
 Spacio
 (a
 different
  name)
 and
 in
 a
 bright
 yellow
 colour,
 with
 a
 larger
 seating
 capacity
 and
 ability
 to
 transport
  good,
 the
 acceptance
 was
 higher.
 
 
  2. Social
  practices
  :
  There
  are
  so
  many
  different
  cultures,
  and
  each
  culture
  exhibits
  different
  social
  practices.
  For
  example,
  in
  a
  few
  villages
  they
  have
  common
  bath
  areas.
  Villagers
 used
 to
 buy
 one
 Lifebuoy
 cake
 and
 cut
 it
 into
 smaller
 bars.
 This
 helped
 lifebuoy
  to
 introduce
 smaller
 75-­?gram
 soap
 bars,
 which
 could
 be
 used
 individually.
 
 

32
 


  3. Decision-­making
 by
 male
 head
 :
 The
 male
 in
 Indian
 culture
 has
 always
 been
 given
 the
  designation
  of
  key
  decision
  maker.
  For
  example,
  the
  Mukhiya’s
  opinion
  (Head
  of
  the
  village),
 in
 most
 cases,
 is
 shared
 with
 the
 rest
 of
 the
 village.
 Even
 in
 a
 house
 the
 male
 head
  is
 the
 final
 decision
 maker.
 In
 rural
 areas,
 this
 trend
 is
 very
 prominent.
 
 
  4. Changes
 in
 saving
 and
 investment
 patterns
 From
 gold,
 land,
 to
 tractors,
 VCR’s,
 LCV’s
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 

33
 

PROMOTIONAL
 STRATEGIES:
 
 
Promotion
 is
 the
 process
 of
 marketing
 communication
 to
 inform,
 persuade,
 remind
  and
 influence
 consumers
 or
 users
 in
 favor
 of
 your
 products
 and
 service.
  Promotion
  of
  brands
  in
  rural
  markets
  requires
  the
  special
  measures.
  Due
  to
  the
 social
 and
  backward
  condition
  the
  personal
  selling
  efforts
  have
  a
  challenging
  role
  to
  play
  in
  this
  regard.
  The
  word
  of
  mouth
  is
  an
  important
  message
  carrier
  in
  rural
  areas.
  Infect
  the
  opinion
  leaders
  are
  the
  most
  influencing
  part
  of
  promotion
  strategy
  of
  rural
  promotion
  efforts.
  The
  experience
  of
  agricultural
  input
  industry
  can
  act
  as
  a
  guideline
  for
  the
  marketing
  efforts
  of
  consumer
  durable
  and
  non-­?durable
  companies.
  Relevance
  of
  Mass
  Media
 is
 also
 a
 very
 important
 factor.
  The
  Indian
  established
  Industries
  have
  the
  advantages,
  which
  MNC
  don't
  enjoy
  in
  this
  regard.
  The
  strong
  Indian
  brands
  have
  strong
  brand
  equity,
  consumer
  demand-­?pull
  and
  efficient
 and
 dedicated
 dealer
 network
 which
 have
 been
 created
 over
 a
 period
 of
 time.
 The
  rural
 market
 has
 a
 grip
 of
 strong
 country
 shops,
 which
 affect
 the
 sale
 of
 various
 products
  in
  rural
  market.
  The
  companies
  are
  trying
  to
  trigger
  growth
  in
  rural
  areas.
  They
  are
  identifying
  the
  fact
  that
  rural
  people
  are
  now
  in
  the
  better
  position
  with
  disposable
  income.
 The
 low
 rate
 finance
 availability
 has
 also
 increased
 the
 affordability
 of
 purchasing
  the
 costly
 products
 by
 the
 rural
 people.
 Marketer
 should
 understand
 the
 price
 sensitivity
  of
 a
 consumer
 in
 a
 rural
 area.
 
 


 

I. Introduction
 
Indian
  Marketers
  on
  rural
  marketing
  have
  two
  understanding
  (I)
  The
  urban
  metro
  products
 and
 marketing
 products
 can
 be
 implemented
 in
 rural
 markets
 with
 some
 or
 no
  change.
 (ii)
 The
 rural
 marketing
 required
 the
 separate
 skills
 and
 techniques
 from
 its
 urban
  counter
 part.
 The
 Marketers
 have
 following
 facilities
 to
 make
 them
 believe
 in
 accepting
 the
  truth
  that
  rural
  markets
  are
  different
  in
  so
  many
  terms.
 
 (i)
  The
  rural
  market
  has
  the
  opportunity
  for.
 
 (ii)
 
 Low
  priced
  products
  can
  be
  more
  successful
  in
  rural
  markets
  because
  the
  low
  purchasing,
  purchasing
  powers
  in
  rural
  markets.
 
 (iii)
 
  Rural
  consumers
  have
  mostly
  homogeneous
  group
  with
  similar
  needs,
  economic
  conditions
  and
  problems.
 
 (iv)
  The
  rural
  markets
  can
  be
  worked
  with
  the
  different
  media
  environment
  as
  opposed
 to
 press,
 film,
 radio
 and
 other
 urban
 centric
 media
 exposure.
 

34
 

II. The
 Promotion
 Media:
 
 
1. Newspaper:
 
  Eenadu(A.P),
  Dina
  Thanthi
  (
  Tamil
  Nadu),
  Punjab
  Kesari
  (North),
  Loksatta
  (Maharashtra),
 Anand
 Bazaar
 Patrica
 (West
 Bengal),
 Daink
 Baskar
 (North)
 
  2. Television:
 
  Sun
 TV
 (Tamil
 nadu),
 Asianet
 (Kerla),
 Eenadu(
 AP),
 Aplha
 Punjabi
 (North),
 Aplha
  Mararthi
 (Maharashtra).
 
  3. Radio:
 
  Radio
  reach
  is
  highest
  amongst
  all
  media.
  It
  is
  the
  highest
  in
  Kerala
  (62%)
  followed
  by
  Tamil
  Nadu
  (35%)
  and
  Karnataka
  (32%).
  E.g.
  Colgate,
  Jyoti
  Labs,
  Zandu
 Balm
 are
 some
 of
 the
 company
 using
 radio
 communication
 program.
 A
 ten
  second
 spot
 in
 Regional
 station
 would
 cost
 only
 about
 Rs.
 2000/-­?
 
  4. Cinema:
  ? ?
  5. Outdoor
 Advertisement:
  Form
  of
  media,
  which
  includes
  signboard,
  wall
  painting,
  hoardings,
  tree
  boards,
  bus
 boards
 etc.
 
  6. Direct
 Mail
 Advertising:
 
  ? ? Mailer
 for
 seed
 and
 pesticides
 to
 be
 sent
 as
 per
 agricultural
 season.
  Direct
 mailers
 on
 consumer
 durables
 to
 be
 sent
 during
 the
 harvesting
 season
  so
 that
 the
 farmers
 will,
 have
 money
 for
 purchasing
 the
 same.
 
 
  Films
  on
  products
  like
  Vicks,
  Lifeboy,
  Colgate
  and
  Shampoos
  are
  shown
  in
  rural
 cinemas
 halls.
  LIC
  and
  Private
  insurance
  companies
  have
  been
  showing
  short
  movies
  in
  rural
 theatres
 to
 create
 awareness
 about
 life
 insurance
 


 
 

35
 


  Farm
 to
 Farm
 /
 House
 to
 House
 
 
 
Many
 LIC
 agents
 and
 companies
 dealing
 with
 high
 value
 consumer
 durables
 have
 tried
  this
 approach
 with
 success
 in
 rich
 rural
 areas.
  ACC
  representatives
  retailers
  make
  house-­?to
  house
  visit
  and
  give
  information
  about
  product
 stability.
 
 

Group
 Meeting:
 
 
1. The
  Banker
  once
  in
  a
  week
  visit
  a
  village
  get
  the
  villagers
  in
  school
  hall
  or
  Panachyat
  office
  and
  explain
  to
  the
  villagers
  the
  various
  financial
  facilities
  offered
  by
 the
 bank
  2. MRF
 conduct
 tractor
 owners
 meet
 in
 association
 with
 local
 distributors
 

Opinion
 Leaders:
 
1. Asian
 Paints
 promoted
 its
 Utasv
 brand
 of
 paint
 by
 painting
 the
 village
 Sarpanch’s
  house
  a
  few
  months
  prior
  to
  the
  launch
  to
  demonstrate
  that
  the
  paint
  does
  not
  peel
 off
 and
 is
 an
 ideal
 replacement
 of
 chuna.
  2. The
 health
 development
 assistant
 of
 HUL
 regularly
 meets
 with
 schoolteachers
 to
  promote
 Lifebuoy
 soap
 in
 Villages.
 

The
 Melas
 (It
 is
 estimated
 that
 over
 20,000
 melas
 are
 conducted
 every
 year):
 
? ? ? ? ?
  Paint
  companies
  supporting
  Pola
  fair
  in
  Maharashtra
  by
  painting
  the
  horns
  of
  the
 bulls.
  Sonepur
 Mela,
 Vaisakh
 Purnima
 Mela(
 Bihar).
  Navaratri
 Fair,
 Ambaji
 (Gujarat)
  Naucahndi
 Mela,
 Ramlila
 Mela(UP)
  Kartik
 Mela,
 Gawlier
 Trade
 Fair(
 MP)
 
 

Haats
  (On
  certain
  days
  of
  the
  week,
  both
  the
  sellers
  and
  buyers
  meet
  in
  the
  village
  to
 buy
 and
 sell
 goods
 and
 services):
 
 

36
 

? ?

Parachut
  Oil,
  Nirma
  washing
  powder
  and
  tiger
  brand
  biscuits
  have
  been
  promoted
 through
 haats.
  About
  40,000
  Haats
  are
  held
  in
  rural
  areas
  in
  our
  country,
  highest
  number
  haats
 in
 U.P
 (10,000).
 

Audio
  Visual
  Van
  (The
  van
  is
  a
  mobile
  promotion
  station
  having
  facilities
  for
  screening
 films,
 slides
 and
 mike
 publicity):
 
? ? ? Nippo
 promotes
 batteries
 through
 specially
 designed
 vans
 called
 melavans.
  The
 van
 are
 equipped
 with
 TV/VCR
 for
 showing
 products
 awareness
 films.
  Colgate
 India
 makes
 extensive
 use
 of
 VANs.
  ITC’s
 mobile
 Vans
 take
 the
 message
 of
 e-­?choupal
 to
 new
 village.
 


 

III.

Success
  Stories
  in
  Rural
  Marketing
  using
  above
  promotional
  strategies
 
? ? ? ? ? Lever's
 Breeze
 soap
 
  A1
 Tea,
 
  Britannia's
 Tiger
 biscuits,
 
  LG's
 Sampoorna
  502
 Pataka
 Chai,
 the
 tea
 brand.
 


  IV. Other
  Examples
  of
  promotional
  strategies
  adopted
  by
  well
  known
  organizations
 
 
1. Brooke
  Bond
  Lipton
  India
  Ltd
  (BBLIL)
  markets
  its
  rural
  brands
  through
  magic
  shows
 and
 skits.
 
  2. Reckitt
  and
  Colemen
  uses
  NGO's
  in
  rural
  areas
  to
  educate
  customers
  about
  product
 benefits,
 which
 establishes
 one
 to
 one
 communication
 channels.
  3.
 HLL's
  ‘Operation
  Bharat’
  to
  tap
  the
  rural
  markets.
  Under
  this
  operation
  it
  passed
  out
  low–priced
  sample
  packets
  of
  its
  toothpaste,
  fairness
  cream,
  Clinic
  Plus
  shampoo,
  and
  Ponds
  cream
  to
  twenty
  million
  households.
  Today,
  these
  brands
  have
 a
 flourishing
 market
 in
 rural
 India.
  4. Marico
 Industries
 -­
 Parachute
 Coconut
 Oil
 Pouches
  37
 

?

With
 the
 objective
 of
 creating
 awareness
 for
 Parachute
 Coconut
 Oil
 pouches
  in
  towns
  with
  less
  than
  20,000
  population
  in
  Tamil
  Nadu,
  and
  in
  order
  to
  convert
 
  loose
  oil
  buyers
  into
  Parachute
  pouch
  customers,
  Marico
  Industries
  launched
  a
  van
  campaign.
  The
  communication
  Strategy
  focused
  on
  getting
  women
  out
  of
  their
  homes
  to
  participate
  in
  the
  van
  campaign,
  which
  was
  aimed
 exclusively
 for
 them
 and
 for
 the
 first
 time
 conducted
 by
 women.
 
 

?

Result:
  A
  study
  by
  Marico
  showed
  a
  25per
  cent
  conversion
  from
  loose
  coconut
  oil
  usage
  to
  Parachute
  Pouch
  Pack,
  post
  van
  campaign
  and
  a
  substantial
 increase
 in
 sales
 from
 the
 campaign
 areas
 


 
 


 
 
 
 
 
 


 
 
38
 

FUTURE
 PROSPECTS
 FOR
 RURAL
 MARKETING:
 
Gandhi,
  the
  father
  of
  modern
  India,
  believed
  that
  the
  country's
  future
  lay
  in
  her
  villages.
 These
 days,
 every
 major
 business
 group
 that
 plans
 to
 move
 into
 the
 hinterland
  would
  agree.
  However,
  the
  level
  of
  affordability
  in
  rural
  India
  is
  low.
  For
  consumers
  to
  buy
  products,
  you
  have
  to
  first
  put
  more
  money
  in
  their
  pockets.
  Create
  a
  virtuous
  circle
  of
  raising
  rural
  incomes,
  which
  leads
  to
  increase
  in
  consumption.
  This
  new
  business
  culture
  I
  am
  talking
  about
  is
  not
  charity
  or
  philanthropy.
  It
  is
  about
  doing
  business
  with
  social
  benefits.
  It
  will
  help
  us
  to
  sustain
  the
  economy
  and
  bring
  in
  lots
  of
  human
 satisfaction
 to
 all
 of
 us.
 You
 can't
 think
 of
 success
 just
 in
 financial
 terms.
 Getting
  goodwill
 and
 recognition
 in
 the
 rural
 market
 is
 also
 not
 a
 small
 asset
 for
 any
 company.
  Companies
  have
  long
  realized
  that
  to
  increase
  sales
  volume
  they
  will
  have
  to
  reach
  outside
 big
 cities.
 In
 several
 categories,
 rural
 India
 accounts
 for
 the
 lion's
 share.
 Rural
  households
 form
 around
 72%
 of
 the
 total
 households
 in
 the
 country.
 Spending
 in
 this
  segment
  is
  growing
  rapidly
  and
  consumption
  patterns
  are
  closing
  in
  on
  those
  in
  urban
  areas.
 
  Today,
 no
 consumer
 goods
 company
 can
 afford
 to
 forget
 rural
 market
 which
 is
 a
 very
  big
  part
  of
  the
  Indian
  consumer
  market.
  You
  cannot
  build
  a
  brand
  presence
  in
  India
  until
 you
 have
 the
 strategy
 for
 reaching
 the
 villages.
 Companies
 that
 have
 figured
 this
  out
  are
  doing
  better
  in
  villages
  than
  cities.
  The
  potential
  is
  huge
  for
  companies
  that
  develop
  effective
  rural
  marketing
  strategies.
  Up-­?gradation
  of
  products
  is
  being
  witnessed
  on
  fast-­?emerging
  consumption
  pattern
  in
  rural
  areas.
  Local
  and
  branded
  products
 are
 getting
 replaced
 by
 national
 brands
 and
 low
 priced
 by
 high
 priced.
  CCI
 claimed
 all
 its
 marketing
 initiatives
 were
 very
 successful,
 and
 as
 a
 result,
 its
 rural
  penetration
  increased
  from
  9%
  in
  2001
  to
  25%
  in
  2003.
  CCI
  also
  said
  that
  volumes
  from
  rural
  markets
  had
  increased
  to
  35%
  in
  2003.
  The
  company
  said
  that
  it
  would
  focus
  on
  adding
  more
  villages
  to
  its
  distribution
  network.
  For
  the
  year
  2003,
  CCI
  had
  a
  target
  of
  reaching
  0.1
  million
  more
  villages.
  Analysts
  pointed
  out
  that
  stiff
  competition
  from
  archrival
  PepsiCo
  would
  make
  it
  increasingly
  difficult
  for
  CCI
  to
  garner
  more
  marketshare.
 
 
  PepsiCo
 too
 had
 started
 focusing
 on
 the
 rural
 market,
 due
 to
 the
 flat
 volumes
 in
 urban
  39
 

areas.
  Like
  CCI,
  PepsiCo
  too
  launched
  200
  ml
  bottles
  priced
  at
  Rs.
  5.
  Going
  one
  step
  ahead,
  PepsiCo
  slashed
  the
  price
  of
  its
  300
  ml
  bottles
  to
  Rs
  6/-­?
  to
  boost
  volumes
  in
  urban
 
  In
 early
 2003,
 CCI
 announced
 that
 it
 was
 dropping
 plans
 to
 venture
 into
 other
 beverage
  businesses.
 Company
 sources
 said
 that
 increasing
 volumes
 of
 cola
 drinks
 had
 made
 the
  company
  rethink
  its
  plans
  of
  launching
  juice
  and
  milk-­?based
  beverages.
  In
  2002,
  CCI
  had
  announced
  plans
  to
  launch
  beverages
  such
  as
  nimbu
  paani
  (lemon
  juice),
  fruit
  juice,
 cold
 coffee,
 and
 iced
 tea
 in
 collaboration
 with
 Nestle
 India.
  Though
 CCI
 was
 upbeat
 on
 account
 of
 its
 early
 success
 in
 its
 drive
 to
 capture
 the
 rural
  market,
  the
  question
  was
  whether
  the
  company
  would
  be
  able
  to
  take
  this
  success
  further.
  In
  present
  situation,
  our
  huge
  population
  is
  helping
  marketers
  to
  think
  new
  marketing
  strategies.
  630
  Billion
  rural
  populations
  are
  greater
  than
  total
  consuming
  markets
  of
  many
 countries
 like
 Canada,
 South
 Korea,
 etc.
  Tapping
 the
 rural
 market
 is
 one
 of
 the
 most
 important
 marketing
 strategies
 followed
  by
 various
 MNCs
 and
 Indian
 companies
 now-­?a-­?days.
 
  A
  number
  of
  companies
  in
  FMCG,
  consumer
  durables
  as
  well
  as
  telecom
  sector
  have
  adapted
  strategies
  to
  expand
  their
  base
  in
  rural
  market.
  Among
  those
  who
  have
  already
  taken
  remarkable
  initiative
  in
  rural
  market
  are
  HLL,
  Colgate,
  LG
  Electronics,
  Philips,
  BSNL,
  LIC,
  CavinKare,
  Britannia
  and
  Hero
  Honda.
  Rural
  Marketing
  in
  simple
  word
 is
 planning
 and
 implementation
 of
 marketing
 function
 for
 rural
 areas.
 
 Rural
  marketing
  has
  been
  defined
  as
  the
  process
  of
  developing,
  pricing,
  promoting,
  distributing
  rural
  specific
  products
  and
  services
  leading
  to
  exchange
  between
  urban
  and
  rural
  markets
  which
  satisfies
  consumer
  demands
  and
  also
  achieves
  organizational
  objective
 
  With
  many
  social
  and
  political
  groups
  becoming
  active
  against
  the
  cola
  companies
  in
  rural
 areas,
 it
 remains
 to
 be
 seen
 whether
 CCI
 will
 be
 able
 to
 quench
 its
 thirst
 for
 the
  rural
 market.
  areas.
 
 


 
40
 


 

 

41
 



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