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INDEX
Sr.No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
Topic Introduction What Rural Market Buy? Why Rural Market Reason For Improvement Of Business In Rural Areas Rural marketing: Challenges,Opportunity And Strategies Some Myths Why Different Strategies? Strategies To Be Followed Different Marketing Strategies In The Rural Market Marketing Strategy Followed By Hul Strategy That Is Followed By Companies Company’s Strategy Case Study Conclusion Bibliography
Page.No 5 6 6 6 7 8 8 9 11 18 22 25 26 27 28
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EXECUTIVE SUMMARY
Marketing is the pivot of economic development in rural areas. It is an essential component in income and employment generation in farm and non-farm sectors. Since marketing is one of the pre-requisites for income generation.Rural marketing is a two way marketing process. The content now encompasses not only marketing of products which flow to rural areas, but also products which flow to urban areas from rural areas. So a broad definition of rural marketing is concerned with the flow of goods and services from urban to rural arid vice-versa. In addition, it also include the marketing in the rural areas.As the rural marketing is a two-way process, this article attempts to highlight both the aspects. It examines the marketing aspects of rural produce with special reference to agriculture while on, the other hand it covers and suggests .strategies for promoting marketing within the rural areas. In recent years, rural markets have acquired significance in countries like China and India, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has taken shape. Sometimes, rural marketing is confused with agricultural marketing – the later denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers. Also, when we consider the scenario of India and China, there is a picture that comes out,huge market for the developed products as well as the labor support. This has led to the change in the mindset of the marketers to move to these parts of the world. Also rural market is getting an importance because of the saturation of the urban market. As due to the competition in the urban market, the market is more or so saturated as most of the capacity of the purchasers have been targeted by the marketers.So the marketers are looking for extending their product categories to an unexplored market i.e. the rural market. This has also led to the CSR activities being done by the corporate to help the poor people attain some wealth to spend on their product categories. Here we can think of HLL (now, HUL) initiatives in the rural India. One of such project is the Project Shakti, which is not only helping their company attain some revenue but also helping the poor women of the village to attain some money which is surely going to increase their purchasing power. Also this will increase their brand loyalty as well as recognition in that area. Similarly we can think of the ITC E-Chaupal, which is helping the poor farmers get all the information about the weather as well as the market price of the food grains they are producing.In other view these activities are also helping the companies increase their brand value. So as it is given above the significance of the rural market has increased due to the saturation of the urban market as well as in such conditions the company which will lead the way will be benefited as shown by the success of HUL and ITC initiatives.
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MARKETING STRATEGY
INTRODUCTION
Prime Minister Manmohan Singh recently talked about his vision for rural India: "My vision of rural India is of a modern agrarian, industrial and services economy co-existing side by side, where people can live in well-equipped villages and commute easily to work, be it on the farm or in the non-farm economy. There is much that modern science and technology can do to realise this vision. Rural incomes have to be increased. Rural infrastructure has to be improved. Rural health and education needs have to be met. Employment opportunities have to be created in rural areas."
'Go rural' is the slogan of marketing gurus after analyzing the socioeconomic changes in villages. The Rural population is nearly three times the urban, so that Rural consumers have become the prime target market for consumer durable and nondurable products, food, construction, electrical, electronics, automobiles, banks, insurance companies and other sectors besides hundred per cent of agri-input products such as seeds, fertilizers, pesticides and farm machinery. The Indian rural market today accounts for only about Rs 8 billion of the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a long way ahead. Although a lot is spoken about the immense potential of the unexplored rural market, advertisers and companies find it easier to vie for a share of the already divided urban pie. The success of a brand in the Indian rural market is as unpredictable as rain. It has always been difficult to gauge the rural market. Many brands, which should have been successful, have failed miserably. More often than not, people attribute rural market success to luck. Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.
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What rural market buys?
Rural India buys small packs, as they are perceived as value for money. There is brand stickiness, where a consumer buys a brand out of habit and not really by choice. Brands rarely fight for market share; they just have to be visible in the right place. Even expensive brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution, many brands are doing well without much advertising support — Ghadi, a big detergent brand in North India, is an example.
Why Rural Market?
The Indian rural market has a huge demand base and offers great opportunities to marketers. Two-thirds of Indian consumers live in rural areas and almost half of the national income is generated here. The reasons for heading into the rural areas are fairly clear. The urban consumer durable market for products like colour TVs, washing machines, refrigerators and air conditioners is growing annually at between 7 per cent and 10 per cent. The rural market is zooming ahead at around 25 per cent annually. "The rural market is growing faster than urban India now," says Venugopal Dhoot, chairman of the Rs 989 crore (Rs billion) Videocon Appliances. "The urban market is a replacement and up gradation market today," adds Samsung's director, marketing, Ravinder Zutshi.
Reasons for improvement of business in rural area
? ? ? ? ?
Socio-economic changes (lifestyle, habits and tastes, economic status) Literacy level (25% before independence – more than 65% in 2001) Infrastructure facilities (roads, electricity, media) Increase in income Increase in expectations
MART, the specialist rural marketing and rural development consultancy has found that 53 per cent of FMCG sales lie in the rural areas, as do 59 per cent of consumer durable sales, said its head Pradeep Kashyap at the seminar. Of two million BSNL mobile connections, 50 per cent went to small towns and villages, of 20 million Rediffmail subscriptions, 60 per cent came from small towns, so did half the transactions on Rediff's shopping site.
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RURAL MARKETING: Challenges, Opportunities & Strategies
? ? The future lies with those companies who see the poor as their customers. To get rich, sell to the poor.
CONCEPT
In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has emerged. But often, rural marketing is confused with agricultural marketing – the latter denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers.
WHAT MAKES RURAL MARKETS ATTRACTIVE?
Rural market has following arrived and the following facts substantiate this. 742 million people In 2001-02, LIC sold 55 % of its policies in rural India. Of two million BSNL mobile connections, 50% in small towns/villages. Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT) 41 million Kisan Credit Cards issued (against 22 million credit-plus-debit cards in urban) with cumulative credit of Rs 977 billion resulting in tremendous liquidity . Of 20 million Rediffmail signups, 60 % are from small towns. 50% transactions from these towns on Rediff online shopping site
SOME MYTHS
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Myth-1: Rural Market Is a Homogeneous Mass Reality: It‘s a heterogeneous population. Various Tiers are present depending on the
incomes like Big Landlords; Traders, small farmers; Marginal farmers: Labors, artisans. State wise variations in rural demographics are present viz. Literacy (Kerala 90%, Bihar 44%) and Population below poverty line (Orissa 48%, Punjab 6%)
Myth-2: Disposable Income Is Low Reality: Number of middle class
HHs (annual income Rs 45,000- 2, 15,000) for rural sector is 27.4 million as compared to the figure of 29.5 million for urban sector. Rural incomes CAGR was 10.95%
compared to 10.74% in urban between 1970-71 and 1993-94.
Myth-3: Individuals Decide About Purchases Reality: Decision making process is collective. Purchase process- influencer, decider,
buyer, one who pays can all be different. So marketers must address brand message at several levels.Rural youth brings brand knowledge to Households (HH).
WHY DIFFERENT STRATEGIES?
Rural markets, as part of any economy, have untapped potential. There are several difficulties confronting the effort to fully explore rural markets. The concept of rural markets in India is still in evolving shape, and the sector poses a variety of challenges. Distribution costs and non availability of retail outlets are major problems faced by the marketers. The success of a brand in the Indian rural market is as unpredictable as rain. Many brands, which should have been successful, have failed miserably. This is because, most firms try to extend marketing plans that they use in urban areas to the rural markets. The unique consumption patterns, tastes, and needs of the rural consumers should be analyzed at the product planning stage so that they match the needs of the rural people. Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. The main problems in rural marketing are: • Understanding the rural consumer • Poor infrastructure • Physical Distribution • Channel Management
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• Promotion and Marketing Communication Dynamics of rural markets differ from other market types, and similarly rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or industrial consumer.
STRATEGIES TO BE FOLLOWED
? Marketing Strategy:
Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, ?melas? and other activities where they assemble.
? Distribution Strategy:
One of the ways could be using company delivery vans which can serve two purposes- it can take the products to the customers in every nook and corner of the market and it also enables the firm to establish direct contact with them and thereby facilitate sales promotion. However, only the bigwigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Annual ?melas? organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases. According to the Indian Market Research Bureau, around 8000 such melas are held in rural India every year. Rural markets have the practice of fixing specific days in a week as Market Days (often called ?Haats‘) when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as ?Mandis? or Agri-markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns they will easily be able to cover a large section of the rural population.
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? Promotional Strategy:
Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns.
SOME LIVE EXAMPLES:
? One very fine example can be quoted of Escorts where they focused on deeper penetration. They did not rely on T.V or press advertisements rather concentrated on focused approach depending on geographical and market parameters like fares, melas etc. Looking at the ?kuchha‘ roads of village they positioned their bike as tough vehicle. Their advertisements showed Dharmendra riding Escort with the punch line ?Jandar Sawari, Shandar Sawari‘. Thus, they achieved whopping sales of 95000 vehicles annually. ? HUL started ?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. ? ITC is setting up e-Choupals which offers the farmers all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access latest local and global information on weather, scientific farming practices as well as market prices at the village itself through this web portal - all in Hindi. It also facilitates supply of high quality farm inputs as well as purchase of commodities at their doorstep. ? BPCL Introduced Rural Marketing Vehicle (RMV) as their strategy for rural marketing. It moves from village to village and fills cylinders on the spot for the rural customers. BPCL considered low-income of rural population and therefore introduced a smaller size cylinder to reduce both the initial deposit cost as well as the recurring refill cost.
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DIFFERENT MARKETING STRATEGIES IN THE RURAL MARKET
Product in the rural perspective is a need satisfying entity unique to a rural consumer and not a futile extension of an urban offering.
Various product strategies adopted by companies are as follows: RURAL PRODUCT STRATEGIES 1.
?
New product design
Companies should use technological expertise and design specific products keeping in mind the rural consumers. ? For rural markets there should be ?no frills? product i.e. it performs the basic feature but it does not have additional characteristics. E.g. Maharaja appliances ltd. launched a semi-automatic washing machines ?bonus? priced at just Rs. 2990/- only one feature of washing. No additional feature attached like dryer, etc.E.g. LG electronics launched ?Sampoorna? India‘s first television with the Devnagri script on screen display. The word Sampoorna meaning ?wholesome? cuts across all linguistic barriers. It is affordable at Rs.14400 in 2001. It can withstand power fluctuations. Sales exceed 21 crores in 2 months.
2.
Sturdy products
Most of the rural consumers believe that the heavier the item, the higher the power and durability. The product should be sturdy enough to withstand rough handling and storage.E.g. Escort has positioned their motorbike, Rajdoot as a tough vehicle. The advertisement shows Dharmendra riding escort motorbike.
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3.
packaging strategies
i. Small unit packaging (SPU)
Small packaging stands a good chance of acceptance in rural markets given the low per capita rural income. The advantage is that the price is low and rural consumers can easily afford it.E.g. RED LABEL Rs.3.00 pack has more sales compared to large pack.
ii. Attractive colors
? Rural consumers feel that the bright, fast colours like red, green, blue, etc. indicates the sturdiness of the product. E.g. RED LABEL packing in red colour. ? Rural consumers identify the product with the colour of the package. E.g. Colgate
iii. Refill and Reusable
It can be used to motivate rural consumers.
iv. Combi-packs
When related products are packed together and sold at economy prices, the rural consumers find it a better option to buy. E.g. Johnsons and Johnsons baby care assortment packages of R.s.175 with powder, soap, shampoo, hair oil and cream.
4. Utility oriented products
Rural consumers are more concerned with the utility of the product than its appearance and sophistication. E.G. Phillips India Ltd. Developed and introduced a low cost medium wave receiver named BAHADUR during early seventies. Initially the sales were good but declined subsequently. On investigation it was found that the rural consumer brought radios not only for information and news but also for entertainment.
5. Branding strategy
Branded goods comprises of 65% of sales in villages today. ? Brand name or the logo should be simple, short and easy to pronounce/remember by rural consumers. E.g. i. Asian paints- ?Gattu? ii. Mangalore chemicals and fertilizers ltd.-?Poorna-Kumbh? with a coconut as its logo and name it ?Mangala? ? For identification the rural consumers do give their own brand name on the name of an item. E.g. Nirma- peeli tikki, Lifebuoy- lal sabun.
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? Brand identity- in rural markets is often created through the visual logo or name or product or colour of the product. E.g. i.Thumps-up is recognized by the logo and mention it as sweet black water that comes in bottles. The generic name is ?SODA WATER? or ?THANDA?
PRICING STRATEGIES-“RURAL MARKETS” 1. Low Price:
A rural customer is price sensitive mainly because of his/her relatively low income level. For example this is precisely what Nike addressed when it launched its sneaker range in rural markets, pricing them competitively at Rs. 750/- a pair only.
(a)
Small Unit Packaging (SUP):
A company can offer small unit sizes at lower price. Eg. - Lux soap which is sold in 25 gms. Pack in urban area is available in 5 or 10 gms. Pack for half the price. (Lifebuoy – 60 gms. ; Rs. 4.50/-)
(b)
Avoid sophisticated packaging:
Avoid sophisticated packaging since rural consumers are more interested in the sturdiness and ability of the product. This will lower down the cost considerably. Eg. Packaging of biscuits – now in airtight polythene (earlier in boxes)
(c)
Lower cost by providing No Frills Product:
Eg. LG Electronics has knocked off some frills in the TV for the rural markets. (No - Golden Eye Feature, only 100 channels, output of 200 watts only etc.)
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2.
Value Pricing Strategy (VFM- Value for money) :
A rural customer shops for value the marketer has to understand that the rural markets are for more utilitarian and pricing conscious. Value pricing needs assigning a low price tag for a product and providing the benefits of low cost mass production to the customers without sacrificing quality. Eg. Lifebuoy follows this pricing method for rural markets.
Value Engineering:
This is a technique to develop by substituting costly raw material with a cheaper one and hence lowering the price of product. Eg. Nestle Cerelac – used soya protein instead of milk protein. (Soya protein is much cheaper than milk protein, but the nutritional efficiency is same.)
3.
Market Penetration Strategy :
Under this pricing strategy, a company introduces the product at lower prices to penetrate and reach a larger segment of the market. At alter stage, the price is increased. Eg. Maggie Noodles were introduced at Rs. 5/- and now the price is Rs. 12/- at present. Maharaja Bonus – introductory price Rs.2990/- and now Rs. 5000/Nestle – launched wafer chocolate brand Munch for Rs.2/- for chota munch; once market was established for the product it launched a new pack for Rs. 5/-
4.
Credit facilities :
The farmer requires credit for meeting cultivation expenses as well as running the family between marketing of produce and the harvest of next crop. Even the rural retailer requires credit from distributors of consumer goods. Eg. HLL, Colgate, Palmolive – in order to make price affordable to rural consumers, many Co. work through banks and offer hire purchase schemes and installment facilities to the rural customers. Eg. Tractors, Pump sets, TV sets.
5.
Psychological Pricing :
In this pricing method, companies price the product ending at odd numbers. It conveys to notions: a) It belongs to a lower price range. b) There is a discount or bargain. Eg. Bata shoe co. prices its product at Rs. 99/Page 12 of 26
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(NOTE: The biggest problem is the perennial shortage of change in India. So prices need to be in easily available denominations. That is why Cadbury‘s experiment with Rs. 6/price point for its 5 star brand didn‘t work. Shop keepers don‘t have change and hence they don‘t push the product.)
6.
Promotion pricing techniques:
Many companies have found that promotional pricing is more effective in generating
sales. Following are the various strategies: ? Discounts – Textile showrooms and footwear shops offer frequently cash rebates to clear inventories. ? Low – Interest financing – TVS 50 and other two wheelers sellers are offering it. ? Longer payment terms – (Installment) LIC policies, LG Electronics. ? Exchange Price Offer – Old products or same of any other brand are exchanged at a lower price with new ones. Eg. Electronic Items (Videocon)
RURAL DISTRIBUTION STRATEGIES
1. Coverage of villages with 2000 and above population: There are around 80000 villages with population of 2000 above although the percentage of these villages is less, the density of population is more. The proportion of rural population covered will be 48% with improved communication facilities it is possible to reach distribution vans to those villages. 2. Use of co-operative societies: About five lakhs co-operative society operates in rural areas, like marketing cooperatives, Dairy co-operatives, Credit co-operatives and other multipurpose co-operatives. This society‘s are linked with higher level society - Tahsil, District and St6ate level. Thus, these co-operatives always have an arrangement for centralized procurement and distribution through their respective state level federation. Such state level federation can be motivated to procure and distribute consumable items, and low value durable items to the members. Many of the society extend credit to their members for their purchases. Eg. FFSCS = Farmers service co-operative society‘s LAMPS = Large agriculture multipurpose societies. 3. Utilization of public distribution systems: Purpose of TDS, is to make available essential commodities like food grains, edible oil, kerosene and others to the consumers at reasonable price through FPS. Year again there is an arrangement for centralized procurement and distribution. Eg. Ration shops 4.37 lacs FPS all through out India under the government PDS. 4. Utilization of multipurpose distribution centers by petroleum oil companies : In order to cater to rural areas the petroleum oil companies have evolved a concept of multipurpose centers in rural areas. In addition to petroleum diesel lubricants this outlets also stoke consumable agricultural inputs like fertilizers, pesticides and seeds. It is estimated that there are about 450 outlets in operation in India. These outlets can be profitably utilized for selling consumables and durable items also. Eg. BP petroleum has many outlets in rural India.
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5.
Distribution up to feeder market / mandies: The rural consumers visit nearby town at regular intervals not only for selling agricultural produce but also for purpose of items like cloth jewelry, hardware, radios and other durables and consumer products. From the feeder market, the stockiest or wholesalers can arrange for distribution to village shops. Eg. 90% of durable are from mandies. 6. Shandies / Haats and Jathras: There are around 47000 shandies / haats and 25000 jathras or melas held regularly in India. While shandies / haats are held on a particular day every week, jathras and melas are held once or twice a year for longer duration. (Normally coinciding with religious festivals). The biggest fairs like Pushkar Mela attracts around 10 million people. There are 50 such big rural fairs occurring regularly like Kumbha Mela in UP. Example: ? Kisan Mela in Ludhiana is a annual feature and companies like Maruti have been able to book orders. ? Parachute oil, Tiger brand biscuits are promoted through haats. ? HUL, Colgate, Britannia promote their products through melas. 7. Agricultural input dealers: There are about 2.5 lacs fertilizers dealer in India, in both co-operative and private sectors. During off season, most do not transact business. The possibility of motivating them to deal in consumer products is worth as many of them have a doubt in their areas and they also extend credit to the farmers. Example: ? Warna Nagar in Maharastra – Sugar and milk co-operatives ? Co-operative sugar market – Chintamani in Coimbatore arranges for free to and fro transport of rural to the super markets for their purchases. 8. Rural Marketing Vans or vehicles: Companies con have their own delivery vans for distribution to retail shop in villages or directly to consumers. Example: ? Bharat Petroleum introduces RMV in 1995 in Punjab. The vehicles moves from village to village and fills LPG cylinders on the spot to rural consumers. ? Eveready Batteries have appointed van operator in each district who supply products to retail shoppers. ? Other examples – HUL, ITC, Brooke bond, Hero Honda, (Mobile service center).
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PROMOTION STRATEGIES
The promotion measure should be cost effective due to low literacy rate of the rural population. Word of mouth is an important message carrier in the rural areas and the ?opinion leaders? play a significant role in influencing the prospective rural consumers about accepting or rejecting a product or a brand. There are other attributes in the promotion strategies which are explained as under: 1) MASS MEDIA In the present world, mass media is a powerful medium of communication. The following are the mass media generally used: ? ? ? ? Television. Cinema. Radio. Print media i.e. handbills and booklets, posters, stickers banners, etc.
2) PERSONAL SELLING AND OPINION LEADERS In personal selling it is required that the potential users are identified and the awareness is created among them about the product, its features, uses and benefits. In fact, word of mouth information hold a lot of validity in rural areas even today. This is the reason why the opinion leaders and word of mouth are thriving among rural consumers. An opinion leader in a rural area can be defined as a person who is considered to be knowledgeable and is consulted by others and his advice is normally followed. The opinion leaders may be big landlords or politicians or progressive farmers.
3)
SPECIAL CAMPAIGNS.
During crop harvest and marketing seasons it is beneficial to take up special promotion campaigns in rural areas. Tractors owners meet conducted by MRF limited is one such example. BROOKE BOND carries out marches in rural areas with band, music and caparisoned elephants to promote the brands of tea.
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MARKETING STRATEGIES ADOPTED BY HUL (HINDUSTAN UNILEVER)
HUL, is considered as one of the best-managed companies in India, understanding the importance of rural marketing. Rural expenditures on FMCG were growing at an impressive rate of 20-25%. In 2004, HUL was India‘s largest FMCG company, with 30 power brands, turnover of over Rs.10000 crores and 40000 employees. HUL derived around 50% of its sales from the customers in rural areas.
MARKETING STRATEGY ? PRODUCT STRATEGY Packaging
1. Small unit packaging: HUL sells small package of ponds talcum of 20 grams. Other e.g. are Clinic Plus and Lifebuoy. 2. Attractive colours: HUL has different colour package for all the different frangrance of the product. Lifebuoy like Red, Green, Blue, and Orange. 3. Literature: Wheel is sold in rural markets by its brand name written in Hindi so that the customers can connect with the product and thus with the company.
Branding
Branded goods comprise 65% of sales in villages today. Thus, the company has kept the brand name of its products short, simple and easy to pronounce. Also due to this the consumers give their own names to the products too link with it. For e.g. Like they call Lifebuoy as Lal Sabun.
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After Sales Service:
The product for the rural markets has to be simple, easy to use and supported by after sales service or maintenance.
Customer value strategy
In case of some products rural consumers exhibit preference similar to those of urban consumers. Premium brands are gaining wide acceptance in rural market, Fair & Lovely and Surf Excel which are premium brands are demanded by rural consumers.
? PRICING STRATEGY
1. Low price: HUL came up with a face cream brand ? Fair & Lovely?. It launched this cream in rural markets just for Rs 15 which has now increased to Rs 27. 2. Small unit packaging: HUL‘s Lux soap which is sold in 25 grams pack in urban areas is available in rural areas in 5 or 10 grams. 3. Value pricing: HUL has adopted this approach through its brand Life Buoy where market is saturated and competition has intensified. 4. Value engineering: HUL‘s tea blend which contains Tea, Chicory and Tapioca. Tea costs Rs100 per Kg, Chicory costs Rs40 per Kg and Tapioca costs Rs10 per Kg. By substituting Chicory to the extent of 20% and Tapioca to 10% the price of tea blend is kept low. 5. Market penetration: HUL‘s Rin Shakti detergent penetrated with lower prices in the initial stage and later went up the pricr ladder. 6. Pricing for price conscious HUL has revolutionized the buying in rural areas by introducing sachets. For e.g. Clinic Plus launched the sachet of 8ml for Rs 2.50 for rural household. Today it came up with 28ml shampoo at Rs. 8 7. Price consciousness: HUL has Blue Wheel powder at a lower end, Rin Shakti powder and bar in mid segment and Surf Excel at the top end in the fabrics wash category.
? PROMOTIONAL STRATEGY
1) Conventional media: TV: Channels like Doordarshan have reached of 97% in rural areas. HUL uses DD1 to promote its products. Radio: HUL‘s product Lifebuoy is widely advertised through radio via programs like ?Krishi Darshan‘ and ?Aapka Swasthya‘.
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Cinema: HUL‘s brand Wheel Detergent has used Govinda in its celebrity ad.( also HUL chulbulli – Clinic Plus ad shown in between the movie) Print Ads: Loksatta, Dainik Jagran, Dainik Bhaskar are a few of the regional newspaper that HUL uses for promoting its product. 2) Non Conventional Media: Wall Paintings: HUL has used the means of wall paintings to advertise its brands like Lifebuoy soap and its new Aim toothpaste. Apart from TV commercials it is using posters, wall and bus paintings on a large scale. Audio Video Vans: HUL used the strategy of sampling and simultaneously selling a range of personal products like Fair & Lovely, Clinic Plus and Pepsodent by penetration through education. 3) Rural Specific Media: Folk media: HUL‘s Brooke Bond/Lipton India Ltd promoted its ?Kadak Chhap‘ tea through magic shows. The show consisted a skit wherein a boy named Nathoo kills the evil guys after consuming a cup of the Kadak Chhap tea. At the end of the show, every villager is given a free sample of the product. Melas and Haats: HUL makes use of festivals like ?Rathyatra‘, ?Onam‘ and ?Kumbh Mela‘ for brand promotion. Lifebuoy also organized a two-day Lifebuoy cricket mela. Personal selling and demonstration: HUL has launched a direct contact programme called Lifebuoy Swasthya Chetana. This project aims at covering about 5 crore people in 15000 villages in 10 states. ?The project intends to generate awareness about good health and hygienic practices, and specially, how the simple habit of washing hands with soap is essential to maintaining good health. HUL requires its managers to spend six weeks living in rural areas to generate knowledge about the hygienic needs and practices of the rural poor. This knowledge has resulted in new product ideas (such as a combined soap and shampoo bar) and promotional program (such as street theatre) for rural markets.
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? DISTRIBUTION NETWORK
1. Indirect coverage: Under this method, company vans were replaced by vans belonging to Redistribution stockists, which services a selected group of neighbouring markets. 2. Operation Harvest: In this strategy the company uses a fleet of vans, which regularly visits remote villages with its primary products. 3. Cinema van operations: Cinema van operations have films and audio cassettes with song and dance sequences from popular films, also comprising advertisement of HUL products. 4. Operation streamline: In operation streamling, HUL agents are appointed who will see to it that the goods safely reach till the redistributors who in turn will sell them to the local ?star sellers‘. These Star sellers will forward these goods to the retail outlets from where the goods are sold to the end users. 5. Satellite Distribution: Stockists get appointed in the major towns who discharge three main function of financing, warehousing and redistribution. Retailers in and around the area get attached to the stockiest. The retailers having large operation of business are then elevated as stockiest. New retail outlets will take birth few joining the old stockist while few joining the new one. 6. Project Bharat: Here in free samples are distributed to create awareness in the market. Project Bharat was carried out in two phases. In I phase, villages of population more than 2000 were targeted whereas in Phase II villages of population less than 2000 were targeted, here only basic products like lifebuoy and wheel were promoted. CONCLUSION These marketing strategies has helped HUL to make products available, penetrate into the market, create awareness and spread knowledge amongst the rural customers and help them to realize their needs which in turn would help the compant to escalate its revenue, there by creating a win-win situation for both, the customers as well as the company.
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STRATEGIES THAT SHOULD BE FOLLOWED BY COMPANIES
? BY PROPER COMMUNICATION IN INDIAN LANGUAGE The companies have realized the importance of proper communication in local language for promoting their products. They have started selling the concept of quality with proper communication. Their main focus is to change the Indian customer outlook about quality. With their promotion, rural customer started asking for value for money.
? BY TARGET CHANGING PERCEPTION
If one go to villages they will see that villagers using Toothpaste, even when they can use Neem or Babool sticks, villagers are using soaps like Nima rose, Breeze, Cinthol etc. even when they can use locally manufactured very low priced soaps. Villagers are constantly looking forward for new branded products. What can one infer from these incidents, is the paradigm changing and customer no longer price sensitive? Indian customer was never price sensitive, but they want value for money. They are ready to pay premium for the product if the product is offering some extra utility for the premium. ? BY UNDERSTANDING CULTURAL AND SOCIAL VALUES Companies have recognized that social and cultural values have a very strong hold on the people. Cultural values play major role in deciding what to buy. Moreover, rural people are emotional and sensitive. Thus, to promote their brands, they are exploiting social and cultural values. ? BY PROVIDING WHAT CUSTOMER WANT The customers want value for money. They do not see any value in frills associated with the products. They aim for the basic functionality. However, if the seller provide frills free of cost they are happy with that. They are happy with such a high technology that can fulfill their need. As "Motorola" has launched, seven models of Cellular Phones of high technology but none took off. On the other hand, "Nokia" has launched a simple product, which has captured the market. ? BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS Companies are picking up Indian models, actors for advertisements as this helps them to show themselves as an Indian company. Diana Hyden and Shahrukh Khan are chosen as a brand ambassador for MNC quartz clock maker "OMEGA" even though when they have models like Cindy Crawford. ? BY ASSOCIATING THEMSELVES WITH INDIA MNCs are associating themselves with India by talking about India, by explicitly saying that they are Indian. M-TV during Independence Day and Republic daytime make their logo with Indian tri-color. Nokia has designed a new cellular phone 5110, with the India tricolour and a ringing tone of "Sare Jahan se achcha". ? BY PROMOTING INDIAN SPORTS TEAM Companies are promoting Indian sports teams so that they can associate themselves with India. With this, they influence Indian mindset. LG has launched a campaign "LG ki Dua,
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all the best". ITC is promoting Indian cricket team for years, during world cup they have launched a campaign "Jeeta hai jitega apna Hindustan India". Similarly, Whirlpool has also launched a campaign during world cup. ? BY DEVELOPING RURAL-SPECIFIC PRODUCTS Many companies are developing rural-specific products. Keeping into consideration the requirements, a firm develops these products. Electrolux is working on a made-for India fridge designed to serve basic purposes: chill drinking water, keep cooked food fresh, and to withstand long power cuts. ? BY GIVING INDIAN WORDS FOR BRANDS Companies use Indian words for brands. Like LG has used India brand name "Sampoorna" for its newly launched TV. The word is a part of the Bengali, Hindi, Marathi and Tamil tongue. In the past one year, LG has sold one lakh 20-inch Sampoorna TVs, all in towns with a population of around 10,000. By the end of 1999, roughly 12Thats Rs 114 crore worth of TV sets sold in the villages in a year. ? BY ACQUIRING INDIAN BRANDS As Indian brands are operating in India for a long time and they enjoy a good reputation in India. MNCs have found that it is much easier for them to operate in India if they acquire an Established Indian Brand. Electrolux has acquired two Indian brands Kelvinator and Allwyn this has gave them the well-established distribution channel. As well as trust of people, as people believe these brands. Similarly Coke has acquired Thumps up, Gold Spot, Citra and Limca so that they can kill these brands, but later on they realized that to survive in the market and to compete with their competitor they have to rejuvenate these brands. ? BY EFFECTIVE MEDIA COMMUNICATION Media Rural marketing is being used by companies. They can either go for the traditional media or the modern media. The traditional media include melas, puppetry, folk theatre etc. while the modern media includes TV, radio, e-chaupal. LIC uses puppets to educate rural masses about its insurance policies. Govt of India uses puppetry in its campaigns to press ahead social issues. Brook Bond Lipton India ltd used magicians effectively for launch of Kadak Chap Tea in Etawah district. In between such a show, the lights are switched off and a torch is ashed in the dark(EVEREADYs tact). ITC's e-chaupal (chaupal is the common place where villagers gather) has been the most elaborate and extensive venture in this field so far. Conceived by ITC's international business division and launched in 2000, the echaupal project has since grown to around 2,700 chaupals covering a population of around 1.2 million in five states {Madhya Pradesh, Karnataka, Andhra Pradesh, Uttar Pradesh and Maharashtra}. ? BY ADOPTING LOCALISED WAY OF DISTRIBUTING Proper distribution channels are recognized by companies. The distribution channel could be a Big scale Super markets, they thought that a similar system can be grown in India. However, they were wrong, soon they realized that to succeed in India they have to reach the nook and the corner of the country. They have to reach the "local Paan wala, Local Baniya" only they can succeed. MNC shoe giants, Adidas, Reebok, Nike started with exclusive stores but soon they realized that they do not enjoy much Brand
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Equity in India, and to capture the market share in India they have to go the local market shoe sellers. They have to reach to local cities with low priced products. ? MELAS Melas are places where villagers gather once in a while for shopping. Companies take advantage of such events to market their products. Dabur uses these events to sell products like JANAM GHUTI(Gripe water). NCAER estimates that around half of items sold in these melas are FMCG products and consumer durables. Escorts also displays its products like tractors and motorcycles in such melas. ? PAINTINGS A picture is worth thousand words.The message is simple and clean.Rural people like the sight of bright colours. COKE, PEPSI and TATA traders .
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COMPANY Bajaj electricals
PRODUCT Home appliance
STRATEGY Pricing basic models closer to products made by the small scale sector Creating awareness by taking bowling alleys to villages Test marketing urban models in rural Punjab Setting task force to hike per capita usage Modifying product for different needs of different regions Sub-dealer distribution in villages Door to door selling in villages of population under 2000
Dabur india
Chayanwan prash, digestive lozenges Refrigerators, washing machines. Toilet soaps bicycles
Electrolux Godrej soaps Hero cycles
Hero Honda motors HUL
Motor bikes, mopeds Personal product and detergents
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CASE STUDY
SOARING UP WITH PARACHUTE
MARICO GROUP‘S history can be traced back to 1862 when KANJI MORARJI started a small trading business in Mumbai. The family set up the Bombay oil industries ltd. (BOIL) in 1948 with manufacturing facilities in Mumbai, which included a coconut oil extraction plant, a vegetable oil refinery and a chemical plant. In 1990, the business (marketing) division hived out into a separate company called MARICO INDUSTRIES limited (MARICO). Its activities are organized into three business function, which functions as profit centers.
? The nature care division: Parachute, Hair & Care, Mediker, Oil of Malabar and Shanti Amla. ? Health care division: Saffola, Sweeekar, Sil, Top Ramen. ? International business groups: currently operates in all Gulf countries, Yemen, Bangladesh. Marico‘s product is also exported to the countries like Nepal, US, Singapore, Srilanka and Malaysia. For the company, it was imperative to grow beyond Parachute in the long term. Currently, the coconut oil market is valued at around Rs.1300 crore, and is divided into the value added oil and plain oil markets. Of the total market 45 percent is accounted for by branded coconut oil; the rest is sols in loose form. The value added oil market is worth Rs.110 crore. Besides Marico, Dabur and HLL are two leading players at the national level. In 1996, HLL offered heavy trade discounts on Nihar and outspent marico‘s promotion on Parachute in a ratio of 2:1. Competition is intense, and players have to remain cost effective and provided value for money to consumers to retain market share. The company‘s brand building effort to increase market share of parachute concentrated on: ? Having fewer but focused product launches.
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High visibility campaigns like the ?Flip-Top‘ campaign for Parachute, the Parachute dandruff solution, the ?Sunday ke Sunday‘ campaign for Mediker, and the ?Home Manager‘ campaign for Sweekar. ? Providing greater value to consumers through innovative packaging like the new flip-top bottle, easy jar (Kamal ka Dhakkan), Saffola/Sweekar 15 litre jar with a tap, etc. ? Launching several brand extension to gain excess to newer markets like the value added oil market. It also concentrated on its distribution network, which is the second largest, after HLL. With an existing infrastructure of over 12 lakh retail outlets, the company is among the top three companies in India. With over 33 C&F agents and 25,000 wholesalers, its products reach 18-20 million households. Marico‘s parallel rural sales and distribution network ranks among the top three in the industry and contributes 25 percent to the company‘s bottomline. The infrastructure comprises more than 117 super distributors, catering to 2,551 small stockists and 9,000 van markets. Marico has also entered into distribution alliances with a number of companies to distribute their product. Marico has established a SATELLITE DISTRBUTION SYSTEMS very effectively in Indian villages for its Parachute brand of coconut oil. Now it can even target more remote villages.
?
CONCLUSION:
Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.
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BIBLIOGRAPHY
http://www.google.co.in/search?hl=en&rlz=1W1ADFA_en &q=MARKETING+STRATEGY+OF+RURAL&btnG=Search&m eta=&aq=f&oq=
http://www.it.iitb.ac.in/~deepak/deepak/courses/eco/ppt /Rural%20Marketing.pdf
http://www.slideshare.net/yashpal01/pricing-strategyfor-rural-market
http://en.wikipedia.org/wiki/Rural_markets
http://www.slideshare.net/yashpal01/HUL for-ruralmarket
RURAL MARLETING-RAMKISHEN RURAL MARKETING- N.G.KALE
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doc_654628912.docx
INDEX
Sr.No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
Topic Introduction What Rural Market Buy? Why Rural Market Reason For Improvement Of Business In Rural Areas Rural marketing: Challenges,Opportunity And Strategies Some Myths Why Different Strategies? Strategies To Be Followed Different Marketing Strategies In The Rural Market Marketing Strategy Followed By Hul Strategy That Is Followed By Companies Company’s Strategy Case Study Conclusion Bibliography
Page.No 5 6 6 6 7 8 8 9 11 18 22 25 26 27 28
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EXECUTIVE SUMMARY
Marketing is the pivot of economic development in rural areas. It is an essential component in income and employment generation in farm and non-farm sectors. Since marketing is one of the pre-requisites for income generation.Rural marketing is a two way marketing process. The content now encompasses not only marketing of products which flow to rural areas, but also products which flow to urban areas from rural areas. So a broad definition of rural marketing is concerned with the flow of goods and services from urban to rural arid vice-versa. In addition, it also include the marketing in the rural areas.As the rural marketing is a two-way process, this article attempts to highlight both the aspects. It examines the marketing aspects of rural produce with special reference to agriculture while on, the other hand it covers and suggests .strategies for promoting marketing within the rural areas. In recent years, rural markets have acquired significance in countries like China and India, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has taken shape. Sometimes, rural marketing is confused with agricultural marketing – the later denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers. Also, when we consider the scenario of India and China, there is a picture that comes out,huge market for the developed products as well as the labor support. This has led to the change in the mindset of the marketers to move to these parts of the world. Also rural market is getting an importance because of the saturation of the urban market. As due to the competition in the urban market, the market is more or so saturated as most of the capacity of the purchasers have been targeted by the marketers.So the marketers are looking for extending their product categories to an unexplored market i.e. the rural market. This has also led to the CSR activities being done by the corporate to help the poor people attain some wealth to spend on their product categories. Here we can think of HLL (now, HUL) initiatives in the rural India. One of such project is the Project Shakti, which is not only helping their company attain some revenue but also helping the poor women of the village to attain some money which is surely going to increase their purchasing power. Also this will increase their brand loyalty as well as recognition in that area. Similarly we can think of the ITC E-Chaupal, which is helping the poor farmers get all the information about the weather as well as the market price of the food grains they are producing.In other view these activities are also helping the companies increase their brand value. So as it is given above the significance of the rural market has increased due to the saturation of the urban market as well as in such conditions the company which will lead the way will be benefited as shown by the success of HUL and ITC initiatives.
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MARKETING STRATEGY
INTRODUCTION
Prime Minister Manmohan Singh recently talked about his vision for rural India: "My vision of rural India is of a modern agrarian, industrial and services economy co-existing side by side, where people can live in well-equipped villages and commute easily to work, be it on the farm or in the non-farm economy. There is much that modern science and technology can do to realise this vision. Rural incomes have to be increased. Rural infrastructure has to be improved. Rural health and education needs have to be met. Employment opportunities have to be created in rural areas."
'Go rural' is the slogan of marketing gurus after analyzing the socioeconomic changes in villages. The Rural population is nearly three times the urban, so that Rural consumers have become the prime target market for consumer durable and nondurable products, food, construction, electrical, electronics, automobiles, banks, insurance companies and other sectors besides hundred per cent of agri-input products such as seeds, fertilizers, pesticides and farm machinery. The Indian rural market today accounts for only about Rs 8 billion of the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a long way ahead. Although a lot is spoken about the immense potential of the unexplored rural market, advertisers and companies find it easier to vie for a share of the already divided urban pie. The success of a brand in the Indian rural market is as unpredictable as rain. It has always been difficult to gauge the rural market. Many brands, which should have been successful, have failed miserably. More often than not, people attribute rural market success to luck. Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.
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What rural market buys?
Rural India buys small packs, as they are perceived as value for money. There is brand stickiness, where a consumer buys a brand out of habit and not really by choice. Brands rarely fight for market share; they just have to be visible in the right place. Even expensive brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution, many brands are doing well without much advertising support — Ghadi, a big detergent brand in North India, is an example.
Why Rural Market?
The Indian rural market has a huge demand base and offers great opportunities to marketers. Two-thirds of Indian consumers live in rural areas and almost half of the national income is generated here. The reasons for heading into the rural areas are fairly clear. The urban consumer durable market for products like colour TVs, washing machines, refrigerators and air conditioners is growing annually at between 7 per cent and 10 per cent. The rural market is zooming ahead at around 25 per cent annually. "The rural market is growing faster than urban India now," says Venugopal Dhoot, chairman of the Rs 989 crore (Rs billion) Videocon Appliances. "The urban market is a replacement and up gradation market today," adds Samsung's director, marketing, Ravinder Zutshi.
Reasons for improvement of business in rural area
? ? ? ? ?
Socio-economic changes (lifestyle, habits and tastes, economic status) Literacy level (25% before independence – more than 65% in 2001) Infrastructure facilities (roads, electricity, media) Increase in income Increase in expectations
MART, the specialist rural marketing and rural development consultancy has found that 53 per cent of FMCG sales lie in the rural areas, as do 59 per cent of consumer durable sales, said its head Pradeep Kashyap at the seminar. Of two million BSNL mobile connections, 50 per cent went to small towns and villages, of 20 million Rediffmail subscriptions, 60 per cent came from small towns, so did half the transactions on Rediff's shopping site.
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RURAL MARKETING: Challenges, Opportunities & Strategies
? ? The future lies with those companies who see the poor as their customers. To get rich, sell to the poor.
CONCEPT
In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has emerged. But often, rural marketing is confused with agricultural marketing – the latter denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers.
WHAT MAKES RURAL MARKETS ATTRACTIVE?
Rural market has following arrived and the following facts substantiate this. 742 million people In 2001-02, LIC sold 55 % of its policies in rural India. Of two million BSNL mobile connections, 50% in small towns/villages. Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT) 41 million Kisan Credit Cards issued (against 22 million credit-plus-debit cards in urban) with cumulative credit of Rs 977 billion resulting in tremendous liquidity . Of 20 million Rediffmail signups, 60 % are from small towns. 50% transactions from these towns on Rediff online shopping site
SOME MYTHS
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Myth-1: Rural Market Is a Homogeneous Mass Reality: It‘s a heterogeneous population. Various Tiers are present depending on the
incomes like Big Landlords; Traders, small farmers; Marginal farmers: Labors, artisans. State wise variations in rural demographics are present viz. Literacy (Kerala 90%, Bihar 44%) and Population below poverty line (Orissa 48%, Punjab 6%)
Myth-2: Disposable Income Is Low Reality: Number of middle class
HHs (annual income Rs 45,000- 2, 15,000) for rural sector is 27.4 million as compared to the figure of 29.5 million for urban sector. Rural incomes CAGR was 10.95%
compared to 10.74% in urban between 1970-71 and 1993-94.
Myth-3: Individuals Decide About Purchases Reality: Decision making process is collective. Purchase process- influencer, decider,
buyer, one who pays can all be different. So marketers must address brand message at several levels.Rural youth brings brand knowledge to Households (HH).
WHY DIFFERENT STRATEGIES?
Rural markets, as part of any economy, have untapped potential. There are several difficulties confronting the effort to fully explore rural markets. The concept of rural markets in India is still in evolving shape, and the sector poses a variety of challenges. Distribution costs and non availability of retail outlets are major problems faced by the marketers. The success of a brand in the Indian rural market is as unpredictable as rain. Many brands, which should have been successful, have failed miserably. This is because, most firms try to extend marketing plans that they use in urban areas to the rural markets. The unique consumption patterns, tastes, and needs of the rural consumers should be analyzed at the product planning stage so that they match the needs of the rural people. Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. The main problems in rural marketing are: • Understanding the rural consumer • Poor infrastructure • Physical Distribution • Channel Management
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• Promotion and Marketing Communication Dynamics of rural markets differ from other market types, and similarly rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or industrial consumer.
STRATEGIES TO BE FOLLOWED
? Marketing Strategy:
Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, ?melas? and other activities where they assemble.
? Distribution Strategy:
One of the ways could be using company delivery vans which can serve two purposes- it can take the products to the customers in every nook and corner of the market and it also enables the firm to establish direct contact with them and thereby facilitate sales promotion. However, only the bigwigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Annual ?melas? organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases. According to the Indian Market Research Bureau, around 8000 such melas are held in rural India every year. Rural markets have the practice of fixing specific days in a week as Market Days (often called ?Haats‘) when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as ?Mandis? or Agri-markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns they will easily be able to cover a large section of the rural population.
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? Promotional Strategy:
Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns.
SOME LIVE EXAMPLES:
? One very fine example can be quoted of Escorts where they focused on deeper penetration. They did not rely on T.V or press advertisements rather concentrated on focused approach depending on geographical and market parameters like fares, melas etc. Looking at the ?kuchha‘ roads of village they positioned their bike as tough vehicle. Their advertisements showed Dharmendra riding Escort with the punch line ?Jandar Sawari, Shandar Sawari‘. Thus, they achieved whopping sales of 95000 vehicles annually. ? HUL started ?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. ? ITC is setting up e-Choupals which offers the farmers all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access latest local and global information on weather, scientific farming practices as well as market prices at the village itself through this web portal - all in Hindi. It also facilitates supply of high quality farm inputs as well as purchase of commodities at their doorstep. ? BPCL Introduced Rural Marketing Vehicle (RMV) as their strategy for rural marketing. It moves from village to village and fills cylinders on the spot for the rural customers. BPCL considered low-income of rural population and therefore introduced a smaller size cylinder to reduce both the initial deposit cost as well as the recurring refill cost.
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DIFFERENT MARKETING STRATEGIES IN THE RURAL MARKET
Product in the rural perspective is a need satisfying entity unique to a rural consumer and not a futile extension of an urban offering.
Various product strategies adopted by companies are as follows: RURAL PRODUCT STRATEGIES 1.
?
New product design
Companies should use technological expertise and design specific products keeping in mind the rural consumers. ? For rural markets there should be ?no frills? product i.e. it performs the basic feature but it does not have additional characteristics. E.g. Maharaja appliances ltd. launched a semi-automatic washing machines ?bonus? priced at just Rs. 2990/- only one feature of washing. No additional feature attached like dryer, etc.E.g. LG electronics launched ?Sampoorna? India‘s first television with the Devnagri script on screen display. The word Sampoorna meaning ?wholesome? cuts across all linguistic barriers. It is affordable at Rs.14400 in 2001. It can withstand power fluctuations. Sales exceed 21 crores in 2 months.
2.
Sturdy products
Most of the rural consumers believe that the heavier the item, the higher the power and durability. The product should be sturdy enough to withstand rough handling and storage.E.g. Escort has positioned their motorbike, Rajdoot as a tough vehicle. The advertisement shows Dharmendra riding escort motorbike.
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3.
packaging strategies
i. Small unit packaging (SPU)
Small packaging stands a good chance of acceptance in rural markets given the low per capita rural income. The advantage is that the price is low and rural consumers can easily afford it.E.g. RED LABEL Rs.3.00 pack has more sales compared to large pack.
ii. Attractive colors
? Rural consumers feel that the bright, fast colours like red, green, blue, etc. indicates the sturdiness of the product. E.g. RED LABEL packing in red colour. ? Rural consumers identify the product with the colour of the package. E.g. Colgate
iii. Refill and Reusable
It can be used to motivate rural consumers.
iv. Combi-packs
When related products are packed together and sold at economy prices, the rural consumers find it a better option to buy. E.g. Johnsons and Johnsons baby care assortment packages of R.s.175 with powder, soap, shampoo, hair oil and cream.
4. Utility oriented products
Rural consumers are more concerned with the utility of the product than its appearance and sophistication. E.G. Phillips India Ltd. Developed and introduced a low cost medium wave receiver named BAHADUR during early seventies. Initially the sales were good but declined subsequently. On investigation it was found that the rural consumer brought radios not only for information and news but also for entertainment.
5. Branding strategy
Branded goods comprises of 65% of sales in villages today. ? Brand name or the logo should be simple, short and easy to pronounce/remember by rural consumers. E.g. i. Asian paints- ?Gattu? ii. Mangalore chemicals and fertilizers ltd.-?Poorna-Kumbh? with a coconut as its logo and name it ?Mangala? ? For identification the rural consumers do give their own brand name on the name of an item. E.g. Nirma- peeli tikki, Lifebuoy- lal sabun.
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? Brand identity- in rural markets is often created through the visual logo or name or product or colour of the product. E.g. i.Thumps-up is recognized by the logo and mention it as sweet black water that comes in bottles. The generic name is ?SODA WATER? or ?THANDA?
PRICING STRATEGIES-“RURAL MARKETS” 1. Low Price:
A rural customer is price sensitive mainly because of his/her relatively low income level. For example this is precisely what Nike addressed when it launched its sneaker range in rural markets, pricing them competitively at Rs. 750/- a pair only.
(a)
Small Unit Packaging (SUP):
A company can offer small unit sizes at lower price. Eg. - Lux soap which is sold in 25 gms. Pack in urban area is available in 5 or 10 gms. Pack for half the price. (Lifebuoy – 60 gms. ; Rs. 4.50/-)
(b)
Avoid sophisticated packaging:
Avoid sophisticated packaging since rural consumers are more interested in the sturdiness and ability of the product. This will lower down the cost considerably. Eg. Packaging of biscuits – now in airtight polythene (earlier in boxes)
(c)
Lower cost by providing No Frills Product:
Eg. LG Electronics has knocked off some frills in the TV for the rural markets. (No - Golden Eye Feature, only 100 channels, output of 200 watts only etc.)
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2.
Value Pricing Strategy (VFM- Value for money) :
A rural customer shops for value the marketer has to understand that the rural markets are for more utilitarian and pricing conscious. Value pricing needs assigning a low price tag for a product and providing the benefits of low cost mass production to the customers without sacrificing quality. Eg. Lifebuoy follows this pricing method for rural markets.
Value Engineering:
This is a technique to develop by substituting costly raw material with a cheaper one and hence lowering the price of product. Eg. Nestle Cerelac – used soya protein instead of milk protein. (Soya protein is much cheaper than milk protein, but the nutritional efficiency is same.)
3.
Market Penetration Strategy :
Under this pricing strategy, a company introduces the product at lower prices to penetrate and reach a larger segment of the market. At alter stage, the price is increased. Eg. Maggie Noodles were introduced at Rs. 5/- and now the price is Rs. 12/- at present. Maharaja Bonus – introductory price Rs.2990/- and now Rs. 5000/Nestle – launched wafer chocolate brand Munch for Rs.2/- for chota munch; once market was established for the product it launched a new pack for Rs. 5/-
4.
Credit facilities :
The farmer requires credit for meeting cultivation expenses as well as running the family between marketing of produce and the harvest of next crop. Even the rural retailer requires credit from distributors of consumer goods. Eg. HLL, Colgate, Palmolive – in order to make price affordable to rural consumers, many Co. work through banks and offer hire purchase schemes and installment facilities to the rural customers. Eg. Tractors, Pump sets, TV sets.
5.
Psychological Pricing :
In this pricing method, companies price the product ending at odd numbers. It conveys to notions: a) It belongs to a lower price range. b) There is a discount or bargain. Eg. Bata shoe co. prices its product at Rs. 99/Page 12 of 26
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(NOTE: The biggest problem is the perennial shortage of change in India. So prices need to be in easily available denominations. That is why Cadbury‘s experiment with Rs. 6/price point for its 5 star brand didn‘t work. Shop keepers don‘t have change and hence they don‘t push the product.)
6.
Promotion pricing techniques:
Many companies have found that promotional pricing is more effective in generating
sales. Following are the various strategies: ? Discounts – Textile showrooms and footwear shops offer frequently cash rebates to clear inventories. ? Low – Interest financing – TVS 50 and other two wheelers sellers are offering it. ? Longer payment terms – (Installment) LIC policies, LG Electronics. ? Exchange Price Offer – Old products or same of any other brand are exchanged at a lower price with new ones. Eg. Electronic Items (Videocon)
RURAL DISTRIBUTION STRATEGIES
1. Coverage of villages with 2000 and above population: There are around 80000 villages with population of 2000 above although the percentage of these villages is less, the density of population is more. The proportion of rural population covered will be 48% with improved communication facilities it is possible to reach distribution vans to those villages. 2. Use of co-operative societies: About five lakhs co-operative society operates in rural areas, like marketing cooperatives, Dairy co-operatives, Credit co-operatives and other multipurpose co-operatives. This society‘s are linked with higher level society - Tahsil, District and St6ate level. Thus, these co-operatives always have an arrangement for centralized procurement and distribution through their respective state level federation. Such state level federation can be motivated to procure and distribute consumable items, and low value durable items to the members. Many of the society extend credit to their members for their purchases. Eg. FFSCS = Farmers service co-operative society‘s LAMPS = Large agriculture multipurpose societies. 3. Utilization of public distribution systems: Purpose of TDS, is to make available essential commodities like food grains, edible oil, kerosene and others to the consumers at reasonable price through FPS. Year again there is an arrangement for centralized procurement and distribution. Eg. Ration shops 4.37 lacs FPS all through out India under the government PDS. 4. Utilization of multipurpose distribution centers by petroleum oil companies : In order to cater to rural areas the petroleum oil companies have evolved a concept of multipurpose centers in rural areas. In addition to petroleum diesel lubricants this outlets also stoke consumable agricultural inputs like fertilizers, pesticides and seeds. It is estimated that there are about 450 outlets in operation in India. These outlets can be profitably utilized for selling consumables and durable items also. Eg. BP petroleum has many outlets in rural India.
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5.
Distribution up to feeder market / mandies: The rural consumers visit nearby town at regular intervals not only for selling agricultural produce but also for purpose of items like cloth jewelry, hardware, radios and other durables and consumer products. From the feeder market, the stockiest or wholesalers can arrange for distribution to village shops. Eg. 90% of durable are from mandies. 6. Shandies / Haats and Jathras: There are around 47000 shandies / haats and 25000 jathras or melas held regularly in India. While shandies / haats are held on a particular day every week, jathras and melas are held once or twice a year for longer duration. (Normally coinciding with religious festivals). The biggest fairs like Pushkar Mela attracts around 10 million people. There are 50 such big rural fairs occurring regularly like Kumbha Mela in UP. Example: ? Kisan Mela in Ludhiana is a annual feature and companies like Maruti have been able to book orders. ? Parachute oil, Tiger brand biscuits are promoted through haats. ? HUL, Colgate, Britannia promote their products through melas. 7. Agricultural input dealers: There are about 2.5 lacs fertilizers dealer in India, in both co-operative and private sectors. During off season, most do not transact business. The possibility of motivating them to deal in consumer products is worth as many of them have a doubt in their areas and they also extend credit to the farmers. Example: ? Warna Nagar in Maharastra – Sugar and milk co-operatives ? Co-operative sugar market – Chintamani in Coimbatore arranges for free to and fro transport of rural to the super markets for their purchases. 8. Rural Marketing Vans or vehicles: Companies con have their own delivery vans for distribution to retail shop in villages or directly to consumers. Example: ? Bharat Petroleum introduces RMV in 1995 in Punjab. The vehicles moves from village to village and fills LPG cylinders on the spot to rural consumers. ? Eveready Batteries have appointed van operator in each district who supply products to retail shoppers. ? Other examples – HUL, ITC, Brooke bond, Hero Honda, (Mobile service center).
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PROMOTION STRATEGIES
The promotion measure should be cost effective due to low literacy rate of the rural population. Word of mouth is an important message carrier in the rural areas and the ?opinion leaders? play a significant role in influencing the prospective rural consumers about accepting or rejecting a product or a brand. There are other attributes in the promotion strategies which are explained as under: 1) MASS MEDIA In the present world, mass media is a powerful medium of communication. The following are the mass media generally used: ? ? ? ? Television. Cinema. Radio. Print media i.e. handbills and booklets, posters, stickers banners, etc.
2) PERSONAL SELLING AND OPINION LEADERS In personal selling it is required that the potential users are identified and the awareness is created among them about the product, its features, uses and benefits. In fact, word of mouth information hold a lot of validity in rural areas even today. This is the reason why the opinion leaders and word of mouth are thriving among rural consumers. An opinion leader in a rural area can be defined as a person who is considered to be knowledgeable and is consulted by others and his advice is normally followed. The opinion leaders may be big landlords or politicians or progressive farmers.
3)
SPECIAL CAMPAIGNS.
During crop harvest and marketing seasons it is beneficial to take up special promotion campaigns in rural areas. Tractors owners meet conducted by MRF limited is one such example. BROOKE BOND carries out marches in rural areas with band, music and caparisoned elephants to promote the brands of tea.
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MARKETING STRATEGIES ADOPTED BY HUL (HINDUSTAN UNILEVER)
HUL, is considered as one of the best-managed companies in India, understanding the importance of rural marketing. Rural expenditures on FMCG were growing at an impressive rate of 20-25%. In 2004, HUL was India‘s largest FMCG company, with 30 power brands, turnover of over Rs.10000 crores and 40000 employees. HUL derived around 50% of its sales from the customers in rural areas.
MARKETING STRATEGY ? PRODUCT STRATEGY Packaging
1. Small unit packaging: HUL sells small package of ponds talcum of 20 grams. Other e.g. are Clinic Plus and Lifebuoy. 2. Attractive colours: HUL has different colour package for all the different frangrance of the product. Lifebuoy like Red, Green, Blue, and Orange. 3. Literature: Wheel is sold in rural markets by its brand name written in Hindi so that the customers can connect with the product and thus with the company.
Branding
Branded goods comprise 65% of sales in villages today. Thus, the company has kept the brand name of its products short, simple and easy to pronounce. Also due to this the consumers give their own names to the products too link with it. For e.g. Like they call Lifebuoy as Lal Sabun.
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After Sales Service:
The product for the rural markets has to be simple, easy to use and supported by after sales service or maintenance.
Customer value strategy
In case of some products rural consumers exhibit preference similar to those of urban consumers. Premium brands are gaining wide acceptance in rural market, Fair & Lovely and Surf Excel which are premium brands are demanded by rural consumers.
? PRICING STRATEGY
1. Low price: HUL came up with a face cream brand ? Fair & Lovely?. It launched this cream in rural markets just for Rs 15 which has now increased to Rs 27. 2. Small unit packaging: HUL‘s Lux soap which is sold in 25 grams pack in urban areas is available in rural areas in 5 or 10 grams. 3. Value pricing: HUL has adopted this approach through its brand Life Buoy where market is saturated and competition has intensified. 4. Value engineering: HUL‘s tea blend which contains Tea, Chicory and Tapioca. Tea costs Rs100 per Kg, Chicory costs Rs40 per Kg and Tapioca costs Rs10 per Kg. By substituting Chicory to the extent of 20% and Tapioca to 10% the price of tea blend is kept low. 5. Market penetration: HUL‘s Rin Shakti detergent penetrated with lower prices in the initial stage and later went up the pricr ladder. 6. Pricing for price conscious HUL has revolutionized the buying in rural areas by introducing sachets. For e.g. Clinic Plus launched the sachet of 8ml for Rs 2.50 for rural household. Today it came up with 28ml shampoo at Rs. 8 7. Price consciousness: HUL has Blue Wheel powder at a lower end, Rin Shakti powder and bar in mid segment and Surf Excel at the top end in the fabrics wash category.
? PROMOTIONAL STRATEGY
1) Conventional media: TV: Channels like Doordarshan have reached of 97% in rural areas. HUL uses DD1 to promote its products. Radio: HUL‘s product Lifebuoy is widely advertised through radio via programs like ?Krishi Darshan‘ and ?Aapka Swasthya‘.
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Cinema: HUL‘s brand Wheel Detergent has used Govinda in its celebrity ad.( also HUL chulbulli – Clinic Plus ad shown in between the movie) Print Ads: Loksatta, Dainik Jagran, Dainik Bhaskar are a few of the regional newspaper that HUL uses for promoting its product. 2) Non Conventional Media: Wall Paintings: HUL has used the means of wall paintings to advertise its brands like Lifebuoy soap and its new Aim toothpaste. Apart from TV commercials it is using posters, wall and bus paintings on a large scale. Audio Video Vans: HUL used the strategy of sampling and simultaneously selling a range of personal products like Fair & Lovely, Clinic Plus and Pepsodent by penetration through education. 3) Rural Specific Media: Folk media: HUL‘s Brooke Bond/Lipton India Ltd promoted its ?Kadak Chhap‘ tea through magic shows. The show consisted a skit wherein a boy named Nathoo kills the evil guys after consuming a cup of the Kadak Chhap tea. At the end of the show, every villager is given a free sample of the product. Melas and Haats: HUL makes use of festivals like ?Rathyatra‘, ?Onam‘ and ?Kumbh Mela‘ for brand promotion. Lifebuoy also organized a two-day Lifebuoy cricket mela. Personal selling and demonstration: HUL has launched a direct contact programme called Lifebuoy Swasthya Chetana. This project aims at covering about 5 crore people in 15000 villages in 10 states. ?The project intends to generate awareness about good health and hygienic practices, and specially, how the simple habit of washing hands with soap is essential to maintaining good health. HUL requires its managers to spend six weeks living in rural areas to generate knowledge about the hygienic needs and practices of the rural poor. This knowledge has resulted in new product ideas (such as a combined soap and shampoo bar) and promotional program (such as street theatre) for rural markets.
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? DISTRIBUTION NETWORK
1. Indirect coverage: Under this method, company vans were replaced by vans belonging to Redistribution stockists, which services a selected group of neighbouring markets. 2. Operation Harvest: In this strategy the company uses a fleet of vans, which regularly visits remote villages with its primary products. 3. Cinema van operations: Cinema van operations have films and audio cassettes with song and dance sequences from popular films, also comprising advertisement of HUL products. 4. Operation streamline: In operation streamling, HUL agents are appointed who will see to it that the goods safely reach till the redistributors who in turn will sell them to the local ?star sellers‘. These Star sellers will forward these goods to the retail outlets from where the goods are sold to the end users. 5. Satellite Distribution: Stockists get appointed in the major towns who discharge three main function of financing, warehousing and redistribution. Retailers in and around the area get attached to the stockiest. The retailers having large operation of business are then elevated as stockiest. New retail outlets will take birth few joining the old stockist while few joining the new one. 6. Project Bharat: Here in free samples are distributed to create awareness in the market. Project Bharat was carried out in two phases. In I phase, villages of population more than 2000 were targeted whereas in Phase II villages of population less than 2000 were targeted, here only basic products like lifebuoy and wheel were promoted. CONCLUSION These marketing strategies has helped HUL to make products available, penetrate into the market, create awareness and spread knowledge amongst the rural customers and help them to realize their needs which in turn would help the compant to escalate its revenue, there by creating a win-win situation for both, the customers as well as the company.
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STRATEGIES THAT SHOULD BE FOLLOWED BY COMPANIES
? BY PROPER COMMUNICATION IN INDIAN LANGUAGE The companies have realized the importance of proper communication in local language for promoting their products. They have started selling the concept of quality with proper communication. Their main focus is to change the Indian customer outlook about quality. With their promotion, rural customer started asking for value for money.
? BY TARGET CHANGING PERCEPTION
If one go to villages they will see that villagers using Toothpaste, even when they can use Neem or Babool sticks, villagers are using soaps like Nima rose, Breeze, Cinthol etc. even when they can use locally manufactured very low priced soaps. Villagers are constantly looking forward for new branded products. What can one infer from these incidents, is the paradigm changing and customer no longer price sensitive? Indian customer was never price sensitive, but they want value for money. They are ready to pay premium for the product if the product is offering some extra utility for the premium. ? BY UNDERSTANDING CULTURAL AND SOCIAL VALUES Companies have recognized that social and cultural values have a very strong hold on the people. Cultural values play major role in deciding what to buy. Moreover, rural people are emotional and sensitive. Thus, to promote their brands, they are exploiting social and cultural values. ? BY PROVIDING WHAT CUSTOMER WANT The customers want value for money. They do not see any value in frills associated with the products. They aim for the basic functionality. However, if the seller provide frills free of cost they are happy with that. They are happy with such a high technology that can fulfill their need. As "Motorola" has launched, seven models of Cellular Phones of high technology but none took off. On the other hand, "Nokia" has launched a simple product, which has captured the market. ? BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS Companies are picking up Indian models, actors for advertisements as this helps them to show themselves as an Indian company. Diana Hyden and Shahrukh Khan are chosen as a brand ambassador for MNC quartz clock maker "OMEGA" even though when they have models like Cindy Crawford. ? BY ASSOCIATING THEMSELVES WITH INDIA MNCs are associating themselves with India by talking about India, by explicitly saying that they are Indian. M-TV during Independence Day and Republic daytime make their logo with Indian tri-color. Nokia has designed a new cellular phone 5110, with the India tricolour and a ringing tone of "Sare Jahan se achcha". ? BY PROMOTING INDIAN SPORTS TEAM Companies are promoting Indian sports teams so that they can associate themselves with India. With this, they influence Indian mindset. LG has launched a campaign "LG ki Dua,
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all the best". ITC is promoting Indian cricket team for years, during world cup they have launched a campaign "Jeeta hai jitega apna Hindustan India". Similarly, Whirlpool has also launched a campaign during world cup. ? BY DEVELOPING RURAL-SPECIFIC PRODUCTS Many companies are developing rural-specific products. Keeping into consideration the requirements, a firm develops these products. Electrolux is working on a made-for India fridge designed to serve basic purposes: chill drinking water, keep cooked food fresh, and to withstand long power cuts. ? BY GIVING INDIAN WORDS FOR BRANDS Companies use Indian words for brands. Like LG has used India brand name "Sampoorna" for its newly launched TV. The word is a part of the Bengali, Hindi, Marathi and Tamil tongue. In the past one year, LG has sold one lakh 20-inch Sampoorna TVs, all in towns with a population of around 10,000. By the end of 1999, roughly 12Thats Rs 114 crore worth of TV sets sold in the villages in a year. ? BY ACQUIRING INDIAN BRANDS As Indian brands are operating in India for a long time and they enjoy a good reputation in India. MNCs have found that it is much easier for them to operate in India if they acquire an Established Indian Brand. Electrolux has acquired two Indian brands Kelvinator and Allwyn this has gave them the well-established distribution channel. As well as trust of people, as people believe these brands. Similarly Coke has acquired Thumps up, Gold Spot, Citra and Limca so that they can kill these brands, but later on they realized that to survive in the market and to compete with their competitor they have to rejuvenate these brands. ? BY EFFECTIVE MEDIA COMMUNICATION Media Rural marketing is being used by companies. They can either go for the traditional media or the modern media. The traditional media include melas, puppetry, folk theatre etc. while the modern media includes TV, radio, e-chaupal. LIC uses puppets to educate rural masses about its insurance policies. Govt of India uses puppetry in its campaigns to press ahead social issues. Brook Bond Lipton India ltd used magicians effectively for launch of Kadak Chap Tea in Etawah district. In between such a show, the lights are switched off and a torch is ashed in the dark(EVEREADYs tact). ITC's e-chaupal (chaupal is the common place where villagers gather) has been the most elaborate and extensive venture in this field so far. Conceived by ITC's international business division and launched in 2000, the echaupal project has since grown to around 2,700 chaupals covering a population of around 1.2 million in five states {Madhya Pradesh, Karnataka, Andhra Pradesh, Uttar Pradesh and Maharashtra}. ? BY ADOPTING LOCALISED WAY OF DISTRIBUTING Proper distribution channels are recognized by companies. The distribution channel could be a Big scale Super markets, they thought that a similar system can be grown in India. However, they were wrong, soon they realized that to succeed in India they have to reach the nook and the corner of the country. They have to reach the "local Paan wala, Local Baniya" only they can succeed. MNC shoe giants, Adidas, Reebok, Nike started with exclusive stores but soon they realized that they do not enjoy much Brand
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Equity in India, and to capture the market share in India they have to go the local market shoe sellers. They have to reach to local cities with low priced products. ? MELAS Melas are places where villagers gather once in a while for shopping. Companies take advantage of such events to market their products. Dabur uses these events to sell products like JANAM GHUTI(Gripe water). NCAER estimates that around half of items sold in these melas are FMCG products and consumer durables. Escorts also displays its products like tractors and motorcycles in such melas. ? PAINTINGS A picture is worth thousand words.The message is simple and clean.Rural people like the sight of bright colours. COKE, PEPSI and TATA traders .
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COMPANY Bajaj electricals
PRODUCT Home appliance
STRATEGY Pricing basic models closer to products made by the small scale sector Creating awareness by taking bowling alleys to villages Test marketing urban models in rural Punjab Setting task force to hike per capita usage Modifying product for different needs of different regions Sub-dealer distribution in villages Door to door selling in villages of population under 2000
Dabur india
Chayanwan prash, digestive lozenges Refrigerators, washing machines. Toilet soaps bicycles
Electrolux Godrej soaps Hero cycles
Hero Honda motors HUL
Motor bikes, mopeds Personal product and detergents
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CASE STUDY
SOARING UP WITH PARACHUTE
MARICO GROUP‘S history can be traced back to 1862 when KANJI MORARJI started a small trading business in Mumbai. The family set up the Bombay oil industries ltd. (BOIL) in 1948 with manufacturing facilities in Mumbai, which included a coconut oil extraction plant, a vegetable oil refinery and a chemical plant. In 1990, the business (marketing) division hived out into a separate company called MARICO INDUSTRIES limited (MARICO). Its activities are organized into three business function, which functions as profit centers.
? The nature care division: Parachute, Hair & Care, Mediker, Oil of Malabar and Shanti Amla. ? Health care division: Saffola, Sweeekar, Sil, Top Ramen. ? International business groups: currently operates in all Gulf countries, Yemen, Bangladesh. Marico‘s product is also exported to the countries like Nepal, US, Singapore, Srilanka and Malaysia. For the company, it was imperative to grow beyond Parachute in the long term. Currently, the coconut oil market is valued at around Rs.1300 crore, and is divided into the value added oil and plain oil markets. Of the total market 45 percent is accounted for by branded coconut oil; the rest is sols in loose form. The value added oil market is worth Rs.110 crore. Besides Marico, Dabur and HLL are two leading players at the national level. In 1996, HLL offered heavy trade discounts on Nihar and outspent marico‘s promotion on Parachute in a ratio of 2:1. Competition is intense, and players have to remain cost effective and provided value for money to consumers to retain market share. The company‘s brand building effort to increase market share of parachute concentrated on: ? Having fewer but focused product launches.
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High visibility campaigns like the ?Flip-Top‘ campaign for Parachute, the Parachute dandruff solution, the ?Sunday ke Sunday‘ campaign for Mediker, and the ?Home Manager‘ campaign for Sweekar. ? Providing greater value to consumers through innovative packaging like the new flip-top bottle, easy jar (Kamal ka Dhakkan), Saffola/Sweekar 15 litre jar with a tap, etc. ? Launching several brand extension to gain excess to newer markets like the value added oil market. It also concentrated on its distribution network, which is the second largest, after HLL. With an existing infrastructure of over 12 lakh retail outlets, the company is among the top three companies in India. With over 33 C&F agents and 25,000 wholesalers, its products reach 18-20 million households. Marico‘s parallel rural sales and distribution network ranks among the top three in the industry and contributes 25 percent to the company‘s bottomline. The infrastructure comprises more than 117 super distributors, catering to 2,551 small stockists and 9,000 van markets. Marico has also entered into distribution alliances with a number of companies to distribute their product. Marico has established a SATELLITE DISTRBUTION SYSTEMS very effectively in Indian villages for its Parachute brand of coconut oil. Now it can even target more remote villages.
?
CONCLUSION:
Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.
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BIBLIOGRAPHY
http://www.google.co.in/search?hl=en&rlz=1W1ADFA_en &q=MARKETING+STRATEGY+OF+RURAL&btnG=Search&m eta=&aq=f&oq=
http://www.it.iitb.ac.in/~deepak/deepak/courses/eco/ppt /Rural%20Marketing.pdf
http://www.slideshare.net/yashpal01/pricing-strategyfor-rural-market
http://en.wikipedia.org/wiki/Rural_markets
http://www.slideshare.net/yashpal01/HUL for-ruralmarket
RURAL MARLETING-RAMKISHEN RURAL MARKETING- N.G.KALE
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