Description
It includes 7ps of marketing, 4As of rural marketing, different product strategies, different pricing strategies, rural distribution, different distribution models in rural India, organized retail in rural India.
APPROPRIATE COMBINATION OF FOUR MARKETING VARIABLES (4 Ps)
? ? ?
VARIABLES ARE INTERDEPENDENT FLEXIBLE AND DYNAMIC CONCEPT CUSTOMER ORIENTED ACTIVITY
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? ?
?
? ?
?
Product Pricing Place (distribution) Promotion Pace Packaging Positioning
4 As OF RURAL MARKETING MIX
? ? ? ?
AFFORDABILITY AVAILABILITY AWARENESS ACCEPTABILITY
4 AS OF RURAL MARKETING MIX ? Affordability ? Does not mean cheap products ? Designing products which match the needs of rural consumer and within his buying capacity ? Example: Nirma detergent powder, Chik shampoo, Chinni pickle
A product will be successful if it delivers value and satisfaction. Value is the ratio between what the customer gets and what he gives. ? Satisfaction is a function of perceived performance and expectations. If the performance falls short of expectations, the customer is dissatisfied, if the performance matches expectations, he is satisfied, if the performance exceeds expectations, the customer is delighted.
?
4 AS OF RURAL MARKETING MIX
? ? ? ? ? ? ?
Availability To ensure that the product reaches the retailers shelf Awareness Rural specific promotion media and methods Acceptability The product should serve its purpose and offer solutions to their problems Examples: Sturdy two wheelers to carry fertiliser bag, milk can, cement, cattle feed, Wrist watches that can be easily repaired, Brass torch light, Basic models of mobile phones etc
?
Chairman, IRDA has said “ Future growth of the
insurance industry lies in designing products that address the needs and aspirations of the people living in rural areas. The penetration of insurance portfolios will not grow unless products make sense to the people in rural areas.
?
Rural population would benefit from a single product that could takes care of all their requirements. The combination of life and non-life features has become important.
Eveready Industries, India’s largest battery maker has introduced LED (Light emitting diode) under the brand name Nu Lite as a substitute to kerosene lanterns in power deficient states like Uttar Pradesh, Bihar, West Bengal and Assam. ? At two-three hours use per day, the LED lanterns cost 50 paise per hour, marginally lower than kerosene lanterns. Introduced in April 2009, the company sells at an average 3,50,000 units per month.
?
The LED lanterns are priced between Rs 150 and Rs 450 and two sets of batteries are given free along with the lanterns. The factors that have contributed to the success of Nu Lite are Understanding the problems faced by villagers in electricity deficit states, affordability, manufacturing capacity, promotion through local news papers, wall paintings and distribution might.
Rural market is not the rich man’s market for classy products. ? However, there is a small percentage of rich people, growing in numbers and also getting richer ( sales of Honda City, Denim, Pantene) ? Rural demand is about lot of people consuming a little and not about a small number consuming a lot.
?
?
?
?
?
STURDY PRODUCTS Bullet/ Rajdoot motor cycles, ambassador cars, HMT mechanical watches DESIGNING PRODUCTS LG Electronics-Sampoorna brand TV, Philips 14” TV
?
SMALL UNIT PACKING
? ?
Examples: Shampoos, biscuits, soaps, tooth paste etc Cavin Kare studied the rural consumer behaviour and came out with Chik shampoo priced at paise fifty and it created a revolution in the packaging/shampoo industry
?
?
UTILITY PRODUCTS: Free power radio by Philips, HMT mechanical watches
BRANDING
Billiwali cell, Ladkawala paint, Peedhari balm, Nirma, Tata shakti, Rishi chavanprash, Parle biscuits
?
?
? ? ? ? ? ?
LOW PRICE 5 Kg gas cylinder-deposit Rs350-refill cost Rs90 14 Kg gas cylinder-deposit Rs700-refill cost Rs 250 NO FRILLS PRODUCTS Nokia - focus on basic models LG- 100 channels and 200 watts output
? ? ?
VALUE ENGINEERING Example: Nirma Pedestrian pack, affordable price, medium quality, availability at village shop, promotion through wall painting and famous jingle on doordarshan
CREDIT FACILITIES
? ? ?
Motivates retailers to stock the products Risk/benefit to be assessed Creditworthiness of dealers/distributors?
PROMOTIONAL SCHEMES ? Off season, bulk purchases, timely payment, cash discount, annual purchases
Even if a company has a good product that meets the requirements of rural consumers, it will succeed only if it is made available as and when required by the consumer. Out of about 6 million retail outlets, 3 million outlets are in rural areas scattered in about 6 lakh villages. Making the products available in these outlets is a challenging job indeed
CONTRAINTS IN DISTRIBUTION ? A large number of intermediaries ? Non-availability of retailers: Practically no shops in two lakh villages with less than 500 population ? There are about 2.7 lakh Villages with 500-2000 population and distribution cost is high to reach these villages ? Companies are concentrating in about one lakh villages having >2000 population
CONTRAINTS IN DISTRIBUTION ? Inadequate banking facilities ? Only 70% of the markets are connected by road ? Roads get flooded during rainy season ? Poor transportation facilities
CHANNEL MEMBERS
C&F Agents at state headquarters, big towns: commission payable: 3-5% ? Distributors at district headquarters: commission payable 3-5% ? Wholesalers at taluka/agri centres: 3-5% ? Retailers in villages/ feeder markets: about 10%
?
CHARACTERISTICS OF RURAL RETAILER ? Deals in a variety of goods ? Sells local, regional and national brands, depending upon the profile of the consumer ? Makes weekly/fortnightly visits to wholesalers in the town ? Provides information about new products to villagers
RURAL RETAILER
? ? ? ? ?
Extends credit facilities Can switch brands Sells at MRP/above MRP Displays the products which he wants to push May not pass on free gifts/samples etc to consumers
RURAL RETAILER
?
?
?
Some retailers sell expired/ spurious products Three categories of spurious products i.e. Look-alikes, spell alikes and duplicates Example: Lucky boy, Teta salt, Pure and lovely etc
CHANNELS OF DISTRIBUTION ? Manufacturer-consumer
?
Farmers markets, Bata shops, Textile show rooms
?
?
Manufacturer-retailer-consumer
Tractors, Two wheelers
?
?
Manufacturer-distributor -retailerconsumer
Regional brands of Tea, coffee, edible oil, biscuits
?
?
Manufacturer-depot/C&F agent -dealer-consumer
Asian paints, LG
?
?
Manufacturer-Depot/C&F agent- distributorretailer-consumer
Agro companies like Bayer, Syngenta
?
Manufacturer-Depot/C&F agent- distributorstockist- retailer-consumer
Britannia, Eveready, HUL, Colgate
?
? ?
Star Sellers (HUL)
1-2 Rural distributors in each district 25-30 wholesalers (Star Sellers) under each distributor ? Star seller covers 60-100 retail outlets ? Also supplies to Shakti entrepreneurs who in turn cover villages having less than 2000 population
?
Project Shakti (HUL) to cover villages having less than 2000 population-25000 shakti entrepreneurs
Hub & Spokes method by Coca Cola: From bottling plan, stocks are supplied to main distributors (Hubs) in key markets. Main distributors supply to subdistributors (Spokes), then to retailers and consumers.
?
LPG distribution (HP) Distributors have opened extension counters in key villages and rural consumers take delivery of the cylinders from extension counters ? LPG cylinders in HP fuels stations in highways and agri centres. ? Operates filling vans in haats and large villages for refilling empty cylinders with LPG
? ?
?
Bicyle distribution model developed by MART,
Delhi provides business opportunity for rural youth. ? Provides adequate training, SP materials, cycle, inbuilt storage box, colour umbrella, T-shirt, cap and public address system ? The promoter buys FMCGs from stockists and sells in interior villages ? Example: Exide, Colgate, HUL
Satellite distribution
? ? ? ?
Appointment of rural stockists in taluka/agri centres Credit facilities and extra commission Stockists supplies to village retailers A number retailers hover around a particular stockist
?
DEVELOPMENT OF RETAILERS
Co-operative societies- 3 lakhs societies Public distribution system- ration shops- 3.80 lakhs shops ? Fertiliser dealers- 2 lakhs dealers ? Postal department ( 1.40 lakhs) for financial products ? Appointment of dealers in Feeder Markets
? ?
?
FEEDER MARKETS
Population towns (nos)
Town class
1 11
1 lakh and above 50,000 to 99,000
423 498
111
1V V VI
20,000 t0 49,000
10,000 to 19,000 5000 to 9900 Less than 5000
1386
1560 1057 237
90% of the durable are purchased from class 2/3 towns
5161
?
PHYSICAL DISTRIBUTION OF STOCKS
? ? ? ? ? ?
Use of delivery van Mobile traders (pheriwaalas) Bullock carts/camels/boats Syndicate van distribution Haats Melas
ORGANISED RETAILING SCENE IN INDIA ? Government of India’s Public distribution system ? Consumer co-operatives and co-operative supermarkets ? One stop stores of Spencer & Co in Plantation areas in South ? Bata show rooms in prosperous rural markets ? Civil supplies department’s Maveli stores in Kerala ? Kamadhenu market in Chennai ? Nilgiris in South
Limitations of current distribution channels ? Push strategy ? Sale of spurious products (duplicates, look alikes and spell alikes) ? Limited choice of products/brands ? Retail price ( MRP/above MRP)
OPPORTUNITIES ? Increase in rural income and rising aspirations of rural population ? Rural people wants to replicate the life style of urban population ? Urban experience while shopping ? Quality products instead of spurious products ? Competitive pricing ? Touch and feel experience ? Outing for rural consumer and children ? One stop shop for consumer goods, durables, inputs and financial services
EXAMPLES
?
?
ITC( Choupal Sagar)
First organised rural retail outlet in India by a Corporate ? Situated in Rafic ganj and 4 km from sehore town ? Eight acres of land, shopping area 7000 sq feet
EXAMPLES ? ITC( Choupal Sagar)
? ? ? ?
Parking space for 100 tractors/jeeps A wide range of products Set up at a cost of about Rs 4 crores Procurement centre for Soya in the same compound
GODREJ AADHAR ? First Aadhar centre in Manchar near Pune in 2003. ? Super markets in potential rural markets ? Deals in consumer goods, house hold appliances, agri inputs ? Soil analysis, veterinary and crop husbandry services ? Outlets in Maharastra,Punjab, Haryana, and Andhra Pradesh ? Recently Future Group has taken a major share in Godrej Aadhar retailing
SHRIRAMS HARIYALI KISAN BAZAAR ? First outlet started in Hardoi in UP in 2002 ? About 100 outlets in Northern states ? All farm needs- inputs, loan facilities, insurance, contract farming , technical service by qualified agronomists. Also sells consumer goods, kitchen ware, readymade garments, insurance, mobile phones etc ? Plans for procurement and distribution of milk ? The ambience is modern, the approach is farmer friendly
Tata Kisan Sansar by Tata Chemicals ? Solutions to field problems from sowing to harvesting and supply of agricultural inputs under franchise arrangement ? Mahindra Shublabh, one stop shop to meet farming requirments and consultancy services
Agriclinics Launched by Govt with the support of NABARD to provide farm consultancy services and supply of inputs. There are about 3000 clinics run by qualified agronomists.
WARNA BAZAAR ? Two Super stores in Kolhapur and Sangli in Maharastra ? Area: 10,000 sq feet ? 30 Village level stores of 500-1000 sq feet ? Sells consumer goods, durables, agri inputs, hardware, grocery items, apparel items
KASTI SOCIETY ? Co-operative rural retailing store near Ahmednagar ? Serves 70 surrounding villages ? Total retail space 5000 sq feet
Over 32,000 petrol outs ? Many are located in high way crossings ? Enough footfalls and sales ? Ideal locations for ATM, food joints, music stores, automobile parts and even agri inputs and Impulse purchases
?
?
Most domestic majors are moving to cities like Kanpur, Surat, Indore, Varanasi, Coimbatore, Madurai, Bhopal, Vijayawada Low real estate cost combined with the hype of branded living will make break even easier for retailers in these cities
doc_890912549.pptx
It includes 7ps of marketing, 4As of rural marketing, different product strategies, different pricing strategies, rural distribution, different distribution models in rural India, organized retail in rural India.
APPROPRIATE COMBINATION OF FOUR MARKETING VARIABLES (4 Ps)
? ? ?
VARIABLES ARE INTERDEPENDENT FLEXIBLE AND DYNAMIC CONCEPT CUSTOMER ORIENTED ACTIVITY
?
? ?
?
? ?
?
Product Pricing Place (distribution) Promotion Pace Packaging Positioning
4 As OF RURAL MARKETING MIX
? ? ? ?
AFFORDABILITY AVAILABILITY AWARENESS ACCEPTABILITY
4 AS OF RURAL MARKETING MIX ? Affordability ? Does not mean cheap products ? Designing products which match the needs of rural consumer and within his buying capacity ? Example: Nirma detergent powder, Chik shampoo, Chinni pickle
A product will be successful if it delivers value and satisfaction. Value is the ratio between what the customer gets and what he gives. ? Satisfaction is a function of perceived performance and expectations. If the performance falls short of expectations, the customer is dissatisfied, if the performance matches expectations, he is satisfied, if the performance exceeds expectations, the customer is delighted.
?
4 AS OF RURAL MARKETING MIX
? ? ? ? ? ? ?
Availability To ensure that the product reaches the retailers shelf Awareness Rural specific promotion media and methods Acceptability The product should serve its purpose and offer solutions to their problems Examples: Sturdy two wheelers to carry fertiliser bag, milk can, cement, cattle feed, Wrist watches that can be easily repaired, Brass torch light, Basic models of mobile phones etc
?
Chairman, IRDA has said “ Future growth of the
insurance industry lies in designing products that address the needs and aspirations of the people living in rural areas. The penetration of insurance portfolios will not grow unless products make sense to the people in rural areas.
?
Rural population would benefit from a single product that could takes care of all their requirements. The combination of life and non-life features has become important.
Eveready Industries, India’s largest battery maker has introduced LED (Light emitting diode) under the brand name Nu Lite as a substitute to kerosene lanterns in power deficient states like Uttar Pradesh, Bihar, West Bengal and Assam. ? At two-three hours use per day, the LED lanterns cost 50 paise per hour, marginally lower than kerosene lanterns. Introduced in April 2009, the company sells at an average 3,50,000 units per month.
?
The LED lanterns are priced between Rs 150 and Rs 450 and two sets of batteries are given free along with the lanterns. The factors that have contributed to the success of Nu Lite are Understanding the problems faced by villagers in electricity deficit states, affordability, manufacturing capacity, promotion through local news papers, wall paintings and distribution might.
Rural market is not the rich man’s market for classy products. ? However, there is a small percentage of rich people, growing in numbers and also getting richer ( sales of Honda City, Denim, Pantene) ? Rural demand is about lot of people consuming a little and not about a small number consuming a lot.
?
?
?
?
?
STURDY PRODUCTS Bullet/ Rajdoot motor cycles, ambassador cars, HMT mechanical watches DESIGNING PRODUCTS LG Electronics-Sampoorna brand TV, Philips 14” TV
?
SMALL UNIT PACKING
? ?
Examples: Shampoos, biscuits, soaps, tooth paste etc Cavin Kare studied the rural consumer behaviour and came out with Chik shampoo priced at paise fifty and it created a revolution in the packaging/shampoo industry
?
?
UTILITY PRODUCTS: Free power radio by Philips, HMT mechanical watches
BRANDING
Billiwali cell, Ladkawala paint, Peedhari balm, Nirma, Tata shakti, Rishi chavanprash, Parle biscuits
?
?
? ? ? ? ? ?
LOW PRICE 5 Kg gas cylinder-deposit Rs350-refill cost Rs90 14 Kg gas cylinder-deposit Rs700-refill cost Rs 250 NO FRILLS PRODUCTS Nokia - focus on basic models LG- 100 channels and 200 watts output
? ? ?
VALUE ENGINEERING Example: Nirma Pedestrian pack, affordable price, medium quality, availability at village shop, promotion through wall painting and famous jingle on doordarshan
CREDIT FACILITIES
? ? ?
Motivates retailers to stock the products Risk/benefit to be assessed Creditworthiness of dealers/distributors?
PROMOTIONAL SCHEMES ? Off season, bulk purchases, timely payment, cash discount, annual purchases
Even if a company has a good product that meets the requirements of rural consumers, it will succeed only if it is made available as and when required by the consumer. Out of about 6 million retail outlets, 3 million outlets are in rural areas scattered in about 6 lakh villages. Making the products available in these outlets is a challenging job indeed
CONTRAINTS IN DISTRIBUTION ? A large number of intermediaries ? Non-availability of retailers: Practically no shops in two lakh villages with less than 500 population ? There are about 2.7 lakh Villages with 500-2000 population and distribution cost is high to reach these villages ? Companies are concentrating in about one lakh villages having >2000 population
CONTRAINTS IN DISTRIBUTION ? Inadequate banking facilities ? Only 70% of the markets are connected by road ? Roads get flooded during rainy season ? Poor transportation facilities
CHANNEL MEMBERS
C&F Agents at state headquarters, big towns: commission payable: 3-5% ? Distributors at district headquarters: commission payable 3-5% ? Wholesalers at taluka/agri centres: 3-5% ? Retailers in villages/ feeder markets: about 10%
?
CHARACTERISTICS OF RURAL RETAILER ? Deals in a variety of goods ? Sells local, regional and national brands, depending upon the profile of the consumer ? Makes weekly/fortnightly visits to wholesalers in the town ? Provides information about new products to villagers
RURAL RETAILER
? ? ? ? ?
Extends credit facilities Can switch brands Sells at MRP/above MRP Displays the products which he wants to push May not pass on free gifts/samples etc to consumers
RURAL RETAILER
?
?
?
Some retailers sell expired/ spurious products Three categories of spurious products i.e. Look-alikes, spell alikes and duplicates Example: Lucky boy, Teta salt, Pure and lovely etc
CHANNELS OF DISTRIBUTION ? Manufacturer-consumer
?
Farmers markets, Bata shops, Textile show rooms
?
?
Manufacturer-retailer-consumer
Tractors, Two wheelers
?
?
Manufacturer-distributor -retailerconsumer
Regional brands of Tea, coffee, edible oil, biscuits
?
?
Manufacturer-depot/C&F agent -dealer-consumer
Asian paints, LG
?
?
Manufacturer-Depot/C&F agent- distributorretailer-consumer
Agro companies like Bayer, Syngenta
?
Manufacturer-Depot/C&F agent- distributorstockist- retailer-consumer
Britannia, Eveready, HUL, Colgate
?
? ?
Star Sellers (HUL)
1-2 Rural distributors in each district 25-30 wholesalers (Star Sellers) under each distributor ? Star seller covers 60-100 retail outlets ? Also supplies to Shakti entrepreneurs who in turn cover villages having less than 2000 population
?
Project Shakti (HUL) to cover villages having less than 2000 population-25000 shakti entrepreneurs
Hub & Spokes method by Coca Cola: From bottling plan, stocks are supplied to main distributors (Hubs) in key markets. Main distributors supply to subdistributors (Spokes), then to retailers and consumers.
?
LPG distribution (HP) Distributors have opened extension counters in key villages and rural consumers take delivery of the cylinders from extension counters ? LPG cylinders in HP fuels stations in highways and agri centres. ? Operates filling vans in haats and large villages for refilling empty cylinders with LPG
? ?
?
Bicyle distribution model developed by MART,
Delhi provides business opportunity for rural youth. ? Provides adequate training, SP materials, cycle, inbuilt storage box, colour umbrella, T-shirt, cap and public address system ? The promoter buys FMCGs from stockists and sells in interior villages ? Example: Exide, Colgate, HUL
Satellite distribution
? ? ? ?
Appointment of rural stockists in taluka/agri centres Credit facilities and extra commission Stockists supplies to village retailers A number retailers hover around a particular stockist
?
DEVELOPMENT OF RETAILERS
Co-operative societies- 3 lakhs societies Public distribution system- ration shops- 3.80 lakhs shops ? Fertiliser dealers- 2 lakhs dealers ? Postal department ( 1.40 lakhs) for financial products ? Appointment of dealers in Feeder Markets
? ?
?
FEEDER MARKETS
Population towns (nos)
Town class
1 11
1 lakh and above 50,000 to 99,000
423 498
111
1V V VI
20,000 t0 49,000
10,000 to 19,000 5000 to 9900 Less than 5000
1386
1560 1057 237
90% of the durable are purchased from class 2/3 towns
5161
?
PHYSICAL DISTRIBUTION OF STOCKS
? ? ? ? ? ?
Use of delivery van Mobile traders (pheriwaalas) Bullock carts/camels/boats Syndicate van distribution Haats Melas
ORGANISED RETAILING SCENE IN INDIA ? Government of India’s Public distribution system ? Consumer co-operatives and co-operative supermarkets ? One stop stores of Spencer & Co in Plantation areas in South ? Bata show rooms in prosperous rural markets ? Civil supplies department’s Maveli stores in Kerala ? Kamadhenu market in Chennai ? Nilgiris in South
Limitations of current distribution channels ? Push strategy ? Sale of spurious products (duplicates, look alikes and spell alikes) ? Limited choice of products/brands ? Retail price ( MRP/above MRP)
OPPORTUNITIES ? Increase in rural income and rising aspirations of rural population ? Rural people wants to replicate the life style of urban population ? Urban experience while shopping ? Quality products instead of spurious products ? Competitive pricing ? Touch and feel experience ? Outing for rural consumer and children ? One stop shop for consumer goods, durables, inputs and financial services
EXAMPLES
?
?
ITC( Choupal Sagar)
First organised rural retail outlet in India by a Corporate ? Situated in Rafic ganj and 4 km from sehore town ? Eight acres of land, shopping area 7000 sq feet
EXAMPLES ? ITC( Choupal Sagar)
? ? ? ?
Parking space for 100 tractors/jeeps A wide range of products Set up at a cost of about Rs 4 crores Procurement centre for Soya in the same compound
GODREJ AADHAR ? First Aadhar centre in Manchar near Pune in 2003. ? Super markets in potential rural markets ? Deals in consumer goods, house hold appliances, agri inputs ? Soil analysis, veterinary and crop husbandry services ? Outlets in Maharastra,Punjab, Haryana, and Andhra Pradesh ? Recently Future Group has taken a major share in Godrej Aadhar retailing
SHRIRAMS HARIYALI KISAN BAZAAR ? First outlet started in Hardoi in UP in 2002 ? About 100 outlets in Northern states ? All farm needs- inputs, loan facilities, insurance, contract farming , technical service by qualified agronomists. Also sells consumer goods, kitchen ware, readymade garments, insurance, mobile phones etc ? Plans for procurement and distribution of milk ? The ambience is modern, the approach is farmer friendly
Tata Kisan Sansar by Tata Chemicals ? Solutions to field problems from sowing to harvesting and supply of agricultural inputs under franchise arrangement ? Mahindra Shublabh, one stop shop to meet farming requirments and consultancy services
Agriclinics Launched by Govt with the support of NABARD to provide farm consultancy services and supply of inputs. There are about 3000 clinics run by qualified agronomists.
WARNA BAZAAR ? Two Super stores in Kolhapur and Sangli in Maharastra ? Area: 10,000 sq feet ? 30 Village level stores of 500-1000 sq feet ? Sells consumer goods, durables, agri inputs, hardware, grocery items, apparel items
KASTI SOCIETY ? Co-operative rural retailing store near Ahmednagar ? Serves 70 surrounding villages ? Total retail space 5000 sq feet
Over 32,000 petrol outs ? Many are located in high way crossings ? Enough footfalls and sales ? Ideal locations for ATM, food joints, music stores, automobile parts and even agri inputs and Impulse purchases
?
?
Most domestic majors are moving to cities like Kanpur, Surat, Indore, Varanasi, Coimbatore, Madurai, Bhopal, Vijayawada Low real estate cost combined with the hype of branded living will make break even easier for retailers in these cities
doc_890912549.pptx