PROJECT REPORT ON

A STUDY OF RURAL MARKETING STRATEGY BY PEPSI

Submitted in partial fulfillment of requirement of Bachelor of Business

Administration (B.B.A) General

BBA V SEMESTER (EVENING)

BATCH 2016-2019

Submitted To: Submitted By:

Dr. Amruta Jajoo. Adhish Anand

Assistant Professor Enrollment Number-

40924501716

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL

KALKAJI

1
 ACKNOWLEDGEMENT

A lot of effort has gone into this training report. My thanks are due to many people with whom
I have been closely associated.

I would like all those who have contributed in completing this project. First of all, I would like
to send my sincere thanks to Dr.Amruta Jajoo of JIMS Kalkaji for her helpful hand in the
completion of my project.

I would like to thank my entire beloved family & friends for providing me monetary as well as
non – monetary support, as and when required, without which this project would not have
completed on time. Their trust and patience is now coming out in form of this thesis.

…………………
………………

2
 DECLARATION

I hereby certify that this is my original work and it has never been submitted elsewhere.

Adhish Anand

40924501716

3
 CERTIFACTE OF COMPLETION

This is to certify that Mr. Adhish Anand of BBA VIth semester (E) of Jagannath
International Management School, Kalkaji, New Delhi has completed his project report on
the topic of Study of Rural Marketing Strategy by Pepsi under my supervision. To the best of
my knowledge the report is original and has not been copied or submitted anywhere else.It is
independent work done by her.

Dr. Amruta Jajoo

Assistant Professor

4
 CONTENTS

Description Page No.

Acknowledgement
Declaration
Certificate of Completion
Contents with page no.
Executive Summary
Introduction to topic
Objectives
Literature review

Research Methodology
Analysis & Interpretation
Findings & Inferences
Limitations
Recommendations and Conclusion
Bibliography
Appendices

Executive Summary

5
A debate continued for a long time amongst the Indian marketers, both practitioners &
academicians, on the justification for the existence of the distinct discipline of rural marketing.
Consequently, two schools of thought emerged. The first school believed that the
products/services, marketing tools & strategies that are successful in urban areas, could be
transplanted with little or no more modifications in rural areas. However, the second school saw
a clear distinction between urban & rural India, & suggested a different approach, skills, tools
& strategies to be successful in rural markets.

What differentiates the two markets is not mere income, but a host of other infrastructural &
socio-cultural factors. Thus, the rural market cannot be tapped successfully with an urban
marketing mindset & would definitely require its thorough understanding. In other words, the
approach toward rural markets needs to be distinct from the one adopted for the urban markets.

Thus, in a large rural economy like India’s, rural marketing has emerged as an important &
distinct internal sub-division within the marketing discipline. This sub-division clearly
highlights the differences between rural marketing & mainstream marketing.

CHAPTER 1

6
 INTRODUCTION
Rural Marketing

Rural marketing involves the process of developing, pricing, promoting, distributing rural
specific product and a service leading to exchange between rural and urban market which
satisfies consumer demand and also achieves organisational objectives.

URBAN RURAL

RURAL URBAN

RURAL RURAL

It is a two-way marketing process wherein the transactions can be:

1. Urban to Rural: A major part of rural marketing falls into this category. It involves
the selling of products and services by urban marketers in rural areas. These include:
Pesticides, FMCG Products, Consumer durables, etc.
2. Rural to Urban: Transactions in this category basically fall under agricultural
marketing where a rural producer seeks to sell his produce in an urban market. An agent
or a middleman plays a crucial role in the marketing process. The following are some of
the important items sold from the rural to urban areas: seeds, fruits and vegetables, milk
and related products, forest produce, spices, etc.
3. Rural to Rural: This includes the activities that take place between two villages in
close proximity to each other. The transactions relate to the areas of expertise the
particular village has. These include selling of agricultural tools, cattle, carts and others
to another village in its proximity.

7
Rural marketing requires the understanding of the complexities. Indian agricultural industry has
been growing at a tremendous pace in the last few decades. The rural areas are consuming a
large number of industrial and urban manufactured products. The rural agricultural production
and consumption process plays a predominant role in developing the Indian economy. This has
designed a new way for understanding a new process called Rural Marketing.

The concept of rural marketing has to be distinguished from Agricultural marketing. Marketing
is the process of identifying and satisfying customers needs and providing them with adequate
after sales service. Rural marketing is different from agricultural marketing, which signifies
marketing of rural products to the urban consumer or institutional markets. Rural marketing
basically deals with delivering manufactured or processed inputs or services to rural producers,
the demand for which is basically a derived outcome.

Rural marketing scientists also term it as developmental marketing, as the process of rural
marketing involves an urban to rural activity, which in turn is characterised by various
peculiarities in terms of nature of market, products and processes. Rural marketing differs from
agricultural or consumer products marketing in terms of the nature of transactions, which
includes participants, products, modalities, norms and outcomes. The participants in case of
Rural Marketing would also be different they include input manufacturers, dealers, farmers,
opinion makers, government agencies and traders.

Rural marketing needs to combine concerns for profit with a concern for the society, besides
being titled towards profit. Rural market for agricultural inputs is a case of market pull and not
market push. Most of the jobs of marketing and selling are left to the local dealers and retailers.
The market for input gets interlocked with other markets like output, consumer goods, money
and labour.
Rural marketing in India is not much developed there are many hindrances in the area of
market, product design and positioning, pricing, distribution and promotion. Companies need to
understand rural marketing in a broader manner not only to survive and grow in their business,
but also a means to the development of the rural economy. One has to have a strategic view of
the rural markets so as to know and understand the markets well. In the context of rural
marketing one has to understand the manipulation of marketing mix has to be properly
understood in terms of product usage. Product usage is central to price, distribution, promotion,
8
branding, company image and more important farmer economics, thus any strategy in rural
marketing should be given due attention and importance by understanding the product usage,
all elements of marketing mix can be better organised and managed.

Evolution of Rural Marketing

DESTINATIO
PHAS MAJOR SOURCE
ORIGIN FUNCTION N
E PRODUCTS MARKET
MARKET
I Before Mid-
1960 (from Agricultural Agricultural Rural Urban
independence Marketing Produce
to green
revolution)
II Mid- Sixties
(Green Marketing Of Agricultural Urban Rural
revolution to Agricultural Inputs
Pre- Inputs
liberalization
period)
III Mid- Nineties Consumables
(Post- Rural And Urban & Rural
liberalization Marketing Durables For Rural
period on 20th Consumption
century) & Production

IV 21st century Developmental All products & Urban & Urban &
marketing services Rural Rural

1. Phase I ( from Independence to Green Revolution):

9
 Before the advent of the Green revolution, the nature of rural market was altogether
different. Rural marketing then referred to the marketing of rural products in rural &
urban products.
2. Phase II (Green Revolution to Pre-liberalization period):
During these times, due to the advent & spread of the Green Revolution, rural
marketing represented marketing of agriculture inputs in rural markets & marketing of
rural produce in urban areas.
3. Phase III (Post-liberalization period on 20th century):
The third phase of rural marketing started after the liberalization of the Indian economy.
In this period, rural marketing represented the emerging, distinct activity of attracting &
serving rural markets to fulfill the need & wants of rural households, peoples & their
occupations.
4. Phase IV (21st century):
Learning from its rural marketing experiences after the independence, the corporate
world has finally realized the quick-fix solutions & piecemeal approaches will deliver
only limited results in the rural markets. And, if an organization wants to tap the real
potential of the rural market, it needs to make a long-term commitment with this
market. Its approach & strategies must not focus in just selling products & services, but
they should also aim at creating an environment for this to happen.

The objective of rural marketing in the current phase is the improvement of the quality of life
by satisfying the needs & wants of the customers, not through atand-alone products or services,
but by presenting comprehensive & integrated solutions which might involve a set of inter-
related products & services.

Till recently, the focus of marketers in India was the urban consumer and by large number
specific efforts were made to reach the rural markets. But now it is felt that with the tempo of
development accelerating in rural India, coupled with increase in purchasing power, because of
scientific agriculture, the changing life style and consumption pattern of villagers with increase
in education, social mobility, improved means of transportations and communication and other
penetrations of mass media such as television and its various satellite channels have exposed
rural India to the outside world and hence their outlook to life has also changed. Because of all
these factors, rural India in now attracting more and more marketers.
10
Increase in competition, saturated urban markets, more and move new products demanding
urban customers, made the companies to think about new potential markets. Thus, Indian rural
markets have caught the attention of many companies, advertisers and multinational
companies. According to a recent survey conducted by the National Council for Applied
Economic Research (NCAER), the purchasing power of the rural people has increased due to
increase in productivity and better price commanded by the agricultural products. By and large
this rise in purchasing power remains unexploited and with the growing reach of the television,
it is now quite easy for the marketers to capture these markets.

Rural marketing has become the latest mantra of most corporate. Companies like Hindustan
Lever, Colgate Palmolive, Britannia and even Multinational Companies (MNCs) like Pepsi,
Coca Cola, L.G., Philips, Cavin Kare are all eyeing rural markets to capture the large Indian
market.

Coming to the frame work of Rural Marketing, Rural Marketing broadly involves reaching the
rural customer, understanding their needs and wants, supply of goods and services to meet their
requirements, carrying out after sales service that leads to customer satisfaction and repeat
purchase/sales.

Nature of Rural Market

 Large, Diverse and Scattered Market: Rural market in India is large, and scattered
into a number of regions. There may be less number of shops available to market
products.
 Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied with
agriculture prosperity. In the event of a crop failure, the income of the rural masses is
directly affected.
 Standard of Living and rising disposable income of the rural customers: It is
known that majority of the rural population lives below poverty line and has low

11
 literacy rate, low per capital income, societal backwardness, low savings, etc. But the
new tax structure, good monsoon, government regulation on pricing has created
disposable incomes. Today the rural customer spends money to get value and is aware
of the happening around him.
 Traditional Outlook: Villages develop slowly and have a traditional outlook. Change
is a continuous process but most rural people accept change gradually. This is gradually
changing due to literacy especially in the youth who have begun to change the outlook
in the villages.
 Rising literacy levels: It is documented that approximately 45% of rural Indians are
literate. Hence awareness has increases and the farmers are well-informed about the
world around them. They are also educating themselves on the new technology around
them and aspiring for a better lifestyle.
 Diverse socioeconomic background: Due to dispersion of geographical areas and
uneven land fertility, rural people have disparate socioeconomic background, which
ultimately affects the rural market.
 Infrastructure Facilities: The infrastructure facilities like cemented roads, warehouses,
communication system, and financial facilities are inadequate in rural areas. Hence
physical distribution is a challenge to marketers who have found innovative ways to
market their products.

Is rural marketing transactional or developmental in

its approach?

It is true, rural markets have become an attractive proposition for commercial business
organizations.
The role of rural marketing as such is more developmental than transactional. It is more a
process of delivering better standard of living and quality of life to the rural environment taking
into consideration the prevailing village milieu.

12
Transactional Vs Developmental: For better comprehension of this role let us distinguish
development marketing and transactional marketing. Table brings out the differences in brief.

Transactional Vs Development Marketing

S.No. Aspect Transactional Development

1. Concept Consumer orientation, Society orientation, societal
Marketing concept concept

2. Role Stimulating and Catalytic and transformation

conversional marketing agent
3. Focus Product-market fit Social change
4. Key task Product innovations and Social innovations and
communications communications
5. Nature of activity Commercial Socio-cultural, economic
6. Participants Corporate enterprises, Government, voluntary agencies,
Sellers corporate enterprises,
benefactors
7. Offer Products and services Development
projects/schemes/programs
8. Target group Buyers Beneficiaries and buyers
9. Communication Functional Developmental
10. Goal Profits Market development
Customer satisfaction Corporate Image
Brand image
11. Time-Frame Short-medium Medium-Long
12. Motivation Profit-motive Service-motive
Business policy Ideological or Public policy

Model: The model of rural marketing represents a combination of the transactional and
developmental approaches.

 Rural marketing process is both a catalyst as well as an outcome of the general rural
development process. Initiation and management of social and economic change in the

13
 rural sector is the core of the rural marketing process. It becomes in this process both
benefactor and beneficiary.
 Innovation is the essence of marketing. Innovative methods of social change for
successful transformation of traditional society are virtual. Such a change narrows the
rural-urban divide.
 The process of transformation can be only evolutionary and not revolutionary. The
growth of the rural market can be a planned evolutionary process based on strategic
instruments of change rather than constitute just short-term opportunities for
commercial gains.

 The exposure of ruralites to a variety of marketing transactions during the change

process puts them in the role of beneficiaries than of just `buyers' of modern inputs and
infrastructural services.

 Communication is the vital element of rural marketing. It should serve to resolve social
conflicts, encourage cooperation and strengthen competitive spirit during interactions
between rural and urban as well as within rural areas. Another critical point for
communication is the point of conversion of ruralite from an "induced beneficiary" to
an "autonomous buyer".

Classification of rural consumers

The rural consumers are classified into the following groups based on their economic status:

14
  The Affluent Group: They are cash rich farmers and a very few in number. They have
affordability but not form a demand base large enough for marketing firms to depend
on. Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in this group.

 The Middle Class: This is one of the largest segments for manufacturedgoods and is
fast expanding. Farmers cultivating sugar cane in UP andKarnataka fall in this
category.

 The Poor: This constitutes a huge segment. Purchasing power is less,but strength
is more. They receive the grants from government and reapthe benefits of many such
schemes and may move towards the middleclass. The farmers of Bihar and Orissa fall
under this category.

Roadblocks of Indian Rural Markets

There are several roadblocks that make it difficult to progress in the rural market. Marketers
encounter a number of problems like dealing with physical distribution, logistics, proper and
effective deployment of sales force and effective marketing communication when they enter
rural markets. The major problems are listed below.

1. Standard of living: The number of people below the poverty line is more in rural
markets. Thus the market is also underdeveloped and marketing strategies have to be
different from those used in urban marketing.
2. Low literacy levels: The low literacy levels in rural areas leads to a problem of
communication. Print media has less utility compared to the other media of
communication.
3. Low per capita income: Agriculture is the main source of income and hence spending
capacity depends upon the agriculture produce. Demand may not be stable or regular.
4. Transportation and warehousing: Transportation is one of the biggest challenges in
rural markets. As far as road transportation is concerned, about 50% of Indian villages

15
 are connected by roads. However, the rest of the rural markets do not even have a
proper road linkage which makes physical distribution a tough task. Many villages are
located in hilly terrains that make it difficult to connect them through roads. Most
marketers use tractors or bullock carts in rural areas to distribute their products.
Warehousing is another major problem in rural areas, as there is hardly any organized
agency to look after the storage issue. The services rendered by central warehousing
corporation and state warehousing corporations are limited only to urban and suburban
areas.
5. Ineffective distribution channels: The distribution chain is not very well organized
and requires a large number of intermediaries, which in turn increases the cost and
creates administrative problems. Due to lack of proper infrastructure, manufacturers are
reluctant to open outlets in these areas. They are mainly dependent on dealers, who are
not easily available for rural areas. This is a challenge to the marketers.
6. Many languages and diversity in culture: Factors like cultural congruence, different
behaviour and language of the respective areas make it difficult to handle the customers.
Traits among the sales force are required to match the various requirements of these
specific areas.
7. Lack of communication system: Quick communication is the need of the hour for
smooth conduct of business, but it continues to be a far cry in rural areas due to lack of
communication facilities like telegraph and telecommunication systems etc. The literacy
rate in the rural areas is rather low and consumer’s behaviour in these areas is
traditional, which may be a problem for effective communication.
8. Spurious brands: Cost is an important factor that determines purchasing decision in
rural areas. A lot of spurious brands or look-alikes are available, providing a low cost
option to the rural customer. Many a time the rural customer may not be aware of the
difference due to illiteracy.
9. Seasonal demand: Demand may be seasonal due to dependency on agricultural
income. Harvest season might see an increase in disposable income and hence more
purchasing power.
10. Dispersed markets: Rural population is highly dispersed and requires a lot of
marketing efforts in terms of distribution and communication.

16
Attractiveness of rural market

1 Large population
2 Rising prosperity
3 Growth in consumption
4 Life cycle changes
5 Life cycle advantages
6 Market growth rate higher than urban
7 Rural marketing is not expensive
8 Remoteness is no longer a problem

1. Large Population: The rural population is large and its growth rate is also high. Despite
the rural urban migration, the rural areas continue to be the place of living majority of
Indians.

17
2. Rising Rural Propensity:

INCOME GROUP 1994-95 2000-01 2006-07

ABOVE RS. 100,000 1.6 3.8 5.6
RS. 77,001-100,000 2.7 4.7 5.8
RS. 50,001-77,000 8.3 13.0 22.4
RS. 25,001-50,000 26.0 41.1 44.6
RS.25,000 & BELOW 61.4 37.4 20.2

Thus we see that population between income level of Rs. 25,000- 77,000 will increase
from 34.3% in 1994-95 to 67.0% in 2006-07. The rural consuming class is increasing
by about 3-4% per annum, which roughly translates into 1.2 million new consumers
yearly.

3. Growth in consumption:
PER CAPITA HOUSEHOLD EXPENDITURE (IS RS.)

LEVEL NO. STATES EXPENDITURE

Punjab 614
Kerala 604
High Haryana 546
7 Rajasthan 452
(Above Rs 382/-) Gujarat 416
Andhra Pradesh 386
Maharastra 384
West Bengal 382
Average Orissa 381
5 Tamil Naidu 381
(Rs. 382/-) Uttar Pradesh 373
Karnataka 365
Low Assam 338
3 Madhya Pradesh 326
(Below Rs. 382/-) Bihar 289

Distribution household’s income wise (projection in Rs Crore)

INCOME 2001 – 02 2006 – 07

RURAL RURAL
GROUPS TOTAL NO. % TOTAL NO. %
HIGH 0.26 0.07 26. 0.52 0.12 23.

18
 9 1
MIDDLE 12.04 7.73 64. 16.72 10.3 61.
2 2 8
LOW 5.7 5.09 88. 3.68 3.52 95.
7 7
TOTAL 18.04 12.8 71. 20.90 13.9 66.
9 4 6 7

Spending pattern (Rural Household’s in Rs.)

ITEM % RIC POO AVERAG

H R E
FOOD ARTICLES 4
147 73 95
4
TOILETRIES 2
67 33 43
0
WASHING 1
43 22 28
MATERIAL 3
COSMETICS 1
33 17 21
0
OTC PRODUCTS 4 13 6 9
OTHERS 9 30 15 19
TOTAL 333 166 215

Average rural household spends on consumables excluding food grains, milk &
vegetables are Rs. 215/-.

4. Life style changes:

19
 Income vs. usage of packed consumer goods (% of household using)

MONTHLY HOUSEHOLD INCOME (RS.)

GOODS UP TO 351 – 751 – 1501
350 750 1500 +
WASHING CAKES/BARS 60 78 86 91
TOILET SOAPS 57 72 89 93
TOOTH 22 36 65 85
PASTE/POWDER
TALCUM POWDER 20 25 41 63
TEA (PACKAGED) 22 30 48 64

5. Life cycle advantage:

STAGES IN LIFE CYCLE

PRODUCT URBAN MARKET RURAL

GROWTH
RATE %
Popular soaps Maturity 2 Growth
Premium soaps Late 11 Early
growth growth
Washing powder Late 6 Early
growth growth
Skin creams Maturity 1.1 Growth
Talcum powder Maturity 4 Growth

6. Market growth rates higher: Growth rates of the FMCG market and the durable
market are higher in rural areas for many products. The rural market share will be more
than 50% for the products like toilet soaps, body talcum powder, cooking medium (oil),
cooking medium (vanaspati), tea, cigarettes and hair oil.

7. Rural marketing is not expensive: Conventional wisdom dictates that since rural
consumers are dispersed, reaching them is costly. However, new research indicates that the
selling in Rural India is not expensive. According to one research it costs roughly Rs.1
20
 Crore to promote a consumer durable inside a state. This includes the expenses of
advertising in vernacular newspapers, television spots, in-cinema advertising, radio, van
operations and merchandising and point of purchase promotion. Campaign like this, which
can reach millions, costs twice as much in urban area.

8. Remoteness is no longer a problem: Remoteness in a problem but not insurmountable.

The rural distribution is not much developed for the reasons,

 Lack of proper infrastructure such as all-weather roads, electrification and

sanitation, and
 Lack of marketer’s imagination and initiative.

Marketers have so far, failed in analyzing the rural side and exploiting rural India’s
traditional selling system- Haats & Melas.Their near obsession with just duplicating the
urban-type network and that too with very limited success, has kept them blind to the
potential of these two outlets.

RURAL VS URBAN MARKETING-SUMMARY

21
NO ASPECT URBAN RURAL
.
1 Marketing & Societal Marketing & Societal
Concepts & Concepts,
Relationship Development
PHILOSOPHY
Marketing Marketing &
Relationship
Marketing
2 A) MARKET
B) DEMAND High Low
C) COMPETITION Among Units In Mostly From
Organized Sector Unorganized Units
CONSUMERS
LOCATION Concentrated Widely Spread
LITERACY High Low
INCOME High Low
EXPENDITURE Planned, Even Seasonal, Variation
NEEDS High Level Low Level
INNOVATION/ADOPTION Faster Slow
3 PRODUCT
AWARENESS High Low
CONCEPT Known Less Known
POSITIONING Easy Difficult
USAGE METHOD Easily Grasped Difficult To Grasp
QUALITY PREFERENCE Good Moderate
4 PRICE
SENSITIVE Yes Very much
LEVEL DESIRED Medium-high Medium-low
5 DISTRIBUTION
Wholesalers, stockists, Village shops,
retailer, supermarket, “Haats”
CHANNELS
specialty stores, &
authorized showrooms
TRANSPORT Good Average
FACILITIES
PRODUCT High Limited
AVAILABILITY
6 PROMOTION
ADVERTISING Print, audio visual TV, radio, print media
media, outdoors, to some extent. More
exhibitions etc. few languages
22
 languages
Door-to-door, Occasionally
PERSONAL SELLING
frequently
Contests, gifts, price Gifts, price discounts
SALES PROMOTION
discount
PUBLICITY Good opportunities Less opportunities

Special Products for Rural Markets:

 Rural Transporter: Mahindra & Mahindra is busy developing the prototype of what it
calls a ‘Rural Transporter’ – basically a hybrid between a tractor and a rural transport
vehicle. The product at 20-25 HP will be targeted at those who cannot afford a normal
tractor and would also fulfill the need of family transporter that could take in the rural
roughs but would be much more comfortable and safer than the conventional tractor-trolley.
 Sampoorna TV: LG Electronics, the Korean firm has rejigged the TV to appeal to local
needs. It spent Rs. 21 Lacs to develop a set that would have on-screen displays in the
vernacular languages of Hindi, Tamil and Bengali. The logic, rural consumers unfamiliar
with English would still be able to use the TV without being intimidated.
 Titan Watches: A recent NCAER study revealed that there is a great potential for watches
in rural areas. In fact it is considered to be a high priority list. It was also found that a rural
consumer looks for the ruggedness of the watch more than the urban consumer does. He
prefers thick watches than slim watches.

The biggest problem that the Marketers are facing in the Rural Markets is Of IMITATIONS.
Imitations may result in two types of goods depending upon the purpose, commitment, and
competence of imitator. A poor imitator will end up in producing deceptive, spurious, fake,
copycat products. He dupes the gullible customer by offering products having close
resemblance with the original. In quality, it is poor cousin to the original. On the other hand, a
poor imitator may even produce an improved version of the original product.

In this scenario the job of the Marketer becomes even more difficult in the sense that he has not
to fight other competitors but also the imitated products.

23
The advantages that these products enjoy in the rural markets are that the Imitators who are in
the villages are making these and they are offering More Margins & Better credit Facilities.

To solve this problem the Marketer has to educate the consumer about his product and show
him the benefits of his products over the imitated ones.

Need-Product Relationships and the changes happening in Rural India

Needs Old Products New Products

Brushing Teeth Neem sticks, Charcoal, Toothpaste, tooth powder

Rocksalt, Husk
Washing Vessels Coconut fiber, Earthy Washing Powders, soaps
materials, Brick Powder, Ash and liquids
Transport Bullock Cart, Horses, Tractors, LCVs, Mopeds,
Donkeys Scooters, Motor cycles
Irrigation Wells, Canals, Water lifters, Bore-wells, Motors, Power
Wind Mills Generators, Pump Sets
Hair Wash Shikakai powder, Retha, Shampoos and hair care
Besan soaps

24
 OBJECTIVES

 To study the emergence of Rural markets in the context of Pepsi.

 To study the present scenario of rural marketing in India.
 To study the future prospects of rural markets and their scope for the Pepsi and Indian
companies, in India.
 To study the challenges faced by rural marketers in India.
 To study the reasons of popularity of rural markets in India.
 To measure the success of rural marketing campaign of Pepsi in Terms of consumer
appreciation.

25
 COMPNAY PROFILE
PEPSI COMPANY MISSION STATEMENT:
Pepsi Company’s over all missions is to increase the value of their share holder’s
investment. they believe that their commercial success depends up on offering quality
and value to their consumers and providing products that are safe, whole some and
economically efficient and environmentally sound. Providing a fair return to their
investors, while adhering to the highest standards of integrity.

HISTORY OF PEPSI COMPANY:

Pepsi Co Inc. was founded by Donald M. Kendall, President and chief executive officer
of Pepsi –Cola and Herman W. Lay, Chairman& Chief executive of FRITO-LAY through
the merger of two companies in the year 1965.

MAJOR PRODUCTS OF THE NEW COMPANIES ARE:

 Pepsi-Cola company Pepsi-Cola(formulate in 1898)

 Diet Pepsi(1964)

 Mountain Dew (introduced by T.P corporation 1984)

 Frito-Lay Inc brand chips Lays brand potato chips

 Cheetos brand chew flavoured snacks

 Ruffles brand potato chips & Rold Gold brand pretzels

Pepsi Company Inc. is among the most successful consumer products company in the
world with: 1998 revenues of over $22 billion &1, 51,000 employees. Pepsi company’s
brand names are among the best known & most respected in the world .Some of the
Pepsi Company’s brand names are 100 years old. FRITO-LAY Company is the world’s
largest manufacturer and distributor of snack chip and Tropicana products Inc. is the
world’s largest marketer and producer of branded juices.

26
Pepsi Company’s success is the result of
 Superior Products.

 High Stands of Performances

 Distinctive Competitive strategies.

 High integrity of its work force

PEPSI-COLA COMPANY:
Calets Bradham, New Beru and Mc.Druggist who first formulated Pepsi coal founded
Pepsi Company’s beverage business at the turn of the century. Brand Pepsi and other
Pepsi-cola products including Diet Pepsi one, Mountain Dew, Slice and mug brands
account for nearly 1/3 rd of the total soft drink in United States. Outside U.S Pepsi
Cola Company’s soft operations include the business of 7up international. Pepsi-cola
beverages are available in about 170 countries.
Key Pepsi-cola international market includes Argentina, Brazil, china, India, Mexico,
Philippines, Saudi Arabia, Spain, Thailand, and the United Kingdom.
Pepsi-cola provides advertising, marketing sales and promotion support to the Pepsi-
cola bottles. New advertising and existing promotions keep Pepsi-cola young. The
company manufacture and sales of the soft drinks are concentrated to the Pepsi-cola
bottles.
 In 1996, Pepsi entered Japan and Eastern Europe.

 In 1967, PepsiCo. Stock splits two-for one.

In 1986, North America van lines (NAVL), a premier transportation company Pepsi co,
and renamed a strong contribution to the Pepsi unit it has divided in 1984.

In 1969 in bold modern Pepsi cola packing which was using red, white and blue were
introduced. FRITO-LAY introduced fungus brand onion flavoured snacks. In 1970
Pepsi introduces the industry’s first two litter bottles. Pepsi is the first company to
respond to consumer preference with light weight, recyclable, plastic bottles.

27
In 1971 Andral E. Pearson was appointed as president of PepsiCo, a position he held
until his retirement in 1984.in 1972 don Kendall announced agreement making Pepsi
cola the first foreign product sold in U.S.S.R. Pepsi co is given exclusive rights to
import Stolichnaya Russian vodka in the U.S.
In 1973 and 1974 Pepsi-cola became the first American consumer product to produce
made and sold in former Soviet Union.
In 1975 Pepsi Lite, with destructive lemon taste, is introduced as an alternative to
traditional diet colas. In 1976 PepsiCo adopts code of worldwide business conduct.
Pepsi-cola became the single largest selling soft drink brands sold in U.S super
markets. In 1977 PepsiCo shares spilt up three for one. In 1987 and 1979 the opening
of PepsiCo research and technological center in Vallah N.Y PepsiCo reached 85 billion
marks in sales. Pepsi was formed to focus on the overseas development of
restaurants. In 1981 PepsiCo fitness center was completed, making PepsiCo, one of
the most advanced companies in the area of employee’s health and fitness.
In 1982 Pepsi free and diet Pepsi free, the first major brands caffeine free colas were
introduced.

Inauguration of the first Pepsi cola operations in china:

In 1983 The Bottler Hall of Fame was established to recognize the achievement and
dedication of international bottlers. In 1984 diet Pepsi is reformulated with 100%
neutral sweet, slice and diet slice. The first major soft drinks sirucsare added in
Mexico. The cola were takes “one giant spilt for mankind” when a Pepsi “space can” is
successfully tested a brand the span shuttle. 1986 Pepsi company board of directors
visit the peoples public of china to make the opening the Pepsi second plant in china.
In 1989, Pepsi Company introduce share power stock option program for all
employees becoming the first large corporation tool award stock options through
virtually all full time employees. In the 1900, Pepsi company was recognized as one of
the most admired corporation by the fortune magazine’s top 10 for the two successive
years. Pepsi signs the largest commercial trade agreement in history with the Soviet
Union expecting sales in the USSR to double by the end of the century. Pepsi re-
entered the Indian market in collaboration with Punjab Agro industries Corporation
(PAIC). In 1991 Pepsi company named one of the fortune magazine’s top most
admired corporations, for the third year in also. Pepsi co. purchased an equity position
28
in the carts of Coloreds Inc. the leading manufacturer and marketer of mobile
merchandising equipment. It was sold in 1955. 1993 Pepsi Cola began the distribution
of Lipton’s line of ready to drinks teas nationwide. in 1996 Pepsi started its website
WWW.Pepsi.com

SOCIAL RESPONSIBILITY OF PEPSICOLA COMPANY:

As a consumer products company, Pepsi Company does not have the major
environmental problems of heavy industry. Their biggest environment challenge is
packaging generated by their products. Packaging is important to public and a critical
component of the distribution system is to deliver products to consumers and
commercial establishment. To meet both consumer demand and safe guard the
environment, they recycle, re-use and reduce packaging wherever possible. Each
business is also committed to responsible use of resources required in manufacturing
their products.
LOGOS OF THE COMPANY

2.4 ABOUT PEPSI INDIA COMPANY

Often new flavours are to be added to the product line of cool drinks to prevent a
competitor. To establish a relation with retailers it is desirable to sell more than one
flavor of cool drinks. To decrease the security seasonal products are added to the
resources available so as to lessen its risks. Pepsi has given the franchise of
Visakhapatnam region to Pearl Beverages which belongs to Pearl Group with Head
quarters at Delhi and Mr. C.K. Jaipuria as the chairman and the Managing Director of

29
the group. Pepsi Foods Ltd., declared Krishna Mohan Beverages and Constructions
as franchise, in 1992.Last year it was changed to Pearl Beverages was taken by the
Pearl Group. Campa-cola Soft Drinks has originally owned the premises since 1980 at
Madhurawada. After the insolvency of campa-cola, KMBC purchased the premises
in1990 in the auction by APSFC. Initially, it used to produce Mc.Dowell’s soda and
Bagpiper soda. It produced these drinks under franchise agreements but company
could not exist in the market due to stiff competition from pearl products.
PepsiCo’s mission is to be the world's premier consumer Products Company focused
on convenient foods and beverages. We seek to produce healthy financial rewards to
investors as we provide opportunities for growth and enrichment to our employees, our
business partners and the communities in which we operate. In everything we do, we
strive to act with honesty, fairness and integrity and to obey the laws and regulations of
the countries where we do business. This Code of Conduct applies to PepsiCo, its
subsidiaries throughout the world, joint ventures over which PepsiCo has management
control and to every employee of these companies.

RESPECT FOR OUR EMPLOYEES

We believe our most important strength is our employees. We seek to provide a work
environment where all employees have the opportunity to reach their full potential and
contribute to PepsiCo's success. We emphasize personal integrity and believe long-
term results are the best measure of an employee’s performance. PepsiCo respects
the human rights and the dignity of all employees. We endeavor to treat our
employees fairly and honestly. We strive to maintain a safe, secure and healthy
workplace and it is against our policy to use forced or child labor. We also strive to
follow all applicable employment laws and regulations. We are committed to equal
opportunity in all aspects of employment for employees and applicants. This means
providing a workplace free from any form of discrimination or harassment, including
sexual harassment. We seek to create a work environment where people feel
comfortable and respected, regardless of individual differences, talents or personal
characteristics. Our objective is for the diversity of our employees to reflect the
diversity of the population wherever we operate and for the performance of all
30
employees to be judged fairly and based on their contribution to our results. PepsiCo
encourages an inclusive culture, which enables all employees to do their best. This
means we:

 Welcome and embrace the strengths of our differences,

 Treat each other with respect and fairness, and

 Foster an atmosphere of trust, open communications and candor.

We recognize the needs of individuals to achieve professional and personal balance in

their lives. We also respect employee privacy and will acquire and retain only that
employee personal information that is required for operation of the Company’s
business or required by law.

CONSUMERS, CUSTOMERS, SUPPLIERS AND COMPETITORS

We are committed to the continuation of free enterprise and the legal and regulatory
frameworks that support it. Therefore, we recognize the importance of laws that
prohibit restraints of trade, predatory economic activities and unfair, deceptive or
unethical business practices. In all of our business dealings with consumers,
customers, suppliers and competitors, we will:
• Avoid any unfair or deceptive practice and always present our services and products
in an honest and forthright manner.
 Treat all customers and suppliers honestly, fairly and objectively

 Select suppliers based on merit, and make clear to all suppliers that we
expect them to compete fairly and vigorously for our business.

 Compete vigorously and with integrity.

 Never comment on a competitor’s product without a good basis for such

statements.

31
  Comply with all competition laws, including those prohibiting agreements or
understandings with competitors to fix prices or other sales terms, coordinate
bids or divide sales territories, customers or product lines. These types of
agreements with competitors are generally illegal in the United States and
many other markets where we conduct business.

GLOBAL RELATIONS

PepsiCo firmly believes that international commerce strengthens stability and peace
by fostering economic growth, opportunity and mutual understanding. As a global
enterprise, we recognize our responsibility to act in concert with the legitimate interests
of the countries in which we do business. We will obey all applicable laws and
regulations of our host countries. Our objective is to be a good corporate citizen
wherever we operate.

BUSINESS GIFTS AND ENTERTAINMENT

Our business decisions are made on merit. Therefore, we will never give or offer,
directly or indirectly, anything of value to a third party, including a government official,
political party or candidate, to corruptly influence that person’s business decision or
gain an unfair advantage. We will observe PepsiCo’s International Anti-Bribery Policy
at all times.
Giving gifts or entertainment to governmental officials is highly regulated and often
prohibited. Such gifts and entertainment should not be provided unless you have
received Law Department approval. Gifts or entertainment given to or received from
customers or suppliers must never influence, or appear to influence, business
decisions. There must be a legitimate business purpose for any business gift or
entertainment, it must be in good taste and it must be consistent with the law, with the
giver’s and receiver’s policies, PepsiCo’s policies and your function/division policies
(including the Travel and Entertainment Policy). If business gifts are permitted under

32
your function/division policies, they must be nominal in value and frequency. Customer
and supplier meals and entertainment must be reasonable in cost and frequency and
consistent with guidelines established by PepsiCo or your function/division.

HEALTH AND SAFETY

PepsiCo is committed to providing safe and healthy work environments at its facilities
for all its employees, visitors, contractors and vendors. It is our policy to provide
employees with a drug-free workplace. In order to create an environment free from
threats, violence and intimidation, we are committed to a policy of zero tolerance for
violence. We are dedicated to designing, constructing, maintaining and operating
facilities that protect our people and physical resources. It is our policy to comply with
all applicable health and safety laws and regulations, provide and require the use of
adequate protective equipment and measures, and insist that all work be done in a
safe and responsible manner. It is the responsibility of each employee to follow all
Company policies and procedures related to workplace health and safety.

ENVIRONMENT

PepsiCo is committed to being an environmentally responsible corporate citizen. We

are committed to minimizing the impact of our businesses on the environment with
methods that are socially responsible, scientifically based and economically sound.
We encourage conservation; recycling and energy use programs that promote clean
air and water reduce landfill wastes and replenish the planet’s natural resources. We
will follow applicable environmental laws and regulations in the countries where we
operate.

33
POLITICAL AND COMMUNITY ACTIVITIES AND CONTRIBUTIONS

PepsiCo believes in contributing to society and encourages employees to participate in

community activities. We will continue to communicate information and opinions on
issues of public concern that may affect
PepsiCo. Decisions by our employees whether or not to contribute time, money or
resources of their own to any political or community activity are entirely personal and
voluntary. We will obey all laws in promoting the Company’s position to government
authorities and in making political contributions. Contributions by the Company to
political candidates may be prohibited or regulated. Any such contribution requires the
approval of PepsiCo’s Vice President of Public Policy and Government Affairs.

CONFLICTS OF INTEREST

PepsiCo’s conflicts of interest policy is straightforward: Don’t compete with PepsiCo

businesses, and never let your business dealings on behalf of any of our businesses
be influenced, or appear to be influenced, by personal or family interests. All actual or
apparent conflicts of interest between personal and professional relationships must be
handled honestly and ethically. You must disclose any potential conflict of interest to
your
Supervisor as soon as you become aware of it. Examples of conflicts that must be
disclosed and resolved include:
 Receiving any financial or personal benefit either yourself or through a family
member from a company that does or seeks to do business with PepsiCo.

 Having more than a nominal equity interest in a competitor or in a company

that does or seeks to do business with PepsiCo (for example, ownership of
more than 1% of a supplier’s stock).

 Serving on the board of directors or providing consulting services to a

company that does or seeks to do business with PepsiCo.

34
  Owning property (such as real estate or patent rights) that PepsiCo may be
interested in acquiring or leasing.

 Having outside business interests that could affect your job performance
because of the amount of time and attention diverted from your responsibilities
to PepsiCo.

CONFIDENTIAL INFORMATION AND INSIDER TRADING

While engaged in PepsiCo business, you may receive or learn of confidential,

competitively sensitive or proprietary information that has not been disclosed to the
public. Confidential or proprietary information includes all nonpublic information that, if
disclosed, might be of use to competitors or might be harmful to PepsiCo, our
suppliers or our customers. You always have a duty to protect the confidential
information of PepsiCo and our business partners. You may not disclose confidential
information to anyone outside PepsiCo, even to members of your own family, unless
there is a clear business need to do so, the party receiving the information has signed
a confidentiality agreement committing to maintain the information’s confidentiality and
you believe that the disclosure will not harm or embarrass PepsiCo or its business
partners. PepsiCo obeys all laws with respect to the disclosure of material, non-public
information. Information is considered material if a reasonable investor would consider
it important to his or her decision to buy or sell PepsiCo stock. Examples of material
information include: a significant upward or downward revision of earnings forecasts; a
significant division restructuring; a major management change; a significant acquisition
or divestiture; a significant upcoming product launch or product innovation. Employees
should not trade in PepsiCo securities or the securities of another company involved
with PepsiCo while they have material, non-public information about PepsiCo or that
company. In addition, employees should not disclose material, non-public information
about PepsiCo or another company to anyone outside the Company, including family
members.
ACCOUNTS AND RECORD-KEEPING

35
We will continue to observe the most stringent standards in the keeping of our financial
records and accounts. Our books and records must reflect all components of
transactions, as well as our own standard of insisting upon an honest and forthright
presentation of the facts. We will ensure that the disclosures we make in
reports and documents that we submit to the Securities and Exchange Commission
and in other public communications are full, fair, accurate, timely and understandable.
It is the responsibility of each employee to uphold these standards. Appropriate
records must be kept of all transactions and retained in accordance with PepsiCo’s
Records Management Policy and Records Retention Schedule. Employees are
expected to cooperate fully with our internal and external auditors. Information must
not be falsified or concealed under any circumstance, and an employee whose
activities cause false financial reporting will be subject to disciplinary action, including
termination.

PROTECTION AND PROPER USE OF COMPANY ASSETS

PepsiCo’s technological resources, including computers, voicemail, e-mail and Internet

access, are nto be used for proper purposes in a manner consistent with the Code and
all other Company policies, including those related to discrimination, harassment and
intellectual property. As with all PepsiCo assets, these resources are to be used for
business purposes. It is generally not PepsiCo’s intent to monitor Internet access or
messages on the voicemail and email systems. However, the Company reserves the
right to do so in appropriate circumstances, consistent with applicable laws and
regulations. If you have access to PepsiCo information precautions necessary to
prohibit unauthorized access to the system. You should safeguard your passwords or
other means of entry. Employees must not reproduce software assets licensed to
PepsiCo, use illegally obtained software or distribute the original software media or
unauthorized copies of software which the Company does not own or license.

36
REPORTING POTENTIAL VIOLATIONS OF THE CODE OF CONDUCT

PepsiCo expects its employees, contractors, agents, customers and suppliers to

promptly report any conduct or situation that she/he believes conflicts with this Code or
violates a local, state or federal law to their immediate supervisor, Human Resources
or through the PepsiCo Speak Up line at:

1-866-729-4888 (from the U.S., Canada, Puerto Rico and U.S. Virgin Islands)
For a list of phone numbers for all other countries, go to:
http://www.pepsico.com/PEP_Citizenship/CodeofConduct/SpeakUp/index.cfm
Reports can be made anonymously, and the Speak Up line is available toll-free 24
hours a day. PepsiCo is committed to reviewing any report made in good faith in a
prompt manner and taking remedial action when appropriate. Every affected employee
is required to fully cooperate with any inquiry that results from any reported conduct or
situation.
PepsiCo is also committed to protecting the rights of those individuals who report
these issues to PepsiCo. Any PepsiCo employee who is found to have engaged in
retaliation against any employee who has exercised his/her rights under this Code or
under applicable laws will be subject to appropriate remedial action. In addition, those
individuals who violate applicable law may also be subject to civil and criminal
penalties.

RESPONSIBILITY FOR COMPLIANCE

All employees are expected to display responsible and ethical behavior, to follow
consistently both the meaning and intent of this Code and to act with integrity on a
daily basis. Managers and leaders are expected to ensure that our business
processes and practices reinforce the Code, to serve as positive role models by
establishing and adhering to high ethical standards, and to create an ethical culture by
encouraging and rewarding actions that are consistent with the Code. This Code
37
cannot provide definitive answers to all questions. For that, we must rely on each
person's judgment and integrity. You are encouraged to seek guidance when a
situation may not be clear. Your supervisor, Human Resources manager or the
PepsiCo Law Department will respond to questions and issues of interpretation about
this Code. Waivers of this Code will be reviewed by the General Auditor and General
Counsel, and in certain circumstances by the Board of Directors, and if required, will
be appropriately disclosed.

Description and Launch of products

Brand name Flavour Date

Pepsi Cola April-1992

Mirinda Orange April-1992

7 Up Clear Lemon April-1992

Mirinda Lime Cloudy Lemon April-1992

Soda Soda April-1992

Pepsi Pepsi Dite 7 Up Mirinda(o) Mirinda(L) Slice Evervess

soda

Coca- Cock Dite Sprite Fanta Limca Maaza Kinleys

cola

Pepsi market share:

Pepsi : 47%
Coca-cola : 53%
Pepsi foods (Pvt.) Ltd.
Pepsi cola was in India from 1956 to 1961. it left this country, as its products were not
found acceptable to the Indian market. Pepsi foods Ltd. Joint venture between Pepsi
Co. international of US(which is holding 40% of the equity)and Tata concerns Voltas
and the Punjab Ago industries Corporation (each of which have as round 25% of the

38
equity),has 25%of its output reserved for beverages with a 50% export commitment
fo9r fruit and vegetable products. According to Pepsi officials the project guarantees
that for every American dollar the company takes out of India, it will bring five back.

They started concentrated factory in Punjab. This company named as Pepsi Foods
Ltd. Pepsi Co. international’s direct investments in India so far amounts to Rs.165
corer. Two thirds of this however has gone into food processing. Pepsi foods are
exporting fruits and vegetables to UK etc.
The Pepsi’s foods processing unit directly supervised 1,200 hectors under tomato
cultivation covering 183 villages and 319 farmers. The company’s technical inputs
enabled the farmer to achieve a yield of 35 to 50 tones a hector against the average of
was after discontinuing teems. KMBC Pvt. Ltd. Has was the bottle for five districts
Vizag, Vizianagaram, NEW DELHI, and East Godavari & West Godavari. It receives
the stock from Cuttack.

PRODUCT PROFILE

The Pepsi Co. is known for the development and introduction of world-class brands &
products. Their portfolio is organized into three core business, which consists of
snacks, Beverages and Restaurants. Pepsi products are constantly changing
themselves to develop new products. They encourage consumer to explore their wide
range of brands.
Main objectives:
The objectives of the company set out in memorandum of association and franchise
agreements are as follows:
 To manufacturing soft drinks by concentrating supplied by Pepsi Foods.

 To market and advertise within specified areas for Pepsi products.

 To sell soft drinks at fixed prices.

FINANCIAL STRUCTURE:
To start and operate business, any company has to invest its capital in fixed assets
and floating assets and also in meeting the daily requirements of the company.

39
However, depending on the nature of business and product being offered by the
company, the ratio of investment of capital in fixed and floating assets differ.
Working Capital:
It means capital required for daily management of the company eg. Wages, salaries,
canteen expenses and transportation expenses etc
Plant layout: the machine and equipment have been imported from Germany, which
are arranged in the plant according to the sequence of operation. All the operations
are carried on a continuous movement. The reasons for choosing the product layout
are:

1. There is continuous supply of material.

2. The brands are all standardized products.

3. The demand for the product brands is reasonable stable.

4. The volume of production is adequate for the reasonable utilization of

equipment.

Since the company follows continuous operation movement, the cost of material
handling goes low. The total floor space required by the machine is less than other
types of plant layouts.
Plant Capacity:
The company installed latest up to date automatic plant conforming to plant layout.
The installed production capacity is 400 bottles per minutes i.e. 24,000 bottles per day.
The plant also is having 100 bottles per 1-leter line. During off-season the plant runs
one shift. The company has to produce enough bottles of soft drinks at a speed to
keep in space with the disappearance of soft drinks form shelves of the retailer.
Production Schedule:
The production schedule is fixed by taking into consideration.
 The present or current market demand.

 The availability of empty bottles.

 The inventory position filled bottles of different flavors.

40
 The production schedule for each brand is fixed daily, filling the bottles of each
branded flavors. This has an advantage in manufacturing the branded product is one
at a time.

Quality control
Pearl Beverages Pvt. Ltd. takes great care to maintain the quality control of the
products in their factory. The Bottles are visually examined for impurities continuously,
as the bottles move out. Samples are checked every ten minutes of production time by
the chemist for its quality and hygiene condition. The chemical analysis is also made
for flavors, gas content and sugar percentages. The appearance, smell and taste of
the products are also checked. If any defects are noticed, the production is suspended
and the correcting measures are taken so as to set right the bottling process
irregularities. Further, samples from each batch are dispatched to the affiliated parent
agency company in each week for quality checkup. Moreover, agency of the company
also lifts sample form the market at the random for quality checkup at any time to
make sure that the quality is maintained to the exact standard of the parent company.
At the end of the production schedule, daily all the equipment floor and wet patches
are cleaned with bleaching powder or some other solution. The standards of hygiene
maintained inside the production shops are commendable.
Organization Structure and management:
The word organization has two common meanings. The meaning signifies an
institution or function as group and the second meaning refers to the process of
organizing the way of work which is arranged and allocated among members often
organization so that the goal of the organization can be achieved efficiently. The
organizing involves balancing the companies. Needs both for stability on one hand and
change on the other hand, an organization structure means adopting a change or it
can be a source of resistance to change.
There are mainly five elements of organization structure.
 Specialization of activities.

 Standardization of activities.

 Coordination of activities.

41
  Centralization and decentralization of deviation making.

 Size of the work unit.

The M.D, Mr. Ruchirans Jaipuria is athe head of the organization and administration.
The company is managed by able director, and is assisted by a team of well-qualified
& experience senior management personnel

LITERATURE RIVIEW

4 A’s approach of Indian Rural Market

The rural market may be appealing but it is not without its problems: Low per capita
disposable incomes that is half the urban disposable income; large number of daily
wage earners, acute dependence on the vagaries of the monsoon; seasonal
consumption linked to harvests and festivals and special occasions; poor roads; power
problems; and inaccessibility to conventional advertising media.

However, the rural consumer is not unlike his urban counterpart in many ways.

The more daring MNC’s are meeting the consequent challenges of availability,
affordability, acceptability and awareness (the so-called 4 A’s)

» Availability

The first challenge is to ensure availability of the product or service. India's 627,000
villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas,
finding them is not easy. However, given the poor state of roads, it is an even greater
challenge to regularly reach products to the far-flung villages. Any serious marketer
must strive to reach at least 13,113 villages with a population of more than 5,000.
Marketers must trade off the distribution cost with incremental market saturation. Over
the years, India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a

42
strong distribution system which helps its brands reach the interiors of the rural
market.

To service remote village, stockiest use autorickshaws, bullock-carts and even boats in
the backwaters of Kerala. Coca-Cola, which considers rural India as a future growth
driver, has evolved a hub and spoke distribution model to reach the villages. To ensure
full loads, the company depot supplies, twice a week, large distributors which who act
as hubs. These distributors appoint and supply, once a week, smaller distributors in
adjoining areas. LG Electronics defines all cities and towns other than the seven
metros cities as rural and semi-urban market. To tap these unexplored country
markets, LG has set up 45 area offices and 59 rural/remote area offices.

» Affordability

The second challenge is to ensure affordability of the product or service. With low
disposable incomes, products need to be affordable to the rural consumer, most of
who are on daily wages. Some companies have addressed the affordability problem
by introducing small unit packs. Most of the shampoos are available in smaller packs.
Fair and lovely was launched in a smaller pack. Colgate toothpaste launched its
smaller packs to cater to the travelling segment and the rural consumers.Godrej
recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs,
priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh —
the so-called `Bimaru' States.

Hindustan Lever, among the first MNC’s to realize the potential of India's rural market,
has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm.
The move is mainly targeted at the rural market. Coca-Cola has addressed the
affordability issue by introducing the returnable 200-ml glass bottle priced at Rs 5. The
initiative has paid off: Eighty per cent of new drinkers now come from the rural
markets. Coca-Cola has also introduced Sunfill, a powdered soft-drink concentrate.
The instant and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm
priced at Rs 2 and multi serve sachet of 200 gm priced at Rs 15.

» Acceptability

43
The third challenge is to gain acceptability for the product or service. Therefore, there
is a need to offer products that suit the rural market. One company which has reaped
rich dividends by doing so is LG Electronics. In 1998, it developed a customized TV for
the rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets
in the very first year. Because of the lack of electricity and refrigerators in the rural
areas, Coca-Cola provides low-cost ice boxes — a tin box for new outlets and
thermocol box for seasonal outlets.

The insurance companies that have tailor-made products for the rural market have
performed well. HDFC Standard LIFE topped private insurers by selling policies worth
Rs 3.5 crores in total premium. The company tied up with non-governmental
organizations and offered reasonably-priced policies in the nature of group insurance
covers. With large parts of rural India inaccessible to conventional advertising media
— only 41 per cent rural households have access to TV — building awareness is
another challenge. Fortunately, however, the rural consumer has the same likes as the
urban consumer — movies and music — and for both the urban and rural consumer,
the family is the key unit of identity. However, the rural consumer expressions differ
from his urban counterpart. Outing for the former is confined to local fairs and festivals
and TV viewing is confined to the state-owned Doordarshan. Consumption of branded
products is treated as a special treat or luxury.

» Awareness

Brand awareness is another challenge. Fortunately, however, the rural consumer has
the same likes as the urban consumer — movies and music — and for both the urban
and rural consumer, the family is the key unit of identity. However, the rural consumer
expressions differ from his urban counterpart. Outing for the former is confined to local
fairs and festivals and TV viewing is confined to the state-owned Doordarshan.
Consumption of branded products is treated as a special treat or indulgence.

Hindustan Lever relies heavily on its own company-organized media. These are
promotional events organized by stockiest. Godrej Consumer Products, which is trying
to push its soap brands into the interior areas, uses radio to reach the local people in
their language.

44
Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per cent of rural
households. It doubled it’s spend on advertising on Doordarshan, which alone reached
41 per cent of rural households. It has also used banners, posters and tapped all the
local forms of entertainment. Since price is a key issue in the rural areas, Coca-Cola
advertising stressed its `magical' price point of Rs 5 per bottle in all media. LG
Electronics uses vans and road shows to reach rural customers. The company uses
local language advertising. Philips India uses wall writing and radio advertising to drive
its growth in rural areas.

The key dilemma for MNC’s ready to tap the large and fast-growing rural market is
whether they can do so without hurting the company's profit margins.

Evolving a New Marketing Mix for Selling to

Rural Indians
12.2% of the world lives in Rural India. Put in a different context, this works out to 1 in 8 people
on Earth. Being able to successfully tap this growing market is every marketer’s dream.
However, myths abound. India’s rural markets are often misunderstood. A clear distinction
needs to be made with regard to the reality versus the image of rural India. If such a distinction
is not made, we will be unable to distinguish between the serpent and the rope and the rope
and the serpent.

The rural market is not homogeneous. Though the aggregate size is very large, individual
subsets of this market tend to be rather small and disparate. Geographical, demographical,
statistical, logistical differences are very apparent. Positioning and realities regarding the
potential of each of these market segments differ and lie at the very core of forming the
strategy for the rural markets.

The face of Indian agriculture is changing from dry land and irrigated agriculture into high-tech
and low-tech agriculture. Farmers in states like Maharashtra and Andhra Pradesh have reaped
the benefits of adopting new age farming practices, including green house cultivation, fert-
irrigation and hydroponics. This has radically changed the economics of farming, with the
investment in these systems lowering the cost of cultivation, increasing yields due to
integrated crop management practices and reducing the dependence on rainfall. As a result,

45
disposable income has grown sharply. The aspirants are becoming climbers showing a
sustained economic upturn as purchasing power is increasing in the rural markets. The
proportion of very rich has increased five- fold. The growing incomes have modified demand
patterns and buyer behaviour. Moreover, the need for a product or service is now adequately
backed up with the capacity, ability and willingness to pay.

However, the market still remains largely unexploited. At most times, potential markets need to
be found and at times, even created. Such creation of demand needs efficient management of
the
supply chain. To increase market share, behavioural change needs to be at the forefront of
any
strategy. Further, due to the diversity of this market, marketers need to think, plan and act
locally.

It is therefore essential to develop an accurate Marketing Mix for selling to rural Indians.

Product
The Rural market is not a homogenous set of customers with preferences frozen in time.
When developing products in any category, marketers must identify the typical rural specific
needs. Urban products cannot be dumped onto rural markets without modifications. Tailor-
made products are better received by the rural audience as the consumers feel empowered
and tend to dentify with the offering.

Pricing
Every marketer must realize that the rural consumer is not a miser. He is not simply
looking for the cheapest product in every category. He understands and demands
value for money in every purchase that he makes. Pricing therefore is a direct function
of factors including cost-benefit advantage and opportunity cost. Pricing offered to
consumers should be for value offerings that are affordable. Price sensitivity is
extremely high and comparison with competitive prices is common. Consumers seem
to create narrow psychological price bands in their minds for product groups and price

46
elasticity beyond the extreme price points is very high. The perceived utility or value of
the product or service is the ultimate decision making factor.

Promotions & Advertising

There are a lot of barriers that militate against homogenous media and message delivery.
These barriers stem from the fact that rural markets vary immensely in terms of tastes, habits
and preferences leading to different expectations of every segment of the population.
However, one fact is certain across all areas. The rural consumer likes to touch and feel a
product before making a choice. Demonstrations are undoubtedly the most effective
promotional tool that shapes purchase decisions of the rural population. Demonstrations
establish the credentials of any new technology used in developing the product.

There are other attributes in the promotion strategy 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: 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 awareness is created among them about the product,
its features, uses and benefits. This can be achieved only by personal selling by highly
motivated sales person. In fact the word of mouth information holds lot validity in rural
areas even today. This is the reason why opinion leaders and word of mouth are
thriving among rural consumers. An opinion leader in rural areas 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. Tractor owners (tonee) conducted

47
by MRF Limited is one such example. Brooks Bond carries out marches in rural areas
with band, music and caparisoned elephants to promote their brand of tea.

Mandi and Mela magic

At last count, India witnessed over 50,000 melas. Of these 25,000 meals are held to signify
religious, cultural festivals as well as local fairs and events. On an average, visitors at these
melas spend between Rs. 5,000 to Rs. 50,000 a day. For example, 3 lakh people visited the
annual mela at Navchadi which lasts for 7 days in Meerut. The largest such mela is the Maha
Kumbh Mela which is visited by an average of 12 crore people.

Place
place is the major reason behind the evolution of rural marketing as a distinct discipline. A
village as a place for promotion, distribution & consumption is very different from a town or city,
thus the general marketing theories can’t be applied directly in rural markets.
Reaching the right place is the toughest part in today’s rural marketing, as most of the
products reach up to the nearest townships of any village, but due to higher distribution costs,
these products fails to reach the village as the distribution channel fails to put in the required
efforts. Most of the times, the rural retailers themselves go to the urban areas to procure these
goods. Rural markets imply complex logistical challenges that show up as high distribution
costs.

Significance of Distribution
No matter how well devised a company’s product, pricing or promotion strategy, the most
crucial link in ensuring the success of rural marketing efforts is distribution. Distribution must
be strengthened and this would raise investment cost barriers for new entrants.

In Rural India, the selection and use of distribution channels is a nightmare. The reason for
this is very clear when we consider that on an average, Urban and Rural India both have
approximately 3 million retail outlets. However, Urban India has only 4,000 towns where these
outlets are located. On the other hand, Rural India’s 3 million outlets are located in 6.3 lakh
villages. Thus, marketers are faced with the problem of feeding 3 million shops located in
vastly diverse areas each of which records an average sale of only Rs.5,000 per outlet.
Further compounding this problem is the fact that even this meagre sale is mostly on credit.
The diversity in the distribution of shops is the self-limiting factor in terms of servicing the rural
distribution network.

48
The distribution of outlets however shows that a marketer need not be present in all markets at
all times. Being present in 6 lakh villages is virtually impossible for an organization of any size.
Rural wealth and demand is concentrated typically at satellite towns, district headquarters,
assembly markets and such central locations. Rural distribution has a rigid hierarchy of
markets that make channel decisions relatively structured.

49
It is essential for rural marketing companies to understand this hierarchy. Rural folk are
habituated to travelling once a week for their weekly purchases to a satellite town. They do not
expect such items to be present in every village. For durables where the outlay involved is
typically large, the purchase would be made in an assembly market for reasons of choice and
availability of adequate cash flow. This is due to the fact that it is at assembly markets that
auction yards are present where the farmers congregate to sell their output. After such sale of
produce, they are cash rich and can afford to make such purchases. It is therefore not
necessary for a marketer of TV sets to take their distribution channel all the way down to the
village shop. A TV will not be sold there as the cash flow does not exist at that point in the
hierarchy of markets. A television distributor must be present at assembly markets which are
much smaller in number, more controllable, easier to reach and service. Keeping the hierarchy
in mind will help decide the optimum level of penetration required to reach a critical mass of
rural consumers.

Haats

Haats are the nerve centre of Rural India. They are a readymade distribution network
embedded in the fabric of rural society for over 1000 years. They have been held on a regular
basis across the length and breadth of the country for over 1000 years. Right from the time of
Chandragupta Maurya, Haats are seen as a place for social, cultural and economic
interchange.

50
MARKRTING STRATEGIES TO CAPTURE RURAL INDIA

 SEGMENTATION OF RURAL MARKET

The first step is to develop & implement any strategy for the rural market should
include the appropriate segmentation of the rural market. The important thing is that
appropriate segmentation basis need to be applied. Different product categories have
different rural markets to cater to & these can be selected by applying different criteria
of segmentation. The organization can do the following thing to start with:
 Focus on select markets.
 Focus on select villages.

BY COMMUNICATING AND CHANGING QUALITY PERCEPTION

Companies are coming up with new technology and they are properly communicating
it to the customer. There is a trade of between Quality a customer perceives and a
company wants to communicate. Thus, this positioning of technology is very crucial.
The perception of the Indian about the desired product is changing. Now they know
the difference between the products and the utilities derived out of it. As a rural Indian
customer always wanted value for money with the changed perception, one can notice
difference in current market scenario.

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 or Gudakhu, 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

51
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 provides
frills free of cost they are happy with that. They are happy with such a high technology
that can fulfil 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-colour. Nokia has designed a new cellular phone 5110, with the
India tri-colour 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

52
ki Dua, 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 India India".
Similarly, Whirlpool has also launched a campaign during world cup.

BY TALKING ABOUT A NORMAL INDIAN

Companies are now talking about normal India. It is a normal tendency of an Indian to
try to associate him/her with the product. If he/she can visualize himself/herself with
the product, he /she become loyal to it. That is why companies like Daewoo based
their advertisements on a normal Indian family.

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 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.

53
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, and 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 electively for launch of Kadak Chap Tea in Etawah district. In between
such a show, the lights are switched of and a torch is flashed in the dark (EVEREADYs
tact).

BY ADOPTING LOCALISED WAY OF DISTRIBUTING

Proper distribution channels are recognized by companies. The distribution channel
could be 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, and
Nike started with exclusive stores but soon they realized that they do not enjoy much
Brand 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.

BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES

MNCs have realized that in India celebrities enjoyed a great popularity so they now
associate themselves with Indian celebrities. Recently Luxor Writing Instruments Ltd. a
JV of Gillette and Luxor has launched 500 "Gajgamini" ranges of Parker Sonnet
Hussain special edition fountain pens, priced at Rs. 5000. This pen is signed by Mr.
Makbul Fida Hussain a renowned painter who has created "Gajgamini" range of
paintings. Companies are promoting players like Bhaichung Bhutia, who is promoted
by Reebok, so that they can associate their name with players like him and get
popularity.

MELAS

54
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
display 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 colors. COKE, PEPSI and TATA traders advertise their products
through paintings.

Product Strategies
The specific strategies, which can be employed to develop or modify the products to targets
the rural market, can be classified as follows:

.1. Small unit packing: Given the low per capita income & purchasing habits of the
rural consumers, small unit packages stand a good chance of acceptance in rural
market. Single serve packets or sachets are enormously popular in India. They allow
consumers to buy only what they need, experiment with new products, & conserve
cash at the same time.

This method has been tested by products life shampoos, pickles, biscuits, Vicks cough
drops in single tablets, tooth paste, etc. Small packing’s stand a good chance of
acceptance in rural markets. The advantage is that the price is low and the rural
consumer can easily afford it.

Also the Red Label Rs. 3.00 pack has more sales as compared to the large pack. This
is because it is very affordable for the lower income group with the deepest market
reach making easy access to the end user satisfying him.

The small unit packing’s will definitely attract a large number of rural consumers.

55
2. New product designs: Keeping in view the rural life style the manufacturer and
the marketing men can think in terms of new product designs. The rural product usage
environment is tough because of rough handling, rough roads & frequent power
fluctuations. Thus, all these environmental factors must be considered while
developing the products meant for rural audience.

Nokia’s 1100 model is a very good example of a customized model for rural markets.
Its design has been modified to protect it against rough usage in rural environment; it
is dust resistant & has a small torch light in view of the frequent power cuts in rural
India. It is also introduces messaging in Hindi language now, in some of the
economically priced models in order to cater to the semi-urban or rural consumers.
This is in real terms, thinking global & acting local.

3. Sturdy products: Sturdiness of a product is an important factor for rural

consumers. The product should be sturdy enough to stand rough handling,
transportation & storage. The experience of torch light dry battery cell manufacturers
supports this because the rural consumers preferred dry battery cells which are
heavier than the lighter ones. For them, heavier weight meant that it has more over
and durability. Sturdiness of a product either or appearance is an important for the
rural consumers.

4. Utility oriented products: The rural consumers are more concerned with utility of
the product and its appearance Philips India Ltd. Developed and introduced a low cost
medium wave receiver named BAHADUR during the early seventies. Initially the sales
were good but declined subsequently.

On investigation it was found that the rural consumer bought radios not only for
information and news but also for entertainment.

5. Brand name: For identification, the rural consumers do give their own brand name
on the name of an item. The fertilizers companies normally use a logo on the fertilizer
bags though fertilizers have to be sold only on generic names. A brand name or a logo
is very important for a rural consumer for it can be easily remembered. Many a time’s
rural consumers ask for peeli tikki in case of conventional and detergent washing
soap.

56
Nirma made a peeli tikki especially for those peeli tikki users who might have
experienced better cleanliness with the yellow colored bar as compared to the blue
one although the actual difference is only of the color.

e.g.: Coca-Cola targeted the whole Indian rural market with the positioning of “Thanda
Matlab Coca-Cola” advertisements because most of the villagers say when wanting a
drink refer to it as Thanda…… so Coca-cola used that word.

Pricing strategies
1. Low cost/ cheap products: This follows from the product strategy. The price can
be kept low by low unit packaging’s like paisa pack of tea, shampoo sachets, vicks 5
grams tin, etc. this is a common strategy widely adopted by many manufacturing and
marketing concerns.

2. Refill packs / Reusable packaging: In urban areas most of the health drinks are
available. The containers can be put to multipurpose uses. Such measures can a
significant impact in the rural market.

For example, the rural people can efficiently reuse the plastic bottle of hair oil. Similarly
the packages of edible oil, tea, coffee, ghee etc can be reused. Pet jars free with the
Hasmukhrai and Co Tea, Ariel Super Compact.

3. Application of value engineering: in food industry, Soya protein is being used

instead of milk protein. Milk protein is expensive while Soya protein is cheaper, but the
nutrition content of both is the same. The basic aim is to reduce the value of the
product, so that a larger segment can afford it, thus, expanding the market.

4. Large volume-low margins (Rapid or slow penetration strategy): Marketers

have to focus on generating large volumes & not big profit margins on individual
products. If they price their product at a level which can lead to good volumes, then
they can still generate good returns on the capital employed.

5. Overall efficiency & passing on benefits to consumers: For rural products, the
strategy should be to cut down the production, distribution & advertising costs &
passing on these benefits to the customers to further increase the turnover. Most
57
often, it has been observed that advertising has less to do with product sales in the
rural areas. If an organization gets the price point right, then it can work in rural
market.

6. Low volume-low price strategy: This strategy of reducing prices by reducing the
package size in order to make it appear more affordable, is delivering very good
results for a large number of FMCG product categories, in the rural markets of India. In
categories where maintaining the price point is extremely critical, this strategy is
delivering very good results.

7. Ensuring price compliance: Rural retailers, most of the times, charges more than
the MRP. The manufacture has to ensure price compliance either through promotional
campaigns, as was done by Coca Cola, or by ensuring the availability of products at
the retail outlets directly.

Promotion strategies
Customized promotional media & messages need to be developed by the
organizations to effectively target the rural market. The following strategies can be
considered while developing promotional campaigns for the rural markets:
1. Think Global Act Local
Rural population is diverse, but the commonalities of their ethos & simple living
habits need to be understood for advertising to succeed. For that, the theme of
the advertisement needs to revolve among universal themes, such as family-
love. But the context, storyline, language & idioms should be such that the rural
audience of different rural market segments can relate to.
2. Think in Local Idiom
This is the need of the advertising professionals who can think like the rural
people. The only we can have insights like ‘Thanda matlab Coca Cola’. There
should be the use of language writers who understands the rural & regional
pulse better.
3. Simplicity & Clarity

58
 All promotional messages targeted at rural audience need to be simple & clear,
which can be easily understood, & they should not include any confusing
elements. It is preferable that it has only a few propositions at a time.
Bombarding rural consumers with too much, in less time can easily confuse
them & leave them bewildered. Promotional message should highlight only the
functional values of the product & explains how those values can make the
consumer’s life even better & solve any of his problems.
4. Narrative Story Style
The promotional message can be delivered in the form of an entertaining story
with a message depicting how the brand delivers “larger good” to the family &
society. The theme of the story line can be about how the product can solve the
problems of the rural consumers.
5. Choice of Brand Ambassador
Brand Ambassador for the rural markets need to be picked carefully as urban
successes might not get replicated in the rural markets. That is why Govinda in
the Mirinda as boosted the sales of the drink in the rural markets. An
organization might spend a lot of money in hiring a brand ambassador only to
find out later that it had little impact on the rural consumer.

DISTRIBUTION STRATEGY
Many companies view the rural markets as great opportunity for expanding their sales
but find distribution as a major problem. Unfortunately, it is almost impossible to
transplant strategies which work successfully in urban markets onto rural markets,
namely, extensive retailing and sustained pull generation through mass media
advertising.
The road blocks to reach the rural customers are:
 Lack of adequate transport facilities.
 Large distances between villages.
 Lack of pucca roads connecting villages to nearest townships.
 Lack of proper retail outlets
 Lack of mass media infrastructure.

59
The following distribution strategies formulated for the rural category.

1. Coverage of villages with 2000 and above population: Ideally, coverage of

villages with up to 2000 and above population could be the break-even point for a
distribution setup. By doing so the percentage of villages covered comes to only 10%
of all the villages, but the rural population covered will be substantial, to the extent of
about 40 to 45 percent. With a distribution network in about 55,000 villages, which
have a population of 2000 persons & above each, one can cover about 25 crores rural
consumers. This strategy is good to begin with & then subsequently, villages with
lesser populations can be added.

2. Segmentation: the number of villages in India is huge & it is not viable to contact &
serve all villages directly. Therefore, companies or distributors can carefully examine
the market potential of different villages & target the villages that can be served in a
financially viable manner through an organized distribution effort.

3. Use of co-operative societies: There are over 3 lacks co-operative societies

operating in rural areas for different purposes like marketing cooperatives, farmer’s
service cooperatives and other multipurpose cooperatives. These cooperatives 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 consumables items and low value durable items to the members to the
society for serving to the rural consumers. Many of the societies extend credit to the
members for purchases.

4. Utilization of public distributory system: The PDS in the country is fairly well
organized. The revamped PDS places more emphasis on reaching remote rural areas
like the hills and tribal’s. The purpose of PDS is to make available essential
commodities like food grains, sugar, kerosene, edible oils and others to the consumers
at a reasonable price. The shops that distribute these commodities are called fair price
shops. These shops are run by the state civil Supplies Corporation, co-operatives as
well as private entrepreneurs. Here again there is an arrangement for centralized
procurement and distribution. The manufacturing and marketing men should explore
effective utilization of PDS.

60
5. Utilization of multipurpose distribution centers by petroleum/oil companies:
In order to cater to the rural areas the petroleum/oil companies have evolved a
concept of multipurpose distribution centers in rural areas. In addition to petrol/diesel,
lubricants, these outlets also stock consumables agricultural inputs like fertilizers,
pesticides and seeds. It is estimated that there are about 450 such outlets in operation
in the country. The rural consumer who has tractors, oil-engine pump sets and mopeds
frequent these outlets for their requirement. These outlets can be profitably utilized for
selling consumables and durable items also.

6. Distribution up to feeder markets/mandi towns: Keeping in view the hierarchy

of markets for the rural consumers, the feeder markets and mandi towns offer
excellent scope for distribution. The rural customers visit these towns at regular
intervals not only for selling the agricultural produce but also for purchasing cloth,
jewelry, hardware, radios, torch cells and other durables and consumer products. From
the feeder markets and mandi towns the stockiest or wholesaler can arrange for
distribution to the village shops in the interior places. This distribution can be done by
mopeds, cycles, bullock-carts, camelbacks etc. depending upon the township.

7. Shandies/Haaths/Jathras/Melas: These are places where the rural consumers

congregate as a rule. While shandies/heaths are held a particular day every week,
Jathras and melas are held once or twice a year for longer durations. They are
normally timed with religious festivals. Such places attract large number of itinerant
merchants. Only temporary shops come up selling goods of all kinds. It can be
beneficial for companies to organize sales of their product at such places. Promotion
can be taken, as there will be ready captive audience. For convincing the
manufacturing and marketing man with regard to the importance of these places from
rural marketing point of view a visit to such places is necessary. It is estimated that
over 5,000 fairs are held in the country and the estimated attendance is about 100
million rural consumers. Biggest fair ‘Pushkar Mela’ is estimated to attract over 10
million people. There are 50 such big rural fairs held in various parts of country, which
attract urbanite also like ‘Mankanavillaku’ in Malappara in Kerela, Kumbh Mela at
Hardwar in U.P. ‘Periya Kirthigai’ at Tiruparunkunaram in Tamil Nadu.

61
8. Agricultural Input Dealers: Fertilizers should be made available to the farmers
within the range of 4-5 km from their residence, as per the essential commodities act.
This is why there are about 2 lakh fertilizer dealers in the country, both in cooperative
& private sector. Example of Varana Nagar in Maharashtra proved an eye opener in
this regard where the sugar and milk co-operatives have totally changed the life style
of people. The supermarket in Varana Nagar caters exclusively to rural consumers.
Similarly a co-operative supermarket called ‘Chintamani’ in Coimbatore (T.N) arranges
free transit of rural consumers to the supermarket of their purchases.

9. Joint distribution by Non-competing Companies: As the cost of distributing the

products in the rural market through distribution vans can be unviable for a single
company, different non-competing companies can come together to jointly operate
distribution vans for the rural market. This will enable them to share the cost of
operating the van & on account of the sharing of the cost by four or five companies;
the entire operation can become financially viable for all the players.
10. Personal Selling Network: It is very successful distribution channel being
developed by companies like Pepsi. It adds a personal touch to the marketing, as the
salesmen are the resident of the village or community itself, making it easier to sell the
product & maximise sales for the company.

RESEARCH METHEDOLOGY
PROBLEM STATEMENT

This study will give the detailed insight of FMCG sector in India and how it has surmounted
the downturn faced in the past. How the companies like Pepsi has changed their marketing
strategies to overcome their shrinking profit margins and beat competition.

WHY THIS PROJECT CHOSEN (JUSTIFICATION OF TITLE)

62
The Indian FMCG sector is the fourth largest sector in the economy with a total market size in
excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well
established distribution network, intense competition between the organized and unorganized
segments and low operational cost. Availability of key raw materials, cheaper labour costs and
presence across the entire value chain gives India a competitive advantage. The FMCG market
is set to treble from US$ 11.6 billion in 2016 to US$ 33.4 billion in 2017. Penetration level as
well as per capita consumption in most product categories like jams, toothpaste, skin care, hair
wash etc in India is low indicating the untapped market potential. Burgeoning Indian
population, particularly the middle class and the rural segments, presents an opportunity to
makers of branded products to convert consumers to branded products.
The slow growth rate witnessed through the years 2000 to 2018 by the FMCG sector was
revived in FY’05, registering a growth rate of about 6%. The growth was mainly driven by
improved performance of personal care products such as shampoos, deodorant, hair dyes, soap,
toiletries, etc and penetration into the rural and semi-urban areas of India. Rural marketing has
become a critical factor in boosting bottom-lines..

CONTRIBUTION THAT PROJECT MAKE (SCOPE OF THE PROJECT)

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in
excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well
established distribution network, intense competition between the organized and unorganized
segments and low operational cost. Availability of key raw materials, cheaper labour costs and
presence across the entire value chain gives India a competitive advantage. The FMCG market
is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2017. Penetration level as
well as per capita consumption in most product categories like jams, toothpaste, skin care, hair
wash etc in India is low indicating the untapped market potential. Burgeoning Indian
population, particularly the middle class and the rural segments, presents an opportunity to
makers of branded products to convert consumers to branded products.
The slow growth rate witnessed through the years 2000 to 2018 by the FMCG sector was
revived in FY’08, registering a growth rate of about 6%. The growth was mainly driven by
improved performance of personal care products such as shampoos, deodorant, hair dyes, soap,
63
toiletries, etc and penetration into the rural and semi-urban areas of India. Rural marketing has
become a critical factor in boosting bottom-lines.

RESEARCH METHODOLOGY
Both primary and secondary analysis method will be used for data collection purpose. The
primary data which will be used:
 Questionnaires as it was easy to quantify and was cheaper and quicker
method for gathering data.

 In-depth interviews as it established good understanding of respondent’s

views.

 Secondary Research:

The secondary data for the project has been collected from various Internet sites, magazines,
books, journals etc.

DATA ANALYSIS AND INTERPRETATION

1. Preference given to different advertising mediums by clients in year 2010

64
Result: 44% customers preferred print media in year 2009 for advertisement purpose apart from
this the almost 65% of the Pepsi company spending huge money over the Advertisement in the
web , TV and electronically.

2. Revenue received in year 2010 through different Pepsi Company to the different
advertisement segment of the Media

65
Result: 51% of revenue is generated by the print media from the advertisement of the various
Pepsi company brand like Coca cola , Vatika i.e. Dabur which is still has unique brand
preference for the Print Media while after launching Radio FM service this industry earned
almost 13% of the revenue from the Pepsi company and the biggest contributor is the Coca
Cola.

3 . Do you find any seasonal variation promoting the Pepsi product through various
advertisement channel?

66
 1, 11%

NO

Yes

8, 89%

Result: 89% agencies have No Seasonal variation in terms of the capacity of the Pepsi
spending over the Advertisement where as 11% of the people suggested yes Pepsi business
almost non Seasonal but it make senses to say Advertisement industry has seasonal variance
from the Pepsi company for the advertisement.

67
4. Percentage break-up of receiving advertisements in different languages

Result: 70% advertisements are received in Hindi language it is know the fact is English
speaking people in India growing day and day out but the best medium through which Pepsi
promoting their product i.e. Hindi because they know it is one common language which atheist
understand by everybody in the India.

68
 5 From which sector do you receive more advertisement?

A. Pepsi
B. Service
C. Consumer Durable
D. Others

Advertisement Frequency
Pepsi 58%
Consumer Durable 12%
Service 19%
Others 11%

Advertisment Frequency

Others; 11%; 11.00%

Service; 19%; 19.00%

FMCG; 58%; 58.00%

Consumer Durabel; 12%; 12.00%

Result: As per out study suggested that the Pepsi contributing highest advertisement spend in
respect to other like Telecom, consumer Durable or the service sector as per our study
suggested that the Pepsi contributed 58% of the revenue in total advertisement Industries.

69
6. Data analysis of advertisement agencies’ clients Which media do you prefer while
advertising?

Result: 45% clients preferred print media for advertisement. Adding to this TV is gaining
equally important 26% of the Pepsi client looking for the TV advertisement while Radio is the
new medium of advertisement for the Pepsi sector which is looked by the 14%.

70
7. Which parameter do you prefer most while advertising?

Result: 47.7% clients considered coverage area of advertising medium as most important
parameter. Adding to this 40.09% of the people suggested that High quality of advertisement is
required because it reflects your quality standard and the different parameter to sustain the
growth of the company.

71
8. How much percentage of your revenue, you spend for advertisement?

Result: 38% clients spend 4-6% of their revenue for advertisement purpose which is about 100
to 115 Crore rupees invested by the Pepsi company for promoting there goods and services to
the consumer. Although this cost some time create problem to the company because they fear if
they reduce this cost might be the sales go down and the competitor will gain the market share.

72
9. How often do you give advertisement in one month?

Result: 48% clients give advertisement for 0-5 times in one month i.e. the changing the
Advertisement sequence although Pepsi company Airing almost every day 10-15 times there
advertisement in TV, Print Media, Internet so the can capture large number of the consumer.

73
10. Are you satisfied with the services of advertising agencies?

Result: Max. clients are satisfied with cost structure. As per our result suggested that 15.17% of
the client are highly satisfied with the Advertisement cost they incurred by the advertisement
agency knowing the fact Innovation and creativity is required lot of work.

RECOMMENDATION
Today the marketer truly understands the needs of the rural consumers, he should strive to
provide them with those products and services that would meet their requirements. The
marketer has to focus on his core competencies like the technological expertise to design the
products for the rural masses. Companies like Calvin Care who launched their shampoo in
sachets, Britannia who conveniently packaged its Tiger brand biscuits with low price tag are the
best examples of understanding the rural customer's needs and providing them with the desired
products.
The marketer's basic need is to understand the pulse of the rural masses and serve them
accordingly. The companies need to make proper assessment while marketing for the rural
India. This could most probably happen in one way by changing the profile of their managers.
As most of them are management graduates bred in urban areas and are taught marketing

74
principles and strategies applicable for the western countries, there is a mismatch in their
thinking and the requirements of the rural consumers. Hence, hiring professionals who have
expertise in rural marketing would go a long way to improve the situation as they can truly
understand the rural traditions and cultures, understand the feelings of rural people before
designing and actually launching the product. It is very essential for the rural marketer to
understand the psychology of their consumers in terms of their usage habits and shopping
behavior along with their emotions and value systems. The integration of both technological
and managerial knowledge would help them to develop the various marketing strategies for the
rural Indian markets. This will further lead to technologically superior, robust and low cost
products that would be in resemblance with the Indian tradition and culture.
The marketers may also consider depending more on traditional media when marketing for
rural consumers. This unconventional method acts as an effective way to create awareness as
mass media is unreliable as it is too glamorous and interpersonal for the rural market. Uses of
skits, magic shows, and education by NGOs are some of the most preferred traditional media
which the marketers can usually use as it goes well with the tastes of the rural consumers
According to our sample size 300 here are the question would gives the insight Study on
buying behaviour of rural consumer indicates that the rural retailers influences 35% of purchase
occasions. Therefore sheer product availability can affect decision of brand choice, volumes
and market share. Some of the FMCG giants like HLL took out project streamline to
significantly enhance the control on the rural supply chain through a network of rural sub-
stockists, who are based in the villages only.
Form our survey result it is showing that 31% of says that Vodafone connection or recharges
are easily available in their respective area and they are strongly agree with this.
Now the segment of people where they not strongly agree with the statement that Vodafone
product reached their respective area 27% respondent said yes some time they will get and
some time not also they suggested that some time new connection is not available. Also 34%
respondent responded that they either strongly disagree or disagree with the statement that
Pepsi not reached their respective area so far. Only 8% respondent says that they have neutral
opinion on this.
Recommendation for Pepsi would be company can target first 34% people those who are
disagree and not satisfied with the product availability of the Pepsi so at least Pepsi have more
than 60% market share of those people who at least knew the product is available near store so
they can easily bought them.
75
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.
The rural market is very large in compare to the urban market as well as it is more challenging
market. The consumer wants those products which are long lasting, good, easy to use and
cheaper. The income level of rural consumers is not as high as the income level of urban
consumers that’s why they want low price goods. It is one of the reasons that the sell of sachet
is much larger in the rural area in all segments.
It is necessary for all the major companies to provide those products which are easy to available
and affordable to the consumers. It is right that the profit margin is very low in the FMCG
products, but at the same time the market size is much large in the rural area. The companies
can reduce their prices by cutting the costs on the packaging because the rural consumers don’t
need attractive packaging. Application of 4A* is also a major task for the major companies in
this area.
Rural market has an untapped potential like rain but it is different from the urban market so it
requires the different marketing strategies and marketer has to meet the challenges to be
successful in rural market.

76
References
1. www.thehindubusinessline.com/nic/073/index.htm
2. www.coolavenues.com/know/mktg/
3. www.indianmba.com/Faculty_Column/FC658/fc658.html
4. business.mapsofindia.com/rural-economy/state-development/marketing.html
5. www.icmrindia.org/casestudies/catalogue/Marketing/MKTG081.htm

77