AMITY SCHOOL OF BUSINESS

DISSERTATION
Strategically Improving the Marketing of Cigarettes at GPIL in Rural Areas in
India

Submitted in Partial Fulfillment of the

Requirement for the award of degree
of
Bachelors in Business
Administration

SUBMITTED TO: SUBMITTED BY:

Mrs. Nidhi Gupta SAURAV LUTHRA
Sr. Lecturer BBA GENERAL
A3906408222

1
 DECLARATION

This is to certify that Saurav Luthra student of semester - VI OF BBA (General)

(2008 - 2011) at AMITY SCHOOL OF BUSINESS, AMITY UNIVERSITY has
successfully completed her Dissertation Project on “Strategically Improving the
Marketing of Cigarettes at GPIL in Rural Areas in India” in partial fulfillment of their
academic requirement of sixth semester.

(Project Guide) Head of the Department

Date: Place:

2
 ACKNOWLEDGEMENT

This research project is based entirely on personal finding and information, which was
gathered from all reliable sources. I have been careful to avoid anything, which in my
judgment could adversely affect GPIL.

It is not possible to thank personally all the people who have helped and assisted in
the accomplishment of this report. But I would like to take this opportunity to express
my profound gratitude and indebtedness to the following

I owe my profound respect to Ms. Nidhi Gupta, my dissertation guide, and express
my deep sense of gratitude and indebtedness for his inspirations, valuable and
scholarly guidance, imperative suggestions and personal attention at each stage of the
dissertation. His gamut of knowledge, dedication towards research, exemplary
devotion and trust towards me has been unique and is the prime key behind the
success of this dissertation. His personality has been instrumental in blending an
exciting spirit and atmosphere for research. It has been a great opportunity and
experience to work with him, as I will forever cherish the deep interaction I had.

I also acknowledge the support and guidance of GPIL for providing me with the
valuable information which was essential for the completion of this project.

Finally, I am most grateful to my parents for their moral support and blessings and for
being an immense source of inspiration for me all through my life.

( S
aurav Luthra)

3
 ABSTRACT

The project was undertaken for:

“Strategically improving the marketing of cigarettes at GPIL in rural areas

of India’’

Hypothesis: ‘‘Sales and distribution extension and creation of demand can

increase the demand of cigarettes in rural markets’’.

Although literature search was done so as to know the fact and figures of the rural
markets, the survey was also aimed at analyzing the consumer behavior of rural
people, media and media strategies used in rural areas (apart from promotional and
advertising strategies).

The literature survey guided me to develop my research plan i.e., how to go and
collect the primary data required to meet the objectives of the project and prepare a
feasible Marketing/Communication plan.

After the literature survey was completed I prepared a set of questionnaire which were
used for collecting primary data in rural areas and pilot tested them in nearby villages
and slums of Delhi, and modified them accordingly. This also gave me a feel of the
behavior of rural people.

I explored two RDP (Rural Development Program) markets and two non RDP
markets in completing the study. 15 villages were covered in each of these markets
for the collection of relevant data required for the study. Apart from the major data
collection instrument used (questionnaire), observation and other data collection
instrument were adopted to complete the study. This was done to make sure that no
required relevant data is missed out and the success of the project is maximized.

The hypothesis was proved after data analysis was over. After the analysis the results,
conclusion were drawn out, and then discussed with the company people and the
recommendations were suggested accordingly with the support of relevant data. On
the basis of data collected and recommendations suggested a
marketing/communication was chalked out.

4
 TABLE OF CONTENTS

Chapter 1: Introduction

Introduction
Background to the Dissertation
Research Benefit of the Project
Aims of the Dissertation
Structure of the Dissertation

Chapter 2: Profile of Indian Cigarette Market

Profile of organization GPIL

The Indian tobacco Industry
Indian Cigarette Industry Structure
Trends in the Industry
The Market
Cigarettes Types
Brand Classification
Companies and Brand in Non-Filter Segment
Punch line of Famous Brands

Chapter 3: Literature Survey and Review of Theory

Overview of Rural Marketing

Facts about the Rural Markets

Emerging Dimensions of Rural Markets

Location Pattern of Rural Consumers

Literacy level of the Rural Consumers

5
Rural Income Pattern

Consumer Expenditure in Rural Areas

Media and Media research in rural market

Significant changes in rural India

Problem areas in rural marketing

Components of rural marketing strategy

Consumer behaviour of rural people

Communication Process

Developing effective communication

Selecting the communication channel

Marketing Communication in Rural Markets

Challenges in communication with rural people

Strategies used in rural communication

Communication strategies used to reach rural people

Selective communication strategies

Ethical Considerations in marketing of Tobacco

Chapter 4: Methodology

Methodology

Hypothesis

Research Design

Data Collection

Sampling Plan and Sampling Error

Assumptions and Limitations of the Project

6
Chapter 5: Results with Analysis & Findings

District Saharanpur
Brief Market
Profile of Customer
Profile of Retailers

District Meerut
Brief Market
Profile of Customer
Profile of Retailers

District Hapur
Brief Market
Profile of Customer
Profile of Retailers

District Bijnor
Brief Market
Profile of Customer
Profile of Retailers

Findings and Observation

Uncommon Findings and Observations in the districts

Saharanpur

Meerut…

Hapur…

Bijnor…

Analysis of Finding and Observation

Chapter 6: Conclusion

7
Major Conclusion of Research

Chapter 7: Recommendations

Recommendations and Suggestion

Sales & Distribution Related

Public Related Recommendations

Marketing/Communication programme for Micro brands

Wider Implication of the Research

APPENDIX

Questionnaire -1

Questionnaire-2

Questionnaire-3

BIBLIOGRAPHY

8
 CHAPTER – 1

INTRODUCTION
This introductory chapter is brief of the Indian tobacco industry,
with the background to the project discussing about the relations of
the author with the company. And all this is followed with aims and
the structure of the dissertation.

Introduction

India is the third largest producer and as well as consumer of tobacco in the world.
According to Dr. C.P.Thakur (Union Minister for Health & Family Welfare, India,)
more than 410 thousand hectares of agriculture land is under tobacco cultivation. It is
estimated in India; about 1.2 million people are involved in tobacco cultivation and
farming and the Cigarette Industry provides employment to say about 0.5 million
peoples in India. Tobacco is used in various forms in India. It is smoked through
cigarettes, hukka, bidi and cigar. Chewing it in the form of Pan Masala is also very
popular in India, it has been estimated that 30% of tobacco consumption in India is in
this chewing form.

With unaffordable prices Indian cigarette industry faces a continuous volume decline,
with response to these challenges cigarette manufacturers have to look for the un-
tapped segments in the India, and the most promising segment that comes up to
subsidise all the downfalls faced up by the industry is the ‘Rural Sector’ of India.
Targeting at this sector can make the industry to come out from its falling market
share. There are 200 million tobacco consumers in India, of which only 25 million
smoke cigarettes. So there is a huge customer base that can be targeted by the
cigarette companies to come up with its downfall.

In this turbulent environment characterized with steep duty hikes and regulatory
government policies, cigarette companies are adopting strategies for improving their
market share and profitability. And the strategies are like adopting cost cutting
measures, capitalizing on existing trademarks and strengthening their brand equity.

9
Background to the Dissertation

The empirical work carried out for this dissertation focuses on the buying and
consumption pattern of cigarettes and bidis in rural India. The major focus of the
project was of developing marketing strategies for Godfrey Philips (Cigarette
Company) in India. The assignment concentrates on formulating an approach to help
GPI increase its market share in the rural market of India.

The period of practical experience was approximately 15 days in the selected areas of
rural India. Here a series of one to one contacts was instigated and analyzed. The
study gave a clear picture about the culture, belief, buying behavior, consumption
pattern, social issues, habits with and the research hypothesis was correctly proven. A
lot of assistance was received from Mr. Rakesh Kumar (Brand Manager) of GPI, as an
Industry Guide, was of tremendous help for me in completing my research. Under his
guidance I also received an opportunity to meet and work with other employees of
GPI. My association with GPI was very valuable and helped me in analysis the
situation of rural consumer pattern and simple tools of theirs helped me achieve my
research objective.

The research was not only constricted to GPI, but efforts were made to reach most of
the merchandising outlets of GPI in the rural region. Prized information was received
from these outlets, which helped me reach to the finale of the report.

10
Research Benefits of the project

Now taking on the academic view, the gains that can be counted under the heading of
academic benefits can be stated by saying like; with this research undertaken I was
able to get along with the important factors in rural marketing such as word of mouth,
price sensitivity, easy accessibility and brand recall importance in the marketing
process. All these factors play a major role in selecting any communication
programme for rural people.

Aims of the dissertation

The ultimate aim for any cigarette-manufacturing firm is to ensure that their product
is available to the customer easily at any given time. To ensure this, an efficient sales
and distribution network must be developed. GPI, with a view to increase its market
base initiated a Rural Development Programme (RDP) in many rural markets.

The whole of this project is primarily centered at;

To prepare a Rural Marketing/Communication programme so as to;

1) Tap the immense potential for cigarette smokers in rural India

2) To Increase the demand for GPI cigarettes in rural markets by ;

♦ Sales and distribution extension.
♦ Creation of demand for GPI cigarettes.

And the other objectives for the project are such;

1) To analyze the buying behavior of rural consumers.

2) To examine the possible obstacles in the marketing of

cigarettes in the rural areas.
3) To measure the effects of media on the rural consumer and to

highlight the most popular means of advertising in rural areas of India.

11
 4) To analyze the brand awareness among the rural consumers of

India.

5) To analyze the behavior of retailers and distributors in the rural

areas.

6) To analyze the smoking pattern of rural consumers.

This project covers all the aspects of rural markets of India, i.e. their living habits,
media habits, consumer behavior, etc. This project also covers the channels used in
rural communication; the problems have been identified of the rural marketing in
India. This has been done so as to develop a feasible and easily implement able
marketing/communication plan for the company.

Structure of the dissertation

The dissertation includes seven chapters and is formulated in a way as follows;

The First Chapter of the dissertation presents a brief introduction about the tobacco
industry of India, which is followed by the objectives and background of the project.
And the relations between the author and the organization are also mentioned in this
introductory part.

Following this comes Chapter Two, which is a background part to the Indian
cigarette market. This chapter talks about the overall cigarette industry structure.

Now the Third Chapter comes up, which presents a theoretical perspective on the
rural India. The chapter looks at the research done on the rural India and presents the
detailed picture of rural India.

This is followed on with Chapter Four, in this the discussion is made about the
methods and the methodology adopted for carrying out the research and collection of
data from the various sources.

12
Now the succeeding Chapter Five comes up, which is focused on the analysis of the
finding and observation covering different aspects of the rural market.

With this comes Chapter Six, which is about making conclusion about the research
and the analysis done in the previous chapter.

Now the final part of the dissertation is Chapter Seven, this is about the course of
action that should be adopted for the better results. And this part recommends best
course of action.

Further this dissertation also includes Appendices, references, acknowledgement and

brief synopsis of the report. And all these are arranged as per the flow of the
dissertation.

13
 CHAPTER - 2

PROFILE OF INDIAN CIGARETTE MARKET

This Chapter is about the history of the Indian cigarette market. The
discussion goes on to give details of that market and the types and
brands of cigarettes competing in it. This chapter talks about the
trends in the market and shows a precise picture of brands within the
market of India.

14
Profile of the Indian Cigarette Market

This chapter describes the histories of companies in the Indian cigarette market. It
goes on to give details of the market and the types and brands of cigarettes competing
in it.

Profile of the organisation GPIL

Godfrey Philips was established in 1936 as a subsidiary of a UK based multinational,

as a trading company in imported cigarettes. Its factory was established in 1994. In
1968, Philips Morris, an American multinational took over Godfrey Philips, and as a
result Godfrey Philips India became a subsidiary of Philip Morris international. Philip
Morris being a professionally managed company brought about a number of changes
in area like Marketing, Operations, and Accounts etc., under Godfrey Philips, U.K,
the selling operations were conducted through D. Marco polo and Co. after the take-
over, the amalgamation of D. Marco polo and Co. with Godfrey Philips was initiated
and approved. RBI gave the scheme in 1973 with the condition that the foreign equity
holding in the merged company would be reduced to 49%, by issuing the fresh equity
shares to Indian residents only. During June-July 1979, Philip Morris further reduced
its share holding to a level not exceeding 40%. During this time, the house of Modis
came to be associated with managing Godfrey Philips.

Other than cigarettes, GPI operates in the area of tea, real estate and exports. Today
GPI has a turnover of over Rs. 1000 crores, sells over 13 billion cigarettes and has a
loyal franchise for its major brands of cigarettes, which are Four square, Red &White
and Cavanders.

GPI’s factories are located in Mumbai (Andheri) and Ghaziabad (Guldhar). The
cigarettes are also manufactured in Hyderabad in two units on a contractual

15
manufacturing basis. The corporate office of the company is in New Delhi and the
registered office is in Mumbai. The sales operations are carried out from branch sales
offices, which are located at Delhi, Mumbai, Hyderabad, Calcutta and Bangalore1.

The Indian Tobacco Industry

The Cigarette industry is a subset of the tobacco industry, which primarily comprises
of;

a) Cigarettes

b) Bidis

c) Chewing Tobacco Segment (Khaini & Zarda)

Bidis & Chewing tobacco are the major components and account for the bulk of
tobacco consumption in the country. Bidis individually account 53% of the tobacco
consumed (by weight) & chewing tobacco products comprise of 27 % of the total
consumption. Cigarettes comprise of 20% of the consumption. But on the other hand
cigarette industry in India accounts for 79% of the total revenue collected from all
tobacco products. The cigarette industry contribution to India Govt is maximum
following the Petroleum Industry.

This is in sharp contrast to the structure of the industry wherein cigarettes account for
around 90% of tobacco consumption.

Although no definite statistics are available but it is estimated that about 100 million
people smoke Bidis, 75 million chew Tobacco and only 20 million smoke cigarettes.

India is now going to take the initiative to properly manipulate its international export
potential as a study by N.C.A.E.R. shows that India is at third place among the
world’s tobacco producers and 8th among the tobacco exporters.

Indian Cigarette Industry structure

1
Source; http://www.godfreyphillips.com/aboutgpi_home.asp.

16
The Indian Cigarette industry is dominated by four major producers who through their
own facilities and contract manufacturers, control approximately 100% of the market
for cigarettes in India, with a minuscule share being contributed by various regional
manufacturers.

A publication of the National Institute of Primary Health Care published in 1998

showed that 60 per cent of males in India above the age of 15 years smoked tobacco
products and that tobacco consumption in India is increasing at the rate of
approximately 2 % per annum.

The cigarette market has changed significantly in India over the last 40 years. The
report of the Tobacco Excise Tariff Committee indicates that in 1951 cigarettes
constituted only 9.5% of the total tobacco consumption. The remainder was consumed
in the form of bidis, snuff and other forms of chewing tobacco. A December 2002
report of Tobacco Institute of India states that Indian tobacco consumption is 20% in
form of cigarettes, 50% in the form of bidis and the remainder is accounted for by
cigars, snuffs and other forms of tobacco usage.

17
Trends in the Industry

1) Slowing of growth rates – It has been reported that the cigarette industry is
globally growing at a rate of 2%.

2) Scramble for market share- This is reflected in the advertisement spending

of the 4 companies in the industry.

3) Presence of experienced buyers –Mostly repeat purchase takes place.

Table 2.1
Advertisement Spending as a % of Sales

Advertisement Increase over Advertisement

the previous
Company Rank Yr.ending Spending Spending/ sales
(in crores)
year (%)
(%)

ITC 2 03/2005 50 36.99 1.14

GPI 5 03/2005 38.42 35.82 4.83

VST 16 03/2005 18.51 22.45 3.07

GTC 33 03/2005 10.03 39.50 3.40

(Source; ‘The Tobacco Industry’, Adapted from Business World Magazine, April
21, 2005)

18
The Market

The market share of the four major tobacco companies as at July 7, 2005 is shown
below;

Table 2.2
Market Share of Cigarette Companies

(Source; http://www.equitymaster.com/detail.asp?date=7/7/2005&story=3)

There are very few players as there are certain limitations to enter the cigarette
industry. These are;

 Entry Barriers are major constraints.

 Massive investments are required in order to set up Marketing structure and

sales promotion, Moreover achieving sales and market share in cigarettes is a
slow and cumbersome process.

 Deep pocket for huge investment is a pre requisite for any new entrant.

19
Cigarette Types and Brands: An Overview

Classification of cigarettes in the basis of its length

Filter Cigarettes:

King Size : > = 84 mm

Longs : > = 74 mm

Regular Size Filter : > =69 mm

Non Filter Cigarettes:

Plains : > = 69 mm

Bingo : > = 59 mm

20
Brands Classification:

Table 2.3
Brands Classification

ITC GPI GTC

KSFT Indian Kings Four Square Kings ---

Classic --- ---

Gold Flake Kings --- ---

Wills Natural Lights --- ---

Longs Wills Filter --- ---

RSFT Gold Flake Premium Cavanders Magnum FT Chancellor FT

Capstan FT Red & White FT Panama FT

--- Four Square Special ---

--- Four Square Premium ---

Plains* --- Cavanders Gold Leaf Panama Virginia

--- Red & White Plains ---

Bingo* Capstan Std Red & White Super Panama Regular

Scissors Std Cavanders Magna ---

(Source; ‘The Tobacco Industry’, Adapted from Business World Magazine, April 21,
2005)

* Micro Brands- Mainly plains and bingo are used in Rural Areas.

21
Companies and Brands in Non-Filter segments/ micro brands

Table 2.4
Brands in non-Filter segment

Higher Lower

ITC Scissors Std. Hero

Capstan Std.

Berkley Std.

Bristol Std.

Red & White Super

GPI

Cavanders Gold Leaf Cavanders Magna

VST
(Vazir Sultan Tobacco) Charminar Gold Vijay

GTC Flair Panama Virginia

ATC Polo Amar

(Source; ‘The Tobacco Industry’, Adapted from Business World Magazine, April
21, 2005)

22
Punch line of the Famous Brands

Classic: Discover a passion

Gold Flake King: Quality that’s forever

Wills Navy Cut: Made for each other

Capstan Filter: John Har Dam.

Four Square Kings: Live life King size

Red & White Filter: Hum Red & White Pine Walon Ki
Baat Hi Kuch Aur Hai. (We Red &
White are different from others)

Cavanders: Bus Mein Aur Mera Cavanders.

(Me and My Cavanders)

Panama: Bus Mujhe to Panama Hi Chahiaye

(I want Panama only)

(Authors Formulation)

23
 CHAPTER - 3

LITERATURE REVIEW

This Chapter presents a theoretical perspective on the rural India.

The chapter looks at the research done on the rural India and
presents the detailed picture of rural India. This is followed on with
the ethical considerations in the marketing oftobacco

24
Literature survey and review of theory

Marketing : According to Kotler (1997, Pg 550) ‘‘A social and managerial process by
which individuals and groups obtain what they need and want through creating and
exchanging products and value with others’’.

Marketing may aptly be described as the process of defining, anticipating and creating
customer needs and organising all the resources of the company to satisfy them.

Overview of Rural Marketing

Rural Marketing: is marketing done in the rural areas (less developed areas, where
means of transport, communication, etc is a problem)

There have been two thoughts among the Indian marketers on rural marketing. The
first school believed that products and marketing techniques, which worked in metro
and urban areas, could be transplanted with little or no modifications to the rural India
(Saxena, 2000: 15). But the more sophisticated Indian marketers, quickly perceiving
certain very basic differences between town and country, inaugurated the second
school; the belief that the rural marketing required radically different skills and
techniques from its urban counterparts (Narayan, 2000: 7). As a result of the swing to
extremities which naturally attends such realisations, several new beliefs become
popular.

• The rural market offers a vast market for consumer goods.

• The distribution task involves covering several lakh villages

• Low priced products should be more successful in rural markets because of the
low per capita income in rural India.

25
 • Rural consumer forms one homogenous group with similar needs, values and
aspirations.

• Advertising should be simple and unsophisticated and in terms of media, use

local fairs, opinion leaders, etc., as opposed to press, film, and radio and such
other urban oriented media.

Underlying these beliefs has been the model of a rural consumer who is relatively
poor ad illiterate, whose only media exposure is the local opinion leader, who
remembers brands by picture symbols as opposed to brands names, and who is unable
to comprehend anything other than the most simple of commercial messages.

Facts about the Rural Markets.

A Hindi poet has rightly said, ‘Bharat Mata Gram Vasini’’, which means mother India
lives in her villages. Both literally and metaphorically it is true. According to 1991
census, India’s population was 850 million, of which 75 % lived in villages. This is
the average. There are states like Uttar Pradesh, Madhya Pradesh, Rajasthan, Kerela,
Bihar and Orissa, where the rural population varies from 80 – 905. The income of the
average villager is rising (according to NCAER survey, 2000). In fact, recession is a
condition only in urban India. Also, rural education level is rising particularly in the
states where genuine efforts have been made.

The rural market remains untapped because of three D’s: Distance, Diversity and
Dispersion.

26
 Reasons for Untapped
Rural Markets

Distance Diversity

Rural areas are scattered and it is next Different food habits, dressing styles,
to impossible to ensure the availability cultural attributes, Needs and
of a brand all over the country Attitudes.

Dispersion

Villages are few kilometers apart, distributed in

many regions, unavailability of fast medium of
transport & communication, consequently cost
benefit analysis is (-ve).

(Authors Formulation)
Figure 3.1

27
Emerging Dimensions of Rural Markets

Industrial consumers vary tremendously on their age, income, education level,

mobility pattern and taste. The size of the Indian consumer can be understood from
under mentioned (Patnik, 1998)
Table 3.1
Population of Indian: Rural- Urban 1971-1991

Increase over previous decade

in absolute numbers

1971 1981 1991 1981 1991

Rural population 43.90 50.20 60.21 +6.30 10.01

(in crores*)

Urban population 10.91 15.62 24.18 +4.71 8.56

(in crores*)

Total 54.81 65.82 84.39 +11.01 18.57

(Source: Rural development Statistics. Published by Govt of India in 1998.)

*Crore is equivalent of 10 million

The above table shows that more than 70% of the total population was rural according
to the 1991 census. At present the rural population is estimated to be over 75 crores.
The table shows that in absolute terms the total population of the country had gone up
sizeably from 54 crores to 84 crores, in rural –urban proportions remained more or
less same as in 1971-1981. During two decades the size of rural market had increased
from 44 crores to 60 crores. Apparently, therefore, in terms of the number of people,
the Indian rural market is almost twice as large as the entire market of the USA and
Russia (NCAER Survey, 2000).

28
Location Pattern of Rural Consumers

The 60 core rural India consumers are scattered unevenly. The nature of the spread is
as such
Table 3.2
Distribution of Rural Consumers

Size of village Number of villages Population in groups

(Based on population) in groups

Less than 200 150072 15246

200-499 168561 56628

500-999 132990 93412

1000-1999 87973 113162

2000-4999 36005 104547

5000-9999 4974 32717

10000 and above 1358 22334

Source; Rural Development Statistic, Published by Govt of India year 1998.

It can be seen from table 2.2, that only 6300 villages have a population of more than
5000 people each. More than three lakh villages or 55% of total are in class of 500
people or less and more than 1.5 lakh villages or 25 % of the total in the class of 200
or less.

It means, generally villages with a population of less than 2000 will have higher
components of lower income consumers. Such villages would primarily be the
markets for daily necessities like matches, cooking oil, salt etc.

29
Literacy level of the Rural Consumers

It is estimated that the rural India has a 27% literacy rate compared to 62.19% of the
whole country. The adult literacy programmes launched by the government in the
rural areas are bound to enhance the rural literacy rate to some extent in the years to
come. Literacy is one of the most important variables that determine the consumption
pattern and buying styles (Patnik, 1998).

Table 3.3
Age wise distribution of rural population

Age group in years Share of total 1971 Population in 1996

0-4 45.8 12.6

5-15 25.6 24.7

15-59 53.4 62.6

60 and above 5.2 9.2

Source: Indian-Basic Statistic, Published by Ministry of Govt of India, Information
and Broadcasting.

It can be seen in table 2.3, that by 1996 more than 60 % of the total rural population
constituted adults, and that only 10 % belonged to 60 years and above group. This
gives an idea of the emerging youth market in the rural market.

30
Rural Income Pattern

The source pattern of rural income is presented as;

Table 3.4
Source pattern of rural income

Source of income Proportion of total %

Agriculture 58.8

Agricultural wages 16.1

Business and crafts 8.8

Non-agricultural wages 7.2

Salaries 2.5

Current transfer 1.9

Others 4.7

Total 100
Source: Indian-Basic Statistic, Published by Ministry of Govt of India, Information
And Broadcasting.

The income pattern shown above reveals that nearly 60% of the rural income is from
agriculture. Evidently, the rural prosperity and the discretionary income with the rural
consumer are directly tied up with the agriculture prosperity, which directly results in
the increased income for the rural people and a consequent increase in their capacity
to spend. The predominance of agriculture in the income pattern has one more
dimension; rural income and therefore rural demand are relatively more seasonal.

31
Consumer Expenditure in Rural Areas

The table 2.5, broadly reveals that the pattern of consumer expenditure in rural areas.
The rural consumer uses less than 40% of his total spending on the non-food items
(Patnik, 2000).
Table 3.5
Consumer expenditure in rural areas
(Value in per person for a period of 30 days)

Amount Percentage in total

Food 110.25 64.1

Non-Food 61.82 35.9

Total 172.00 100

Source; Rural Development Statistics, Published by govt of India 2000.

32
Media and Media research in rural markets

Table 2.6, addresses about the media and media research in the rural markets.

Table 3.6
Media and Media research in rural markets.

Percentage of Rural Total number

Adult population (million)

Press 9 32

Radio 32 113

T.V 31 108

Cinema 36 125

Total Adults 352

(Source; Saxena Anjila, Rural Marketing Thrust & Challenges, National

Publishing House, 1998.)

The T.V satellite expansion programmes launched by the government are bound to
enhance to some extent the media reach in the rural areas, which consequently helps
in building a national market for a product.

To sum up the Indian rural market broadly, it can easily be seen that the winds of
change are blowing and transforming the rural market appreciably. The revolution of
rising expectation is gaining ground, incomes are increasing and literacy level is
going up. And the transport and communication facilities are improving and in
addition the transport and credit facilities have increased substantially in rural
markets. (Saxena, 1998: 54).

33
Significant changes in rural India, attracting companies to go rural.

Changes within the rural sector of India are resulting in making the sector more
attractive for the companies to expand their operation into this unexploited sector.
(Singh, 2001: 180). And the reasons can be summarized as;

• As with the increase in population, there’s been a consequent rise in demand

of goods. The rural population in 1971 was 43.80 crores, which increased to
52.50 crores in 1981 to 76 crores in 1998.

• There has been a marked increase in the rural income due to agrarian
prosperity, making rural people rich.

• There is large inflow investment for the rural sector from government and
other sources.

• With the increase in literacy and the education level among the rural folks is
leading to a resultant inclination to lead sophisticated lives, consequently
helping marketers to reach rural consumer easily.

Problem areas in rural marketing

The problem arise basically out of the peculiar dynamics of the rural markets of India;
the uniqueness of rural consumer, the uniqueness structure of the rural market, and the
peculiarities of the distribution infrastructure in the rural areas. They are special to the
rural market and they require unique handling. (Singh, 2001: 190).

Practically in every aspect of marketing, rural marketing pose certain special

problems, but the following are found to be important from the point of view of
marketing management.

34
 1. Distribution logistics, storage, transport and handling.

2. Location and degree of concentration of demand.

3. Dealer’s attitude and motivation.

4. Consumer motivation and buying habits.

5. Mass communication media, their reach and the influence.

6. Organizational alternatives.

For any marketer covering more than 6 million villages of the country is a formidable
task. Rail or road does not connect many villages. Further the storage facilities in rural
areas are inadequate and of poor quality. Again, the concentration of consumers is
less as they are widely dispersed. Finding right type of deals is difficult. One also
faces higher degree of conservatism and reluctance on part of the rural consumer to
take major risk. Another problem is their low level of literacy, which makes it
difficult to communicate with them through various media. (Singh, 2001).

Thus it can be summarized that the rural market bristles with a variety of problems,
and for successful footing, a marketer has to grasp these problems and find innovative
solutions to them.

Components of rural marketing strategy

It is difficult to formulate sound marketing strategy without knowing what the others
are doing and what their strengths and weakness are. Marketers can build a marketing
strategy for tapping rural areas by taking into consideration the following
components. (Singh, 2001: 180).

Consumer research; the relevance of consumer behavior to the profession of

marketing cannot be over looked. In the competitive economic system, the success of
a business unit depends on accurate knowledge of the consumers, however in India,

35
research on consumer behaviour has been very limited, and not much systemized
information is available about the rural consumers. Rural consumer should be
considered different from their urban counterparts, especially in the context f the
environment in which they operate. This can be observed in the under mentioned table
3.7.
Table 3.7
Rural Urban Dichotomy

Criteria Rural Urban

Occupation Cultivators Manufacturing and services

Larger than rural

Size of
Open farms, small community community
community

Density of
population Lower Higher

Homogeneity More homogeneous on radial

of population and psychological traits. More heterogeneous

Social Lesser Higher

differentiation

Territorial, occupational and

Mobility other forms of population are Mobile
comparatively less intensive.

Environment

Less numerous interpersonal

a) Social interactions, but more More numerous
frequent with some people. interactions.

b) Economic Frequency of income

Acute seasonality and receipts predictable at
chance element in income regular intervals.
receipt

c) Marketing Low product and ad

exposure, low brand High product and ad
awareness and low rate of exposure, high rates
retail outlet 36 retail outlets.
(Source; Singh Parmal, Marketing Strategy to tap rural markets, Journal of Rural
Development, Vol 2 2001, Hyderabad, Pg 175-195.)
Research on consumer not only covers who they are and how often they buy the
product. It also covers the process of deciding the brand, the place from where they
buy the product, the environment to which they belong, and their price behavior.

Product Demand – The goods and services currently used by the consumers in rural
areas and the direction of their flow are the vital information required for a marketer.
This information helps the marketer position his product in the market. What is
required is first to identify the requirement of the rural consumer, and then translate
these into products that are demanded, the manufacturer can make suitable variations
in the product demanded, and design new packaging suitable to particular rural
market segments. The main thrust should be on harmonizing product design with the
rural conditions and requirements. (Singh, 2001: 185).

Price strategy – Observed in research that the rural consumer is more price sensitive,
but less quality conscious. The price of the product’s for the rural market is therefore
kept on the lower side. The main reason is their lack of awareness about the quality
goods available in the market. Moreover, unlike the urban consumers, who buy their
requirements for a month at a time, the rural consumer generally purchases their
requirements as and when they need them, almost on daily basis. This provides
opportunities for the wholesalers and retailers to cash in on that. (Singh, 2001: 185).

Retail Distribution – The dictum, ‘supply creates its own demand’ seems to be
especially true for the rural markets. It is therefore necessary to make goods available
in as many towns and in as many outlets in village centers as possible.

The present channels will have to be remolded and new channels evolved, to reach
the rural markets timely and more effectively. This means expanding the rural
distribution network to capture a large share of the market.

37
Development of Infrastructure – The major hindrance in distribution to rural
markets is transportation. A large part of the rural market is well outside the reach of
the rail and road transport networks. Lack of proper infrastructure facilities poses a
great challenge in distributing the desired product at right time and in right place. This
problem can be partly solved by help of sales vans, they can be either company owned
or hired.

Aggressive Advertising – A suitable advertising media to reach the rural market is

the need of the time. The reach of print media in rural India is 31%, T.V reaches 28%
although the viewer ship figure is 14.4%, Radio listening has a reach of 20.2%, and
cinema is watched by 15.1% of adults, and video merely 8.8% of the rural population.
There is need to find out the appropriate media who could reach the hearts of the rural
masses. (Singh, 2001: 185).

Consumer behaviour of rural people

Consumer satisfaction lies at the core of the marketing philosophy of a firm. To

generate consumer satisfaction, a firm has to know what the consumer wants. The
product offering has to be based on, an understanding of consumer wants, and this
understanding provides basic parameters for formulating marketing strategies.

‘‘The purchase act by a consumer is governed by various factors such as Economic,

Social and Psychological. Consumer are inherently concerned with meeting their
needs, with living their lives with all that implies in terms of cultural socio economic
and psychological influences’’. (Watking, 1986).

Since purchase is a process, it is necessary for a marketer to analyse the factors

involved in the process. The act of purchasing a product is some time very complex.
The consumer not only must collect information and determine the selection criteria,
but also must make many decisions concerning style, size, colour, retail agent, and the
like.

38
Source of Information

The consumer (Rural Consumer) can be termed as a central processing unit (CPU) as
in computer, which receives, stores, process and delvers the output. In a sense a
consumer is exposed to the information created and transmitted by the marketers into
the environment. The transmission (delivery) may be through different media
available, such as radio, television, print, film, outdoor and etc. Though there are
different media, it is possible that the rural people may be receiving the information
only through one or some of the media, depending upon the accessibility of the media
in that rural area. (Singh, 2001).

Before making a buying decision, the consumer seeks information for three purposes;
Awareness, Interest and Evaluation. First, he must be aware of product before he can
buy it. He needs information about the existence or availability of the product or
brand, i.e., awareness. Second, on the assumption that interest is a necessary
precondition, considering the fact that consumer needs information, which will help
him giving reason to become interested in the product.

The consumer (Rural Folk) has three basic types of information sources to which he
can turn in order to satisfy his information needs. Firstly, the marketer dominated
sources, which are under the direct control of the marketer, such as the product itself,
packaging, promotion through different distributions etc. Secondly, the consumer
dominated sources, i.e. all interpersonal sources of information (family, friends and
neighbors). Thirdly neutral information sources, such as reports and magazines, and
newspaper articles about products.

In a recent study it was revealed that the information to the poor generally passes
through a zigzag and a horizontal fashion. Most of the mass media like television the
press/print/ad., messages, transfer information in a vertical fashion to the rural areas
and the urban slums. This moves in a horizontal and non-linear fashion. The
information transfer among the rural people takes through indirect mechanisms like
gossip among men in tea and Bidi shops and gossip sessions of women they gather
around the village well, pond, bathing ghat or temple.

39
Studies also provide information that radio has the maximum reach in terms of
providing information to the rural people. Friends and dealers are the next most
influential source of information for the rural consumer. The social dimension of the
consumer behaviour can be explained by the fact that majority of the rural consumers
draw information from their friends. (Singh, 2001).

Influential sources

Through the sources of information are many, it is likely that the consumers use
information from only one or two sources for decision making.

‘‘Consumers vary in types and number of sources of information they consult when
they need information for reaching a purchase decision. Because of the nature of
information sources, consumers seldom find it necessary to consult the mass media.
Often they fine it necessary to supplement mass media information with the
information from sources they consider more complete or most trustworthy’’.
(Reynolds and wells, 1977).

One of the most important published studies (Kartz & Lazarafeld, 1955) in consumer
behaviour showed that inter personal communication among friends plays a major
role in a great many consumer decisions, and thus some consumers, the ‘opinion
leaders’ – have a more central role in this process than others.

Interestingly the friends and the retailers are the major sources of information, rural
areas, and the rural people rely more on the personal sources of information compared
to the market dominated sources. The retailers, comparatively, has a great role to play
in the rural markets.

40
Impact of advertising
Both in rural and urban markets, a study revealed, on very few people had an impact
of advertisement through mass media. The high ‘No Response’ of the rural folk
showed their less exposure to the mass media and the influence of retailer. The study
also showed that advertising have been mainly playing the role of increasing
awareness in the rural areas, but for the decision making, the rural people appear to
have been dependent mostly on their peer groups.

Interpersonal and social influence

No consumer is an island. This implies that the consumers are in constant and
frequent interactions with their immediate neighbors. Consumer behavior cannot be
fully understood unless consideration is given to the effects of inter personal influence
on development of attitudes, norms, values, aspirations and purchase behavior.

Neighbors play a vital influential role in the selection of a brand by the rural
consumer, which is not that much cited social prestige. It is evident in studies that
even in rural areas, consumers are conscious of social prestige. It may thus be inferred
that consumers associate brand use with social prestige. (Singh, 2001).

Price in purchase process

In another study, it was found that price is the most important economic factor which
affects the behavior pattern of the rural folk. As according to this study, about 90 per
cent of the consumers in the rural markets have the attitude that the price is always
important factor in the purchase process.

Place of buying
It is necessary for the marketer to find out the place where consumers buy their
products. As the place of buying has an important implication in designing the
distribution network. It is observed in studies that more than 70 per cent of the
consumers in both rural and urban markets buy in the same shop. For the purchase of
the convenience products, majority of rural people buys from the same shop,
indicating the need for intensive distribution network. (Singh, 2001).

41
Communication Process

Communication is the most important element in view of an interactive dialogue

between the company and its customers. Companies can communicate to its
customers by numerous means, for example, advertisements, sales promotion, public
relation, personal selling, and direct marketing. It is very essential to deliver an
impression which strengthens customer’s view about the company and its product.
The whole marketing mix should be integrated and should deliver a consistent
message and strategic positioning. (Kotler, 2004).

Therefore to communicate effectively and efficiently, marketers need to understand

the fundamental elements underlying in the process of communication. Below in the
diagram we can see the nine elements.

Figure 3.2
Communication Process

Message Decodin RECIEVER

SENDER Encoding
g
Media

NOISE

Feedback Response

(Source; Kotler Philip, Marketing Management, Millennium edition, Prentice Hall

publication, Pg 550.)

42
• Sender & Receiver: are two major parties in communication between
whom communication is carried out. For example, Company being the sender and
customer being at the receiver end. (Kotler, 2004).

• Message & Media: are two communication tools with the help of
which information is communicated to the receiver. Message formulated by the
company for its customers is carried out with the help of media (like Newspaper,
TV, and Internet etc. (Kotler, 2004).

• Encoding & Decoding: is the functions undertaken by sender or

receiver in the communication process.

• Feedback: it is a vital monitoring and checking mode in the

communication process. With the help of feedback sender can interpret how well
the message has been imbibed by the receiver. And accordingly sender can review
its message and media appropriately. (Kotler, 2004).

• Noise: is the unwanted errors and interference which intend to disrupt

the communication channel. We can list below few reasons when noise occurs:
 Selective Attention: customers selectively grab those messages which
interest them and ignore advertisement that fail to create an impact on
them.
 Selective Distortion: customers will accept messages which fit their
belief system. Therefore prejudices are attached with the messages
resulting in wrong interpretation of the message. Therefore, it is an
important task of marketers to mend a simple, clear, interesting,
message about the company to get their objective across to its target
customers.
 Selective Retention: customers can selectively retain messages for long
term on very small level. To retain message, customer has to do the
following act: (a) attend the message (positively or negatively) first (b)
secondly, initiate argument or discussion will likely to have high recall
and shall stay in long-term memory.

43
Developing effective communication

To develop effective communication to reach the consumer mind the marketer must
consider these under mentioned points;

Identify the target Audience

A marketing communication starts with a clear target audience in mind. He identifies
the characteristics of the selected target audience. The audience could be the potential
buyers of the products, current users, deciders or influencers. The target audience will
critically influence the communicator’s decision on what to say, how o say, when to
say, where to say, and to whom to say. (Singh, 2001)

Determining the communication objectives

Once the target market and its characteristics are identified, the marketing
communicator decides on the desired consumer response. T he desired ultimate
responses are purchase, High satisfaction, and Favorable word of mouth. But purchase
behaviour is the end result of a long process of consumer decision making. The
marketing communicator uses skills to move the target audience to higher of readiness
to buy.

The marketer can seek a cognitive, affective or behavioral response from the target
audience. That is the marketer can put something into the consumer mind, change the
consumer attitude, or get the consumer to act. (Singh, 2001)

Designing the message

After defining the desired audience response, the marketer moves to developing an
effective message. Ideally the message gain attention holds interest, arouse desire, and
elicit action (AIDA). (Singh, 2001)

Formulating message requires four problems; what to say (message content), How to
say it logically (message structure), How to say it symbolically (message format), and
whom should say it (message source).

44
Message content
The communicator figures out what to say to the target audience to produce the
desired response. In determining the best message content, the management searches
for an appeal, theme, idea, or unique selling proposition.

Rational appeals
Rational appeals appeal to audience self-interest. They show that the product will
produce the claimed benefits. Examples are message demonstrating a products
quality, economy, value, or performance.

Emotional appeals
Emotional appeals attempt to stir up negative or positive emotions that motivate
purchase. Marketer’s search for the right emotional selling propositions (ESP). The
product may be similar to the competition but have unique association for consumers
(examples are Mercedes, Cartier etc); communication appeals to this associations. In
addition the communicator work with negative appeal such as fear, guilt, and shame
to get people to do thing s they should (e.g. brush teeth’s, health check up) or stop
doing things they should not (e.g. alcohol, overeating). Communicators also use
positive emotional appeals such as humor, love, pride and joy.

Moral appeals
Moral appeals are directed to the audience’s sense of what is right and proper. They
are often used to exhort people to support social causes, such as cleaner environment,
better race relations, and equal rights for women, and aid to disadvantaged.

Message structure
A message’s effectiveness depends upon its structure as well as its content. The
message is designed so as the target audience gets affected by it in the desired way.
The message should appeal to the customers in such a fashion that they are attracted
toward the product.

45
Message Format
The communicator develops strong format for the message. In a print ad, the
communicator decides on the headline, copy illustration and colour. If the message
has to be carried over the radio, the communicator carefully chooses words, voice
qualities (speech rate, rhythm, pitch, articulation), and vocalizations (pauses, sighs,
and yawns). If the message is to be carried out on the television or in person, then all
of these elements plus body language (non-verbal cues) have to be planned. If the
product or its packaging carries the message, then the communicator pays attention to
colour, texture, scent, size and shape. (Singh, 2001)

Message source
Message delivered by attractive or popular sources achieve higher attention and recall.
Often celebrities as spokesperson are used in advertisements. Celebrities are effective
when they personify a key product attribute. But what is equally important in the
spokesperson is credibility. Messages delivered by highly credible sources are
persuasive.

Selecting the communication channel

The communication selects efficient channels of communication to carry the message.

In many cases many different channels are used. (Nelamegham, 1992)

Communication channels are of two broad types, personal and non-personal. Within
each are found many sub channels.

Personal communication channel

Personal communication channels involve two or more persons communicating

directly with each other. Personal communication channels derive their effectiveness
through the opportunities for individualizing the presentation and feedback.

46
A further distinction can be drawn among advocate, expert, and social channels of
personal communication. Advocate channels consist of company’s salespeople
contacting buyers in the target market. Expert channels consist of independent
experts making statement to target buyers. Social channels consist of neighbors,
friend’s family members, and associates talking to target buyers.

Many companies are becoming acutely aware of the ‘Talk Factor’ or ‘Word of
Mouth’ coming from expert and social channels in generating new business. They are
seeking way to stimulate these channels to provide recommendations for their product
and service. (Nelamegham, 1992)

Non-Personal communication channel

Non-personal communication carry message without personal contact or interaction.

They include media, atmospheres and events.

• Media: Consists of print media (newspaper, magazines, direct mail),

broadcast media (radio, television), electronic media (audio tape, video tape),
and display media (billboards, signs, posters). Most non-personal messages
come through paid media.

• Atmospheres: Atmospheres are ‘packaged environments’ that create or

reinforce the buyer’s learning towards product purchase.

• Events: Events are occurrences designed to communicate particular messages

to target audiences. Public relation departments arrange new conferences,
grand openings, and sport sponsorships to achieve specific communication
effects with a target audience.

Although personal communication is often more effective than mass communication,

mass media might be the major means of stimulating personal communication. Mass
communication affects personal attitudes and behaviour through a two step flow of
communication. Ideas often flow from radio, television and print to opinion leaders
and from these to the less active population groups.

47
The two step communication flow has several implications. Firstly, the influence of
mass media on public opinion is not as direct, powerful, and automatic as supposed. It
is meditated by opinion leaders, people whose opinion are sought in one or more
product areas. Opinion leaders are more exposed to media, thus extending the
influence of the mass media. They may carry altered messages or none at all, thus
acting as gatekeepers.

Secondly, the two step communication flow challenges the notion that people’s
consumption styles are primarily influenced by a ‘trickle-down’ effect from higher-
status classes. On the contrary, people interact primarily within their own social class
and acquire their fashion and other ideas from people like themselves who are opinion
leaders. (Nelamegham, 1992)

Marketing Communication in Rural Markets

Consumers are not always sure of their wants or about what they are offered and so
are much more open to persuasion than in commonly acknowledge under the
marketing concept. Marketing communications can help shape wants and beliefs and,
the degree to which it is possible.

Marketing communication and promotion poses problems in rural markets. There are
many constraints emanating from the profile of the audience and the availability of
media.

The literacy rate among the rural consumers being low, the printed word has limited
use in rural context. In addition tot the low level of literacy, the tradition bound nature
of the rural people, their cultural barriers and taboos and their overall economic
backwardness add to the difficulty of the communication task. The situation is further
compounded by linguistic diversity. Rural communication has to necessarily be in the
local language and idiom.

It has been observed that rural communication has also become quite expensive. For
rural communication to be effective repeat exposure is a must and if the gap between
the exposures is long the message loses its edge during the period. Rural

48
communication has to go through all the time consuming stages of creating
awareness, altering attitudes, and changing behaviour, moreover it has to work against
the deep-rooted behaviour patterns. All these factors collectively make rural
communication expensive

Rural Communication Process

Rural Communication

Corrective Stage 1
Measures
Create
Awareness
Feedback
Feedback

Stage 2

Alter Attitudes

Stage 3

Change
Behavior

(Author Formulation)
Figure 3.3

49
Challenges in communication with rural people

To tap the vast expanding rural market, companies need to develop effective
communication strategies taking all the challenges into account. Some of the
challenges, which a marketer has to face in the rural market of India, are as such;

 Low literacy level.

 Poor infrastructure facilities.
 Unique media habits.
 Low spending capacities
 Lack of researched data.
 Selective attention/retention.
 Linguistic and socio-cultural differences.
 Different leisure time activities.

All the problems pose some challenges to the communicator, but he can convert these
challenges into opportunities by using effective communication strategies. Although it
a difficult task to reach the rural peoples but not an impossible one. Hundreds of years
ago, Gautaum Buddha, Kabir, Guru Nanak, Adi Shankracharya, etc (Indian
Philosophers and writers) were able to spread their messages of peace, harmony and
humanity, without the use of modern means of communication. (Rajgopal, 2003)

50
Strategies used in rural communication

It is difficult to reach the rural people, but they are reached and a message is passed
on to them by using appropriate design and media mix strategies.

Before designing the message or deciding the media-mix strategies, the communicator
clearly understands the following questions;

1. Communication for whom?

2. With what motives?
3. With what past experience?
4. With what means and medium?
5. By whom?
6. With what organisational/ administrative framework?

As the answer to these questions provide a deeper understanding of the things to be

done and help in the development of appropriate communication strategies for the
marketer to reach the rural folk. (Rajgopal, 2003)

51
Communication strategies used to reach rural people

Most likely strategies followed on by companies to reach their targeted rural markets
are as such; (Rajgopal, 2003)

• Use of audio-video medium: Communicating through T.V, Radio.

• Use of appropriate communication mix: Local promotional tools such as

wall paintings, stalls, hoardings etc are effectively used.

• Tailor made communication: The content of advertising is moulded

according to regional requirements, instead of national releases. Tailor made
messages counter linguistic, social and cultural differences.
• Use of Publicity vans/ Animals: Publicity vans fitted with audio-visuals
gadgets are used to reach ruralitys, especially people living in remote tribal
and hilly areas. These vans also carry the products to induce brand trials.

• Use of Stall and Hatts: Stall and Hatts especially in village festivals, also
help the communicator to spread the message and also include brand trials.

• Appropriate Scheduling: Scheduling of ads is very important. Generally,

during the post harvest period, farmers and cash rich are in the right frame of
mind to consider buying new products. Hence most of the ads are slotted
around this time of the season.

• Use of cinema halls and video parlors: Cinema halls and video parlors
present an exciting audio-visual media option for the rural market. This is
especially true for the states of kerala, Andhra Pradesh and Tamil Nadu, with
64 per cent, 62 per cent and 60 per cent rural households exposed to the
medium. Whereas rest of rural areas have an exposure of only 10 per cent.

52
Selective communication strategies

Out of approximately 6 million villages in the country, only few with greater sales
potential concern a marketing man. Even among these only feeder villages. Thus, a
selective communication strategy is needed. Most of the advertising and promotional
tools are used only in villages having larger size and potential. (Rajgopal, 2003)

• Use of logos and symbols: As illiterate people remember brands only by

picture, symbols as opposed by brand names. So, care is taken deliberately to
design a symbol for the product before introducing it in the rural markets of
India.

• Focus on reference groups: Normally, it is the opinion leaders and the

reference groups who are the only ones exposed to media. These opinion
leaders are normally the key persons in the villages, like the village Sarpanch
(Head of village), the gram sewak (community workers) or other prominent
villagers, like the village school head-master or the people of the younger
generation who have attended school. These people on account of their urban
exposure get information about urban products and their way of life plays a
prominent role in their major buying decisions and has the capacity to promote
various products and brands through their advice and influence. So these
people are taken into account while chalking out communication strategies.

Finally the government also plays a vital role and help in the overall
promotion of rural communication. By opening new channels and frequencies
for the rural people through the government owned media like A.I.R (All India
Radio) and Doordarshan (Indian broadcasting network).

53
Ethical Considerations in marketing of Tobacco

Ethics in marketing

Ethics is the pursuit for rules of right behaviour; it’s the study of rational principle
that guides that conduct. Bartels says by ethics it means ‘a standard by which business
actions may be judged right or wrong’. (Bartel, 1967, Pg-21). A sum of around eleven
marketing practices were formulated by Bartel to capture standards of conduct that
could be judged right or wrong as shown in Appendix four A company's degree of
ethical marketing practices is the addition of its scores on the eleven components of
marketing practices. Marketing ethics consistently examines morality of marketing
and marketing itself. It looks at issues related with the safety of product, deceptive
pricing, deceptive advertising, and issues related to the exploitation of consumer
weaknesses and so on.

There are two schools of thoughts on this ethical perspective following the sale of
cigarettes. The one that supports the view that it is unethical to sell tobacco and the
other which gives a supporting structure saying it is ethical to sell tobacco in the
market.

Taking on the view that it is not ethical to sell tobacco a discussion can be made
as;

Taking on the ethical perspective in the marketing of tobacco, the main arguments
that come up can be identified with here as,

• Deceptive Advertisement
• Methods of Advertisement
• Teenagers being ethically wrong group to target.

54
The above are the main ethical issues that rise up when the morality of cigarette
marketing is considered. According to Claire Andre and Manuel Velasquez (1988)
around 350,000 people died world wide as due to tobacco related illnesses. As per the
research smoking is responsible for 85 % of all deaths from lung cancer, moreover the
research by WHO FCTC (World Health Organization Framework Convention on
Tobacco Control) has found out that nicotine contained in cigarettes is as addictive as
heroine and cocaine. It can be said that these views fall into the school of thoughts
saying that it’s not ethical to sell tobacco in the market. So the further discussion can
be carried out on the finding of Claire Andre and Manuel Velasquez as;

This lethal product (cigarette) which contains addictive nicotine is legally bought and
sold and promoted through advertisements in the popular media. And these
advertisements rely on using alluring images of prestige, power, success, vitality and
sex appeal to create positive association between ‘good life’ and smoking. It is
misleading that such types of images are used to sell a product that creates profound
dependence.

The argument that comes from anti-smoking activists is that everyone has a basic
right to freedom of expression; to the degree it has no harm on others as a result of it.
Society is morally obligated to restrict this freedom, when it results in harming the
others. And the same rational goes for cigarette advertising, as it cause grave harm. It
can be said that the cost of smoking to the society is increasing, as smoking is
responsible for $23 billion in health care cost annually and over $30 billion in lost
productivity as per the recent government report. Society is therefore bound by
morality to ban the marketing of cigarettes which cause such a drain on the society
resources.

Further Claire Andre and Manuel Velasquez have argued that the ban on such
delusory and manipulative marketing practices becomes more obligatory when such
practises are used to prey on minor. And the young people are in fact the main target
group of tobacco industry advertising campaigns. And the rational for this is that; as
to maintain sales, tobacco industry must recruit around 2 million peoples every year to
supersede those who have died and quit smoking. Since majority of new smokers are
children’s or teenagers, this signifies that the tobacco industry must entice youngsters

55
to take up smoking. This all is done by their advertisements which rely on the
psychological manipulation. As per Sim Shin Ying Jasmine (The ethical edge:
Marlboro, Singapore Management University), ‘‘this can be seen as a strategic
marketing plan, as when you see such marketing advertisements, they bypass us
without much conscious reasoning. This is because these advertisements
unconsciously arouse in the person a powerful desire that is not rationally weighted
against one interest’’. It becomes more obligatory to the society to ban such
indoctrinating advertising practices which force the consumers into taking up smoking
habit.

Now, taking on the view that it’s ethical to sell tobacco, a discussion can be
carried out as such;

The argument in favour comes from the critical comment of Alan Strudler (March
2003, Pg; 215.). He argues that its not inherently wrong to sell tobacco, its morally
debatable in the marketing circumstances in which such sales tend to occur; so
according to him screens against tobacco firms may therefore be justified.

Alan Strudler argues that it is not wrong to sell and market tobacco as because it has
bad aspects as long as one sells to a buyer who knowingly and out of his/her free will
chooses to buy it. Further he has concluded that the moral problem with the tobacco
industry is not that it is inherently wrong to sell tobacco, but the problems come up
when such industries wrongly market and distributes such products.

The second point of view that comes from Claire Andre and Manuel Velasquez is
that; the marketing of cigarettes do not cause people to smoke, just as ads for soap
don’t cause people to bath. There are varieties of reasons people take up smoking. For
teenagers it’s often peer pressure or simulating adults that act as a main cause for
them to take up smoking. And the charges made on the advertisement of cigarettes,
that its advertisement intentionally decisive customer can not be justified. The images
presented in the advertisements are realistic ones. There are celebrities that do smoke
cigarettes.

56
Further the argument goes on saying that, cigarettes ads can not be banned on the
bases that they manipulate consumers or to say decisive consumers. As the
advertisements ploys and patterns used by the tobacco industry are no different are no
different from any other industry technique to lure their targeted customers towards
their offerings. Today’s consumers are well informed and aware with the rules of the
game in advertising. Neither it can be said that tobacco industry targets at the minor
age group of peoples, as the examples like Philip Morris and R.J Reynolds has even
gone as far as advertising in the magazine with the message that their products are not
meant for younger age group or children’s.

Finally, to conclude with this point of view, supporters of tobacco advertisement

claim that ban on advertisement of tobacco has not shown any favorable results, as
previously in five countries where cigarettes advertisement were banned , failed to
show any positive results but instead resulted in the rise of per capita consumption of
cigarettes. To be morally concerned about the marketing of cigarettes in the rural
sector of India, the main grounds on which this research project has been chosen are
that the rural sectors in India are consuming local hand made form of cigarettes
(Bidi’s), which has an high nicotine content in it, and the cigarettes that GPIL will be
marketing to rural areas of India will be possessing low nicotine content then local
hand made Bidis.

57
 CHAPTER - 4

METHODOLOGY

In this Chapter the discussion is made about the methods and the
methodology adopted for carrying out the research and collection of
data from the various sources.

58
Research Methodology

This chapter looks at the methods and methodology adopted for getting on with the
issues raised in the chapter of the Introduction. This project is mainly focused on the
behavior of the rural consumer of India. The project looks at their buying behavior
and the consumption pattern of cigarettes and bidis in the rural India. Further the
research moves on to the issues related with the development of marketing
programme to tap the rural consumers and create awareness of cigarettes among the
rural folk.

Hypothesis
Sales and distribution extension and creation of demand can increase the demand for
cigarettes in Rural Markets.

The failure or success of the above hypothesis depends on the controllable and

uncontrollable factors in the marketing environment. And the controllable factors are

related with the (a) Marketing Policies, (b) Marketing strategies and on the other part

uncontrollable factors are related with (a) Consumer, (b) Competition, (c)

Government, (d) Economy, (e) Technology, (f) Legal and (g) Social/cultural.

Research Design

After defining the research problem and laying down the hypothesis, the choice of
research design depends on the depth and extent of data required, the cost and benefit
of research, the time available for completing it. Research design is actually the blue
print of any research project, and when implemented must bring out the information
required for solving the identified marketing problem.

The project is concentrated more on the part that is creation of demand for GPIL
brand cigarettes, so as to make a feasible marketing/communication programme. With
the above in mind questionnaires were prepared and were pilot tested in the slums of

59
Delhi (India) and in the near by villages, this was done as the slums and nearby
villages had many attributes common with that of the rural areas.

The study was to be an exploratory research type. Four rural markets two with RDP
(Rural development programme) and two without RDP were covered. In each of these
markets I covered 15 villages.

In these villages retailers and customers were contacted. The retailers include Pan
shops, Grocery shops, Hotels and others. I contacted a minimum 25% of the total
number of retailers in every village with a judicious mix of the type of retail outlets.
Since it was not possible to have a sample size for the number of customers to be
contacted, I had to resort to convenience sampling. On the whole I contacted
approximately 300 customers over a period of approximately 15 days.

This data collected was then tabulated, analyzed and studied in depth to find out the
trends emerging from it. Also, it was decided that I (researcher) would not stick very
strictly to the data collection instrument where through observations or probing in
depth there was a possibility of finding out additional information which will be
relevant to the study and the hypothesis. So this flexibility in approach gave some
extra inputs and feedback which would not have been possible in any other way.

Data collection

Data collection is an elaborate process in which the researcher makes a planned

search for data collection, as data is the foundation of any marketing research. It is
heart of any research.

The task of data collection began after research problem had been defined; hypothesis
is laid down and research design / plan chalked out. There is not much secondary data
available on the rural markets as not much research has been done previously, apart
from this the Distance, Dispersion and Diversity in the rural markets poses a problem
in selecting the most relevant information of the market under study. Secondary data

60
available on rural markets become obsolete very soon as the rural markets are
undergoing change.

Considering these factors in mind rural markets have been practically explored for
detailed and in-depth study. This was done so as to know the consumer behaviour of
rural people in the markets explored. The in-depth study of the rural markets would
also give a clear picture of their culture, beliefs, attitudes, living habits and etc of
these rural folks so as to develop a feasible, flexible and easily implement able
marketing/communication plan for different brands of cigarettes of GPIL.

The only other source that was used was the list of the merchandising outlets prepared
by the company. So the data collection instrument in the form of a schedule was
prepared to gather relevant data in the desired format. ‘‘The data collected is specified
in advance by the managers who will use the data; this assures managers that the data
will be tailored to their needs’’. (Boyed, Westfall and stasch, Marketing Research, pg.
22)

However, frequent reference was made to books such as ‘‘Marketing Research’’ by

Boyed, Westfall and Stasch. Also ‘‘Research Methodology’’ by R.C. Kothari was
also consulted from time to time, so as to collect the most relevant primary data
accurately and in right fashion.

In addition to all these, the opinion of the distributor, salesman, the supervisor’s etc.,
came handy and proved a valuable source of data. The valuable advice and guidance
of area sales executive, my guide at GPI (Brand Manager), the branch manager and
other GPIL people were of great help and source of inspiration.

While deciding about the method of data collection to be used for the study the
researcher should keep in mind two types of data i.e.,

1. Secondary Data
2. Primary Data

61
Secondary Data

Secondary data whether internal or external is data already collected by others. Before
commissioning any effort for collecting Primary data researcher hunts for the recent
and relevant secondary data so as to meet the desired objective of the research. As
there are times the secondary data is itself sufficient to solve the problem. Usually the
cost of searching the secondary data is also low than the cost of organizing primary
data. It also helps plan the collection of primary data, if primary data is necessary.

To meet the desired objective so as to accomplish the research effectively, a thorough

hunt for secondary data on Rural Markets was undertaken and the most relevant and
recent data available on the rural India was chosen.

Apart from this a study was undertaken on the demographic and geographic profile of
rural people so as to get deeper understanding of their behavior, habits, life style, etc.
This was done, to help in preparing a feasible and easily implement able
marketing/communication programme for the rural folk.

Different companies Rural Marketing Strategies were studied and evaluated to check
the viability of the hypothesis. These rural marketing strategies were also used to
make a marketing/ communication programme for GPIL.

Primary Data

Primary data are those which are collected fresh and for the first time. And thus
happens to be original in character. There are various methods of collecting primary
data.
1. Observation Method
2. Interview Method
3. Questionnaire Method
4. Schedule Method
5. Other Methods example; Distribution audit, Depth interview, etc.

Basically questionnaire method was used in collection of data. Apart from this
observation as well as interview method was also used wherever necessary to get the

62
much-needed data relevant to reaching the objective of the research and proving the
hypothesis.

In this project, primary data is used to analyze the consumer behavior of the rural
folk, his living habits, culture, attitudes, beliefs and etc, to develop a feasible, flexible
and easily implement able marketing/ communication plan.

Target Respondents

For the data collection, the main source of information for this study work were, the
retail outlets (Pan Shops, Grocery Shops, Hotels and others) in the rural markets
covered, users of product (Macro Brand Cigarettes), the Rural Folk, wholesale dealers
of the market and the sales man servicing that market.

The research collected the data from the retailers directly so as to collect the original
data. The questions asked through questionnaire were logical, relevant and simulate
general response. Also, attention was paid to discuss issues one by one and not let
them get mixed up as chances of Halo’s effect or Horn effect could affect responses.
Whenever an unusual response came from retailer, normally the question was
reworded and repeated, just to make things clear and eliminate chances of any
communication gap. If the responses received were same they were recorded as it is,
or else further clarification was sought and only on confirmation were responses
recorded.

Rationale and benefits of Questionnaire Method

The reason for selecting questionnaire as a primary source for data collection is the
demand of the study. There is not much research done on Rural India and hence less
information is available. The open ended and multiple-choice questions can generate
lot of ideas and bring new insight to the topic under consideration. Questionnaires
play a central role in the data collection process. A well designed and structured
questionnaire efficiently collects data and helps in overall reduction in the cost and
time associated with data collection and processing.

63
Data Collection Instruments

Three questionnaires were prepared to felicitate data collection. The first

questionnaire was developed so as to collect the details about the village. Another
questionnaire was prepared to collect retailer connected details. And the third
questionnaire was meant to collect the customer-related details.

The questionnaires contained both open ended and multiple-choice questions. The
focus of the project was to develop a marketing/communication plan, so, both open
ended and multiple choice questions had to be used. However, after collection of data,
most of the responses were found to be similar or even identical.

Sampling Plan and Sample error

Fifteen (15) villages in a district were chosen as the sample villages. This was done as
the information gathered from fifteen villages would provide a basis for developing
the marketing/communication plan and also check hypothesis. A minimum 25% of
the total number of retailers were contacted in every village with a judicious mix of
the type of retail outlets. Since it was not possible to have a sample size for the
number of customers to be contacted, therefore convenience sampling was chosen. On
the whole approximately 300 customers were contacted over a period of 15 days.

Random sampling techniques have been used to select number of villages from each
district. As the study focuses on Rural India, samples from four major districts have
been selected. The districts have been selected randomly as per the convenience of the
researcher. The set of questionnaires were randomly asked to the respondents and the
response rate was very high.

The number of samples (villages) selected from different districts was done as to
reduce the level of bias in the research. Since, the research is on Rural India, it
includes various districts from around India and the selected districts are the most
representative of Rural India. Sampling error is found in the study as it was not been
possible to cover each and every district and villages in the Rural India.

64
Assumptions and Limitations of the Project

 An assumption was made that the personal bias of the retailers does not come
into play while answering. This included individual likes dislikes and
preferences of the retailers. In some cases, the retailers did not like the area
salesman. The reason they gave was that at the time of change of rates of the
cigarette salesman use to stock them and provide them after the rates are
increased.

 Second and the major assumption is that the translation from English to Hindi
and then again translation of the responses from Hindi to English did not
create any discrepancies. This was because the researcher is equally
conversant in both the languages. So the chances of error are further
minimized.

 The major limitation for this project is that it was not been possible to consider
the effects of all uncontrollable factors on this research.

 The other limitation for this project is that the sample size chosen from every
district cannot be representative of the entire rural population. But it has been
assumed that the districts selected are the most representative of the Rural
India.

With these methods taken into consideration a research work was carried out in the all
the four districts selected as a sample for this study, and the results for them are
presented in the preceding chapters.

65
 CHAPTER - 5

RESULTS WITH ANALYSIS AND FINDINGS

This Chapter is focused on the presentation and analysis of the

finding and observation covering different aspects of the rural
markets in all the four districts.

66
Results with Analysis & Findings

District/ Region: Saharanpur

Brief of the Market

Saharanpur is the market where the Rural Development programme (RDP) has been
ongoing for last 8 years. The company has very cordial relations with the whole sale
dealer M/s Kashyil Enterprise. The company is represented by Mr. Arun Pawar who
works in the capacity of sales officer. There are 9 salesmen who cover the local
market, 2 salesmen who cover the outstations and 6 salesmen for the rural market.
Under the RDP, 229 villages are covered. The most popular brand in the market is
Cavanders Magna. It faces stiff challenge from brands like capstan (ITC) and Red&
White Flake.
Sales Figure for GPI Brands for the year 2002-03 & 2003-2004 in Saharanpur are as
follows;
Table 5.1
Sales Figure of GPI in Saharanpur (Figures in ‘000 Sticks)

Brands 2002-03 2003-04

1 Four Square Kings 56 42

2 Four Square Special 969 564

3 Four Square Premium 51 51

4 Red & White Filter 639 1233

5 Cavanders Filter 47 52

6 Cavanders Gold leaf 1439 1114

7 Red & White Plain 1248 582

8 Cavanders Magna 3660 7202

9 Red & White Super 947 735

10 Commando 2 9

Total 9058 11584

67
In the district of Saharanpur 16 villages were covered and these villages were
selected randomly as per the convenience.

Table 5.2
Villages covered in the District

S.No Name Distance from

Population
Wholesaler

1 Khedafghan/Sissila 20 K.M 8000+

2 Manihari 24 K.M 1000+

3 Puvarka 8 K.M 3000+

4 Sarkhadi Sheikh 13 K.M 4000+

5 Laknauti kala 20 K.M 3500+

6 Aasan Wali 18 K.M 2000+

7 Halalpur 5 K.M 2000+

8 Buddhakheda 25 K.M 5000+

9 Patni 12 K.M 2000+

10 Gumti 21 K.M 4000+

11 Chakhareti 19 K.M 3000+

12 Fundpuri 14 K.M 2000+

13 Kota 20 K.M 6000+

14 Kolkikala 16 K.M 4000+

15 Pather 23 K.M 3000+

16 Sidki 25 K.M 3000+

68
Profile of the consumers contacted in Saharanpur

Under mentioned figures and charts shows the visibility of the consumers contacted in
the district of Saharanpur, in terms of marketing analysis.

Total number of consumers contacted in Saharanpur: 75

Table 5.3
Age wise break up in Saharanpur

Age wise Break-up Numbers

Up to 20 years 10

21-30 years 25

31-40 years 19

Above 40 years 21

Total 75

Age Wise Break-up (Saharanpur)

25
25
21
20 19

15
Respondents 10
10
Series1
5

0
Upto 20 21-30 31-40 above 40
years years years years
Age

Chart 5.1

69
 5.1.2.1. Smoking pattern break-up in Saharanpur

Table 5.4

Smoking pattern Break-up Numbers

Bidi Smokers 34

Cigarette Smokers 9

Dual Smokers 32

Total 75

Smoking Pattern Break-Up (Saharanpur)

Dual Smokers Bidi Smokers Bidi Smokers

43% 45% Cigarette Smokers
Dual Smokers
Cigarette
Smokers
12%

Chart 5.2

With these figures smoking pattern of the rural people contacted in the district
of Saharanpur is shown.

70
 Occupation wise Break-up Saharanpur

Table 5.5

Occupation Wise Break-up Numbers

Farming 26

Non-Farming 49

Total 75

All the above tables are used for representing the exact profile of the consumers
within the district of Saharanpur. And as a part of it the above mentioned table
highlights the occupation pattern in Saharanpur. With this the next representation is
followed on about the profile of the retailers in the district of Saharanpur.

71
Profile of the retailers contacted in Saharanpur

Total number of retailers contacted in Saharanpur: 75

Table 5.6
Types of retailers in Saharanpur

Types of Retailer Numbers

Pan Shops 48

Grocery Shops 23

Others 4

Total 75

Saharanpur (Retailer Profile)

others
5%
Grocery Shops Pan Shops
31%
Grocery Shops
Pan Shops
others
64%

Chart 5.3

72
District/ Region: Meerut

Brief of the Market

Meerut is a market where Rural Development Programme was introduced 4 years

back. The company has excellent relations with the wholesale Dealer M/s Laxmi
Narayan & Sons. Mr. Ashok Aggarwal, who works in the capacity of sales officer,
represents the company. There are 9 salesmen who serve the local market, 5 salesmen
for the outstation and 8 salesmen exclusively for the rural markets. Under the RDP, a
total of 266 villages are covered. The most popular brand in the market is Red &
White Flake. The competing Red & White Plain, Super & Capstan (ITC).

Sales Figure for GPI Brands for the year 2002-03 & 2003-2004 in Meerut are as
follows;
Table 5.7
Sales Figure of GPI in Meerut (Figures in ‘000 Sticks)

Brands 2002-03 2003-04

1 Four Square Kings 80 75

2 Four Square Special 1202 707

3 Four Square Premium 89 109

4 Red & White Filter 1616 3384

5 Cavanders Filter 59 62

6 Cavanders Gold leaf 1332 1661

7 Red & White Plain 3692 2716

8 Cavanders Magna 351 490

9 Red & White Super 7 Nil

10 Commando 1772 1906

Total 10200 11111

73
In the district of Meerut 15 villages were covered and these villages were selected
randomly as per the convenience.

Table 5.8
Villages covered in the District

S.No Name Distance from

Population
Wholesaler

1 Masuri 20 K.M 7000+

2 Bana 17 K.M 3500+

3 Rajpura 12 K.M 2000+

4 Dabathua 12 K.M 8000+

5 Jangheti 8 K.M 10000+

6 Jhanjhokar 20 K.M 2500+

7 Nannu 15 K.M 5000+

8 Mahal 25 K.M 6000+

9 Bhagwanpur 18 K.M 5000+

10 Bahcholi 9 K.M 6000+

11 Sisauli 20 K.M 5000+

12 Dorli 10 K.M 4000+

13 Sofipur 11 K.M 4500+

14 Incholi 18 K.M 3500+

15 Laavad 14 K.M 4000+

74
Profile of the consumers contacted in Meerut

This entire section shows the picture of the rural consumer in the district of Meerut by
putting them on different dimensions.

Total number of consumers contacted in Meerut: 72

Table 5.9
Age wise break up in Meerut

Age wise Break-up Numbers

Up to 20 years 5

21-30 years 13

31-40 years 22

Above 40 years 32

Total 72

Age wise Break-up (Meerut)

35 32
30
25 22
20
Respondents
15 13

10
5
5
0
Upto 20 21-30 years 31-40 years above 40
years years
Age

Chart 5.4

75
 Smoking pattern break-up in Meerut

Table 5.10

Smoking pattern Break-up Numbers

Bidi Smokers 32

Cigarette Smokers 6

Dual Smokers 34

Total 72

Smoking pattern Break-up (Meerut)

Dual Smokers Bidi Smokers Bidi Smokers

48% 44% Cigarette Smokers
Dual Smokers
Cigarette
Smokers
8%

Chart 5.5

This is the picture of the smoking pattern of the rural consumer in the district of
Meerut

76
 Occupation wise Break-up in Meerut

Table 5.11

Occupation Wise Break-up Numbers

Farming 49

Non-Farming 23

Total 75

With this the principal activity - the occupation pattern of the rural people in the
district of Meerut is shown. And the next is the representation of the retailer profile in
the following page.

77
Profile of the retailers contacted in Meerut

Retailers picture can be seen in the under mentioned table and chart.

Total number of retailers contacted in Meerut: 75

Table 5.12
Types of retailers in Meerut

Types of Retailer Numbers

Pan Shops 52

Grocery Shops 23

Others 0

Total 75

Meerut Retailer Profile

Grocery Others, 0
Shops, 23 Pan Shops
Grocery Shops
Pan Shops, 52 Others

Chart 5.6

78
District/ Region: Hapur

Brief of the Market

Hapur is a market where RDP has not been introduced so far by GPIL. The coverage
by salesman is limited to the local market and the outstations. The retailers in the local
markets get their stock from the dealers. The wholesale dealer for this market is M/s
Dhaularam Shivdayal. The company is represented by Mr. Vivek Saxena who works
in the capacity of sales officer. 2 salesman service the local market, while these 2
salesman service outstation market as well. The motivational level of salesman is not
very high. The Wholesale Dealer feels that the company for promotions dose not
exploit the famous GARH Mela (Fest). Also, the Hapur Dushera mela does not have
the participation of GPI. The ongoing SHAHEED Mela also did not have
participation of GPIL as well.

Sales Figure for GPI Brands for the year 2002-03 & 2003-2004 in Hapur are as
follows;
Table 5.13
Sales Figure of GPI in Hapur (Figures in ‘000 Sticks)

Brands 2002-03 2003-04

1 Four Square Kings 22 18

2 Four Square Special 145 70

3 Four Square Premium 102 108

4 Red & White Flake 1123 1800

5 Cavanders Magnum Filter 168 120

6 Cavanders Gold leaf 696 700

7 Red & White Plain 1451 750

8 Cavanders Magna 98 150

9 Red & White Super 350 400

Total 4163 4000

79
In the district of Hapur 15 villages were covered and these villages were selected
randomly as per the convenience

Table 5.14
Villages covered in the District

S.No Name Distance from

Population
Wholesaler

1 Acheja 8 K.M 2200+

2 Nizampur 11 K.M 2500+

3 Kasthala 9 K.M 3000+

4 Babugarh 10 K.M 12000+

5 Chapkoli 15 K.M 4500+

6 Bhikaspur 11 K.M 4500+

7 Nurpur 12 K.M 3500+

8 Rajpur 18 K.M 3000+

9 Chithauli 11 K.M 5000+

10 Saadakpur 12 K.M 3000+

11 Haafizpur 10 K.M 2500+

12 Vaarpur 9 K.M 4000+

13 Upeda 13 K.M 4500+

14 Simbhavali 23 K.M 3000+

15 Shyamnagar 12 K.M 3000+

80
Profile of the consumers contacted in Hapur

This whole section shows the picture of the rural consumer in the district of Hapur by
putting them on different dimensions

Total number of consumers contacted in Hapur: 65

Table 5.15
Age wise break up in Hapur

Age wise Break-up Numbers

Up to 20 years 2

21-30 years 27

31-40 years 18

Above 40 years 18

Total 65

Age wise Break-up (Hapur)

30 27
25
20 18 18

Respondents 15
10
5 2
0
Upto 20 21-30 years 31-40 years Above 40
years years
Age

Chart 5.7

81
 Smoking pattern break-up in Hapur

Table 5.16

Smoking pattern Break-up Numbers

Bidi Smokers 19

Cigarette Smokers 11

Dual Smokers 35

Total 65

Smoking pattern Break-up (Hapur)

Bidi Smokers
29% Bidi Smokers
Dual Smokers Cigarette Smokers
54% Dual Smokers
Cigarette
Smokers
17%

Chart 5.8
This is the pattern of rural consumer by putting them on the dimension of ‘Smoking
Pattern Break-up’.

82
 Occupation wise Break-up in Hapur

Table 5.17

Occupation Wise Break-up Numbers

Farming 26

Non-Farming 39

Total 65

All the above tables are used for representing the exact profile of the consumers
within the district of Hapur. And as a part of it the above mentioned table highlights
the occupation pattern in Hapur. With this the next representation is followed on
about the profile of the retailers in the district.

83
Profile of the retailers contacted in Hapur

Retailer picture in the district of Hapur is depicted below, in the forms of table and
chart.

Total number of retailers contacted in Hapur: 72

Table 5.18
Types of retailers in Hapur

Types of Retailer Numbers

Pan Shops 52

Grocery Shops 20

Others 0

Total 72

Hapur Retailers Profile

Others
Grocery Shops
0%
28% Pan Shops
Grocery Shops
Pan Shops Others
72%

Chart 5.9

84
District/ Region: Bijnor

Brief of the Market

Bijnor is a non RDP market. There is a proposal to implement an RDP from July of

2006. The wholesale dealer for this market is M/s Mayank Trading Company. They

were appointed only seven months back, prior to that a different wholesale dealer was

in charge of the market. In the intervening period the company lost its hold of the

market due to improper servicing of retailers. The company is represented by Mr.

Neeraj Khurana who works in the capacity of sales officer. 2 salesmen while the

outstations are serviced by 1 salesmen service the local market. The most popular

brand in this market is ‘Cavander Magna Filter’. The main competing brand is

‘Capstan’.

The retailers in the rural markets of Bijnor get the local stock from the local dealers.

The retailers are also dependent of the dealers for getting the POS material as well.

The local market has a very good availability and visibility both in terms of stock and

POS material. The sales figures for different brands could not be obtained, as the

wholesale dealer does not have figures for previous years

85
In the district of Bijnor 14 villages were covered and these villages were selected
randomly as per the convenience

Table 5.19
Villages covered in the District

Name Distance from

S.No Population
Wholesaler

1 Sikeda Navada 14 K.M 1500+

2 Khurrampur 19 K.M 1500+

3 Saadipur 16 K.M 8000+

4 Mahashawari 18 K.M 6000+

5 Bisnoiwala 16 K.M 1800+

6 Chandupura 20 K.M 1200+

7 Mohammedpur 13 K.M 1200+

8 Vajidpur 16 K.M 4000+

9 Baruki 8 K.M 4500+

10 Mandavali 8 K.M 5500+

11 Inampura 12 K.M 5000+

12 Mojanpur 15 K.M 4200+

13 Jindaarpur 7 K.M 3500+

14 Tikopur 11 K.M 3500+

86
Profile of the consumers contacted in Bijnor

With this the exact picture of the rural consumer in district of Bijnor is shown up.

Total number of consumers contacted in Bijnor: 75

Table 5.20
Age wise break up in Bijnor

Age wise Break-up Numbers

Up to 20 years 5

21-30 years 23

31-40 years 17

Above 40 years 30

Total 75

Age wise Break-up (Bijnor)

30
30
25 23

20 17
Age 15

10
5
5
0
Upto 20 21-30 years 31-40 years Above 40
years years
Respondents

Chart 5.10

87
 Smoking pattern break-up in Bijnor

Table 5.21

Smoking pattern Break-up Numbers

Bidi Smokers 21

Cigarette Smokers 9

Dual Smokers 45

Total 75

Smoking pattern Break-up (Bijnor)

Bidi Smokers
28% Bidi Smokers
Cigarette Smokers
Dual Smokers Cigarette
60% Dual Smokers
Smokers
12%

Chart 5.11

This is the pattern of rural consumer by putting them on the dimension of

‘Smoking Pattern Break-up’

88
 Occupation wise Break-up in Bijnor

Table 5.22

Occupation Wise Break-up Numbers

Farming 39

Non-Farming 36

Total 75

The above table depicts the occupation pattern within the district of Bijnor, it gives up
the picture of Bijnor district on the scales of ‘occupation break-up’. And With this the
next representation is followed on about the profile of the retailers in the district.

89
Profile of the retailers contacted in Bijnor

Retailer picture in the district of Bijnor is depicted below, in the forms of table and
chart

Total number of retailers contacted in Bijnor: 65

Table 5.23
Types of retailers in Bijnor

Types of Retailer Numbers

Pan Shops 34

Grocery Shops 28

Others 3

Total 65

Bijnor RetailerProfile

Others
5%
Pan Shops
Grocery Shops Pan Shops Grocery Shops
43% 52% Others

Chart 5.12

90
Findings and observation

Common, Village related findings and Observations for the Districts.

With the research done on four of the districts, it has been found out that there are
many common answers that have come up in all the districts. It has been found that
the most common and popular means of entertainment in all the four districts is
television and most popular means of advertising are wall paintings. Further the
finding on these district shows that the Video on wheels coverage by GPIL is not
adequate. No one in the villages could recall the exact visit of the video on wheels of
GPIL. However the people could recall the video on wheels operated by Urea and
Soaps companies. And the other finding that comes common in these districts is that
the most common special in all the villages of the districts is Weekly Bazaar.

Common, Retailers related findings and Observations for the Districts.

The same rationale goes for this; it is also observed that for retailers there are many
common findings which coincide in all the districts. The common points that have
come up in these districts are related with the price fluctuation, the retailers were
unhappy about the fluctuating prices of cigarettes even during the non-budget time. It
was also found out that in all of the districts retailers were not aware of the schemes
introduced by the company. And all the retailers from all the districts assured that
they intend to buy more if the credit scheme is granted to them by the company and
stock is supplied to them at their doorsteps.

Common, Customer related findings and Observations for the Districts

The customer related findings and observations that were found out to be common in
the districts are that, the influence for starting to smoke is derived mainly by friends
and same thing is found out in all the districts, the other thing that is found out is that
the among bidi smokers, the main reason given for preferring bidi to cigarette is price
and taste in all the four districts. And it was also found that many customers are under
the misconception that cigarette smoking is more injurious to health than bidi
smoking, as they feel that the smoke emanating due to burning paper causes cough
and other aliments

91
Findings and Observations that were not found out to be common among the
four districts taken for the study are as such;

Saharanpur

Retailers, sales and Distribution related observation and findings

In the district of Saharanpur the Visibility and availability of Cavavders Magna is

highest, and the major competing brand is Capstan (ITC). The POS material is more
visible in pan shops then the grocery shops and the retailers in the district of Bijnor
demand for glow signs from the company. It was found that the Retailers expressed
their opinion that the packing of SELECT closely resembles that of VIJAY (which is
perceived as a cheap and low quality cigarette by the rural customers), thereby
making it difficult for them to push it to customers. Further it was also observed that
the retailers expressed their opinion that Cavanders Magna is thicker and cheaper than
other brands, which make it suitable for stuffing ‘‘Sulfa/Bhang’’.

Customer related findings and observations

Analyzing Saharanpur on the customer basis shows that in this district the most
recalled top of the mind brands is Cavanders (25 out of 75), closely followed by Red
& White (19 out of 75) and then capstan (13 out of 75). 47 customers could recall
having seen the advertisements of cigarettes out of which Cavanders is the maximum.
However the exact contents of the advertisements could not be properly described by
customers. The other findings about Saharanpur shows that the almost all bidi and
dual smokers consume at least one bundle of bidis in a day, and the recall of brand
like ‘Chidiy’, ‘Sher’, ‘Laltin’, and ‘Kainchi’ is high in spite of the non-availability of
most of them. Capstan is recalled as ‘Captain’ and Cavanders is recalled as
‘Commander’ (which is close to commando), and the most brand of bidi is ‘Deluxe
Tarzan’. The starting age of smoking in Saharanpur is 16-17 yrs.

92
Meerut

Retailers, sales and Distribution related observation and findings

In Meerut Visibility and availability of Red & White Flake is highest, the major
competing brands are Red &White Super and Plain and capstan (ITC). There’s no
new POS material distributed for last six months. It has been found that the SELECT
has been recently introduced but the response of the customers has been lukewarm.
Other findings about Meerut shows that the ‘Red & White Super’ racks were being
distributed in the villages; however the retailers were using it to display ITC brand
cigarettes as well. Out of the 52 Pan Shops contracted, 42 were in the possession of
large mirrors, which were prominently displayed in the shops. And the retailers in
Meerut wanted coupon scheme from cigarette companies as in existent for Bidi
companies. Further it was also found that the salesman visit shops on the main road
but neglect shops that are in the villages.

Customer related findings and observations

In Meerut it was found that the most recalled top of the mind brands is Red & White
(34 out of 72). Recall of brands like ‘Chidiy’, ‘Sher’, ‘Laltin’, and ‘Kainchi’ is high in
spite of the non-availability of most of them. And Capstan is recalled as ‘Captain’ and
Cavanders is recalled as ‘Commander’ (which is close to commando). The starting
age of smoking in Meerut is also 16-17 yrs. And the most popular brand of bidi are
‘Kalpana’ and ‘Dholak’.

Hapur

Retailers, sales and Distribution related observation and findings

The major competing brands in Hapur are Red & White Super and Plain and capstan
(ITC). It been found that in Hapur for GPI brands the retailers have to go to local
dealers, however ITC salesman visit the rural market selectively. And the salesmen do
not build stock pressure due to lack of push on their part. GPI promotional material is
not visible in the rural markets. Capstan Danglers (ITC) were present in most of the
shops. The cases of damaged and dented material were observed in Babugarh market,
which the sales officer was aware of. It was also found that wholesaler dealer was not
clear of the responsibility of the outstation of Hapur (Pilakhwa and Gulawathi). And

93
the retailers have to get the POS material from the dealers who distribute it
selectively.

Customer related findings and observations

Among the customers of Hapur the most recalled top of the mind brands is Red &
White (43 out of 65). 43 customers could recall having seen the advertisements of
cigarettes out of which Red & White is the maximum. However the exact contents of
the advertisements could not be properly described by customers. And the most
popular brand of bidi are ‘Sundari’ and ‘502 Pathka’

Bijnor

Retailers, sales and Distribution related observation and findings

In Bijnor the visibility and availability of Cavanders Magnum Filter is highest and the
major competing brand is Capstan (ITC). It has been found that the POS material was
not visible prominently in the rural markets, but the POS material of bidi companies
was very prominent in the rural retailer outlets (the most common POS was calendar).
And the stock pressure is not built up due to lack of push by the salesman.

Customer related findings and observations

IT was found that the in this market only one customer was able to recall having seen
the advertisement on video on wheels. The recall of brands like ‘Chidiya’, ‘Star’,
‘Sher’, ‘Laltin’, and ‘Kainchi’ is high in spite of the non-availability of most of them.
And the most popular brand of Bidi id ‘Laoji’ and ‘502 Pathaka’.

94
Analysis of Finding and Observation

People influenced by for smoking.

Table 5.24
Influencer for smoking

Influencer Number of Respondents

Doctor 24

Friends &Elders 246

Others 30

95
 Influence to Start Smoking

Others Doctors
10% 8%
Doctors
Friends & Family
Others
Friends &
Family
82%

Chart 5.13
82% of the total sample said that they induced smoking habit from their friends and elders.
Followed by doctor advice 10%.

Promotional Platform Visibility.

Table 5.25
Promotional Platform Visibility

District Cinema Walls Shops Others

Meerut 12 10 10 7

Saharanpur 21 9 17 1

Hapur 11 15 10 17

Bijnor 18 8 16 2

Total 62 42 53 27

96
 Promotional Platform Visibility

25

21
20
18
17 17
16
15
15 Cinema
12 Walls
11
1010 10 Shops
10 9
8 Others
7
5
2
1
0
Meerut Saharanpur Hapur Bijnor

Chart 5.14
The visibility of promotional activities was highest seen in Saharanpur. Followed by
Hapur, Bijnor and then Meerut. The most seen promotional platform was observed to
be Cinema followed by Shops. Promotion through walls was also quite visible.

Advertisement Visibility.
Table 5.26
Advertisement Visibility

97
 District Yes No

Meerut 42 30

Saharanpur 47 28

Hapur 43 30

Bijnor 41 27

Total 173 117

Advertisement Visibility

50

40
Meerut
30
Saharanpur
20 Hapur
Bijnor Bijnor
10 Hapur
Saharanpur
0 Meerut
Yes
No

Chart 5.15

The visibility of advertisement was good in all the markets covered.

Reasons for Smoking Bidis.

Table 5.27
Factors Influencing Bidi Smoking

98
 Factors Response

Price 28

Strength 42

Taste 27

All Friends smoke Bidi 3

Habit 76

Not aware of low priced Cigarettes 7

In the way of Living 3

Bidis are less harmful 30

Availability 13

Reasons For Smoking Bidi's

13% 12%
1%
3%
18%

34% 12%
6% 1%

Price Stregth
Taste All friendsSmoke Bidi
Availability Habit
Not aware of low priced Cigarettes In the way of living
Bidis are less harmful

Chart 5.16
Habit was the basic reason for smoking bidi, followed by the perception of strength.
Another reason for bidi preference was price closely followed by the belief of bidi
being less harmful over cigarettes.

Awareness about the Brands (Un-aided)

99
 Table 5.28
Unaided Brand Awareness

Brand Un-Aided

R.W.S 18

CVM 7

CAP.Std 8

Scissors 10

Charminar 0

Vijay Deluxe 0

Hero 3

Commando 3
Panama Prince 6

Un-Aided awareness of Brands

11%
5%
33%
5%
0%

18%
13%
15%

R.W.S CVM CAP Std

Scissors Charminar Vijay Deluxe
Hero Commando Panama Prince

Chart 5.17

Awareness about the Brands (aided)

100
 Table 5.29
Aided Brand Awareness

Brand Un-Aided

R.W.S 40

CVM 16

CAP.Std 13

Scissors 18

Charminar 5

Vijay Deluxe 3

Hero 6

Commando 5
Panama Prince 10

Aided Brand Awareness

9%
4%
5% 34%
3%
4%

16%
11% 14%

R.W.S CVM CAP Std

Scissors Charminar Vijay Deluxe
Hero Commando Panama Prince

Chart 5.18
People having tried different Brands
Table 5.30

101
 Tried Brands by the Respondents

Brand Tried

R.W.S 32%

CVM 20%

CAP.Std 18%

Scissors 22%

Charminar 4%

Vijay Deluxe 14%

Hero 18%

Commando 17%
Panama Prince 7%

Percentage of people who have tried different

Brands

35% 32% R.W.S

30% CVM
25% 22% CAP Std
20%
20% 18% 18% 17% Scissors
14% Charminar
15%
Vijay Deluxe
10% 7% Hero
4%
5% Commando
0% Panama Prince
1

Chart 5.19
Most tried brand was Red & White Super, followed by Scissors and Cavanders
Magna. Apart from these Capstan and Commando follow closely.
Ranks for Micros (percentages are derived only from the smokers’ aware of
micro brands.)
Table 5.31

102
 Micros ranked on certain attributes

Attributes Best overall micro Availability Prestigious Macho

23%
R.W.S 20% 15% 8%
8%
CVM 9% 6% 3%

Commando 3%
6% 2% 5%

Scissor 4% 2% 2% 8%

Cap.Std 5% 6% 2% 2%

Panama Prince 3% 5% 3% 6%

Hero 7% 4% 2% 12%

8% 4% 2% 10%

Cap.Std
Vijay Deluxe

Ranks for Micros on Certain Attributes

Vijay Delux

Hero

Panama Prince
Macho
Cap Std Prestigious
Scissor Availability
Best overall micro
Commando

CVM

R.W.S

0% 5% 10% 15% 20% 25%

Chart 5.20
On the basis of certain attributes Red & White Super was said to be an over all best
Micro brand, in terms of its availability its prestigious image and macho image.
The second among these brands was Cavanders Magna. Closely followed by Vijay
Deluxe and Scissors (ITC).

103
 CHAPTER-6

CONCLUSION

This part is about making conclusion about the research and the
analysis done in the previous chapter of this project. It also says
about how the considerations made in chapter review were related to
thefindings.

104
Major Conclusions of the Research

 Mainly friends and elders influence rural folk for smoking cigarettes, as it has
been observed that a majority of the rural consumers draw information from
friends, elders, and neighbour. This is also evident in many researches
undertaken on the rural markets. Hence, companies feel that if they can create
even a meager demand for the micro brands in the rural markets today, the
probability is high of capturing the vast potential in the rural markets in the
coming future.

 Although there is evidence that radio has the maximum reach in terms of
providing information, but Cinema is used as the major platform for
promotional activity by the different cigarette companies, followed by Shops.
Through these promotional activities undertaken by the cigarette companies in
rural markets they have been able to create demand for micro brand
successfully among rural folk. Through these promotional activities
cigarette companies have created awareness of the micro brands available
in the markets to the rural consumers, consequently increasing sales and
demand for the micro brands.

 The cigarette companies advertise extensively in the rural areas considered for
the study undertaken, as most of the respondents were aware of the
advertisements. The company has chosen different means of communicating
the rural folk and has been quite successful in creating awareness,
consequently creating demand for the micro brands, which has given boost in
the sales figure of the company over previous sales figure.

 Habit was termed to be the most influential factor of Bidi smoking, followed
by the strength. Many people also termed price as an influential factor
inspiring them to repeated purchase of bidi’s. Apart from this the rural folk are
under misconception of cigarette being more injurious than bidis, which is the
other way round. The companies are further looking forward to change bidi
smokers to cigarette smokers, and the beginners to adapt cigarette directly, so

105
 as to extend their sales and distribution network and create demand for their
brands.
 The awareness level of the respondents was high for Red & White Super
followed by Cavanders Magna & Scissors, Capstan Std, both in aided and
unaided means. This shows that the companies have been very successful in
creating awareness about the micro brands among the rural folk through their
distribution network and efficient marketing and promotional strategies used
in the rural India.

 The sales figure of the company has gone up for the micro brands from the
previous year in every rural markets undertaken. This shows the success of the
company in tapping the rural folk through creation of demand for their brand
of cigarettes. To do so the company has spent extensively on promotion and
distribution of their brand, and has done massive advertising for creating
awareness in rural areas.

Further to add up it can be said that the issues raised in chapter of literature review
were found out to be useful in the main research carried out in the rural India. The
issues like rural consumers are more price sensitive were mentioned in the discussion
made in the chapter of literature review and same comes up after analyzing the
research data.

It has been found out in the research done in the ‘Result and Analysis’ part of the
chapter, that word of mouth plays very important role in the rural marketing process
and the same goes with the considerations made in the chapter of literature- One of
the most important published studies (Kartz & Lazarafeld, 1955) in consumer
behaviour showed that inter personal communication among friends plays a major
role in a great many consumer decisions, and thus some consumers, the ‘opinion
leaders’ – have a more central role in this process than others. Now shifting the view
to the ethical perspective, the discussion can be made by saying that; although it is
inherently wrong to advertise cigarettes but taking on the view that with these
advertisement rural peoples will get aware of less harmful product i.e. is cigarette as
to Bidi. The advertisement is making the people aware and more informed.

106
From this research study, it is clear that Sales and Distribution extension taken up by

the company (GPIL) and attempts made for the creation of demand for the cigarettes

in the rural areas have been a success story so far

Hence,

Hypothesis: ‘‘Sales and distribution extension and creation of demand can increase
the demand for cigarettes in Rural Markets’’.

 Is proved to be successful, i.e., the company is going in the right direction,

so as to tap the vast potential in rural areas, by creating awareness, sales
and distribution extension and creating demand for micro brand cigarettes
in the rural India.

Although the company is going in the right way, the hypothesis can further be made
successful. On understanding, findings and observation both from the primary and
secondary sources, some recommendations are given in the next chapter which will
further result in the success of the above proved hypothesis.

107
 CHAPTER-7

RECOMMENDATIONS

This Chapter is about the recommending the course of action that

should be adopted for the better results and it further recommends
best course of action in the present scenario.

108
Recommendations and Suggestions

The following recommendations and suggestions are based on the findings &
observations in the rural markets. The following recommendations and suggestions
for the company will help the company to meet the objectives of sales and distribution
extensions and creation of demand in the rural areas.

 During the course of study two RDP markets and two Non-RDP markets were
covered. Due to the introduction of RDP, the rural retailers who previously use
to buy stock from the local dealers now get stock at their doorstep. This has
not resulted in just the place of purchase being shifted. The overall demand in
the RDP market had gone up. Also, due to coverage of village under RDP,
awareness of the availability of the brands had gone up. The salesmen are also
able to push the brands to the retailers thus resulting in increased sales.

Action Plan: Implementation of RDP in the markets not covered as yet is

highly recommended.

 It was found that the friends and elders have the maximum influence on non-
smokers (82%) to start smoking. However, doctors from the second most
influential group to influence non-smokers to start smoking. There are
umpteen cases where in the patients go to the rural doctors with the complaint
of stomach pain and gastric problem, ulcers etc. Doctors recommend smoking
as a form of medication for relief against such ailments. Thus, if Doctors are
influenced by GPIL to recommend cigarette smoking to such patients, many
non-smokers can become potential customers thereby increasing the demand
for GPIL brand cigarettes.

Action Plan: A meeting of all the rural doctors in the targeted rural market
should be organized and awareness must be created about the GPIL brand
cigarettes available. Souvenirs (Thermometers, Writing Pads, and Cotton
Swabs etc) should be distributed to these doctors, which would bear the names
of GPI, brand cigarettes. These doctors need to be influenced to recommend

109
 cigarette smoking and not Bidi smoking as a form of medication against the
above aliments.

 The average age for starting to smoke in the rural markets was found to be 16-
17 years. These youngsters are mainly influenced by their friends and elders to
start smoking. Also, in majority of the cases, smokers start with Bidi rather
than cigarettes. Thus an action plan has to be formulated to thrust the brand
names of GPI cigarettes on these youngsters who would make them directly
adopt cigarettes rather than Bidis.

Action Plan: The potential smokers should be tapped at a young age when
their minds are not mature enough to make an opinion of their own. Rural
youngsters are fond of play items like Tops, Marbles, and Catapults etc,
these could be made on a large scale bearing the brand names of GPI
cigarettes. These should be freely distributed among the rural youngsters. The
children are also fond of items like Stickers Badges etc; these could also be
made on a large scale and freely distributed in the villages. This would help in
making the brand names of GPI cigarettes reach every rural household.

 It is observed that bidi smokers and Dual smokers smoke at least a bundle of
bidis (20-24 sticks) in a day. Assuming that a normal villager has a working
day of 16 hours (0700 hrs. to 2100 hrs) he smokes 1.5 bidis in an hour or 1
bidi every 40 minutes. Also the smokers are in the habit of offering their bidis
to their friends. Cigarettes (Micro Brands) come in pack s of 10’s which
means, if smoked at the same frequency will last only half a day. Farmers
working in the filed do not have access to cigarette shops during the middle of
the day and purchase a complete bundle of bidis in the morning before going
to work.

Action Plan: The Company should come out with 20’s pack in the micro
segment as well. This would reduce the packing cost and this could be passed
on to the consumers. Alternatively, the company could also give a discount or
a match box free with the purchase of 2 × 10’s packs.

110
 The misconception that ‘‘Cigarette smoking is more injurious than bidi
smoking’’ is very prevalent in the rural markets. Smokers are of the opinion
that the smoke emanating out of burning paper (in case of cigarettes) causes
cough and other breathing aliments, as against the smoke emanating out of
burning Tendu Leaf (in case of bidis). Doctors in the rural markets also
confirmed their belief in the above. Bidi companies also propagate the above
belief. Bidi companies also propagate the above belief through audio vans in
the rural markets.

Action Plan: The organization should operate Audio Vans as well and hold
meetings in the villages to clear the above misconceptions and educate the
customers about the superior quality of tobacco used in cigarettes.
Doctors should also be contacted to clear their misconception; they
could act as channels for communicating the correct message to the
customers.

111
Sales and Distribution Related (Recommendations and Suggestions)

 Many retailers are of the opinion that if credit facility were extended to them,
they would carry more stock. At present due to the shortage of cash, retailer’s
stock cigarettes only for 3-4 days and for the remaining days of the week, they
buy stock from the local dealers.

Action Plan: A credit scheme could be introduced for the A-class retailers in
the rural markets. Under this scheme the retailers would have to pay 80 % of
the total outstanding (this figure could be worked out) should be paid
immediately and the rest could be carried forward. As a result the sales
through the salesman would also increase resulting in their getting a higher
commission.

 Bidi companies offer schemes to retailers and customers by way of coupons.

Every carton of bidi has a numbered coupon for the retailer. At the end of
every 3-4 months lucky draw is held where attractive prices are given to the
retailer with the wining coupon. Also each of these coupons can be exchanged
for 25 paisa. Similarly, schemes have been introduced for the customers where
lucky coupon is present in some bidi bundles and prizes like combs, spoon,
match box, 50p off, etc are given.

Action Plan: Similar schemes should be introduced for the retailers and
customers with attractive prizes like televisions, Bicycle, Transistors, and etc.
These prizes when won by rural consumers would generate a lot of word of
mouth publicity for GPI cigarettes.

112
Public Related (Recommendations and Suggestions)

 The video on wheels used by the organisation is a very effective form of

promoting cigarettes in rural areas as it evident in the literature survey.
However, GPI’s video on wheels has a very low viewer ship (1 out of 300
customers contacted). Also, the frequency of visits by video on wheels is very
low in the visited markets of the rural India. People could recall having seen
the video on wheels needs to be revised of soap companies (HLL, P&G) and
also of urea companies.

Action Plan: The complete schedule of GPI’s video on wheels needs to be

revised to exploit this effective platform of promotion.

 The ‘Red & White’ bravery award is a very good and effective means of
promoting the ‘Red & White’ brand name. However the awareness level of the
‘Red & White’ bravery award is very low.

Action Plan: Regular advertisement in the local dailies with a call for entries
from the rural markets, pamphlets should also be printed detailing the
significance and purpose of these awards. Just like the children’s bravery
awards is associated with the Republic Day of India (26th January), the ‘Red &
White’ bravery award should be associated with a national day (15th August,
2nd October, etc), or any event which is a national event. The winner
achievements should be publicised through all the dailies, which would
generate a lot of word of mouth publicity in the villages of the award winners
and also the nearby villages.

 The most common made of transport in the villages is the village bus, bullock
cart and Jugad. In the villages the bus stops are on the highway with a very
few bus stops with shelters. It was also observed that the bidi companies use
the bus stands for the publicity of their brands. However none of the cigarette
companies use these bus stands for promoting their brands.

113
 Action Plan: The Company should exploit the situation and put shelters on
the roadside in villages which would act as bus stands. These stands could be
made of asbestos sheets supported by poles on four sides, hence making it cost
effective. These could be used as a promotion tool for the GPI brand cigarette.
Boards could be put up on the sides of these shelters with advertisements for
GPI brand cigarettes.

 The POS materials used for promoting GPI brand cigarettes are innovative and
attractive. It was also observed that all pan shops have a mirror, which is
displayed prominently on the stall. ITC has flooded Saharanpur market with
danglers of ‘Capstan’ brand. No danglers could be seen of GPI brands.

Action Plan: The mirror available in almost al pan shops would provide an
ideal platform for promoting the brands of GPI cigarettes. These mirrors have
a very high visibility. Attractive stickers should be made on a large scale and
freely distributed to the pan shops as well as to the barbershops where mirrors
are available. Danglers should be made of GPI brand cigarettes and these
should be distributed to the retailers in the rural markets.

 In the rural markets the most common special even is the weekly bazaar. Other
events like Melas (Fairs), Haat Bazaar, etc. also have a very high attendance.
These could be exploited for promoting GPI brand cigarettes.

Action Plan: The Company should actively participate in these special events.
Handcarts should be operated in the weekly bazaars. Tempos and Vans could
also be used for operation in these bazaars. The company should put up stalls
in the melas and have lucky draws with attractive prizes for the customer.
They should also sponsor monthly or quarterly sporting events like kabaddi,
wrestling, cricket etc. for a cluster of villages.

114
 The calendars of GPI brand cigarettes have Indian film star photograph on it
and fonts are only in English. However, the viewer ship and awareness of the
personality is very low. Bidi companies provide the retailers with calendar
having fonts in English, Hindi and even in Urdu.

Action Plan: Special calendars should be prepared for the rural markets with a
personality whom the villagers identify with and these calendars should have
fonts in English, Hindi and Urdu.

 When the salesman in the Saharanpur market were contacted they expressed
their difficulties in pushing ‘Select’ brand of cigarettes, because the retailers
felt its packing resembles the packing of ‘Vijay’ brand of cigarettes, which is
perceived as a low quality and cheap cigarette. The illiterate rural consumers
mistake ‘Select’ for ‘Vijay’ and as a result the retailers have a problem in
pushing ‘Select’.

Action Plan: A detailed study needs to be done to check the validity of the
above hypothesis and if it is accepted the packing of ‘Select’ has to be
changed to differentiate it from other brands.

 A favourite pass time in the villages is to play cards in the afternoon.

Action Plan: Card packs with the brand name of GPI cigarettes should be
offered to the rural customers under exchange schemes. (1 card pack with 10
empty packs of the GPI brand cigarettes).

115
  The RDP salesmen operate on mopeds for which they are paid maintenance
charges. These mopeds could be utilised for promoting GPI brand cigarettes.
In Hapur market it was observed that the cycles used by ITC salesman have
boards with ‘Capstan’ written on it prominently.

Action Plan: The mopeds and cycles used by GPI salesman should be fitted
with boards carrying the brand names of GPI cigarettes. These could also be
fitted with boxes for carrying the stock. In addition to this the salesmen should
be given T-shirts carrying the brand name of GPI cigarettes. This would not
only be an incentive for the salesman but would also provide the company
with a platform of promotion.

On the basis of the in-depth study undertaken on the rural markets, the following

Marketing/Communication program has been developed and is recommended to the

company so as to tap the immense potential of the rural market.

In the following Marketing Communication programme the above recommendations

for the sales and distribution extension and creation of demand for GPI Brand

Cigarettes in the rural areas have also been taken, so as to make a feasible, flexible

and easily implement able Marketing/Communication program.

Marketing/Communication Programme for Micro Brand Segment

To prepare a feasible, and easily implementable Marketing/Communication plan for

GPIL in Rural Market the first step taken was to develop a structure of the plan:

Structure
 Communication objectives.
 Market prioritization.

116
  Media selection for communicating rural audience.
 Promotional activities.
 Tracking mechanism.

Communication Objectives
 Create awareness of
 Micro brands.
 Price
 Establish advantage of cigarette smoking over the disadvantage of bidi
smoking.
 Clearing misconception about cigarette category and micro brands.

Need Pilot Study

Any rural thrust requires large investment therefore the strategy needs to be tested out
for communication and effectiveness in terms of;
 Contribution to trials and conversion.
 Role of each element of the media mix.
 Role of the message.

Market Prioritisation Parameters

Districts
 Top 10 districts.
 Sales and distribution (RDP Coverage).

The top 10 distribution are taken so as to facilitate efficient sales and distribution
network, as it is easy to run RDP in almost every district (large in size).

Feeder Town
 Selected at a cut off <10,000 population strata. This is because the target
audience will be more in number, if large population area is selected.

Villages

117
  Within 15 Kms of feeder town.
 Direct distribution
 Easy self stock replenishment (minimizing stock out situation)
 70% villages covered within 15 kms, radius of feeder towns.
 All villages in 2000-10,000 band fall within 15 kms radius.

Media Selected for Communicating

The following Medias are selected after the finding of literature survey, which
supports the following decision of media selection so as to reach the rural consumer
effectively and efficiently.
Table 7.1
Media Role
Wall painting Reach/Visibility
Tin Plates Exposure Builder
Dealer Boards Exposure Builder
Local Transport Exposure Builder
Direction Board Exposure Builder
Video Vans Participate
Folk Performance Participate
Cinema Festival Excitement Generation
The company for the communication tasks should use these Medias. By making use
of these Medias for the communication the company can;

 Create category and brand awareness.

 Establish the heritage.
 Familiarise with the pack.
 Relate brand choice with the progressive lifestyle and aspirations.

These media means are very successful in the rural India, as there is evidence for this
in the Literature survey. The company should emphasis especially on the cinema, wall
paintings, Tin boards, Local transport and folk performances.

118
Facts about Wall Paintings
More than half of the people contacted were aware of wall paintings. Due to wall
paintings people could recall the price, colour of pack, slogan etc. Hence, wall
paintings will be of great use in reaching the rural customers.
Facts about Tin Plates
Tin Plates are extremely critical for shop visibility, as bright colours used in the plates
stand apart. If Tin Plates coverage is ensured at every outlet, outside and inside of the
villages, the objective of creation of demand can be met quickly and easily.
Facts about Local Transport
The novelty of this activity draw a lot of attention thus will be effective in delivering
the set objectives. This will provide effective exposure tot the rural audience, as the
activity will capture them in their environment.
Facts about Folk Performances
It is effective and efficient platform to gather and address large gatherings; hence, the
company should communicate brand values;

 Pride
 Price
 Quality
 Availability

Apart from this folk performances generate excellent captive audience turnout.

Facts about Cinema/Film festivals

The film festival is an effective medium to create hype. It has high audience
participation, both direct and indirect. Action movies get maximum participation, so
the company should undertake action film festival to generate awareness among the
rural folk.
From the above it is clear that the company should use the judicious mix of all these
media to communicate with the rural folk, making him aware of the brands available,
eliminating his misconception etc, consequently making him to switch to cigarettes.

Promotional Activities

119
Apart from the promotional activities recommended in the recommendation part, the
company should promote pack buying to increase sales further, for this the company
should launch a gift scheme (Tohfa Scheme).
Gift Scheme (Tohfa Scheme)
 A scheme focussed towards motivating pack buying.
 Lure customers through attractive status symbol gift items, which can be
redeemed against empty packs of cigarettes. Gifts can be like purse, key
chains, watches, cameras, etc.
 Involve retailers in the scheme too, so that they also push the brand.

Tracking Mechanism
The feed back should be collected for all the promotional activities undertaken for
communicating the rural audiences and corrective measures should be taken to meet
the desired objectives.
Components of Tracking Mechanism
 Company’s own people feedback.
 Company’s field staff monitoring and feedback.
 Resource network experience.
 Structure feed through informal research.

Marketing Communication
Program

Structure

Communication Media Promotional

Market
Objectives Selected Activity
Prioritizatio
n
 Creating  Wall  Gift
Awareness paintings Schemes
 Distri
ct  Cinema
 Advantag  Credit
 Folk
e of cigarettes period
 Feede performance
r town  Local
 Eliminatin transport
g  Free trials
 Villag  Tin plates
misconception e  Dealer
Boards
 Video vans
 Direction
boards
120
 Author Formulation
Figure 7.2
Wider Implication of the Research

The wider implication for this research work can be talked on many aspects. Taking
this research further deep into the rural sectors covering every part of India, can be a
useful source of information for any marketing companies targeting their efforts to tap
the rural India customers, apart from the cigarette companies. Other thing that can
also be looked on is that this research work can provide a deep insight into
competitors move and tactics followed by them. And this research work can be
proved to work as an marketing research report for the tobacco companies in India
and as well as other MNC’s that are planning to target the rural consumers of India in
the coming future.

121
122
 APPENDICES

Questionaire-1

(Village Details)

Name of the village:------------------------------------------------------------------------

Name of the market:------------------------------------------------------------------------

Distance of the village from wholesaler depot:--------------------------------------

Name of the salesman servicing the village:----------------------------------------------

Access to the village: rail/road:---------------------------------------------------------------

Population of the village:-----------------------------------------------------------------------

Primary occupation:---------------------------------------------------------------------------

Literacy level of the villages (%):-------------------------------------------------------------

Special event in the villages:-------------------------------------------------------------------

Modes of entertainment:

Theatre yes/no
Nautanki (Play) yes/no
Video parlour yes/no
Others ------------------

Means of advertisement in the village:---------------------------------------------------------

Video on wheels

Wall paintings

Hoarding

Other----------------------

Questionaire-2

123
 (Retailer Details)

Name of the retailer:-------------------------------------------------

Type of retailer: (Pan shop (local shop) / Grocery/ Hotel/ other)

Mode of purchase: Salesman/Direct/ other

Salesman’s name:--------------------------------------------

Frequency of visit:------------------------------------------------------------

Days stock ordered at a time:-------------------------------------------------------------

Types of POS (Point of sales) at outlet:------------------------------------------------

Type Brand

Glow sign
Posters
Calendar
Clock
Counter
Other

Availability of brands and approx, sales

Brand Sales (stick)

Other details :---------------------------------------------------------------------------

124
 Questionaire-3
(Customer)

Age Range :----------------------------------------------------------------------------

Sex:----------------------------------------------------------------------------------------

Literacy level:-----------------------------------------------------------------------------

Occupation:-----------------------------------------------------------------------------

Income (monthly):--------------------------------------------------------------------------

Smokes: Bidi/Cigarette/Hukka

Smoking for the past:------------------------------- years

Who influenced you to start smoking:-------------------------------------------------------

Daily consumption: Bidi--------------------------- Cigarettes--------------------------

Current Brand of Bidi/Cigarette:---------------------------------------------------

Previous brand tried:--------------------------------------------------------

Reason for change: ------------------------------------------------------------

Means of entertainment: -----------------------------------------------------------------

Brand recall (cigarette) -------------------------------------------------

Top of mind------------------------------
Unaided recall----------------------------
Other brands recalled--------------------------

Aided recall:

Four Square yes/no

Red & White yes/no

Cavanders yes/no

Select yes/no

Gold Flake yes/no

125
 Classic yes/no

Wills yes/no

Panama yes/no

How do you compare different cigarettes?

-------------------------------------------------------------------------------------------------------
----------------------------------------------------

Have you seen the advertisements of cigarettes? Yes/no

Which Brands? -----------------------------------------------

Tell us about the

ads:--------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Where did you see the ads? --------------------------------------------------------------------

Do you like the ads? ----------------------------------------------------------------------------

Other details: --------------------------------------------------------------------------------------

126
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