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ASSIGNMENT
NO-4 MGT-635

TOPIC- Launch a new Lipstick in Orissa.

“The future lies with those companies who see the poor as their customers."
- C. K. Prahalad

Submitted by Guided by
Ratneshwar Kumar Mishra Mr. Hitesh Jhanji
Section-A
Roll number –RT1901-A-12

Reg No:- 10900335

Table of Content

S. No. Topic Page

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No.
1 Acknowledgement 03
2 Objective of the study 03
3 Introduction of Orissa 04
4 Introduction of Rural Mkt in India 06
5 Why Rural India 06
6 Marketing Plan for launching 07
7 Market Situation Analysis 09

8 Reason for choosing Orissa 10

9 4A’s approach of Orissa Rural Market 11

10 Product strategy for Lipstick 13
11 Conclusion 13
12 Recommendations 14
13 Bibliography 14

ACKNOWLEDGEMENT
I provide full justice to this term paper which is prepared by visiting various web-
sites, magazines, articles etc.
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I would like to take an opportunity to thank all the people in collecting the
necessary information and making of the report. I am grateful to all of them for their
time and wisdom.

My project becomes a reality only due to cooperation of many people who had
helped me in completing this project. I sincerely extend my gratitude to Mr. Hitesh
Jhanji who has given me this precious opportunity to have know about the
Indian Rural Market.

Objective of the study.

 To launch a new Lipstick product.

 Increase the knowledge about rural market in India.

 To create effective market plan for the Lipstick Product.

 To create effective Brand Image of the Lipstick Product.

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INTRODUCTION OF ORISSA
Orissa is situated in the east coastal region of the country. Its geographical area is almost
4.74% of India and its population is 36.7 million (2001census), about 3.57 per cent of
India’s population. The population density of the state is 236 persons per sq. km. (in
2001), but there is a sharp divide here between the coastal and inland districts (the inter-
district coefficient of variation in this respect is of the order of 63.56 per cent, a reflection
of a significant differential in the ‘carrying capacity’ of land). The urbanization rate, at
14.97 per cent (2001), is the lowest among the major states of India and also there is a
very marked inter-district variation (Coefficient of Variation (C. V): 73.29 %: 2001).

The rate of growth of population of Orissa during the decade 1991-2001 has been only
15.94 per cent as against 21.34 per cent for all-India, and indeed this has been the third
lowest growth rate of population among the major Indian states, higher than only Kerala
(9.42 %) and Tamil Nadu (11.94%). This has occurred not because of a normal process
of demographic transition (as in the case of Kerala and Tamil Nadu), but due to a peculiar
demographic regime, namely, a relatively faster decline in the birth rate from a relatively
low level on the one hand and a relatively slower decline in the death rate from a relatively
higher level on the other.

• Population Distribution in Orissa:

Rural Urban Combind

Male Female Male Female Male Female Total
15.7 15.5 2.9 2.6 18.6 18.6 36.7
• Percentage of Working Population: 40%

Cultivators Agriculture House hold Other workers

Industry workers
33% 39% 5% 23%
• No and Percentage of Population below the Poverty line:

Poverty line
Rural 48.0% 323.9
Urban 42.8% 473.1
• Per capita Consumption:

Food Non Food

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64.1 35.9
• Average expenditure on FMCG:

Urban Rural
5982.0 2512.0
• Village Town Distribution:

Village Town
51352 138
• Rural Household Assets:

No of Banking Electricity Radio TV Phone Bicycle Bike Car

household service
6782879 20 19 21 9 1.6 49 4.5 0.6
• Media Coverage in Orissa:

Press Satelite Raido Cinema Hatts TV

All 14 4 19 13 3445 39
Rural 11 0.9 15 30 2865 34
Urban 31 22 30 20 580 68

Facts and Figures About Orissa

Geographical area 155,707 sq. km
Total forest area 58136 sq. km.
Coastline 480 km.
Capital Bhubaneshwar
Population of Orissa 36804660 (2001 census), 3.58% of country's Population.
Population density 236 per square km. Male - 1,86,60,570,
Female - 1,81,44,090 and the sex ratio F:M is 972:1000. The
urban population is 55,17,238 whereas rural is 3,12,87,422.
Literacy rate Total 63.08 percent; 71.35 percent male and 50.51 percent
female.
Religion The majority (over 94 percent) consists of Hindus. Muslim,
Christians, Sikhs, Buddhist and Jains form a very small
minority.
Language Unilingual Oriya speaking state.
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Introduction of Rural Marketing in India

The rural India has a plethora of opportunities all waiting to be harnessed. Not
surprisingly, it has become the latest marketing buzzword for most of the FMCG majors.
Many of the FMCG companies are busy formulating their rural marketing strategy to tap
the chance .To name few companies showing deep interest in rural India are HLL, Marico
industries, Colgate – Palmolive and Britannia Industries. Rural markets are an important
and growing market for most products and services Including FMCG. The characteristics
of the market in terms of low and spread out population and limited purchasing power
make it a difficult market to capture. The Bottom of the pyramid marketing strategies and
the 4 A's model of Availability, Affordability, Acceptability and Awareness provide us
with a means of developing appropriate strategies to tackle the marketing issues for
marketing telecom services in rural area.

Why Rural India?

70 % of India’s population lives in 627000 villages in rural areas. 90 % of the rural
population is concentrated in villages with a population of less than 2000, with agriculture
being the main business. This simply shows the great potentiality rural India has to bring
the much-needed volumes and help the FMCG companies to bank upon the volume –
driven growth. This brings a boon in disguise for the FMCG Company who has already
reached the plateau of their business curve in urban India.

As per the National Council for Applied Economic Research (NCAER) study, there are as
many 'middle income and above' households in the rural areas as there are in the urban
areas. There are almost twice as many 'lower middle income' households in rural areas as
in the urban areas. At the highest income level there are 2.3 million urban households as
against 1.6 million households in rural areas.

According to the NCAER projections, the number of middle and high-income households
in rural India is expected to grow from 80 million to 111 million by 2007. In urban India,
the same is expected to grow from 46 million to 59 million. Thus, the absolute size of
rural India is expected to be double that of urban India.

• Marketing plan for launching the new Product.

• Company name: Liplop care.
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• Mission Statement: “we try to minimize the impact of our product on the
environment”.

• Vision Statement: “your skin is our first priority”.

• Location: In starting phase we only focus the main 10 District of Orissa.

• Head office: Bhubaneswar.

• Reasons for this Business: As we know that India is very vast county. The
population size is very high in compare to other country. So, here a lot of
opportunity available for the business. We know that Lipstick is a Cosmetic
product so the growth is very high for this product.

Product
 We provide the various types of Lipstick to our target customer.

 We provide the natural Lipsticks.

 We have contact the research regularly. And according to the customer needs
we make the products.

Price
‘The mass market for lipsticks (price range between Rs 30 to Rs 100) forms 43 per
cent of the total lipsticks market. The price range below Rs 30 forms roughly 48 per
cent of the market. The mass premium segment (price range Rs 100 plus) is just
nine per cent of the total lipsticks market. That figure show the price range is 20 to
50. We sell our lipstick product between 20 to 50.

Place
• As discus earlier we start our business in Orissa.

• In starting phase we only focus the main 10 District of Orissa.

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• We also try to graph the whole district of Orissa.

Promotion
As we know that Promotion play a important role in awareness. So we use the local
source of awareness. This is very chief and reliable. Those are

• Haats or weekly markets

• Meals
• Wall Paintings
• Customer contact ‘touch points’
• Van Campaigns
• Event Management
• Folk media
• Interactive games

• Market Situation Analysis

Indian Lipstick Market!
Lipstick is a cosmetic product containing pigments, oils, waxes, and emollients that
applies color and texture to the lips. There are many varieties of lipstick. As with most
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other types of makeup, lipstick is typically, but not exclusively, worn by women. It is
usually not worn until adolescence or adulthood but some young girls tend to wear it.

Surprising! Shocking! Fact of Lipstick Market.

According to U. K. Modi, Chairman & CEO, Modi Revlon in 2003 ( EVERY CEO is
influenced by AC Nielson/ ORG MARG when it comes to numbers) total Indian Lipstick
Market size accounts for Rs.116 crore.

• Organized Sector - Rs.78 crore

• UnOrganised sector - Rs. 38 crore
• Market Leader Lakme - 40 %
• Maybelling - 14%
• Revlon - 19%
But a study done on 2004 says Revlon now occupies 28.6% of lipstick market but there
are a lot of brands available in the Market. Those are

• Avon
• Bobbi Brown
• Clinique
• Cover Girl
• Elle 18
• Estee Lauder
• Lakme
• MAC
• Max Factor
• Maybelline

• Reason for Choosing Orissa

When you study the data of Orissa you find one things that is The rate of growth of
population of Orissa during the decade 1991-2001 has been only 15.94 per cent as
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against 21.34 per cent for all-India, and indeed this has been the third lowest growth
rate of population among the major Indian states, higher than only Kerala (9.42 %)
and Tamil Nadu (11.94%).

• Population Size: Most of the Orissa work force is also young. 54% of the
Orissa population is under the age of 25, which, presumably makes them
more adaptable to changes and are therefore ideal for businesses that need
workers that can adapt to their system.

• New Innovations: Apart from crop changes, innovative farming techniques

are boosting productivity, encouraging new entrepreneurship and having a
huge social impact.

• Spending Power The big reason for the growth is that Orissa rural
consumers are steadily gaining more spending power. The number of rural
households earning less than US$260 a year is down from 65% to 24% since
1993, while those with an income of US$725 have more than doubled from
22% to 46%. Combine these factors with improved roads and other
infrastructure in rural to help products reach their markets, and it's easy to
see rural attraction.

• Standard or Living Increased Orissa is quickly developing a growing

economy that attracts plenty of businesses – and with good reason. Choosing
Orissa to set up shop in has plenty of benefits that are not available in other
states.

• Women empowering: When you study the data of Orissa you find that
women’s are the most effective in compare to man. As we know that Lipstick
is a women item so we chose the Orissa as our Potential Market.

4 A’s approach of Orissa Rural Market

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

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

Availability
The first challenge is to ensure availability of the product or service. In Orissa there are
51352 villages are spread over 1.2 million sq km; 700 million Indians may live in rural
areas, finding them is not easy. However, given the poor state of roads, it is an even
greater challenge to regularly reach products to the far-flung villages. Any serious
marketer must strive to reach at least 13,113 villages with a population of more than
5,000.

Affordability
The second challenge is to ensure affordability of the product or service. With low
disposable incomes, products need to be affordable to the rural consumer, most of who are
on daily wages. Some companies have addressed the affordability problem by introducing
small unit packs.

Affordability:. They cannot hence make planned purchases and large

purchases. Small pack sizes help the rural consumer pick the product at a price
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that he can afford. Storability: The storage life of a product also has a bearing
on this decision.

Acceptability
The third challenge is to gain acceptability for the product or service. Therefore, there is a
need to offer products that suit the rural market. However, the rural consumer expressions
differ from his urban counterpart. Outing for the former is confined to local fairs and
festivals and TV viewing is confined to the state-owned Doordarshan. Consumption of
branded products is treated as a special treat or luxury.

Awareness
The key dilemma for our business to tap the large and fast-growing rural market is
whether they can do so without hurting the company's profit margins. So we focus on
local medium of awareness.

• Haats or weekly markets

• Meals
• Wall Paintings
• Customer contact ‘touch points’
• Van Campaigns
• Event Management
• Folk media
• Interactive games

PRODUCT STRATEGIES
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The following are the product strategies for the rural market and rural consumers:
1. Small Unit Packing: This method stands a good chance of acceptance in rural markets.
We offer small Packs.
2. New Product Designs: The manufacturer and the marketing men can think in terms of
new product designs, keeping in view the rural life style.
3. Sturdy Products: For the rural consumers, heavier weight means that the product is
more durable,
4. Utility Oriented Products: Rural consumers are more concerned with the utility of the
product and its appearance.

5. Brand Name: The rural consumers do give their own brand name on the name of an
item. A brand name or logo is very important for a rural consumer for identification
purposes.

6 Branding: Brand is the term, name, sign, symbol, design or a combination of them,
which helps to identify the seller products & identify them from competitor products. Its
primary purpose is creating an identity of the product.

7 Combi-packs: Another packaging innovation is ‘combi-packs ’. When related products

are packed together and sold at economy prices, the consumer finds it a better option to
buy. The combi-pack may become an assortment when more than two products are packed
together
8 See-through packs: Many companies are coming up with new packages that are
attractive as well as economical.

RECOMMENDATIONS
We are the new player rural markets, but not the only one now. There are many companies
which entered rural markets. So we needs to be competitive and keep on updating its
strategy to have a foothold in the Rural markets. For India to maintain and improve
economic growth it is imperative to improve rural markets. Even today there is imbalance in
rural development. Government and Marketers have to undertake measures to improve the
Rural markets.

CONCLUSION
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As we know that the Indian rural market is one of the big markets in the world. "Did you
know that 11% of rural women use lipsticks compared to just 22% of urban Indians? The
Rural to Urban ratio? 3:1. therefore more rural women uses lipsticks than urban. And the
biggest selling lipstick brand in India? No, it’s not Lakme or Revlon. Its Raja Lipsticks."
This brand has 79% of the rural market. International brands would kill to get that kind of
a penetration in the 1 billion populations!"
And to make it more interesting here comes the next BOMB
"Apart from this, here are some other aspects of this lipstick market. The application
factor of lipsticks by Urban women is 1.1 (that is.. on an average, they apply 1.1 layers on
their lips). Rural women on the other hand have an application factor of 2.5 (2.5 layers on
their lips). This number directly translates into higher usage of lipsticks."

BIBLIOGRAPHY
 Ramkishen.Y, (2nd Edition, 2004): Rural & Agricultural Marketing
 C.S.G. Krishnamacharyulu and Lalitha Ramakrishna, Rural Marketing,
published in 2002.
 Philip Kotler, (10th Edition) : Marketing Management
 Rajan Saxena, (2nd Edition) : Marketing Management

Websites:
 http://www.scribd.com/doc/34884904/Rural-Marketing-Strategies-Hll

 http://www.scribd.com/doc/20541418/Distribution-Strategies-in-Rural-
Markets

 http://www.slideshare.net/aashimna3

 http://www.indianmba.com/Faculty_Column/FC213/fc213.html