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Rural marketing
It is often said that markets are made, not
found. This is especially true for the rural
market of India
Meaning of Rural
Collins cobuild dictionary describes the word
rural as places for away from towns or cities
Sociology point of view rural is defined as a
group of people who are traditionalists inout
look, rooted in the land and who resist
change.
Rural marketing
In simple words, is planning and
implementation of marketing function for the
rural areas.
It is a two-way marketing process which
encompasses the discharge of business
activities that direct the flow of goods from
urban to rural areas(for manufactured goods)
and vice-versa (for agriculture produce)
Cont..
Rural consumption
Relationship between agriculture, rural income
and consumption
Literacy in rural india
Electricity availability in rural india
Electricity availability in rural india
Development indicators in rural india
D)Rural consumption
FMCG Rs 65,000 crore
Per capita expenditure on education by urban
households was 4,5 times by rural households
Urban spend twice on health compare to rural
Urban rental house five times more that rual
area
42 million, rural, - 27 million, urban avail
banking services
2) Heterogeneous market
Not a homogeneous
24 languages and 1642 dialects- varies every
100 km
Difficult to develop uniform message caste,
community, tradition values (from state to
state, region to region differ)
Punjab
Bihar(per capita income)
25,048
5466
562
332(1965)
5) infrastructural facilities
Road, warehouse, communication system and
financial facilities are inadequate in rural area
Roads donot connect nearly 50% villages in
the country
Inadequate infrastructure is single most
important factor distinguishes urban and rural
Promotion and physical distribution thus
becomes very difficult
1) traditional outlook
Values old customs and tradition
2) perception and its influence
In rural markets, colour, size and shapes are
interpreted differently
(ex) yellow colour indicate prosperity in the
rural south, but it indicate sickness and
disease in s
7.budgetary allocation
Corporate sector loves the rural markets, but
when it comes to allocations, the amount of
investment in rural marketing is very limited,
observes R. Gopalakrishna executive director,
Tata sons Ltd.
Allocate at least respectable amount of the
budget for research and promtion
6. large popualtion
The population is very large and its growth
rate is also high
C.K. Prahlad, the future lies with companies
who see the poor as their customer
There is an opportunity to make a lot of
money in rural india. But, there are obstacle
too i.e rural consumers is still evolving.
Rural products
Unit III
Rural Buyer Behaviour: Rural buyer behaviour
Factors determining rural consumption
Rural buying process Current trends in rural
buying behaviour.
Consumer behaviour
Dynamic behaviour and the environment by
which human beings conduct
It can be understood, by the statistical report
Continuous study should be there
Knowledge of buyer behaviour is vital for
marketing strategic
Fundamentals of consumer
behaviour
Four types of buying behaviour, based on the
following two parameter
1) degree of buyer involvement ( high and
low)
2.degree of differences among brands
(significance and non significance)
High involvement
Low involvement
Significant
Complex buying
differences
behaviour
among brands (expensive, may
difference in brands
like computer,
automobile)
Variety seeking
buying behaviour
(less expensive and
frequently purchased,
experience
size,smell, sound,
touch, ice crea,
confection) per yr
India 6 brand,
america -2 brand
Few
difference
among brand
Habitual buying
behaviour(low cost,
frequently purchased
salt,soap,-exception
in cigaretter- brand
preference is more)
Dissonance reducing
behaviour(expensive,
but few different like
social productsfurniture)
Need Recognition
Information Search
Cultural, Social,
Individual and
Psychological
Factors
affect
all steps
Evaluation
of Alternatives
Purchase
Postpurchase
Behavior
Sour Grapes
a story of
cognitive dissonance after being unable to
reach the grapes the fox said, these grapes
are probably sour, and if I had them I would
not eat them.
-Aesop
2.group
Consumers are part of a group to which they
belong
Opinion leader- a teacher, bank manager, vDO,
etc
The acceptability of an idea by the group and
by the leader is critical in rural areas.
3.family
Family size and the role played by family
members (joint family)
5. sociability
In rural areas, individual are know and
identified better
Accepted by the group makes them agreeable
6.economic factors
More than 70% of the people are in smallscale agricultural occupation
These factors affect the purchase decision
7. political factors
Programmes for self-employment like the
prime ministers Rojgar Yojana (RMRY)of the
cental govt.
CMEY- chief minister employment yojana
program in Andhra pradesh increase the
potential of the rural market
The IT, telecom and infrastructure policy,
which is bringing connectivity to village is
empowering the consumer
examples
Conclusion
The size of the rural market is quantitative and
qualitative
Mr. kartik raina of dalmia consumer caretobacco free beedi called vardaan
the rural market in not for all, but for those
with the guts, the skin of an elephant and the
mind of an evangelist .
the market.
case
examples
Behaviour Variations of Watch Buyers
The demand for watches is high in rural areas and it increases
during the marriage season. This is true throughout the country. The
variation is, however, in the type of watch and brand that is preferred
by the consumers. In the villages of the north, winding watches are
preferred which are bought from large feeder villages nearby. They
fi nd it convenient to get it serviced at a nearby place. The awareness
of quartz brand of watch is limited. The awareness of a brand is usually
from newspapers in addition to word of mouth.
In the south, the preference is for a quartz watch and is purchased
from a showroom in the town. In some of the villages, television has
created a high degree of product awareness. As the purchase of quartz
watches is expensive, the villager prefers to buy it from the town and
is willing to take it back to the showroom in town in the event there
is a problem with the watch.
Occupation
examples
Unit IV
Product and pricing for rural market:marketing
mix for rural markets- developing a new
product for rural market- product life cycleinnovations in product design rural marketbranding products for rural markets price
determination for rural market- pricing
methods for rural market.
Marketing mix
A series of interconnected and interdependent
marketing issues that need to be considered
together
First developed by Neil Borden in 1950
1960s jerome Mccarthy (Harvard) elaborated the
concept of the four Ps
Marketing mix refers to the set of actions, tactics
tools or variables that a company uses to promote
and sell its brand or product in a market
4Ps of marketing
Decisions about the controlled marketing
variables
4Ps : product, price, promotion, and place
(distribution)
Several other Ps: Packaging, positioning,
people, pace, passion, publics and even
politics as well
4 Cs of pricing
(a)costumer value- value the customer
perceives that the product delivers
(b) competitors prices
(c) cost to the company- combination of fixed
and variable cost
(d) strategic and pricing objectives of the
company- the financial, marketing and
strategic objectives that the organization has
decided to achieve from a product.
Pricing objectives
case
The brand has a good image in the rural market but the presence
of a large number of local and small brands competing on price
restrict the market share. The rural market is large but because of
price competition its major share is from the urban market. It is
the leader in South India but its leadership is because of the urban
market.
Pricing process
Step 1- developing the marketing strategy:
performing the segmentation, targeting and
positioning functions
Step 2- making the marketing mix decisiondetermining the other 3 Ps:product, place and
promotion
Step 3 estimating the demand curve
analysing how the demand is likely to vary
with the price
Pricing methods
A) cost plus pricing- organisations add certain profit
margin over the cost of the product
B) target return pricing targeted return on its
investment
C) value based pricing based on customers
perception of value
D) psychological pricing- already existing reference or
psychological prices in the mind of customer
Pricing through the product or service life cycle
Place
Refers to the point of sale
The main aim of distribution or place strategycatching the eye of the consumer and making
it easy for to buy a product
ideal balance between the cost to the
organisation and consequent convenience to
the customer
In fact, the mantra of a successful retail
business is location
Distribution
Means ensuring the spread of the product
throughout the market place in a manner ,so
that a large number of people can buy it.
Distribution channels
Flow of products from the site of manufacture
to the point of sale
Conventional channel : factory- c&fdistributors- retailers(most common channel
for the most goods)
examples
Case
Product
Modified to suit the lifestyle and needs of the
rural consumers
Rural consumers like to buy products for need
based consumption
Recycling and putting a product to all possible
practical uses before discarding
While designing a product- consider reuse and
recycle
The product to be useful and easy to use
Branding
Making them change their product or brand is
very difficult
Higher brand loyalty among the villager
Once a brand is accept(vill, state, region) very
difficult to replace
According to Harish Manawani ,the vice
president HLL, international brands need to
be relevant interms of perceived image,
performance value if they are t succeed in the
Indian market
Packaging
The decision of packaging is influenced by the
characteristics of consumers i.e affordability,
cultural preferences, usage conditions and
ability to read
Minimum quantity of the product for weaker
section(financially poor)
The problem of dust, heat or bumpy roads
special stress on packaging
Illiterate not able to ask for a brandadvertised recognise the product by its
packaging
This is why (imitating the packaging ) is
available in village shops
SKU
Stock keeping unit
Organisations should maintain a smaller
number of SKU for the rural market
As the rural retailer has a limited working
capital
Product strategies
In rural marketing
1) new/modified product designs
A) research and marketing department think
new design according to their (rural) life style
B)rural environment- product tough- rough
handling, rough roads and frequent power
fluctuation
C) nokias1100- customised model for rural
D)dust resistant, small torch, economically etc.
Price
Price is the most important phenomena
affecting rural market
Little extra for better qualilty- cheaper version
Some retailers in the interior villages charge
more than the maximum retail price(mrp)-to
fetch spend time and money from
distributors
Pricing strategies
As per capita income of india was low
Extremely price sensitive
(a)large volume- low margin : rapid or slow
penetration strategy
To focus on generating large volumes
Not big profit margins
Place
Third P
Village as place for promotion, distributiondifferent form town or city general
marketing theories cant be applied
Reaching right place is the toughest part in
todays market
Because high distribution cost
Most the rural retailers themselves go to the
urban areas to procure these goods
Significance of distribution
The best product, price, promotion and
people come to nothing if the product is not
available for sale at the point
Good distribution system- company has
greater chance of sellling it s product more
than its competitors
In the FMCG industry in india companies
have to distribute to over 10 lakh retail outlets
or point of sale
Promotion
As it is thin population- promotion aspect is
challenge
Media dark- inaccessible to television
signals- not only denied to access to product
but also knowledge about it.
Problem in mass media communication- time
gap between the point of exposure and the
time of purchase
case
Responses to Consumer Behaviour
Hindustan Lever found that retailers in villages
were cutting its large
100 gm Lifebuoy soap into smaller pieces and
selling these. So it
introduced a smaller 75 gm pack. It also
introduced Wheel detergent
in a 100 gm pack (Joshi, 1991).
Unconventional media
As media does not cover as much as 43% of
rural india
Events like fair, festivals, cinema van, shop
front
Stickers on hand pumps, wall of wells, putting
on tin plates on all the trees, pond- innovative
media used by HLL for lux, life boy and wheel
Folk media quite popular in different regions
and state
High frequency
Low frequency
High reach
Low reach
Co operative notice,
shop front painting, tin
plating calender /
label
Promotion strategies
1.Think global act local
Rural population is diverse
But the commonalities of their ethos and
simple living habits need to be understood for
advertising to succeed( context, story line,
language and idioms)
2. think in local idiom
thanda matlab coca cola
examples
Oscar Televisions Offering to the Rural Markets
the leading television brands. Arpita Khurana, the director of the
Oscar television competed effectively in the rural markets against
company expects a boom in the rural market with growth of nearly
80 per cent.
Oscar television competes in the rural market by providing a no frill
value for money product. For instance, Oscar, which derives 40 per
cent of its sales from the semi-urban and rural sectors, has launched
a battery-operated television model in the 14" segment to cater to
parts of Eastern UP and Bihar. This has boosted the companys sales
by 5 per cent to 7 per cent. It is planning to come out with a similar
21" model in the near future. Says Khurana, Since electricity is a
problem in these areas, we felt the model would be a success.
Source: (Ghosh and Verma, 2003).
cases
B) screening stage
Elimination process- which carry unacceptable level
of risk
Vital criteria for evaluation
1) nature of demand
2) compatibility new idea matches with the
corporate objectives, impact the existing product
3)resource what amount of money, tech, time
4) competition actual competition strength
and weakness
D) business alnalysis
Likely cost? Potential demand? Recovered?.
ROI?
E) product development
Approves particular product
Executed in research lab stage concept on
the paper is transformed in to a product in
hand
G) product Testing :
1) product testing : before it is formally launched
in the market Intel took the personal computer
designed for rural market
Test in pilot project changes made accordance to
it
2) concept testing : entire product concepts is
presented to the customer to have their reaction
it might be successful or not
3) test marketing done by selling the product in
limited
H) commercialisation or launch :
New product is actually launched in its target market place :
do some effort
Introduction stages:
Growth , sales volume is low,
Product awareness is limited
Profit is unlikely
Focus on to build awareness
Establish distribution network
Growth stage
Becomes aware of the product of its benefits
Characteristics :
rapid growth in sales and profit ,
economies of scales,
lower prices are possible,
the competitors move in the market
So focus :
To build brand preference,
To increase market share
Marketing strategies for growth stages
A)product strategies :
i) brand reinforcement educating the
customer about benefits
Maturity stage
Competition becomes even more intense
Most of the product remains in this stage
globally for a considerably long time
Characteristics of maturity stage
Maximum sales and profit
Intense competition
Face tough competition - withdraw
C) promotion strategies
Appear novel in product promotion
Brand repositioning add new market
segments, promote how their offerings are
different and better from competitors
Promotion needs to be made broad based
potential consumers due to their
conservative attitude.
Decline stage
It is not possible to extend the maturity stage
Tooth paste- maturity stage- but still they
cannot be considered immune from declining
stage
Washing soaps taken oven by detergent
Characteristics
Sales drop, demand diminishes, market for
product shrinks, inventories start piling up,
profit decline
Marketing strategies
A)rejuvenate the product
i) revive the product by additional features
ii) harvest the product
Sell their manufactured product at reduced
prices
Brand
Origin- Norwegian word- brandr- means to
burn
A brand is defined as a name , term, sign,
symbol or special design or some
combination of these elements that is
intended to identify or differentiate the
goods or service of one seller or a group of
sellers (American Marketing Association)
Branding process
Branding is a process, a tool, a strategy and an
orientation
The process of creating a brand stem from
research that starts with the concept of what
the product is and what its functions and
objectives are
Brand building is usually a long, tedious and
methodical work
It is not static- continuous change in product
appearance and performance
Brand loyalty
the degree of consistency in buying particular
brands as a function of cognition, emotion ,
satisfaction, commitment, habit and positive
attitude towards brand
Consumer loyalty refers to the unwillingness
on part of consumer to switch over to the
other products, brands, or stores
Consumer loyalty is a board term
encompassing brand loyalty and store loyalty.
Significance of brands
Market place teeming with thousands of
product and servicing
A brand differentiates a product from similar
other products
Worlds top three brand represent
enormous capital value
Value of coca- cola (Rs 3,17,400 crores)
Microsoft 2,99,000 crores
IBM- 2,43,800 crores, BMW- 64,400 crores
Regional brands
A regional brand is need specific and unique
to a particular region
However, should not be confused with a
national brand
Mass consumption product like tea, soap,
detergent and dish washing powder have
several regional brands with loyal customers.
555 and chhokra soap strong regional
brands in punjab
Arun ice cream of Hatsun foods- third of
market share
Relevance
The brand name or the punch line is in
vernacular language
The same logic applies to the colour, logo and
slogan
Celebrity not only the brand awareness spread
but it also has a good impact on over all sales
volume growth.
Media
The media selected to promote the brand is
very important
As the conventional mass media may not
prove to be very effective when used alone
select other below the line media- live
demonstration, contests
Demonstration vans with audio visual
equipments have deep rooted impact, than
the short commercial on TV
Haats can be an effective medium for rural
marketing
Message
Message should meet the rural sensibilities
With emotion touch and story line are most
effective
Commercials with gimmicky hi-tech story- not
work well
Rural consumers have strong visual sense.
Recongnition
Either does not understand english or even
illiterate
Cavinkare strategy 5 empty sachets of chic
shampoo contest by the consumer
conscious that he is buying only the chic
shampoo
Imitation
Imitations may result in two types
A poor imitator will end up in producing
deceptive, spurious , fake, copycat products.
On the other hand, a competent imitator may
even produce an improved version of the
original product
Core product
A core product provides benefits that correspond to
the need specified by consumers
What are the needs of consumers?
What kind of form and functional utilities are
consumer demanding?
A core product is one that provides important form
utility and ensure performance of the basic function
Can the tooth powder be used to keep the teeth
clean?
Tangible product
The product concept becomes visible and
operational when psychological needs are specified
in physical terms
A) quality durability, capacity, efficiency, economy,
reliability
B) features 1) rational problem solving- it is
willingness to buy solutions that leads marketers to
add features to the stripped down model 2) emotion
fancy- the second type of features are those that
capture the attention of the buyer . They are less
funtional and more fanciful.
Augmented product
Marketers should have the vision to look at
the specific needs of consumers and also their
related requirement
Augmentation requires fortifying the product
strategy with additional force drawn from
other Ps. as a result buying and using the
product becomes a pleasant and exciting
experience.
Unit V
Distribution trends
1. Emergence of new customer groups : more
and more price conscious consumers are
demanding the best value for the money
they spend. They are now brand conscious
and looking for exposure, explanation.
2. High media exposure: highly active media is
both boon and bane for marketers. Brands
can be build over night and can also
demolishes. The penetration of Tv, DTHhighlighted
Distribution strategy
Ensure constant availability of advertised
products in the market
In India what ever is available at the outlet,
influenced largely by the retailers advice and
recommendation
Reaching to 6 lakh villages is a distribution
nightmare
Despite increasing in the number of
consuming class- 68% of the rural market still
lies untapped primarily due to inaccessibility.
Channels of distribution
Managing such a massive sales and
distribution network is in itself a huge task.
It is estimated that over a million market
intermediaries wholesalers, stockists,
transporters and retailers.
Urban areas have a variety of distribution
outlets, ranging from large supermarkets to
smaller retail stores.
Small shop alone are the back bone of the local retail
network
There are 5 layers of distribution channels for the
movement of products from the company depot to
the interior village markets
Layer
channel
location
1
company depot national/state level
2
distributor
district
3
sub-distributor
town
4
wholesaler
large village
5
retailer
village