Rural

Marketing

Subash Ch. Nath

Asst. Prof. (Marketing)
Rural Markets are defined as those
segments of overall market of any
economy, which are distinct from the other
types of markets like stock market,
commodity markets or Labor economics.
 Product
 “ Anything that has a value in exchange”
 Product – price – place – promotion
 – Availability, affordability,
Challenges

acceptability & awareness

Marketing Tools Marketing Challenge

Product Acceptability
Price Affordability

Place Availability

Promotion Awareness

Source: The Rural Marketing Book- Kashyap. P & Raut. S

Cont’d
 Appropriate Product Strategies

 Existing & New Products

 Product features – service quality – price & performance
relationship
 Simplicity is key
 “ Sense & Simplicity” – Phillips Global Campaign
 Urban market successes could be rural market failures
 Appropriate new product development processes
 Product Levels

CORE BENEFIT

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT

POTENTIAL PRODUCT
 Cont’d
Product Level Characteristics Example Rural Vs Urban
Core Benefit Fundamental Entertainment Same
benefit/ services
Basic Product Benefit/service Television Set Same
into tangibles
Expected Product Attributes & Digital sound, flat Appearance of
conditions buyers screen differences in
normally expect expectations

Augmented Exceeding Battery Operated Pleasant surprise

Product customer TV for rural customer
expectations
Potential Product Encompassing all Jolly Startek TV Uniquely rural
augmentations & value proposition
transformations
Product Development Stages
Stage Marketing Activities
Idea Generation •Searching for new product ideas

Idea Screening •Selectthe most promising ideas and drop those with only limited potential. Study the
needs and wants of potential buyers, the environment and competition.

Concept Testing •Describe or show product concepts and their benefits to potential customers and
determine their responses. Identify and drop poor product concepts. Gather useful
information from product development and its marketing personnel.

Business Analysis •Assess the product’s potential profitability and suitability for the market-place.
Examine the company’s research, development, and production capabilities. Ascertain
the requirements and availability of funds for development and commercialisation.
Project ROI.

Product Development •Determine technical and economic feasibility to produce the product. Convert the
product idea into a prototype. Develop and test various marketing mix elements.

Test Marketing •Conductmarket testing. Determine target customers’ Reactions. Measure its sales
performance. Identify Weaknesses in product or marketing mix.

Commercialisation •Make necessary cash outlay for production facilities. Produce and market the product
in the target market and effectively communicate its benefits.
 FMCG Consumption Trends
Products Urban( 1000 HH) Rural ( 1000 HH)
Toilet Soap 998 992
Washing Cake 980 950
Cooking Oil 968 952
Hair Oil/ Cream 897 787
Tea 876 758
Toothpaste 822 449
Washing Powder 819 576
Electric Bulb 723 394
Shampoo 663 352
Biscuits 579 314
Health Beverages 324 67
Source: National Council for Applied Economic Research, 2002
 Consumption Ranking
Rank Rural Product Urban Product Rural HH
Consumption
grams / month

1 Toilet Soap Toilet Soap 268

2 Washing Powder Biscuits 950

3 Packaged Tea Washing Powder 268

4 Biscuits Packaged Tea 302

5 Detergent Cake Detergent Cake 893

Source: A.C Nielsen Retail Audit, MAT, July -2004 & ORG- MARG Retail
Consumer Panel, 2001
 Rural Durable Usage Trends
NCAER has classified durables into three categories
Group One( <Rs. 1000)
Group Two( Rs.1000- 6000)
Group Three( >6000)
In group one the growth is as high as 75 percent
Electrical goods show the highest urban- rural disparity, why ?
Television( B & W) 195/1000HH in rural Vs 490/1000HH in urban
Colour TVs 48/1000 HH in rural Vs 304/1000HH in urban
 Packaging
Associated with affordability - Convenience -
Consumer recognition & product protection
Packaging material, size, convenience and
aesthetics
 Example: Chik Sampoo
 Corporate Responses to Fakes

Look-alikes- Spell-alikes & Duplicates

Prices range from MRP to 60 % of MRP

Margins range from 60 % to 300 %

Legal action – awareness programmes – New Package

Development
Fakes: Some Examples
Cont’d
Pricing
 Issues in Pricing
 Internal & external factors
 Selecting pricing methods
 Pricing adaptations
 Low price points – Simple packaging –
utility around packaging material
 Highlighting value
 Price Adaptations ( Indicative)
 Product sharing services, Example:
Tractors
 Product Bundle pricing, Example: HUL
Operation Bharat
 Free gifts – may sometimes not work in
rural areas
 Special event pricing- Hero Honda Rs.
500 campaign
Colgate- Cibaca
Place- Rural Distribution Challenges

Large number of small markets

Dispersed population and trade
Poor connectivity
Low availability of suitable dealers
Inadequate banking/ credit facilities
Poor product display and visibility
Poor communication of offers and schemes
Levels of Distribution
Level Partner Location

1 Company Depot/ C & FA National/ State level

2 Distributor/ Van District level

Operator/ Super
Stockist/ Rural
Distributor

3 Sub Distributor/ retail Tehsil HQ, towns and

Stockist/ sub large villages
stockist/star seller

4 Wholesaler Feeder towns, large

villages, haats

5 Retailer Villages, haats

 Distribution Adaption( Indicative)

 Hub and Spoke Model, Example: Coca Cola

 Use of Affinity groups, Example: Project Shakti
 Haat Activation, Example: Colgate
 Syndicated distribution, Example: Cavin Care &
Amrutanjan
 Use of marketing co-operatives, Example: Warna
Bazaar in Rural Areas
 Mobile traders, Example: FMCG companies
Promotion- Adaptations for Rural Markets

Conventional Non- Conventional Personalised

Television Haat and Mela Direct mailer

Radio Folk Media( puppet and POS (demonstration,

magic show) leaflet)

Press Video Van Word of mouth

Cinema Mandi Interpersonal

communication

Outdoor: Wall Painting, Animator

Hoarding
 Melas & Haats
Melas
1. 25,000 melas
2. Companies can concentrate
on the top 100 melas
3. Pushkar Mela in Rajasthan
4. Organised by the state
veterinary department
5. Product sales, promotion,
demonstration and database 5. Traders participate in at least 4
generation
6. Cultural activities and rural
sports
Haat
1. Periodic markets located in larger
villages(> 40,000)
2. 10 – 50 villages are serviced
3. Sunday markets are most popular
4. Average number of outlets is 315
and average daily sales is about
Rs 2 lakhs
haats
6. 81 percent of the visitors are
repeat customers
 Types of Promotions
Advertising
Sales promotions – coupons, contests, demonstrations
and sampling, Example: Tata Shaktee Haat Hungama
Direct marketing, Example: Videocon
Publicity, Example: Project Shakti and AP Online
Using a direct selling through a sales force, Example:
Swasthya Chetna for Lifebouy
 Cont’d
Push strategy – sales force and trade promotion

Pull strategy – advertising and consumer promotion

 Strategies
 Dynamics of rural markets differ from other market types, and
similarly rural marketing strategies are also significantly
different from the marketing strategies aimed at an urban or
industrial consumer. This, along with several other related
issues, have been subject matter of intense discussions and
debate in countries like India and China and focus of even
international symposia organized in these countries.
 Rural markets and rural marketing involve a number of
strategies, which include:
 Client and location specific promotion
 Joint or cooperative promotion..
 Bundling of inputs
 Management of demand
 Developmental marketing
 Unique selling proposition (USP)
 Extension services
 Business ethics
 Partnership for sustainability