1.3.Taxonomy,Changing Patterns, Attraction, Constraints 1 (2)
Transcript of 1.3.Taxonomy,Changing Patterns, Attraction, Constraints 1 (2)
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Taxonomy, Changing Patterns,Attractiveness, Constraints
RURAL MARKETING
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Taxonomy
Consumer Markets Industrial Markets
Service Markets FMCGs, Durables Seeds,Fertilizers,Pesticides,Tractors,Farm implements Repairs,banking,communication,entertainment
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Map The 7 Os To Each Market
Who constitutes the Market? OCCUPANTS What does the market buy? OBJECTS Why does the market buy? OBJECTIVES
Who participates in the buying? ORGANIZATIONS How does the market buy? OPERATION When does the market buy? OCCASION Where does the market buy? OUTLETS
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Rural Share 1989-90 1992-93 1998-99 2004-2005
Over 75%
1
Radio/ Transistors
2
Bicycle.Radio/Transistors
4
Bicycle.Radio/Transistors,Mechanical WristWatch, B&W TV 6
Bicycle.Radio/Transistors,Mechanical WristWatch, B&W TV,Pressure Cooker,Cassette Recorder
50-75%
5
Bicycle, Motor Cycle,Table Fan, SewingMechanical WristWatch 4
Table Fan, SewingMachine, MechanicalWrist Watch
7
Cassette Recorder,Pressure Cooker,Table Fan, CeilingFan, Sewing Machine,
Motor Cycle, QuartzWrist Watch
6
Table Fan, Ceiling Fan,Sewing Machine, MotorCycle, Quartz WristWatch, Moped
30-50%
7
Moped, B&W TV,Cassette Recorder,Pressure Cooker,Electric Iron, CeilingFan, Quartz WristWatch
8
Moped, Motor Cycle,B&W TV, CassetteRecorder, PressureCooker, Electric Iron,Ceiling Fan
5
Moped, CTV,Mixer/Grinder,Scooter, Electric Iron
4
CTV, Mixer/Grinder,Scooter, Electric Iron
20-30% 2 Scooter,Mixer/Grinder
2 Scooter,Mixer/Grinder
1 Refrigerator 1 Refrigerator
10-20%2
CTV, Refrigerator 1
Refrigerator 2
VCR/VCP, WashingMachine 2
VCR/VCP, WashingMachine
5-10%1
Washing Machine2
VCR/VCP, WashingMachine 0
-0
-
Below 5% 1 VCR/VCP 0 - 0 - 0 -
Changing Patterns
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Income distribution (Million population)
288
130
41
90
153
312
0
100
200
300
400
Low Low er middle Middle high
Rural Urban
2001-02
305
17
79
272
170
352
0
100
200
300
400
Low Low er middle Middle hig
Rural Urban
2009-102001-02
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CONTRIBUTING FACTORS
AgricultureConsistent good monsoons Better procurement prices fixed for various crops
Better yields due to many research programs (HYV seeds provided by thegovernment)
Tax structures Spread of education Improved infrastructure Better banking facilities Government schemes like IRDP, JRY, NREGA Increased expenditure in plan outlay (from Rs.14000 Cr in 7 th plan to
Rs.30000 Cr in 8 th plan)
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Increased penetration of electronic media
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Life style changes
50 % of todays rural income is not comingfrom the agriculture sector
Up gradation from local products to branded and from low priced bands to premium brands
Increasing influence of the youth in the buying decisions.
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HURDLES IN RURAL MARKETING
High distribution costsLarge no. of daily wage earnersAcute dependence on the vagaries of the monsoonsSeasonal consumption linked to harvest and festivals
Inaccessibility to conventional advertising mediaPoor roads, power qualityBanking and credit issuesHigh initial market development expenditureWholesaler and dealer network issues
Highly dispersed and thinly populated marketsSocial and cultural backwardness of the rural masses.Low level of exposure to different product categories and product brands.
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MAJOR CHALLENGES
I. AVAILABLITY
India's 6,38,365 villages are spread over 3.2 mn. sq. kms.720 mn people - reaching them is not easyGiven the poor state of roads, even greater challenge.
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II. AFFORDABLITY
Products need to be affordable to rural consumers ,mostof them are on daily wages.
Some companies have addressed the affordability problem by introducing small unit packs :
GODREJ introduced Cinthol and Fairglow in 50 gram packs priced at Rs.4
coca-cola introduced Sunfill ( a powdered soft drinkconcentrate ) 25 gram pack priced at Rs. 2
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III. ACCEPTABLITY
To gain acceptability for the product orservice, there is a need to offer products
that suit the rural markets and conditions.coca-cola is providing low cost ice-
boxes because of the lack of electricity andrefrigerators in the rural areas.
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IV. AWARENESS
With large parts of rural India inaccessible to conventionaladvertising media, building awareness is anotherchallenge.
Companies like HLL use posters, banners and
wall paintings to create awareness.
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SOME SUCCESSFULAPPROACHES
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Being first on the shelf
The retailers generally stock a single brand in a productcategory.
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Different means of advertisingHaats and melas
A survey by MART (Marketing and ResearchTeam) revealed that 47000haats and 25000 melas take place every year in India
Large visitor turnoutThese melas are held during post harvest season, when the purchasing
power of the people is highThe companies provide touch and feel demonstrations and distributed free
samples
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Advertising
Performing arts including theatre, songs, dance puppetry, magic shows
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Rural Markets advertising points
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CAVIN CARE
First to come out with the concept of sachets and itrevolutionized the whole market, making the Chicshampoo the 2 nd largest selling shampoo in India
What followed was the flood of products in small packing ranging from toothpaste, face creams, soaps, hair
oil
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NIRMA
Introduced the innovative technique of using video vans formarketing Nirma products .
Reach to interior areasOffer opportunity for personal interaction .
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LG
The company needed new cheaper products to capture therural markets . The company did this by introducing a cheaperrange of TV's by the name of Sampoorna .
More offices in small towns. The company opened 178 branchoffices in a short period of time
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2. It also tapped local available opportunities provided by annual haats and fairs and made huge investmentin infrastructure for distribution and marketing.
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3. It brought down the average price of its productsfrom Rs.10 to Rs.5,therby bridging the gap betweensoft drinks and other local options like tea, buttermilk
or lemon water.
4. It doubled the spend on Doordarshan
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5. It focused its entire advertising towards therural customer.
As a result the rural market accounts for 80 %of the new coke drinkers and 30% of its total
volumes.
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ITCs e - CHAUPALThe companys e -chaupal initiative is a novel idea which bypasses the brokers
between the Company and the farmers. It is helping Indian agriculture to enhanceits competitiveness by empowering Indian farmers through the power of the internet.
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Formed in 1946,it is a brand name managed byan apex cooperative organization ,Gujarat Co-operative Milk Marketing Federation Limitedwhich today is jointly owned by some 2.41million milk producers in Gujarat.
Has established itself as a uniquely appropriatemodel for rural development.
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Hindusthan Lever Limited
William Hasketh Lever 1885 Sunlight laundry soap in India 1888 (1757 EIC, 1858 British Raj) Merged with Margariene Unie of Netherlands (vanaspathi) to form
Unilever Ltd UK 1930
Formed Hindustan Manufacturing Co for production of edible oil (1932 75% of 6000 MT edible oil market) Lever Brothers India Pvt Ltd 1933 United Traders for import & distribution of toilet products 1935 Three companies merged to form HLL 1956 (10% public)
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Launching of Brands & Rural Base
Late 1950s modernization of factories Purchased vanaspathi units Trichy (TN), Shamnagar & Gaziabad (Delhi) Vanaspathi 3,36,000 MT Lux 1961
Anik 1961 Sunsilk -1964 Rin 1969 Clinic 1971 Liril 1974
Close Up 1975 Late 1970s set up 70 medium & small-scale factories in rural areas
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Diversification & Expansion Chemical plants at Haldi (Calcutta), Taloja (Maha), Jammu (J & K) FERA NRI 51% - 1980 Followed Govt regulation 10% exports, 60% priority sectors New synthetic detergent plant 1983 (Chindwara, MP) Agri Products 1985 (Hydrabad)
Lifebuoy Personal, Breeze 1987 Colaboration with National Starch Corp,USA Pondicherry 1988 Synthetic detergent plant, toilet soap plant Sumerpur & Orai (UP) 1989 Lifebuoy Plus, Le Sancy 1991 Pepsodent, Methadent G 1992
Tomco, Kwality, Kissan, Lakhme (1992-1996) 50:50 JV Kimberly Clarke USA diapers, sanitary napkins late 1990s JV S C Johnson & Co USA pest repellents & disinfectants
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Indias Leading FMCG company
62% market share FMCG 1998 10 new factories packaged tea, personal products
& detergents
Focused on 30 power brands out of 110 brands 2001 Rs.1100 Cr T/o with PAT Rs.154 Cr. Today 12,000 Cr with 50% from rural markets
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HLLs Distribution Channel
Wholesalers & retailers Stock transfer through vans Redistribution stockists in towns who carried bulk
stocks & serviced retailers 7000 redistributors who serviced over a million
retailers
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Rural Focus
Sales, marketing & production of PowerBrands in rural areas
Key issues to be addressed availability,awareness, overcoming attitudes & habits,penetrative pricing
Target of 16 million new rural households by1999
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Project Streamline (1998)
Rural distribution issues Increase rural retail outlets from 50,000 (1998) to 100,000
(1999)
Selected places with poor base, and no distribution facilitiesat all
Rural distributor with 15 to 20 sub-stockists in villages whodrove distribution in villages through unconventional means(bullock cart)
Offered better service frequency, full line availability andcredit
Reach in rural markets increased from 25% to 37%
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Project Bharat ..cont
Villages with population less than 2000 Self employment through self help groups Direct-to-home distributors
Less than Rs. 750 15 20 villagers Micro-credit from banks By 1999, covered 13 million households
Shampoo 5% U - 16%R Skin care 8% U 14% R
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Project Shakthi (2001)
A.P 6 months Sustainable relationship HLL & low income
customers
Access to micro-credit Invest as company distributors Profit sharing for growth SHGs, NGOs, Govt. bodies to train March 2002 (6 months) 20% increse in sales Guj, MS, MP