Submitted By: Sandeep Singh Bhadwal - 10 Twarit Bhargava Rajinder Dhindsa Gaurav Gupta Saurabh Kumar Alpana Sarangi - 12 - 19 - 26 - 41 - 61

Introduction

Rural MarketingAssessing, stimulating and converting the purchasing power of rural consumer into an effective demand for specific products and services.

Gaps Bridge by Govt. & Development. Agencies1) Low priority to Agriculture. 2) Failure of Land Reforms. 3) Inadequate Food Supplies. 4) Slow growth of Infrastructure. 5) Inadequate Inputs 6) Slowdown of rural Industrialization.

Phases of Rural MarketingPHASE I (before mid 1960's)

Considered as a synonymous with "Agricultural Marketing". Referred to marketing of 118 rural products in Rural and Urban areas and agricultural inputs in rural markets.

PHASE II (mid 1960's-mid 1990's)

Better irrigation facilities, soil testing, use of high yield variety seeds, fertilizers, pesticides and employment of machinery like power tillers, harvesters' crushers. Two separate areas of activity had emerged- the new "marketing of agricultural inputs " and the conventional "agricultural marketing". Formation of agencies like Khadi and Village Industries Commission, Girijan CooperatIve Societies and Apco Fabrics

PHASE III (After mid 1990's)

India's Industrial Sector had gained strength and maturity. The market has grown for household consumables and durables. Development programs run by Central and State Governments.

TAXONOMY OF RURAL MARKET

CONSUMER MARKETConstituents:Individuals Households.

Products :

Consumables, Food- Products, Toiletries, Cosmetics, etc

Durables :

Watches, Bicycles, Radio, T.V, Kitchen Appliances Furniture,

INDUSTRIAL MARKET Constituents :y y y y y y

Agricultural and allied activities, Poultry farming, Fishing, Animal husbandry, Cottage Industries, Panchayat office etc.

Products :y y y y y

Consumables, seeds, Fertilizers, Pesticides, Petroll diesel etc.

Durables :y y y y y

Tillers, Tractors, Pump sets, Generators, Boat etc.

SERVICES MARKETConstituents:Individuals, Households, Offices Production firms.

Services :

e airs, Trans ort, Ban in credit, Insurance, Education, Communications etc

MARKET DIFFERENCES WITH URBAN MARKET

Environment DifferencesSmall settlement units of villages widely dispersed. Low Infrastructure level (such as road, electricity etc.) Low Density of population per square kilometer of space Poor physical connectivity with other villages and towns, Low mobility.

Social Relations-Peculiar AspectsLess number of impersonal interactions, more frequent interactions between the same people. Individual better known and with a strong identity of his/her own Status is ascribed: determined by births in a family, lineage. Strong class structure. Social norms influencing individuals are more visible.

DEPENDENCE ON NATUREAbundance of Natural Resources and high dependence on them for a large number of households needs. High dependence for livelihoods, employment and Income on Natural factors. Differential access to resources based on Caste, Political and Money Power etc.

STRATEGIESPRODUCT STRATEGIES

Includes product mix changes Modernization and product design considerations. Competitive product strategies Identity strategies Customer value strategies Packaging strategies Branding strategies

PRICING STRATEGIESQuality conscious : Discriminatory, perceived value and psychological pricing. Value conscious : Psychological, value, penetration and skimming. Price conscious : Low prices, Premium pricing (small units) and barter pricing.

PROMOTION STRATEGIESMass media (Radio, Cinema, Press and TV) Local media (Haats and Melas, Wall painting,Leaflets, Video vans, Folk media, Animal parade) Personalised media incl des direct comm nication, dealers, sales persons and researc es BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS

DISTRIBUTION STRATEGIES

Distribution Channel Includes:a) company depot b) Redistribution stockiest, clearing agents c) Semi wholesalers and retailers d) Itinerant traders, Vans, Sales people, NGOs and garment agencies

Communication StrategiesBY COMMUNICATING AND CHANGING QUALITY PERCEPTION BY PROPER COMMUNICATION IN INDIAN LANGUAGE BY TARGET CHANGING PERCEPTION

Other StrategiesBY DEVELOPING RURAL-SPECIFIC PRODUCTS

BY ACQUIRING INDIAN BRANDS BY GIVING INDIAN WORDS FOR BRANDS BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES

What kinds of themes are attractive to rural consumers?Need category : Quality of life messages -nutritious, healthy. Problem category : Convenience, economy I hassle free, easy to maintain, lifetime companion, a friend in need and the way to prosperity. Desire category : Independence, status, luxury etc.

Ideal category : Communal harmony, social cohesiveness, religious conformity, national integration and peace.

CASE STUDIES

NIRMAThis washing powder adopted a market penetration strategy based on price which was 40%. lower than the highest priced product in the market. Its distribution efforts were highly concentrated in Western and Northern zones. It made the industry leader lose its market share substantially in those zones. Nirma is possibly the largest detergent brand in the world with sales of 700,000 tonnes a year.

PROMISE TOOTHPASTEThe Company, Balsara, decided to "against position" the new product and aimed at No.2 position. The advertisements were framed so as to offer all the benefits being claimed by No.1 in a positive sense. The product became a success with growth rate of 30% in a market expanding at the rate of 7%.

LIFEBUOY SOAPSuccess of this soap can be attributed to the right market focus. The market segment is clearly identified as the lower income segment and price sensitive. Recently HUL introduced a new segment "Fighting sweat", for relatively higher incomes. This culminated in "Lifebuoy Plus" a pink coloured deodorant soap at a price higher than Lifebuoy.

ASIAN PAINTSThey entered the exterior decorative segment with "ace", focusing on non-metro markets. "Utsav and "Opal PuB followed. Advertisements in TV and cinema are resorted to before festivals like Pongal in Tamilnadu and other festivals elsewhere when demand for outdoor decorative paints.

It is recognized that turnover and volume growth will come from rural markets.

Mobile vans and demonstration cum sales techniques are used to flog "Utsav" brand.

RUF AND TUF JEANSA ready to stitch jeans for the first time users priced at Rs.195/- as against the unorganized sector's range of Rs.150-3501Arvind mills, India's leading denim manufacturer created this new product specifically for the rural market. The kit included a denim trouser length with specific tailoring instruction and the branded zipper, rivets and buttons that distinguish jeans in the consumer's mind. The product was made available in villages with a population as small as five thousand. Local cloth shops were used as retail outlets. Seminars were organized to train tailors in denim fits and inform them about the changes required in sewing machines for stitching jeans. The additional machine accessories were initially provided free of cost and later at a subsidized rate.

OUTCOMEThe strategy worked. In the first two months, demand crossed a million pieces as against a production capacity of 2,50,000 kits. So, the company had to stop advertising. Consumer feed back showed that nearly 75% were first time jean wearers. R& T shorts and ready-made jeans were' launched for the slightly more evolved customer who demanded jean specifics like the right wash. This is a perfect example of brilliant product promotion.

PSYCHOGRAPHIC SEGMENTATION

In some parts of Gujarat, it is reported that farmers are going in for big 50 HP tractors when their need was for smaller 25 to 30 HP ones. The reason was compulsion to "Keep up with the neighbours". Now M&M has come out with 35 HP and 45 HP tractors name "Sarpanch" to flatter the ego of such buyers and retain them.

PRODUCT LINE PRUNING

HUL is pruning its eighty strong brand portfolio to the 30 power brands, which account for 75% of its FMCG turnover. This is an example of optimization of resources to achieve more with the same ad-spend and marketing effort.

LINE MODERNISATION

HUL relaunched VIM dish wash bar with a superior formulation. Vim bar, the first such product fuelled the growth of dish wash bar segment by over 200% in five years. It converted customers from unbranded proxy products like ash and mud.

BRAND AWARENESS BUILDING

In 1990, TVS launched TVS 50 XL as a "value for money" vehicle. This was supported by massive advertising campaigns on TV to increase awareness of the brand. TVS spent around Rs.1.5 crore on the "Namma ooru Vandi" (Our own vehicle) which showed people from various walks of life swearing by TVS 50 XL.

USE OF INTERNET FOR RURAL MARKETING

ITC has launched three web-based initiatives (E-Choupals in company speak) as part of its strategies to vertically integrate its sourcing operations. Aqua Choupal.com in Andhra Pradesh, Soyachoupal.com in M.P and Planters net.com in Karnataka. ITC - .has setup 235 Internet kiosks, which cater to 10,000 farmers and cover 2,50,000 hectares of land. ITC Info Tech structured the entire virtual interaction model and Meta markets for inputs like fertilizers, pesticides etc. that the farmers in different states can use. Its plan was to set up 3000 kiosks to cover 100000 farmers. The idea is to use this network as a distribution channel for other products

AMULIt recognized the fragmented and rural nature of milk production in India. It organized a very efficient milk collection network and supported small dairy farmers with a variety of extension services. It installed very modem processing and packaging facilities. Used mass advertising very effectively to build high levels of brand awareness and preference for its products.

THE OUTLOOK

This new century brings a host of challenges and opportunities in the rural market as the younger generation frees itself from the bonds that tied down the previous one.

India's democracy allows the people to change the government if the majority of the voters feel strongly about the lack of basic amenities Though marketers are alive to the importance of rural markets it would be very difficult to wean the rural customer away from regional or local brands unless there is perceived benefit in price or value.

ContdIn FMCG Sector, the next battle for a market share in rural areas would be between local or regional brands on one side and national brands on the other. The former would fight like hell using all means fair and foul to retain their share of market and survive.

In the white goods sector the battle would be between new producers with latest technology and the older ones. The success of LG and SAMSUNG in penetrating both urban and rural sectors in a short time is a lesson in market approach. Local brands have so far used gut feeling and plain common sense in their marketing operations, as well as direct contact with the retailers. When they scale up to regional level, they use low cost media as Cable TV, Radio and Regional print media. This enables them to reach more customers while retaining existing ones.

ContdAgricultural inputs such as fertilizers and pesticides may see a price increase and volumes may fall as more and more farmers turn to "Precision farming .

Increased incomes in the rural sector should result in investment in goods and services enabling a better quality of life, like better housing schooling and more white goods. But a portion may be wasted in conspicuous consumption and even wasteful expenditure as on liquor. Campaigns should be launched in such areas to avoid such evils.