Rural Marketing, MBA I Semester

Rural Marketing, MBA I Semester

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Prepared by K.Swapna, Assistant Professor, Dept of MBA, CMRCET

LECTURE NOTES

On

RURAL MARKETING

I MBA I semester R 18 syllabus

Prepared by

K. SWAPNA

ASSISTANT PROFESSOR, DEPT. OF MBA

CMRCET


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UNIT – I

INTODUCTION TO RURAL MARKETING

Introduction: Meaning - Evolution – Nature and Characteristics of Rural Market –

Understanding the Indian Rural Economy –Rural Marketing Models – Rural Marketing

Vs Urban Marketing – Parameters differentiating Urban & Rural Market - Differences in

consumer behavior in Rural and Urban market.


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Marketing is the study and management of exchange relationships. Marketing is

the business process of creating relationships with and satisfying customers. With its

focus on the customer, marketing is one of the premier components of business

management

Rural Marketing: Rural marketing is now a two-way marketing process. There is inflow of products into

rural markets for production or consumption and there is also outflow of products to

urban areas. The urban to rural flow consists of agricultural inputs, fast-moving consumer

goods (FMCG) such as soaps, detergents, cosmetics, textiles, and so on. The rural to

urban flow consists of agricultural produce such as rice, wheat, sugar, and cotton. There

is also a movement of rural products within rural areas for consumption.

Features of Rural Marketing: The main reason why the companies are focusing on rural market and developing

effective strategies is to tap the market potential,that can be identified as follows:

1. Large and scattered population: According to the 2001 census, 740 million Indians forming 70 per cent of India‟s

population live in rural areas. The rate of increase in rural population is also greater than

that of urban population. The rural population is scattered in over 6 lakhs villages. The

rural population is highly scattered, but holds a big promise for the marketers.

2. Higher purchasing capacity: Purchasing power of the rural people is on rise. Marketers have realized the potential of

rural markets, and thus are expanding their operations in rural India. In recent years, rural

markets have acquired significance in countries like China and India, as the overall

growth of the economy has resulted into substantial increase in purchasing power of rural

communities.

3. Market growth:

The rural market is growing steadily over the years. Demand for traditional products such

as bicycles, mopeds and agricultural inputs; branded products such as toothpaste, tea,

soaps and other FMCGs; and consumer durable such as refrigerators, TV and washing

machines has also grown over the years. Mouth Marketing, Personal Selling. These tools

of communication are collectively called as Marketing Communication Mix

4. Development of infrastructure:There is development of infrastructure facilities such

as construction of roads and transportation, communication network, rural electrification

and public service projects in rural India, which has increased the scope of rural

marketing.

5. Low standard of living: The standard of living of rural areas is low and rural consumers have diverse socio-

economic backwardness. This is different in different parts of the country. A consumer in

https://en.wikipedia.org/wiki/Management

https://en.wikipedia.org/wiki/Exchange_(economics)

https://en.wikipedia.org/wiki/Business_process

https://en.wikipedia.org/wiki/Customer

https://en.wikipedia.org/wiki/Business_administration

https://en.wikipedia.org/wiki/Business_administration


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a village area has a low standard of living because of low literacy, low per capita income,

social backwardness and low savings.

6. Traditional outlook: The rural consumer values old customs and traditions. They do not prefer changes.

Gradually, the rural population is changing its demand pattern, and there is demand for

branded products in villages.

7. Marketing mix: The urban products cannot be dumped on rural population; separate sets of products are

designed for rural consumers to suit the rural demands. The marketing mix elements are

to be adjusted according to the requirements of the rural consumers.

Scope of Rural Marketing Let us take at some of the points with respect to Rural India as per Census

a. Population density of less than 400 per sq.km.

b. At least 75% of the male working population is engaged in agriculture.

c. No municipality or board.

If we go by statistics, roughly around 70% of the Indian population lives in the rural

areas. That is almost 12 % of the world population. To expand the market by tapping the

countryside, more and more MNCs are foraying into India‟s rural market.

Below are the few points why organizations are looking at rural marketing with a positive

attitude

1. Population According to 2011 Census rural population is 72% of total population and it is scattered

over a wide range of geographic area. That is 12% of the world population which is not

yet fully utilized.

2. Rising Rural Prosperity Average income level has unproved due to modern farming practices, contract farming

industrialization, migration to urban areas etc. There has been an overall increase in

economic activities because during the planned rural development heavy outlay of

resources on irrigation, fertilizers, agricultural equipment‟s and agro processing industry

has been made. Saving habits in rural people also has increased. This too contributes in

higher purchasing power

3. Growth in consumption There is a growth in purchasing power of rural consumers. But, the average per capita

house hold expenditure is still low compared to urban spending

4. Change in life style and Demands Life style of rural consumer changed considerably. There has been increase in demand

for durables and non-durables like table fans, radios, mopeds, soaps, etc. by rural

consumers. This provides a ready market for the producers. Rural market is expanding

day after day.


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5. Market growth rate higher than urban: The growth rate of fast moving consumer goods [FMCG] market and durable market is

high in rural areas. The rural market share is more than 50% for products like cooking oil,

hair oil etc.

6. Life cycle advantage

The products which have attained the maturity stage in urban market is still in growth

stage in rural market.

7. Decision-making Units Women in rural areas are beginning to make fast decisions for purchases. Studies reveal

that 72.3% decisions are taken jointly in a family. With education and mass media, role

of children in decision making is also changing.

Rural Marketing - In Indian Economy

Rural marketing in Indian economy can be classified mostly under the following two

categories −

the markets for consumer durables consists of both durable and non-durable goods

the markets for agricultural products which include fertilizers, pesticides, seeds,

and so on.

Rural marketing in India is sometimes mistaken by people who think rural marketing is

all only about agricultural marketing. Rural marketing determines the carrier of business

activities from urban sectors to the rural regions as well as the marketing of various

products manufactured by the non-agricultural workers from rural to urban areas.

The following are the characteristics of rural markets −

Here agriculture is first and also the main source of income.

This income is seasonal in nature and fluctuates as it depends on crop production.

Though it is large, the rural market is geographically scattered.

It shows religious, cultural and economic disparities.

The market is not much developed, because the people here exercise adequate

purchasing power.


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These markets have their orientation in agriculture, with poor standard of living,

low per capital income and backwardness.

It shows sharper and different regional preferences with distinct predictions, habit

patterns and behavioral aspects.

Rural marketing process is an outcome of the general rural development process

initiation and management of social and economic change in the rural sector is

the core of the rural marketing process.

Importance Of Rural Marketing Rural marketing implies applying marketing theory and directing marketing efforts to

create and satisfy needs and wants of rural market (customers). Importance of marketing

indicates the contribution of rural as well urban marketing.

Rural market is growing faster than urban, rural marketing results into overall balanced

economical and social development. Rural marketing turns beneficial to business units,

people residing in rural areas, people residing in urban areas, and to the entire nation.

Let‟s see how growth and development of rural marketing contribute to overall prosperity

and welfare.

1. Reduced Burden on Urban Population: Rural marketing can contribute to rural infrastructure and prosperity. People can also live

comfortably in villages due to availability of all goods and services in villages, even

comparatively at low price. People, due to growth of marketing activities, can earn their

livelihood in rural places. Population pressure on urban can be reduced.

2. Rapid Economic Growth: Naturally, marketing acts as catalyst agent for economic growth. There exists more

attractive business opportunities in rural than urban. Rural market is more potential for

consumer durables and services. Rural population largely depends on agriculture and it

can contribute nearly 50% to total national income. Agriculture enjoys significant portion

in export business, too. Rural marketing improves agricultural sector and improved

agricultural sector can boost whole economy of the country.

3. Employment Generation: At present, nearly 70% of total Indian population feeds on agricultural activities in rural

areas. Rural marketing can generate more attractive employment opportunities to rural

and urban people. Growth of rural marketing leads to increased business operations,

professional activities, and services that can generate a lot of employment opportunities.


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4. Improved Living Standard: Due to rural marketing system, rural buyers can easily access needed standard goods and

services at fair prices. In the same way, rural marketing improves rural infrastructure.

Additionally, rural marketing can also improve their income. These all aspects can

directly improve living standard.

5. Development of Agro-based Industries: Rural marketing leads to set up agro-based processing industries. Fruits, vegetables,

cereals, pulses, etc., are used as raw-materials. Such industries can improve farmers‟

profit margin and employment opportunities.

6. Optimum Utilization of Rural Untapped Resources: There are unlimited businesses opportunities exist in rural areas. Untapped and

underutilized resources can be utilized at optimum level and that can further accelerate

overall economic growth.

7. Easy Marketability of Agricultural Produces: Growth of rural marketing improves whole marketing system. Multiple options are

available to farmers and local producers to market their products. Big domestic corporate

houses and multinational companies prefer to buy agricultural products directly from

villages by their own or through agents and small firms. Rural producers can sell their

produces easily at satisfactory prices. Their improved income level can improve their

purchasing power that can further fuel to industrial demand.

8. Improved Rural Infrastructures: Rural marketing and basic infrastructures go hand to hand. Growth of rural marketing

leads to improved transportation, insurance, banking, communication, entertainment, and

other facilities. Due to availability of basic infrastructural facilities, business units can

easily reach the target rural buyers.

9. Price Stability: Marketing results into better transportation, warehouses, and communication facilities.

Agricultural products can be systematically marketed throughout the year. Huge gap

between demand and supply can be avoided and, as a result, prices of most of

commodities remain more or less stable.

10. Quality of Life and Reduced Crime: Marketing can refine entire living style and system. Better quality products at reasonable

price, improved income level, availability of facilities, etc., have direct positive impacts

on quality of life. Quality of life improves and level crime reduces.

11. Balanced Industrial Growth: The gap between rural and urban development can be reduced gradually. Rural

development improves rural life and reduces pressure on urban life.

12. Others: Apart from these points, there are a number of ways that rural marketing can significantly

contribute to economic and social development.


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Rural vs Urban Mindsets Human settlements are classified as rural or urban depending on the density of human-

created structures and resident people in a particular area. Urban areas can include town

and cities while rural areas include villages and hamlets.

While rural areas may develop randomly on the basis of natural vegetation and fauna

available in a region, urban settlements are proper, planned settlements built up according

to a process called urbanization. Many times, rural areas are focused upon by

governments and development agencies and turned into urban areas.

Unlike rural areas, urban settlements are defined by their advanced civic amenities,

opportunities for education, facilities for transport, business and social interaction and

overall better standard of living. Socio-cultural statistics are usually based on an urban

population.

While rural settlements are based more on natural resources and events, the urban

population receives the benefits of man‟s advancements in the areas of science and

technology and is not nature-dependent for its day to day functions. Businesses stay open

late into the evenings in urban areas while, sunset in rural areas means the day is virtually

over goods/ service for some value in return such as Money" . So the Market is same

everywhere .But, the difference is in the consumer behavior. There will be different

buyers in each market. This is because of different factors which Influence them. So the

same way there is a difference between Rural and Urban Market. The factors are so many

to define. There is a difference in all the marketing Variables. That is where most of the

companies approach with different Marketing Mix and Strategies to Rural Market. The

strategies differs from the urban to rural market. The companies which have understood

the phenomena of rural market have succeeded in the market, For Ex: HUL, ITC,

Colgate, Rajdoot Motorcycle. These companies have done a perfect homework and

Implemented in terms of effort and Operations. These companies approach shows that

there is a difference between Rural and Urban Market.

The Differences can be Infrastructure, Economy, Lifestyle, Socio- Cultural Background,

Availability or reach, Habits, Competition, and Consumer Behavior.

Infrastructure: The facilities like Electricity, Internet, Roads and Buildings, Educational

Institutions, Financial Institutions, Communication and Organized Market, Other

Facilities differs in urban and rural market. In urban everything gets implemented soon

and Availability is also there. Where as in rural market everything takes a good amount

of time.

Economy: Here the Economy means, the earning Capacity in a rural Market. The cost of

Living always depends upon their way of earning. So, the Income levels are unreliable, as

Most of them are depended upon the seasons and Agriculture. So the Income levels

cannot be a fixed one.

Lifestyle: The Lifestyle, that is living pattern of both the markets differ a lot. This can be

important factor which influences the companies to think of when they approach rural

market.

Socio- Cultural Background: Due to the illiteracy level, and Culture adaptability from

long time the rural market always gets differ than the urban market. The superstition and


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other belief as well as the way of thinking towards products and goods differ in these two

markets.

Availability or Reach: Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult. The logistics for rural market is a tough

task than to reach the Urban Market.

Habits: The daily routine of the people makes them to cultivate different habits. Apart

from due to the awareness is low in Media terms there will be a difference in the habits.

Competition: The competition in the market for brands and Companies always differ. As

in rural markets it is always the channel Partner and Retailer plays a vital role. But where

as in Urban Market Brand plays a great role.

Consumer Behavior: consumer behavior is the task for the task for the companies. The

mindset of the rural consumer is completely different from Urban Consumer. The

Mindset of the consumer is different .For Ex: In urban market, to buy Electronic Item the

customer thinks of Brand and Its updated feature, where as in rural market he thinks of in

so many ways, such as money, Durability, Buying Capacity and so on. So these mindset

makes a difference in both markets.

Growth of rural markets Rural markets are tomorrow‟s markets in India. They are big attractions to producers and

marketers. For instance, Hindustan Unilever Ltd. (HUL), ITC, Parley Foods and many

other companies are concentrating on the rural markets as the urban markets have

become saturated. The scope of future expansion lies in the development of rural

markets. In fact, rural marketing should be recognized as developmental marketing by big

business firms.

In India it has gained greater significance these days as the overall growth of the

economy has resulted into substantial increase in the purchasing power of the rural

communities. On account of the green revolution in India, the rural areas are consuming a

large quantity of industrial and consumer products produced near the urban areas. In this

context, a special marketing strategy, namely, rural marketing has replaced agricultural

marketing which was confined merely to selling farm machines and other inputs.

Due to competition in the urban market, the market is more or less saturated as most of

the capacity of the purchasers has been targeted by the marketers. So the marketers are

looking for extending their product categories to an explored market, i.e., the rural

market. This has also led to the CSR activities being done by corporates to help the poor

people attain some wealth to spend on the product they want. For instance, HUL‟s Project

Shakti is not only helping the company earn some revenues but also helping the poor

women of the village to earn some money which is surely going to increase their

purchasing power. Similarly ITC‟s e-Chaupal, is helping the poor farmers get all the

information about the weather as well as the market price of the food grains they are

producing and those of inputs (seeds, fertilizers, etc.) they want to buy.


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The Indian rural economy has not been impacted by the global economic slowdown,

according to a recent study by the Rural Marketing Association of India (RMAI). The

study found that the rural and small town economy which accounts for 60% of India‟s

income has remained insulated from the economic slowdown. Moreover, rural incomes

are on the rise driven largely due to continuous growth in agriculture over the years and

increase in employment opportunities in the rural areas.

According to the Techno Pak study, rural demand for fast moving consumer goods

(FMCG), pharma, auto and consumer durables is estimated to match sales generated in

urban areas soon. While durable‟s market shrunk in urban India, rural market is seeing a

15% growth rate. FMCG sales are up 23% and telecom is growing at 13%.

40% of the revenue of Maruti Suzuki comes from rural India. That is why, the company

is opening new showrooms in rural and semi-urban areas. Mahindra & Mahindra is

bullish on the rural and semi-urban markets, with its utility vehicle, Scorpio clocking

over 60% sales in 2011-12 from the rural markets as against 20% earlier. TVS Motor also

registered around 50% of its sales from the rural and semi-urban markets during 2011-12.

Many leading consumer durable companies are now increasing their presence in rural

India. Recently, LG set up 45 area offices and 59 rural and remote offices. Moreover, it

has outlined plans to invest around US$ 40 million towards development of entry-level

products targeted at rural markets.

RURAL MARKETING V/S URBAN MARKETING The market is a place where buyers and Sellers Exchange Things. In lay man terms "It is

a place where buyers and sellers exchange goods/Service for some value in return such as

Money". So the Market is same everywhere. But the difference is in the consumer

behavior. There will be different buyers in each market. This is because of different

factors which Influence them. So the same way there is a difference between Rural and

Urban Market. The factors are so many to define. There is a difference in all the

marketing Variables. That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market. The strategies differ from the urban to

rural market. The companies which have understood the phenomena of rural market have

succeeded in the market, e.g. HUL, ITC, Colgate, Rajdoot Motorcycle. These companies

have done a perfect homework and Implemented in terms of effort and Operations. These

companies approach shows that there is a difference between Rural and Urban Market.

Parameters differentiating Urban & Rural Market

A. Environmental Differences The urban environment is characterized by:

Large contiguous settlement units of town or urban agglomerations mostly

concentrated.

High infrastructural level (such as road, electricity).


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High density of population per square kilometer of space.

Good physical connectivity, high mobility.

The rural environment presents a different picture.

Small contiguous settlement units of villages widely dispersed.

Low infrastructural level (such as road, electricity).

Low density of population per square kilometer of space.

Poor physical connectivity with other villages and towns, low mobility.

B. Social Relations Peculiarity In the urban society, social dynamic represent a more liberated system.

Large number of interactions with persons, less frequent between the same people.

Individuals are less known and identified between members in the social and

settlement system.

Social norms are less visible.

Status is achieved.

Caste influence indirect and of less strength, generally subjected to economic

influence.

On the contrary, the outlook of rural society is a mixture of both of traditional and

modernisms‟. The traditional picture is:

Less number interpersonal interactions, more frequent interactions between the

same people.

Individual better known, and identified.

Social norms influencing individuals are more visible.

Status is ascribed, determined by birth in a family.

Caste influence direct and strong.

C. Low Exposure to Marketing Stimuli: Urban markets are in a vantage position. They have better exposure to marketing stimuli.

High product exposure: high exposure to branded products.

High ad exposure, high brand awareness.


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High exposure to marketing researchers, multiple sources of information and

learning.

More convenient buying, high rate of retail outlets per 1000 population and high

market reach, availability of wide range of products.

A different and apathetic situation we find in rural markets

Low product exposure, low exposure to branded products.

Low as exposure, low comprehension of ads, low brand awareness.

Low exposure to marketing researchers, limited sources of information and

learning.

Less convenient buying, low rate of retail out lets per 1000 population and low

market reach, availability of limited range of branded products along with

imitation products.

D. Dependence on Nature: In the urban areas, dependence on natural resources is less

Access is a function of purchasing power

Most resources to be purchased

Low dependence on employment and incomes on natural factors

On the other hand, the rural life is dependent on

Abundance of natural resources and high dependence on them for a large number

of house-hold needs.

Differential access to resources based on caste, political and money power etc.

High dependence on livelihoods/employment and income on natural factors.

E. Employment and Incomes Variations: The urban occupations and incomes are more stable and permanent:

Occupations mostly include employment in government, business, industry and

service organizations; contract or daily labor in organized and unorganized sector.

White collar employees and workers a majority.

Frequency of income receipts predictable and at regular intervals.

On the other hand, rural people work in a less certain environment

Agrarian base, mostly small land holdings per house hold (two hectares or less)

and more than to 70 per cent people in small scale agricultural occupations.

Acute seasonality in income receipts; high chance element in income receipts

(because of the dependence on agriculture and natural factors)


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Unit-II

RURAL MARKET RESEARCH

Rural Market Research: Sources of Information- Factors influencing rural consumers

during purchase of products – Rural consumer Life style –Approaches and Tools of

Marketing Research - Rural Business Research- Evolution of Rural Marketing Research

– Sources and methods of data collection, data collection approaches in rural areas, data

collection tools for rural market. Limitation and challenges in rural marketing research,

role of rural marketing consulting agencies


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Rural Market Research The systematic design, collection, analysis and reporting of data and findings relevant to

a specific marketing situation facing by the company in rural market.

“The systematic planning, gathering, recording and analyzing data about problems related

to marketing of goods and services.”

Rural Market Research Process Marketing research involves a sequence of steps-

Step-I Defining a research problem

Step-II Finalizing a research design

Step-III Developing a research hypothesis

Step-IV Planning the research methodology

Step-V Data collection

Step-V Data analysis

Step-VI Conclusion and Recommendations

Approaches and Tools of Marketing Research:

Marketing research is a formalized way of getting information to be used in making

marketing decisions. The American Marketing Association defines market research as:

“The systematic gathering, recording and analyzing of data about problems related to

marketing of goods and services.”

Reactive approach These organizations do not conduct research, but follow what others do and see it as a

way to keep up with competition.

Proactive approach These organizations await developments in the market and introduce new ideas and

methods to exploit opportunities or to minimize problems, so as to get ahead of

competition.

Sources and methods of Data Collection in Marketing Research Data Collection in Marketing Research is a detailed process in which a planned search for

all relevant data is made by researcher.

Types of Data 1. Primary Data- Primary data is the data which is collected first hand specially for the

purpose of study. It is collected for addressing the problem at hand. Thus, primary data is

original data collected by researcher first hand.

2. Secondary data- Secondary data is the data that have been already collected by and

readily available from other sources. Such data are cheaper and more quickly obtainable

than the primary data and also may be available when primary data cannot be obtained at

all.


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Data Collection Approaches in Rural areas A considerable number of rural people are not aware of the concept of market research.

Along with that, they are also suspicious about the intentions of the market researchers or

investigators. Although they are short of time like urban respondents, the investigators

need to first build a rapport with them, make them understand the importance of the

research that he is conducting and break the barrier of hesitation and reluctance to

participate in an activity that they are not familiar with and have not done in the past .

Data collection Methods

• Secondary Data

– Census of India, NCAER, CSO, DRDA, Panchayat office

– Primary data

– In-depth interview,

– focus group discussion,

– social research (PRA),

– Questionnaire,

– Sampling

Primary Data • PRA technique

– Is a set of approaches and methods to enable rural people to share, enhance and analyze

their knowledge of life and conditions, to plan and to act.

– PRA Tools

– Social mapping : capture house location/ caste distribution

– Resource mapping : availability of resources

– Seasonality diagram : information on the basis of seasons

– Venn diagrams : to identify various issues with relative importance


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Advantages of PRA & FGD PRA(Participative

Rural Appraisal)

FGD( Focused Group

Discussion)

Large and Heterogeneous Small and Homogeneous

All people participate in Verbal & Non

Verbal ways

Spokespersons Dominant the

discussion

in Verbal form.

Attitude and Behavioral oriented. Action oriented

Attitude and Behavioral oriented. Action oriented

Spot analysis by Participant Analysis done by Moderator

Research Tools for Rural Market • Semiotic Analysis -appropriate colors, signs and symbols to avoid inappropriate ones.

Helps advertising agencies in promotion mix

• Customer I.Q -quality, satisfaction and loyalty which provides information about brand

equity

• Advanced Tracking Program (ATP) -tracking brand health and brand equity to analyze

different brands performance

Limitations & challenges in Rural Marketing Research

1. Low literacy levels: Literacy level in rural India is low. Due to this, villagers often

find it difficult to understand • the questions or respond to western ratings and

ranking tools.

2. Poor media exposure, low product and brand awareness: Media penetration,

electronic or non-electronic is very • low in rural areas. Thus, awareness regarding

products and brands is very low, making brand studies virtually impossible.

3. Local language communication: There are 15 official languages, making

communication very difficult for the • researchers.

4. Scattered and remote villages; inaccessible roads: Tiny villages are remotely

located, scattered and have almost • inaccessible roads. Sampling such villages is a

really painful task for researchers.


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5. Social taboos; difficulty in interacting with women respondents: Women in some

parts of the country like • Rajasthan and some parts of UP remain behind purdah.

If the respondents include women, then this makes the job difficult for the

researchers.

6. Interview timing: Normally, younger men go to the fields in the morning and

come back only in the evening. • Women are busy in the morning and evening

with cooking and other household chores. Researchers need to plan the day

according to accessibility of the respondents.

7. Rule out revalidation of data: The possibility of validating data over the telephone

in rural areas is eliminated as • telephone penetration per household is extremely

low and physical validation is not feasible, because villages are remote and

scattered.

Rural Consumers during the purchase of products:


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Rural Consumer Life Style

Lifestyles of rural consumer are as follows:

Rural consumer is very religious: Dabur developed religious calendars and gave

Hanuman Chalisa along with their products. Ganga was made of milk and holy

water of Ganga.

Rural consumers prefer to work hard themselves. Machines have to be sold on the

basis of benefits offered and not on the basis of comfort and convenience.

Strong family ties and respect for family values

Likes to play cards and hangs out at Choupal.

Dimensions Urban Rural Demographics Convent educated, salary

earner, small nuclear

family, large dense

population, apartments

Govt school, self-

employed, large family,

small/scattered population,

ordinary spacious houses

Activities Office jobs, internet

surfing. health club,

shopping, clubs and party

Agriculture, physical

sports, gossip, playing

cards, cinema, religious

congregation.

Interests Chinese, continental foods,

designer clothes, beauty

salons, holiday trips

Desi food, milk, bright

coloured clothes,

jewellery, visiting towns,

markets/melas

3.8 1 Rural Shopping Habits: Consumer Insights

Rural shopping habits are as follows:

Preference for small or medium package: Cavinkare‟s Chik Shampoo, Britannia‟s

Tiger Biscuits and small Coke for Rs. 5.

Role of opinion leaders for durables: Opinion leaders like Sarpanch, village elders

and educated youth of the village.

Literacy: 23% of rural Indian population is literate and people are getting added

to this list year after year. There are still some villages which are underdeveloped.

Maximum education is primary school or in some cases high school. To this group

the marketing promotional strategy to be adopted is demonstration of product

features and advantages. Print media and posters do not make any impact.


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Income: An average rural consumer has a much lower income than his urban

counterpart. The disposable income has increased in the recent years to

considerable extent. In spite of this, the common traits of rural consumers are low

purchasing power, low standard of living, low per capita income and low

economic and social positions.

Density: Rural population is scattered across 7 lakh villages. This implies that

rural demand is scattered and urban demand is concentrated. · Influencers: There

are many reference groups in a village. These include teacher, doctor, panchayat

members, health workers, bank manager and co-operative board workers. These

influencers need to be kept in mind when a marketer decides on rural marketing.

Occupation: The main occupation is agriculture. The size and ownership of land

determines the basis for differentiation and consumption patterns

Culture: Rural consumers are traditional in their outlook. They associate faster

with messages that match their cultural behavior.

Language: English is not a language of rural India. Hence a marketer should aim

for communication in the local language.

Media Habits: Television, radio, video and theatre are some of the traditional

media that a rural consumer identifies with.

The above are some of the factors that differentiate the rural consumer from his urban

counterpart. A marketer has to decide on all the above parameters while designing a

marketing plan.

Information Search and Pre-purchase Evaluation

Information search and pre-purchase evaluation are as follows:

The rural consumer mainly seeks and gets his information from opinion leaders

and influencers, rather than the media. However, this information search is fuelled

by exhibitions and road shows, because of the opportunity of personal interaction

and leisurely pace of absorbing and understanding the information and its

relevance.

In the case of high involvement products, this information search needs to be

supplemented by an out of village visit to a company outlet with an opportunity

for personal interaction. The need to demonstrate individual accessories of the

product and their performance also becomes critical.

The ultimate clincher is always the „touch and feel‟ experience. Anything less will

not lead to a purchase


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Changing profile of rural consumers Rural consumers as studied are dependent on agriculture and were not very literate about

products and services available. This scenario is slowly changing due to increase in

literacy and disposable income. Not long ago, rural consumers went to a nearby city to

buy`` branded products and services". Only select household consumed branded goods,

be it tea or jeans. Earlier, big companies flocked to rural markets to establish their brands.

Rural markets today are critical for every marketer - be it for a branded shampoo or a

television. Earlier marketers thought of van campaigns, cinema commercials and a few

wall paintings to entice rural folks under their folds. Today a customer in a rural area is

quite literate about myriad products that are on offer in the market place, thanks to

television. Many companies are foraying into the rural markets and educating them on

newer products and services. The rural youth today are playing a far more significant role

in influencing the purchase decisions. They travel frequently out in the village and are the

drivers of purchase decisions regarding radios, television (black and white as well as

color), automobiles and other goods. They may not be the end customers but often are the

people who influence the purchase of high value products and they decide on which

brands to choose. Penetration levels of consumer durables in the rural sector have risen

dramatically in the last decade or so. Even the rural woman is coming out of the closet.

She is exercising her choice in selecting categories - the choice of brands may still be

with the males of the household. The prerogative of making the final purchase decisions

stills rests with the chief male. In other words, the “chief wage earner” syndrome still

applies in the rural markets.

Influencing the rural consumers The biggest challenge today is to develop a scalable model of influencing the rural

consumers‟ mind over a large period of time and keep it going. This needs to be achieved

in a limited or a reasonable budget. That‟s where the marketers who really understand

rural markets and advertising agencies can make a difference and develop a scalable

media/communication model.


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The mass media has the drawback that the time gap between the point of exposure and

the time of purchase is long. Hence it is difficult to use it in rural communication.

The most important element in rural communications is that the marketer has to integrate

3 things in communication.

1. Exposure of a message

2. Trial or demonstration

3. Final sale.

There is minimal brand loyalty in rural consumers. This is mainly due to a bigger

problem of brand recognition. There are a lot of looks alike in the rural market. The

challenge is to create communication that would help the rural consumer in recognizing

brands, logos, visuals, colors, etc., so that he or she actually buys the actual brand and not

something else.


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UNIT-III

Rural Marketing Mix

Rural Marketing Mix: Rural Marketing Mix – Additional Ps in Rural Marketing – 4As

of Rural Marketing Mix – New Product Development for Rural Market – Rural Market

Product Life Cycle – Objectives behind new product launch – New Product development

process.


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Introduction to Rural Marketing Mix

Marketing mix comprises of various controllable elements like product, price, promotion

and place. Success of any business enterprise depends on marketing mix and these four

elements are like powerful weapons in the hand marketers.

Since behavioral factors of rural consumers are different and almost unpredictable in

nature, the marketers have a challenging task to design marketing mix strategies for the

rural sectors. Due to considerable level of heterogeneity, marketers need to design

specific programs to cater needs and wants of specific groups.

The 4Ps and 4 As of Rural Marketing

Most of the companies treat rural market as a dumping ground for the lower end products

designed for an urban audience. But, this scenario is slowly changing and importance is

given to the need of the rural consumer. Hence it is important to understand the 4Ps along

with 4 As of rural marketing with respect to a rural consumer.

4Ps

1. Product

A product is the heart of rural marketing. It is a need satisfying entity to a rural consumer.

NCAER has classified consumer goods into 3 categories. These categories cover most of

the products from Rs. 100 to Rs. 20000 and above.


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Category I – These products are of immediate use to the family

Pressure Cookers, Mono Cassette Recorders

Pressure Pans

Wrist watches (mechanical)

Wrist watches (quartz)

Radio/Transistors

Electric irons

Ceiling Fans

Category II- These products reduce the strain of the households and also act as a source

of entertainment.

2-in-1 (mono)

2-in-1 (stereo)

B and W TV (S)

B and W TV (R)

Instant Geyser

Sewing Machines

Storage Geysers

Vacuum Cleaners

Table Fans

Bicycles

Category III- These are combination of means to supplement income.

C TVs (S)

C TVs (R)

VCRs/ VCPs

Scooters

Mopeds

Motor Cycles

Refrigerators

Washing Machines

Mixer/grinders

The hierarchy depends on the needs of the rural consumers. Rural branding aims at

creating and disseminating the brand name so that it is easily understood and recognized

by the rural consumers.

The following have to be kept in mind while the marketer makes a decision on the

product.


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1. The product for the rural markets has to be simple, easy to use and provide after sales

service or maintenance.

2. The product has to be packed for low price and convenient usage.

3. The pack has to be easily understood by the rural consumer. The information on the

pack is preferred in local language communicating the functional benefit of the product

not technical advantages.

2. Pricing

A rural customer is price sensitive and shops for value mainly because of his lower

income levels than his urban counterparts. Hence the marketer has to find ways of

making the product affordable to the rural consumer.

For example banks offer loans for tractors, pump sets, television sets and so on to make

the product affordable to a rural consumer.

Smaller unit packs are preferred in the case of FMCG products to offer at lower prices.

3. Placement or Distribution

Distribution of products is one of the biggest challenges of rural marketing.

A three tier rural warehousing setup exists:

CWC/SWCs (Central/ State Warehousing Corporation)

Co-operatives

Rural Godowns

CWC and SWCs reach up to the district levels. The co-operatives are at the mandi level.

The Rural Godowns are at the village level wherein they are owned by panchayat heads.

All these tiers provide warehousing facilities only to their own members. Hence it is a big

problem for a company to store its goods in rural areas.

There are some problems of rural distribution:

Transportation has not been fully developed.

Lack of proper channels of communication like telephone, postal services, and so

on pose a lot of problem to marketer to service the retailer as it is difficult to the

retailers to place order for goods.


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This problem is on the way to have a solution by the advent of mobile phones

which are now available at cheaper rates due to tough competition among the

players.

Storage of goods in rural areas is also a problem for the marketers.

Multiple tiers push up the costs and channel management is a major problem for

marketers due to lot of middlemen in the process.

Availability of suitable dealers.

Poor viability of rural outlets.

Rural outlets need banking support for remittances to principals, get fast

replenishment of stocks, receive supplies through bank and facilitate credit. This

gets handicapped due to inadequate bank facilities.

Retailers in rural markets

There are different kinds of retailers.

Shops within the village.

Shops located on the main road and not exactly within the village

Kasba market or the tahsil market.

Margins are very important to a rural retailer. The pushing by the retailers depends on

margins and the pushing by the wholesalers depends on retailers.

The gap is very wide because the local manufacturers do not undertake investments either

in terms of advertising or anything. Hence they are very fast imitators.

For rural retailers, it‟s the question of simple economics – Am I getting more money if I

invest on these brands? More the margin better choice to stock and sell.

The rural retailer stocks few brands in each category. This may have important

implications for a company and its managers because whoever reaches the market first

gets the share of the market.

4. Promotion

Communication to rural consumer is through organized media. More number of rural

consumer (~70%) listen to radio and many go to cinema.

Rural communication can be through Conventional media or through a nonconventional

media.


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Conventional media: Print, Cinema, Television and Print.

Non-conventional media: Theatre, Posters, Haats, street plays, Melas and through

influential person in the area.

The conventional media have excellent reach, less expensive and create a better impact.

But at the same time, it is not customized to each village and also offers unnecessary

coverage at times.

Problems in rural communication:

1. Language

2. Low literacy rates

3. Cultural & traditional differences

4. Rural reach

5. Attitudes and behavior

An effective promotion should plan for a proper mix of media which must take care of all

the problems of communication to rural consumers.

The Indian rural market today accounts for only about Rs 8 billion (53 per cent - FMCG

sector, 59 per cent durables sale, 100 per cent agricultural products) of the total pie of Rs

120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a

long way ahead.

Hindustan Lever is the first company that comes to mind while thinking of

rural marketing due to its initiative of project „Shakti‟.

Amul is another case in point of aggressive rural marketing.

Other corporate that are slowly making headway in this area are Coca Cola

India, Colgate, Eveready Batteries, LG Electronics, Philips, BSNL, Life

Insurance Corporation, Cavin Kare, Britannia and Hero Honda to name a few.

The greatest challenge for advertisers and marketers is to find the right mix that will have

a pan-Indian rural appeal. Coca Cola, with their Aamir Khan Ad campaign succeeded in

providing just that.

Corporates are still apprehensive to "Go Rural." Since, the rural consumers are scattered

and it is difficult to predict the demand in the rural market.

A few agencies are trying to create awareness about the rural market and its importance

are Anugrah Madison, Sampark marketing and Advertising Solutions Pvt Ltd, MART,

Rural Relations, O&M Outreach, Linterland and RC&M, to name a few. Also, the first

four agencies mentioned above have come together to form The Rural Network. The

paramount objective of the Network is to get clients who are looking for a national

strategy in rural marketing and help them in executing it across different regions.


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The 4As of Rural Marketing

For rural market 4Ps alone are not sufficient. The 4As also has to be considered and keep

in mind while formulating the plan to enter the rural market because these are also

critically important.

1. Availability

The first challenge in rural marketing is to ensure availability of the product or service.

India‟s

7, 00,000 villages are spread over 3.2 million sq km; 700 million Indians may live in

rural areas, finding them is not easy. They are highly dispersed.

Given the poor infrastructure, it is a greater challenge to regularly reach products to the

far-flung villages. Marketer should plan accordingly and strive to reach these markets on

a regular basis. Marketers must trade off the distribution cost with incremental market

penetration.

India's largest MNC, Hindustan Lever has built a strong distribution system

which helps its brands reach the interiors of the rural market.

Coca-Cola, which considers rural India as a future growth driver, has evolved

a hub and spoke distribution model to reach the villages. To ensure full loads,

the company depot supplies, twice a week, large distributors which act as hubs.

These distributors appoint and supply, once a week, smaller distributors in

adjoining areas.

LG Electronics has set up 45 area offices and 59 rural/remote area offices to

cater to these potential markets

2. Affordability

The second major 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. A part of it has been mentioned in product (first P).

A solution to this has been introduction of unit packs by some companies. Most of the

shampoos are available in smaller packs.

Fair and lovely was launched in a smaller pack.

Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in

50- gm packs.

Hindustan Lever has launched a variant of its largest selling soap brand,

Lifebuoy.


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Coca-Cola has addressed the affordability issue by introducing the smaller

bottle priced at Rs 5. The initiative has paid off: Eighty per cent of new

drinkers now come from the rural markets.

Some product also can be made affordable by making available the loan facility by

having alliance with banks.

3. Acceptability

The next challenge is to gain acceptability for the product or service. Therefore, there is a

need to offer products that suit the rural market.

LG Electronics have developed a customized TV for the rural market named

Sampoorna. It was a runway hit selling 100,000 sets in the very first year.

Coca-Cola provided low-cost ice boxes in the rural areas due to the lack of

electricity and refrigerators. It also provided a tin box for new outlets and

thermocol box for seasonal outlets.

HDFC Standard LIFE topped private insurers by selling policies in rural sector.

The company tied up with non-governmental organizations and offered

reasonably-priced policies in the nature of group insurance covers.

4. Awareness

Building awareness is another challenge in rural marketing. A large part of rural India is

inaccessible to conventional advertising media. The media penetration in rural areas is

only about 57%.It has been seen that, two out of five Indians are unreached by any media

- TV, Press, Radio and Cinema put together. Haats, mandis and melas are opportunities.

Family is the key unit of identity for both the urban and rural consumer. However, the

rural consumer expressions differ from his urban counterpart. For a rural consumer,

outing 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

indulgence. Haats, mandis and melas are the place of opportunities to promote awareness

about the product.

Hindustan Lever has its own company-organized media. These are promotional

events organized by stockiest.

Godrej Consumer Products, which is trying to push its soap brands into the interior

areas, uses radio to reach the local people in their language.

Coca-Cola uses a combination of TV, cinema and radio to reach the rural

households. It has also used banners, posters and tapped all the local forms of

entertainment. Since price is a key issue in the rural areas, Coca-Cola advertising

stressed its `magical' price point of Rs 5 per bottle in all media.

LG Electronics uses vans and road shows to reach rural customers. The company

uses local language advertising.


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Philips India uses wall writing and radio advertising to drive its growth in rural

areas.

NEW PRODUCT DEVELOPMENT

New Product Development (NPD) covers the complete process of bringing a new product

to market. A central aspect of NPD is product design, along with various business

considerations. New product development is described broadly as the transformation of a

market opportunity into a product available for sale.[1] The product can be tangible

(something physical which one can touch) or intangible (like a service, experience, or

belief), though sometimes services and other processes are distinguished from "products."

NPD requires an understanding of customer needs and wants, the competitive

environment, and the nature of the market.[2] Cost, time and quality are the main

variables that drive customer needs. Aiming at these three variables, innovative

companies develop continuous practices and strategies to better satisfy customer

requirements and to increase their own market share by a regular development of new

products. There are many uncertainties and challenges which companies must face

throughout the process. The use of best practices and the elimination of barriers to

communication are the main concerns for the management of the NPD

NPD Process

New Product Strategy – Innovators have clearly defined their goals and objectives for the

new product.

Idea Generation – Collective brainstorming through internal and external sources.

Screening – Condense the number of brainstormed ideas.

Concept Testing – Structure an idea into a detailed concept.

Business Analysis – Understand the cost and profits of the new product and determining

if they meet company objectives.

Product Development – Developing the product.

Market Testing – Marketing mix is tested through a trial run of the product.

Commercialization – Introducing the product to the public.


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Idea Generation

The first stage of the New Product Development is the idea generation. Ideas come from

everywhere, can be of any form, and can be numerous. This stage involves creating a

large pool of ideas from various sources, which include

Internal sources – many companies give incentives to their employees to come up with

workable ideas.

SWOT analysis – Company may review its strength, weakness, opportunities and threats

and come up with a good feasible idea.

Market research – Companies constantly reviews the changing needs, wants, and trends

in the market.

Customers – Sometimes reviews and feedbacks from the customers or even their ideas

can help companies generate new product ideas.

Competition – Competitors SWOT analysis can help the company generate ideas.

Idea Screening

Ideas can be many, but good ideas are few. This second step of new product development

involves finding those good and feasible ideas and discarding those which aren‟t. Many

factors play a part here, these include –

Company‟s strength,

Company‟s weakness,

Customer needs,

Ongoing trends,

Expected ROI,

Affordability, etc.

Concept Development & Testing

The third step of the new product development includes concept development and testing.

A concept is a detailed strategy or blueprint version of the idea. Basically, when an idea

is developed in every aspect so as to make it presentable, it is called a concept.

All the ideas that pass the screening stage are turned into concepts for testing purpose.

You wouldn‟t want to launch a product without its concept being tested.


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The concept is now brought to the target market. Some selected customers from the target

group are chosen to test the concept. Information is provided to them to help them

visualize the product. It is followed by questions from both sides. Business tries to know

what the customer feels about the concept. Does the product fulfill customer‟s need or

want, Will they buy it when it‟s actually launched.their feedback helps the business to

develop the concept further.

Business Strategy Analysis & Development

The testing results help the business in coming up with the final concept to be developed

into a product.Now that the business has a finalized concept, it‟s time for it to analyse and

decide the marketing, branding, and other business strategies that will be used. Estimated

product profitability, marketing mix, and other product strategies are decided for the

product.

Other important analytics includes

Competition of the product

Costs involved

Pricing strategies

Breakeven point, etc.

Product Development

Once all the strategies are approved, the product concept is transformed into an actual

tangible product. This development stage of new product development results in building

up of a prototype or a limited production model. All the branding and other strategies

decided previously are tested and applied in this stage.

Test Marketing

Unlike concept testing, the prototype is introduced for research and feedback in the test

marketing phase. Customers feedback are taken and further changes, if required, are

made to the product. This process is of utmost importance as it validates the whole

concept and makes the company ready for the launch.

Commercialization

The product is ready, so should be the marketing strategies. The marketing mix is now

put to use. The final decisions are to be made. Markets are decided for the product to

launch in. This stage involves briefing different departments about the duties and targets.


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Every minor and major decision is made before the final introduction stage of the new

product development.

Definition of Product Life Cycle (PLC)

Before discussing the product life cycle stages, it is wise to explain what the product life

cycle actually is. The product life cycle (PLC) is the course of a product‟s sales and

profits over its lifetime.

Product Life Cycle Stages

There are five distinct product life cycle stages:


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Product Development. When the company finds and develops a new product idea,

product development starts. During product development, sales are zero, and the

company‟s investment costs increase.

Introduction. Sales slowly grow as the product is introduced in the market. Profits are still

non-existent, because the heavy expenses of the product introduction overweigh sales.

Growth. The growth stage is a period of rapid market acceptance and increasing profits.

Maturity. In the maturity stage, sales growth slows down because the product has

achieved acceptance by most potential buyers. Profits level off or decline because

marketing outlays need to be increased to defend the product against competition.

Decline. Finally, sales fall off and profits drop.

OBJECTIVES BEHIND NEW PRODUCT LAUNCH

Creating a Cost Effective Marketing Plan

The small business owner needs to conserve capital and spend money only on

marketing strategies that have a high probability of securing significant numbers

of customers. One approach is to research which methods are working well for

other companies like his. His plan should take advantage of marketing methods

that are very low cost, such as sending out press releases about the new product

which may result in free publicity.


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Building Customer Awareness

The marketing plan for the new product must include strategies for building

customer awareness -- bringing the product to the attention of potential customers.

Building awareness is difficult because consumers see and hear numerous

marketing messages each day through many different media including print

advertising, television advertising and the Internet. Marketing professionals refer

to this challenge as being heard above the "noise" in the marketplace. If the

company is effective at building awareness, the target customers will become

curious about the product and want to learn more about its uses and benefits.

Introducing the Product's Benefits

The small business owner must be able to clearly articulate why the product will

be of benefit to the target markets he has selected. Benefits are often expressed as

solving a problem for the customer or meeting a customer need. Benefits can

include saving the customer time or money. The product may also help the

customer get more enjoyment out of life, such as sporting goods that help the user

be more competitive in his favorite sport. For products marketed to business, the

marketing message many times stresses that they will improve the company's

productivity.

Positioning the Product vs. the Competition

Particularly if the small business owner has entrenched, larger competitors, when

introducing a new product it is critical he determines what aspects of his product

are superior to competitive products and emphasize these points of differentiation

in the marketing message he delivers to his target market. He must also market the

product based on his company's own strengths and not try to beat out the

competition in areas where they are perceived by customers as having the clear

advantage.

Maintaining High Customer Satisfaction

Excelling at customer service and maintaining high customer satisfaction provide

immediate rewards through increasing the likelihood the current customer will

purchase the product again. Encouraging word-of-mouth recommendations of the

product from extremely satisfied customers is one of the least expensive and most

effective marketing strategies a small business owner can use. Minimal cost is

involved -- perhaps just rewarding customers for making these recommendations

with discounts on future purchases. Recommendations are powerful. Consumers

rely on the opinions of current users of the products -- associates, friends and

family -- to determine whether they want to purchase them as well.


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Unit-III

Rural Market Brand & Channel Management

Rural Marketing Mix: Rural Marketing Mix – Additional Ps in Rural Marketing – 4As of Rural Marketing Mix – New Product Development for Rural Market – Rural Market Product Life Cycle – Objectives behind new product launch – New Product development process.


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BRAND LOYALTY Brand loyalty can be defined as the power of preference for a brand compared to other

similar available options. This is regularly measured in terms of repeat purchase behavior

or price sensitivity.

Factors of Brand Loyalty The factors were brand names, price, style, product quality, promotion, store environment

and service quality.

Brand name

Famous brand names can disseminate product benefits and lead to higher recall of

advertised benefits than non-famous brand names. There are many unfamiliar brand

names and alternatives available in the market place. Consumers may prefer to trust

major famous brand names. These prominent brand names and their images attract

consumers to purchase the brand and bring about repeat purchasing behavior and reduce

price related switching behaviors. Also, brand personality provides links to the brand‟s

emotional and self-expressive benefits for differentiation. This is important for brands

which have only minor physical differences and are consumed in a social setting where

the brand can create a visible image about the consumer itself.

Product quality

Product quality encompasses the features and characteristics of a product or service that

bears on its ability to satisfy stated or implied needs. In other words, product quality is

defined as „fitness for use‟ or „conformance to requirement‟. Consumers may repeat the

purchase of single brands or switch around several brands due to the tangible quality of

the product sold. The components of product quality of fashion merchandise include

cutting or fitting, size measurement, colour, material, function and the performance of the

merchandise. Fitting is a crucial aspect in garment-selection because some fitted

garments, such as swimsuits and aerobic wear can ideally enhance the consumers‟

general appearance. Material is important in product quality as it affects the texture, hand

feel and other performance aspects of the product. Further, consumers relate personally to

colour, and could select or reject a fashion because of colour. If the colour does not

appeal to them or flatter their own colour, they will reject the fashion.

Functional attributes in sportswear include breathable, quick-dry, odour-resistant,

waterproof, lightweight, and antimicrobial and finally, durability which is the use-life of

garments.

For instance, some consumers wear their sportswear for heavy work and some for leisure

and sports, as they need a lot of movement, while durability is an important consideration

in purchasing sportswear. Perfectionist or quality consciousness is defined as an

awareness of and desire for high quality products, and the requirement to make the best

or perfect choice versus buying the first product or brand available. This indicates that

quality characteristics are also related to performance.


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Price

Price is probably the most important consideration for the average consumer. Consumers

with high brand loyalty are ready to pay a premium price for their favored brand, so, their

purchase intention is not easily affected by price. In addition, customers have a strong

belief in the price and value of their favourite brands so much so that they would compare

and evaluate prices with alternative brands (Evans et al., 1996; Keller, 2003). Consumers‟

satisfaction can also be built by comparing price with perceived costs and values. If the

perceived values of the product are greater than cost, it is observed that consumers will

purchase that product.

Loyal customers are willing to pay a premium even if the price has increased because the

perceived risk is very high and they prefer to pay a higher price to avoid the risk of any

change. Basically, long-term relationships of service loyalty make loyal customers more

price-tolerant, since loyalty discourages customers from making price comparison with

other products by shopping around. Price has increasingly become a focal point in

consumers‟ judgements of offer value as well as their overall evaluation of the retailer.

Price significantly influences consumer-choice and incidence of purchase. He

emphasized that discount pricing makes households switch brands and buy products

before than needed. Price is described as the quantity of payment or compensation for

something. It indicates price as an exchange ratio between goods that pay for each other.

Price also communicates to the market the company‟s intended value positioning of its

product or brand. Price consciousness is defined as finding the best value, buying at sale

prices or the lowest price choice. Additionally, consumers generally evaluated market

price against an internal reference price, before they decide on the attractiveness of the

retail price.

Style

Style is visual appearance, which includes silhouette, line and details affecting consumer

perception towards a brand. According to Abraham and Littrell (1995), a composite list

of apparel attributes has been generated and one of the conceptual categories is style.

Consumer‟s judgement depends on the consumer‟s level of fashion consciousness, so

judgement will be made by their opinion of what is currently fashionable. Brands that

supply stylish sportswear attract loyal consumers who are fashion-conscious. Fashion

leaders or followers usually purchase or continue to repeatedly purchase their fashion

garments in stores that are extremely fashionable. They gain satisfaction from wearing

the latest fashion and style which also satisfies their ego.

A research conducted by Duff (1999) investigated the niche market in women‟s

sportswear, and the results showed that sportswear shoppers were becoming more

fashion-conscious and were demanding products with more style; furthermore,

consumers have a tendency to wear different attires for different occasions. Fashion-

consciousness is generally defined as an awareness of new styles, changing fashions, and

attractive styling, as well as the desire to buy something exciting and trendy.

Store environment

Omar (1999) emphasized that the store environment was the single most important factor

in retail marketing success and store longevity. Positive attributes of the store, which


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include store layout, store location and in-store stimuli, affect brand loyalty to some

extent. Store location and number of outlets are crucial in altering consumer shopping

and purchasing patterns. If consumers find the store to be highly accessible during their

shopping trip and are satisfied with the store‟s collection and services, these consumers

may become loyal afterward. Thus, a store‟s atmosphere is one of the factors that could

influence consumer‟s decision-making.

The stimuli in the store, such as the characteristic of other shoppers and salespeople, store

layout, smells, noises, shelf space, temperature, and displays, colors, sign, and

merchandise, affect consumers and serve as elements of apparel attributes, which may in

turn, affect consumer decision making and satisfaction with the brand. On the other hand,

background music played in the stores affects attitudes and behavior . The slow-beat

musical selection leads to higher sales volume as consumers spend more time and money

in a conducive environment. There are many advantages to retailers having loyal

customers. customer loyalty could yield a favourable operating cost advantage for

retailers. Also, they stressed that obtaining new customers cost five to six times as much

as retaining current customers. Research conducted by Lin and Chang (2003) showed that

the channel convenience of the brands had significant influence on buying behaviour.

This means that the accessibility to this product/brand in the store is important when

purchasing low involvement products. Consumers will not go to another store just to find

the brand. Instead, they will stay put and choose another brand.

Promotion

Promotion is a marketing mix component which is a kind of communication with

consumers. It includes the use of sales promotions, advertising, personal selling and

publicity. Advertising is a non-personal presentation of information in mass media about

a brand, product, company or store. It greatly affects consumers‟ images, beliefs and

attitudes towards products and brands, and in turn, influences their purchase behaviors.

This shows that promotion, especially through advertising, can help establish ideas or

perceptions in the consumers‟ minds as well as help differentiate products against other

brands.

Promotion is an important element of a firm‟s marketing strategy. Promotion is used to

communicate with customers with respect to product offerings, and it is also a way to

encourage purchase or sales of a product or service. Sales promotion tools are used by

most organizations in support of advertising and public relations activities, and they are

targeted towards consumers as final users. She also states that promotion has a key role in

determining profitability and market success and is one of the key elements of the

marketing mix which includes advertising; sales promotion; direct marketing; public

relations and publicity; personal selling and sponsorship.

Service quality


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BRANDING PROCESS

Branding is a process, a tool, a strategy and an orientation. It is a process by which a

marketer tries to build a long-term relationship with the customers, a tool to position a

product or service with a consistent image of quality and value for money to ensure the

development of a recurring preference by the consumer. Branding provides

differentiation strategy when product cannot be easily distinguished.

The process of creating a brand stems from research that starts with the concept of what

the product is, and what its functions and objectives are. From this evolves the idea of

what is should look, feel and talked about like. From these ideas generate the name and

all its connation, after which packing, logo and communication strategies are developed.

This is a simplistic view. Brand building is usually a long, tedious and methodical work

involving segmentation, marketing mix, and packaging, technical and financial inputs.

A branding process, if executed well creates a brand ie equipped to handle changes in

demographics, thinking from and functional changes as well as competitor actions.96%

of new brands that are developed in the FMCG sector failed. This only goes to so that the

market place in an unforgiving master. It suggests that branding is not a static

phenomenon; rather a continuous change in product appearance and performance as well

as the total value equation is must for survival of any brand.

BRANDING IN RURAL INDIA

The concept of branding has been a late entrant in rural markets. Consumers have

graduated d to branded products with increased affordability as a result of increasing

rural incomes in recent years. A brand name in the rural context facilitates easy brand

recall and in drawing any colours, visual or numeric association. But some brands are

known by their names, for example, Nirma and Baba Zarda. The choice of Sampoorna as

the name for its rural television brand helped LG as it is a Sanskrit word meaning

"wholesome" and hence it cuts across all regional linguistics barriers.

The challenges in creating a brand identity in rural involve the need to relate the brand

with the rural lifestyle, or with appropriate status symbols, or with the rural environment.

As most brands are introduced in urban markets and then move to rural, creating a brand

identity in rural becomes a tough challenge. Britannia Tiger biscuits created an identity

associated with a smart, active and sharp child.

BUILDING A BRAND IMAGE

The brand should have a personality of its own. It should emote, empathize and talk to its

consumers. Such an ability helps in brand connect with rural audiences and contributes a


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great deal to brand equity and competitive advantage. Mahindra & Mahindra have

maintained their sterling image in rural. The Bhumiputra (son of soil) series of tractors,

with its rugged features and the Sarapanch (village head) series have helped to improve

sales. The sarapanch brand helped to draw close brand recognition between the product

and the head of the village. In this way, it provided an opportunity to the consumer to

relate himself with the sarpanch, who commands high status and respect in the village.

A significant percentage of sales in the rural areas comprise of branded products. Studies

also have found out that the brand loyalty in the rural areas is much higher than that

found in the urban ones. This only happens when the brand has found an acceptance in

the rural market as the one offering good value proposition. But building brands in rural

areas is a different science altogether. This requires a specific committed focus and may

not happen as spill over from urban market or by doing slight modification in

communication and brand building efforts that were planned for urban markets.

The following tools, approaches and strategies have been employed by different

organizations, to successfully build their brand in the rural markets:

Customization

An in-depth study of rural markets is the prerequisite to find out the needs, wants and

aspirations of rural consumers by directly contacting them. This can be followed with

creating or 'reengineering' a product to make it relevant to the need of rural consumers.

The entire brand building efforts has to be built on the basis of their needs and aspirations

from a specific product category and the corresponding value provided by the brand.

Relevance

It begins with the brand name itself and it is important that the brand name or the punch

line is in vernacular language and is in tune with the ethos of the market and the social

milieu of the market in which the product is going to be sold. The same logic applies to

the colour, logo, slogan and every aspect of communication so that it strikes a right chord

with the rural consumer and they can relate to the message. The successful advertisement

campaign by Coca-Cola with the tagline 'Thanda matlab Coca-Cola', has a celebrity

endorser not as a hero but as one who is depicting an identity of population of different

regions, speaking in the regional idiom; it was a campaign to which audiences could

relate to.

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 in the rural market. Therefore,

organisation should select other below the line media as well; to arouse the interest of


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rural consumers. The media selected should build a desire for a particular brand i.e. live

demonstrations, or contests depicting the qualities and the strengths of a given product.

Demonstration vans with audiovisual equipments , which clearly demonstrate how a

given product will solve the existing problems of rural consumers, are likely to have

much deep-rooted impact, than the short commercial on TV.

The brand building, which is done in the Mandis, Melas and other gatherings, can be

followed by the presence of the organisation in the regular Haats and Mandis for live

demonstration of the benefits and actual sales of a product. Because of high level of

interaction, haats can be an effective medium for rural advertising. Villagers are in

buying mood at the haats and mandis. Around 7,600 mandis , all over India provide a

good opportunity to have direct interaction with up to 200 farmers a day.

Message

Message should be in the local parlance and such that the rural audience can easily

decipher the intended meaning. Message should meet the rural sensibilities and should be

modified in accordance with the cultural variation from one region to another.

Simple 'Slice of life' message with touch of emotions and storyline are more effective

with rural folks. Commercials with gimmicky hi-tech story that is fast paced may not

work well with the rural audience. Message should be utilitarian and narrating the

functional benefits of the product.

Rural consumers have strong visual sense. As they relate more with logos, colour and

symbols, icons. Therefore, these have to be built prominently in the overall

communication. Otherwise the entire brand building effort can go haywire.

Recognition

The vast multitude of the rural population either does not understand English or even is

illiterate. Therefore, it becomes extremely important that the illiterate rural consumers or

those who can not understand English can be certain that they are getting what they are

thinking of or desiring to have and not the cheap imitation or a fake product having a

similar name.

Word Of Mouth Publicity

Rural communications effort undertaken by an organization should be such that it can

generate a lot of publicity in the oral collectivist culture of rural India. Therefore,

targeting the right set of opinion leaders with the campaigns which lead to oral publicity


43


in the region is more likely to develop the brand recall than the five or ten seconds

commercial on the TV, which the rural consumers are likely to forget at the time of the

purchase.

The rural consumers want more credible information and in order to be doubly sure they

prefer to hear from other people whom they feel to be more dependable than the TV or

print media advertisement. The stories they hear from others are more believable in the

from of hints a

CHANNEL MANAGEMENT

Definition: The term Channel Management is widely used in sales marketing parlance. It

is defined as a process where the company develops various marketing techniques as well

as sales strategies to reach the widest possible customer base. The channels are nothing

but ways or outlets to market and sell products.The ultimate aim of any organization is to

develop a better relationship between the customer and the product.

Description: Channel management helps in developing a program for selling and

servicing customers within a specific channel. The aim is to streamline communication

between a business and the customer. To do this, you need to segment your channels

according to the characteristics of your customers: their needs, buying patterns, success

factors, etc. and then customize a program that includes goals, policies, products, sales,

and marketing program

(1). The goal of channel management is to establish direct communication with

customers in each channel. If the company is able to effectively achieve this goal, the

management will have a better idea which marketing channel best suits that particular

customer base. The techniques used in each channel could be different, but the overall

strategy must always brand the business consistently throughout the communication

(2). A business must determine what it wants out of each channel and also clearly define

the framework for each of those channels to produce desired results. Identifying the

segment of the population linked to each channel also helps to determine the best

products to pitch to those channels.

INDIAN RURAL RETAIL MARKET

In the past few years, rural development has assumed global attention especially among

the developing nations. It is a great opportunity for a country like India where 65% of the

people reside in rural areas. The present strategy of rural development in India mainly

focuses on provision of basic amenities, poverty alleviation, better livelihood

opportunities and infrastructure facilities through innovative schemes of wage and self-


44


employment. Thus Indian rural markets offer a sea of an opportunity for the retail sector

that needs to be tapped with care.

Rural India is proving to be the emerging growth centre for Indian retailers as the rural

population dominates the Indian market with over 720 million consumers (approx. 70%

of the total population) spread across nearly 0.63 million villages. Usually, Indian rural

retail stores are in the form of haats, melas etc. Purchasing power of rural people is on

rise and market is growing at a rate of 3-4% per annum. Coke/Pepsi or Colgate/Close Up

or Dove/Pantene or Ariel/Surf Excel or Lays/Bingo are household brand names in rural

markets today. To give a boost to the rural economy, the Union Budget for 2015-16

allocated a total of Rs 79,526 Cr for rural development activities including Mahatma

Gandhi National Rural Employment Guarantee Act.

Undeniably, the urban market (metropolitan cities, tier II, III cities) offers great

opportunities to organized retailers but they are expected to saturate in the near future.

Moreover, low penetration rate in rural market facilitates most big retail companies to

enter the untapped rural market (bottom of the pyramid). For example, ITC has taken a

initiative through Choupal Sagar, DCM through Hariyali Kisan Bazaars, Pantaloons in a

JV with Godrej through Aadhars, TATA through Kisan Sansars to name a few. These

corporate retailers have already established the farm linkages resulting in Indian farmers

making good money, after centuries of social and economic exploitation. Also, as rural

areas have been affected to a lesser degree by the current economic slowdown, several

other Indian companies are contemplating over launching rural retail brands. Thus, rural

retailing in India has a very long haul ahead.

In rural markets, consumers are experimental and price conscious. Even though

consumers at the bottom of the pyramid do not seem to have fixed income (which affects

purchasing dynamics), the rural market prove to be surprisingly loyal. So if the

companies could channelize this sentiment then they could really reap the rewards. Also,

it is well known that for the same level of income, the purchasing power in rural areas is

much higher as the expenditure on basic necessities is relatively lesser due to being

subsidized or free in comparison to the urban India. Rural consumer insights show that

they buy products more often (mostly weekly), buy small packs (low unit price more

important than economy) and buy value for money, not cheap products.

However, there are intrinsic problems in the way products and services are retailed in

rural India therefore the organized retailers have been facing a difficult time to lure

customers from traditional kirana stores, especially in the food and grocery segment.

Other impediments include gaps in road and telecommunications connectivity, lack of

reliable electricity and water supply, higher overhead costs, fluctuating demand that

depends on the monsoon etc. Rural populations share several commonalities like

domestic constraints, financial hardships, difficult living conditions, lack of basic

information for making informed decisions, amongst others.


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The Indian rural retail scenario is headed for a quantum leap. Besides newer names set to

dot the landscape, new and emerging retail formats are driving the diversity of the fast-

changing retail backdrop. As organized retail in rural India awaits the arrival of new

players, current majors like ITC are expanding their retail operations by setting up more

stores, offering newer product categories and entering new states. A shift from selling

agricultural-inputs will help these stores target the non-farming segments. It is a little

known fact that 25% of the rural population is not engaged in agriculture but it earns 50%

of the rural income. The Indian rural retail market is the next growth frontier for

corporate India as it offers an opportunity for a large player to build approximately Rs.

40,000 Cr retail business spanning multiple categories by the end of 2015 (at current

prices).

RURAL RETAIL CHANNEL MANAGEMENT The second major task in rural marketing is organizing an effective distribution channel.

This task too has many problems:

Multiple tiers, Higher Cost and Administration Problems: The distribution chain in

the rural context requires a large number of tiers as compared to the urban context. In the

rural context, at the minimum level the chain needs the village shopkeeper, the

wholesaler, etc., whereas at the top level involves the manufacturer‟s own warehouses,

office operations at selected centers. Such multiple tiers make channel management a

major problem area.

Scope for Manufacturer’s own Outlets Limited; Greater Dependence on Dealers:

Scope for manufacturer‟s direct outlets such as depots or showrooms is limited in rural

markets unlike in the urban context since it is expensive and unmanageable.

Non-Availability of Dealers: There is also a problem of availability of dealers. Suitable

dealers are limited even if the firm is willing to start from scratch and try out rank

newcomers; the choice of candidates is limited.

Poor Visibility of Retail Outlets: Sales outlets suffer from poor viability in the rural

market. Scattered nature of market and the multiplicity of tiers in the chain use up the

additional funds the manufacturer is prepared to part with. Moreover the business volume

is not adequate enough to sustain the profitability of all groups and the retail tier is the

worst sufferer.


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Inadequate Bank Facilities: Due to lack of bank and credit facilities distribution in rural

markets is handicapped. Rural outlets need banking support for 3 important purposes;

In facilitating remittances to principals and to get fats replenishment of stocks.

In receiving supplies „through bank‟ (retiring documents with the bank).

To facilitate securing credit from banks.It is estimated that there is only one bank branch

for every 50 villages.

Inadequate Credit Facilities from Banks: Another constraint is the inadequacy of

institutional credit. Rural outlets are unable to carry adequate stocks due to lack of credit

facilities. The vicious circle of lack of credit facilities leading to inadequate stocking and

loss of business, finally result in poor viability of outlets, getting perpetuated.

STRATEGIES OF RURAL RETAIL CHANNEL MANAGEMENT

Studies reveal that the bigger villages of above 5000 population are fairly covered by the

marketing people of various companies manufacturing consumable and durable products.

The

smaller villages are not fully touched due to various reasons like accessibility, small

markets and far distances from towns and villages. Strategies for distribution to various

rural segments are discussed as under:

Small Villages:

In order to reach smaller villages, two types of strategies have to be adopted i.e., reach all

villages above 2000 population and reach all those within 50 km radius of big towns and

cities. This will help cover about 50% of the rural population and even this extent of

coverage means approximately 350 million populations and this is a massive coverage.

Very small villages below 500 populations can be ignored at this stage as the output will

not compensate the input. There should be distribution vans to cover villages on fixed

period (at least once a week) so that the shopkeepers us well as the public are sure of

supplies from the feeder centre, which will be nearby a town or city. The village shop

keeper of 2000 population in towns should be used as a distribution channel for shop

keepers of very small villages around it. This is essential as some of the smaller villages

are not having motor able roads.


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Agro Input Dealers:

Agricultural input dealers have know how and scope to deal with rural public as they are

already in touch with them for essential inputs like fertilizers, seeds and chemicals. In

their transactions, they are managing credit arrangements and hence are in a better

position to take care of consumer goods also. This method needs to be tried seriously.

Some of the farmers from agriculturally well off states like Punjab, Haryana, Western UP

have improved their per capita income to the level of urban people and can afford to buy

more and more consumer goods. With affluence, their awareness of modern goods and

facilities also has increased. In addition to this, the areas where cooperatives of sugar and

dairy are stronger, the farmers have better income level and cash flow is steady. It is in

such places that the efforts to sell consumer goods give results. These farmers will set a

trend for other farm communities.

Activating Co-operative Societies:

Though cooperatives have been started mainly for input and output of rural produce,

there is scope and possibility to use these premises and offices for marketing of consumer

goods to rural people throughout India, there are more than three lakh cooperative offices

working under different names like marketing cooperatives„, credit cooperative society„,

farmers „service cooperative societies and various local level cooperatives. There are

organizations, some active and some not so active. The premises and manpower can be

better utilized by introducing the consumer, durables and consumables required by the

rural population. The approach has an institution backing the marketing executives can

feel safe 10 keep goods and

give credit on institution and hence basis than on the individual basis. The premises of

cooperatives is also a good place to keep hoardings and display of items kept for sale.

Utilizing P.D.S Stores and Petrol Pumps:

These are two unexplored areas to develop market. Public Distribution Systems (PDS)

are available throughout the country and even in villages. Similarly petrol pumps are

available on all highways, state highways and link roads to towns and big villages. These

are two places which are not fully utilized. In cities, the petrol pumps are very busy and

cannot do anything other than giving petrol and diesel to hundreds of vehicles coming to

them day and night. In urban and rural areas and less busy roads the petrol pumps have

adequate spare time to attend additional functions. Similarly PDS stores which are in

private hands have ample time three weeks in a month. PDS stores have now-a-days

become least active due to decreasing importance of this scheme and very little gap

between market price and PDS prices. This naturally gives scope to make better

utilization of these outlets.

Towns as Feeder Centers:

Towns are frequently visited by rural people for education, cinema, dramas, purchases,

medical treatment and various functions. It will be convenient if the town market is used

as a distribution channel for various villages surrounding towns. One or two traders in

town need to be used as feeders to village stores and also to sell directly to villagers

coming to towns. This method is already working in many places and can be further

strengthened. The distribution strategy can be changed based on the changing life style,


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communication and conveyance facilities. The strategies discussed thus far are the

possibilities for the current situation.

Promotion Strategy

Various types of promotion methods work as integrative systems between producers and

consumers. In case of consumer goods, this is done on large scale whereas for rural

products, it is on small scale or specific target wise done. The producers and processors

think in terms of ―How to reach our customers‖ and ―How our customer can reach us‖.

Due to technological innovations people can now communicate through both traditional

and newer methods of media. Both mass communication and / or target communications

can be used as per requirements. Very commonly used media of communication are

newspapers; magazines, radio, TV, telephone, computers, fax, pagers and mobile phones.

These usage proportions differ from product to product.

For five marketing related functions like (1) Advertising (2) Sales promotion (3) Public

Relations (4) Personal selling and (5) Direct marketing, there is a different way of

approach in urban and rural markets.

The product package, shape, color, pricing and sales persons get up and general

impression are no more monopoly of consumer goods, dealers. Now even for rural

related commodities like dairy products, flour, pickles, high quality grains and fruits and

foods are neatly packed, branded, weight, contents, price are written. Slowly and steadily,

the marketing of rural produce in towns and cities and marketing of consumer goods in

rural sectors is taking a professionalized approach. The basic difference is in

organizational strength, permanent address and executive to attend any type of call for

consumer goods. Such facility is a far cry for rural products. Since the literary level of

rural population is low, it pays to do promotions through mass media like TV, cinema

and radio advertisements. In print media, mostly hoardings and wall paintings will help

more. These promotional strategies are covered as under:

Cinema:

For the last 60 years, cinema continues to be influencing factors in style, tastes, dress

materials and total Indian culture. The effect of cinema is much more in Southern India

than elsewhere. In the South, 76 % rural people view cinema regularly whereas elsewhere

it is around 25 %. This justifies why Tamil Nadu and Andhra Pradesh had cinema actors

as Chief Ministers for a long time. Despite TV being parallel popular, the hold of cinema

on rural sector and urban middle class and labour class continues. Product advertisements

before a movie and during intervals get good publicity. All the theaters do this with the

help of slides and 1 or 2 minutes movie type advertisements to highlight the product

performance and utility. This method will continue to be popular as many villagers like to

see movies in theatres than on TV.

Television:

Since the last two decades, TV viewing has been a regular pastimefor all Indian public.

The


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TV serials like ‗Mahabharat„, ‗Ramayan„, ‗Humlog„ and cricket matches have made TV

very popular. Infact, Doordarshan covers 85 % of India and private channels have started

operating at continental, national and regional levels. The advertisers have choice of

segment to be touched.

For all India coverage, important and popular serial intervals are best to advertise on TV.

Further, DD has special programs on specific days and time for farmers. Advertising

before

and in between this programme also gets good effect. The only constraint is that such

prime time advertisements cost more. Only products which can absorb such high costs

can afford this.

Radio

Listening to Radio for a longtime has been for news, commentary (sports) and category

songs. It has been a recent trend since two-three various last decades to use radio

programmes for advertisements. The first and most famous commercial on Radio was

Binaca Geethmala„ on Radio Ceylon. Subsequently, many programs have come

onVividha Bharati„ and local languages. Film songs are popular and playing

advertisements in between to attract attention by the listeners. Coverage of radio stations

is wide and serves the purpose. Rural people have the habit of carrying transistor radio

sets and hence they play the radio wherever they go. About 75% of the rural population

listens occasionally. Both local language stations and Vividh Bharti stations are popular

and hence advertising through these channels serves the purpose.

Print Media

Due to low literacy rate and poor reading habits, this is not a popular promotion strategy.

However, some advertisements are made through the local language low priced dailies.

Rural people normally read newspapers on Fridays and Sundays when there is more

coverage about the movies being shown and the forth coming movies. So the promotion

of cinema viewing is best done by the newspapers as far as rural people are concerned.

Hoardings

Hoardings on village entry junctions, writing and painting on walls of public buildings in

villages, compound walls of private people will be more appealing and readable. The

rural inputs like fertilizers and pesticides are advertised like this. The picture of product

and catchy slogans are considered to be the best promoters.

Village Congregations/ Gatherings

Certain places have specific market days which can be used for mass communication to

speed awareness of products. Similarly particular places have local deities and Jathra or

fairs along the festival type celebrations. These occasions help to promote sales,

explanation or product awareness. If some promotional schemes are kept in those

occasions, it will be a more appealing effort. On these occasions, audio visual shows can

be made for better explanations.

The implication is that pack size and price points are critical to sales, and importantly,

that rural consumers view the purchase-tradeoff dilemma across a much wider range of

product categories. As a result, the nature of competition is much greater; a beverage


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manufacture is not only competing with other manufacture in its category, but also with

other products that consumers may consider one-off luxury purchases such as shampoo.

Hindustan Lever, a subsidiary of Unilever coined the term sachet. In tiny pillow-like

plastic packets that contain about 20 millimeters of product, Unilever sells shaving gel,

dishwashing liquid and toothpaste, to name just a few items. The sachets answer the

needs of rural consumers who cannot, or are not used to, buying larger sizes and enables

them to buy on a more frequent basis. This strategy provides a viable entry-level price for

many rural consumers who want to try new products, and allows companies to drive

volume sales. Today, Hindustan Lever„s estimates- its shampoo sachets are sold in

around 400,000 of India„s 600,000 villages.

The success of Nirma is an example. In the late 1980s, Nirma started offering detergent

products and later toilet soaps for poor consumers mostly in the rural areas. Today, the

brand Nirma has become so popular among the tire 4 segments that it has captured a

market share of nearly 35% by value in the detergent segment and 20% market share in

the toilet soap segment. In cassettes, the T-series brand was extremely successful with its

low pricing and at the same time providing value with its more songs per cassette

Ratan Tata, Chairman of Tata Group, had announced that Tata was planning to

manufacture a car made from different low cost components like cycle parts, which

would be priced at Rs.1,00,000. At such a price, it might be able to expand the car market

by attracting new customers with lower disposable income and also by luring away some

of the existent two wheeler users. Creating buying power: For any product to sell,

consumers need to have disposable income. The consumers in tier 4 segment have desire

to buy products, but they do not have the purchasing capacity, as majority of the products

are priced higher. To meet their desires, companies need to take steps so that these

customers could have access to credit and have higher earning capacity. Many

companies, however, might argue that it is not their responsibility to increase the earning

capacity of the consumers to get access to credit. A few companies, however, proved it

wrong. Way back in 1920s, Henry ford increased the wages of his employees to increase

the sales of his Ford cars and he was successful.

Hindustan Lever Ltd. (HLL) the Indian subsidiary of unilever has started a programme

targeting villages with a population of less than 2000. Under the program, the company

provides self-employment opportunities to villagers through Self-Help groups (SHGs).

SHGs operate like direct to home distributors wherein groups of 15-20 villagers who are

below the poverty line (Rs. 750) are provided with an opportunity to take micro-credit

from banks. With the help of this money, villagers are able to buy HLL„s products and

sell them to other villagers, thereby generating employment and income for themselves

and also increasing the reach of HLL„s products.

Generally, the poor have difficulty in getting access to commercial credit, as the

traditional banking system does not normally lend money without collateral security.


51


However, some institutions, like the Grameen Bank in Bangladesh, are helping the poor

to access money through innovative solutions such as micro lending. In the Grameen

Bank model, one group of rural women took out a loan for as little as $ 25 to start a

business. Only when she repaid could the next woman in the group borrow.

The success of Grameen Bank has helped to spread the idea of micro-lending throughout

the world. In Bangladesh alone, there are now around 10 million people who have taken

the help of micro-finance to start business. It is now planning to replicate the success in

rural India. The above banking model can fit well in the already existing cooperative

banking models with some changes, to initiate the concept of micro lending.

Not only this, the success of Grameen Bank had also led to its offshoot, Grameen Phone,

a provider of village phone service. As mentioned in the article serving the World„s Poor,

Profitably by Prahalad C. K. and Hammond Allen, under the Grameen Phone, a single

entrepreneur in a village borrows money from Grameen Bank to buy a mobile phone,

which is being used by the entire village generating an average monthly revenue of

around $90 for the entrepreneur.


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UNIT-V

Applications and Innovations

Applications and Innovations: Marketing of Consumer products, services, social marketing,

agricultural marketing, rural industry products- Innovation for Rural Market – Marketing

Strategies – e-Rural Marketing – Agricultural Co – operative Marketing – Rural Market

Mapping – Corporate Social Responsibility – Organized Rural Marketing – IT for Rural

Development – e-Governance for Rural India.


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SOCIAL MARKETING

Social marketing relies on voluntary compliance rather than legal, economic or coercive

forms of influence.

Kotler et al. (2002) argue that social marketing is often used to influence an audience to

change their behaviour for the sake of one or more of the following:

improving health – health issues

preventing injuries – safety issues

protecting the environment – environmental issues

contributing to the community – community-building issues.

Lazer and Kelley define social marketing as follows:

Social marketing is concerned with the application of marketing knowledge, concepts and

techniques to enhance social as well as economic ends. It is also concerned with analysis

of the social consequences of marketing policies, decisions and activities.

This definition adds a further dimension to the scope of social marketing. Sometimes

described as „critical marketing‟, this involves an assessment of (usually) commercial

marketing's impact on society. This course will, however, concentrate on the first element

of the definition, i.e. the use of marketing to achieve social goals.

Reasons against social marketing

Arguments against the use of social marketing can be based on the following:

Cost – Social marketing programmes can cost considerable amounts of money. Criticisms

of these expenditures are heightened as they are often financed by public money in times

of resource constraints and therefore have a high opportunity cost. A related issue is that

of the problems involved in assessing the success of these programmes. The long term

nature of behavioral change and the difficulties in establishing cause–effect relationships

add to the fuel for the critics.

Misconceptions and negative attitudes about marketing – As most introductory marketing

text books relate, marketing is often equated with selling and persuading people to buy

things that they do not really want. Interestingly, when people are asked if they have been

persuaded they usually say no. Today's adoption of marketing principles and techniques

(for example, market segmentation, market research, branding) by the banking sector is

now evident. It was not too long ago, however, that bank managers were describing such


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activity as „nauseating‟, „odious and irrelevant‟ and „an over-rated pastime‟. Many

professional services such as accountants and solicitors still equate marketing with

advertising . Public sector organisations, such as hospital trusts, have also been slow to

adopt. Lack of awareness of the potential of marketing, misunderstanding and the

observation of some of the more doubtful practices of the commercial sector are some of

the reasons behind this. As previously mentioned, the criticism of commercial marketing

is an element of social marketing, and this is highlighted in the Lazer and Kelley

definition. A final reason for resistance to marketing may be due to the nature of the

language. Strategic marketing, for example, adopts the terminology of Sun Zu's „The Art

of War‟. Phrases such as „flanking defence‟, „encirclement‟ and „full frontal attack‟ are

probably not particularly attractive to the World Wildlife Fund or Oxfam.

Parameters of marketing activity – A final point emerges from marketing authors

themselves. In response to Kotler and Levy's article „Broadening the Concept of

Marketing‟, Luck (1969) argued that the wider application of marketing away from the

commercial sector dilutes the content and nature of marketing as a discipline. There are

few proponents of this view, however, and the last four decades have seen many

applications including, of course, the application of social marketing.

MARKETING STRATEGIES

Focused marketing strategies are discussed in the paragraphs below.

Product

Developing relevant products to meet the specific needs of rural consumers will exercise

the minds of marketers. For e.g., we know that voltage fluctuation is a major problem in

our villages, because of which bulbs last but a few days. Companies will put their R & D

teams to develop filaments that can withstand violent fluctuations, thereby extending the

life of the bulb.

Price

As rural incomes continue to rise in the coming years, we may see the share of low unit

packs coming down somewhat and economy packs gaining share. As the reach of media

and awareness level improve, we are likely to see companies shift their focus from trade

to consumers.

Distribution

Challenge of reach will be addressed through innovation. Project Shakti of HUL is one

such successful example. Nehru Yuva Kendra „volunteers‟ model through haats being

piloted by MART for Colgate, is another such new model. Amway is already selling bio-

fertilizers in rural India, through its famous multi-layer distribution model.

Communication

Indian advertising industry has to be firmly grounded in rural perception, values and

traditions. It has to drown itself in local colours, customs and modes of communication,

to make itself relevant to rural society. It has to gain the trust of masses, by undercutting

excessive dependency on western advertising.


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CO-OPERATIVE MARKETING IN INDIA

Marketing is a comprehensive term covering a large number of functions. Recently the

concept of marketing has broadened considerably. It includes not only purchases and

sales of products, but also the various business activities and process involved in bringing

the products from the producer to the consumer. So an efficient and organized marketing

is essential for the healthy growth of any community.

Marketing is one of the major problems of Indian agriculture. Owing to lack or shortage

of suitable market, infrastructure, farmers are compelled to dispose off their produce at

very low prices and, thus, they are deprived of the real income which they should get out

of their venture. At this condition, co- operative marketing can prove very beneficial and

of course the only solution.

According to the Reserve Bank of India, a co-operative marketing society "is an

association of cultivators formed primarily for the purpose of helping the members to

market their produce more profitably than possible through the private trade." In general

it is a process of marketing of products which enables the growers to market their

produce at better prices, followed by the intention of securing better marketing services

and ultimately contributing to improvement in the standard of living of members.

Agricultural marketing begins at the farmers field. It includes several activities like

assembling the produce, grading, storage, packing, processing, value – addition,

gathering market information, transportation, selling etc., There are certain special

features attached to agricultural marketing which is different from that of manufactured

goods. These are; perishability of the product, seasonability of production, bulkiness of

products, variation in quality, irregular supply, small size and scattered production,

processing etc.,

Marketing Difficulties:

Even though the conditions have improved over the years with regard to agricultural

marketing still there are problems like long chain of middlemen, multiplicity of market

charges, adulteration and

lack of grading, traditional method of sale, weighing procedure, delayed payment, low

marketable surplus, inadequate storage facilities, defective transport, lack of market

information, insufficient number of regulated markets, financial problem, inefficient

management, lack of integration between production and marketing etc.,

Importance of co-operative Marketing:

Organized marketing is of considerable significance to the economy of a country. In fact,

a well-organized co-operative marketing structure is an essential pre-requisite for large

scale increase in co-operative credit. Under the crop loan system, there is a shift in the

emphasis from land to crop as the main security, and linking of credit with marketing

would provide a built – in mechanism for recovery of production loans also.

Apart from the above the prevailing hurdles in agricultural marketing can be solved

through co-operative marketing system in a country like India. The following are some of

the important reasons which justify the establishment of co-operative marketing structure.


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To overcome the malpractices.

To reduce the price – spread between the producer and the consumer.

For large-scale expansion of co-operative credit.

For integration.

To improve the economic conditions of the producers by strengthening his

bargaining power.

To educate the farmers.

To overcome the problem of unwanted participation of multi-national companies

in domestic marketing.

Role of co-operative marketing

Co-operative marketing plays a significant role in the following areas;

Optimization in resource use and output management.

Widening the markets

Growth of agro-based industries

Generates Employment

Increase in farm income.

Aims and objectives of co-operative marketing

The broad aim of co-operative marketing societies is to rationalize the whole marketing

system so that it may be beneficial to the producer. Its basic objective is to strengthen the

bargaining capacity of the farmer so as to secure him better price and eliminate the

superfluous middlemen.

Objects and aims

Strengthen the bargaining capacity of the cultivation.

Secure the member a better price for their produce.

Eliminate the middlemen.

Provide members the needed finance.

Persuade the farmer to grow better quality products.

Stabilize the price.

Developing fair trade practices.

Provide the facility of grading and transportation.

Act as an agent of government for procurement and implementation of price

support policy as well as market intervention scheme.

Promote the economic interest of its members by encouraging self help, thrift and

better farming among members.

Act as a distributive center for agricultural requisites such as seeds, implements

etc.,

Help in the expansion of co-operative credit programme by linking marketing with

credit.

Educating the farmers.


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IT for Rural Development

IT and connectivity impact the way business is done. Today with STD facility, the

retailer can dial the town distributor instantly and fresh stocks would reach him in just a

couple of days, because of better road connectivity.

Benefits of IT-driven business strategy are as follows:

Ease of access

Up-to-date content

Layout, design, consistent themes

Easy navigation

Higher interactivity

Access through multiple media

Higher use of non-textual information

Multiple languages

Lower transaction cost.

Rural managers

As the rural market is already bigger than its urban counterpart, there is need to develop a

good understanding about it among corporate managers. For this to happen, rural

marketing should be taught as a subject in every business school.

Glamorise rural marketing

Rural marketing should be glamorised by adopting following measures:

Rural is considered as unglamorous. Industry seminars on these subjects also

evoke a similar response. This must change as the rural market in size is bigger

than any of the other markets mentioned here.

Industries associations (CII, FICCI, ASSOCHAM, etc.) government agencies and

academic institutions should take upon themselves to give due importance to rural

marketing.

Public-private partnership

Companies would join hands with the government in self-interest to increase the size of

the pie, by creating economic activity in villages through micro-enterprises and

mainstream these efforts by linking them with large industry.

ICT Initiatives in rural markets are as follows:

ITCs e-choupal

N-Logue communications: Business of providing internet, voice, e-governance

and other rural services through a network of local service providers.


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Electronic governance or e-governance is the application of information and

communication technology (ICT) for delivering government services, exchange of

information, communication transactions, integration of various stand-alone systems and

services between government-to-customer (G2C), government-to-business (G2B). .

E-governance aims to restore democracy to its true meaning by improving citizen

participation in the Governing process, by improving the feedback, access to information

and overall participation of the citizens in the decision making.

Numbers of Advantages of e- governance. Some of them are mentioned below:-

1. Speed: - e-governance means using electronic technology by the government.

Electronic technologies make communication better, and faster . It will take

very less time for any policy, or scheme to reach to the people. As you yourself

can see that internet , cell phones and mobile communications have these

capabilities.

2. Transparency: - Democracy is all about transparency . Since independent we

have come to know that, it has become difficult for citizen of India to get

information about the policies of the Government. Or In other words, it has

become easier for wrong doers to hide the wrong deeds done by them form the

eyes of the citizens. But, by using the internet, all the information of each and

every policy will be directly available to the citizens, hence strengthening

democracy.

3. Accountability: - Accountability is answerability to the people by the the

government. Hence, once the transparency is achieved the government will

automatically become accountable .

4. Reduction in Cost:-For implementing the various policies and schemes of the

government, crores of rupees are invested in stationery materials like for buying

pens, papers, and printers. But with the use of Internet the government will be

able save these expenditures , which can be further used for other developments.


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Rural Marketing, MBA I Semester

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